ATA IMS Bhd’s slip into the crimson serves up some massive takeaways. For one, it’s a reminder to buyers that firms within the red-hot EMS or digital manufacturing providers sector have their dangers.
Secondly, it once more illustrates the native manufacturing sector’s habit to low-cost overseas labour, a difficulty that the nation has tried to handle since 15 years in the past with little progress.
ATA IMS noticed over RM1bil of its market capitalisation worn out early this week after it reported a lack of RM11.17mil for its second quarter ended Sept 30, 2021 in contrast with a web revenue of RM52.29mil a yr earlier.
The corporate stated the decline in earnings was the direct results of its adherence to the strict normal working procedures and restrictions of workforce capability imposed by the federal government.
Notably, ATA IMS says that it continues to face manpower shortages following the federal government’s freeze on overseas employee recruitment because the starting of the Covid-19 pandemic and that native employee recruitment as a substitute has not achieved the specified outcomes.
The corporate reckons that issues would stabilise solely when the federal government opens overseas employee recruitments for the manufacturing sector.
It is a clear indication that firms like ATM IMS are depending on the overseas employee labour pressure, driving dwelling the purpose that our manufacturing sector remains to be largely hooked on that supply of labour.
And because the pandemic has proven, the presence of huge overseas labour forces within the nation are inclined to result in different dangers such because the unfold of illnesses as a consequence of their dwelling circumstances.
A method out is to lift the requirements of these dwelling circumstances. However in the long term, firms have to get out of over-dependence on overseas labour, lest comparable hiccups to their operations floor once more, as seen within the case right now.
Significance of audited outcomes
THE puzzling case of INIX Technologies Holdings Bhd ought to function a reminder to public-listed firms when coping with the discharge of monetary statements.
Inix launched its annual report for the monetary yr ended June 30, 2021 (FY21) on Nov 8, however afterward Nov 11 stated that its auditor, Messrs SBY Companions PLT, had not signed off the audited monetary statements (AFS).
The corporate had deliberate to add the signed-off model by Nov 12, however missed the deadline as as much as that time, the auditor had but to signal the AFS.
On Monday, Inix defined that it was underneath the impression from its auditor that it might submit its newest annual report back to Bursa Malaysia with out having the AFS signed off.
Because of this, its shares had been suspended, following its failure to maintain to its personal deadline of Nov 12 to publish the signed-off annual report.
The matter has since been resolved with the AFS signed. The annual report has been launched and its shares resumed buying and selling. Nevertheless it does serve a reminder to listed firms.
Within the Inix case, it defined that the rationale it uploaded the preliminary model of the AFS and annual report on Nov 8 was as a consequence of a WhatsApp dialog with a accomplice of its audit agency that the corporate might proceed to present the accounts to the printers for printing and issuing.
Therefore Inix was underneath the impression that the accounts had been good for submission to the inventory alternate. And that subsequently, the auditor had offered Inix with the up to date model which implied that the listed firm might proceed with the importing of the paperwork.
Nonetheless, clearly, the foundations stipulate that solely audited and signed off accounts will be offered to be filed with the alternate.
The rationale for this rule is as a result of it’s concerning the integrity of monetary statements, which in flip permits buyers to belief the knowledge they obtain about firms through which they spend money on.
Positive, funding selections are usually not made on the idea of monetary statements alone.
Different elements do come into play: corresponding to market circumstances, competitors within the trade and technological adjustments.
Nonetheless, when assessing the monetary well being of the corporate, the monetary statements, the audited ones, stay the very best supply of data.
Something much less simply won’t reduce it.
KEJURUTERAAN Asastera Bhd (KAB) has been making headlines because the starting of final yr.
It has introduced numerous contract wins for electrical works for buildings, telecommunication towers in addition to photo voltaic installations and operations tasks.
The corporate has had board adjustments and has launched into quite a lot of company workouts.
These entailed share splits, bonus issuances and personal placements.
KAB was listed on the ACE Market of Bursa Malaysia again in October 2017 with a market capitalisation of mere RM28mil from the issuance of 112 million shares.
Immediately, the corporate has greater than 1.7 billion shares and has an enormous market capitalisation of RM586.3mil.
The inventory trades at a lofty worth a number of of 72 occasions its earnings.
Again in April KAB’s share worth had skyrocketed to greater than RM1.20 giving the corporate a market valuation of a whooping RM1.7bil at the moment.
It then traded at greater than 100 occasions its earnings. Notably, its market capitalisation has shrunk by a 3rd of that of worth in simply four-months.
One wonders if this firm wants so many shares to be issued within the first place?
It doesn’t but report big earnings to assist these valuations. And earnings nonetheless stay lumpy.
Its earnings for the monetary yr ended Dec 31, 2020 nearly halved to RM5.43mil from RM10.44mil in FY19.
For the six months ended June 30, 2021, KAB reported a doubling of earnings to RM2.94mil from RM1.55mil in the identical interval final yr.
Maybe buyers are hoping for a major spike in earnings on the again of its partnerships and joint ventures.
During the last 4 months, KAB has been piling on new contract wins and partnerships to enterprise into new companies.
These embrace RM55.72mil in contracts for 3 photo voltaic tasks in Thailand.
It additionally signed a memorandum of understanding with a Philippines-based firm to construct telecommunication towers, a deal KAB estimates will churn out annual revenues of RM15mil.
Nonetheless, KAB’s share worth has declined by some 62% since August to 34 sen every. So what offers?