China Gaoxian

I used to be vested in China Gaoxian as I found the financial statements strong and healthy, with good revenue booked in every quarter.

The latest financial statements are recently out and you can view them in SGX.

Opinion: Poor

A few things I would point out:

1. Gross Profit
Gross Profit in the Q4 2010 is worse than my own expectations. Despite ramp-up in revenue, they did not contain cost inefficiencies and resulted in a lower GP than in Q4 2009!

2. Accounts Receivables
STRANGELY, A/R at Group Level is lower than that of Company Level. I wonder how that really is possible. It is puzzling, and I don't like to be puzzled.

3. EPS
EPS calculation - Should it not include the KDRs (600m singapore shares equivalent) in its calculation? Looks like a bad accountant error. I don't like companies with poor accountants.


4. Dividends
Dividends - None again. The lack of a final dividend seems to imply that the previous interim dividend was only to reward shareholders which they wanted to sweeten their deal to the KRX investors, making it look like they give dividends often. Well, with such a healthy profit and capital expenditure almost done, why still maintain the cash?

And to sum it off, I had previously emailed their investor relations department (that was when I was still vested) on why their website was not updated. It is puzzling- for a large listed co to not update. The investor relations got my point and replied that they would highlight to the management for consideration. I think that was at least 6 months ago. Currently now, even with its KDR listing, its website is still not updated.

I have no good comments on its latest financial statements.

Reconsider buying?  
No.