Monday, May 31, 2010

The Good: NTPM Holdings Bhd

A Brief Background
Founded in 1975 by Mr. Lee Sin Jin, Nibong Tebal Paper Mill (NTPM) Holdings Bhd is the largest tissue manufacturer in Malaysia. Its principal activities involved manufacturing and trading of tissue papers and toilet tissue. Its competitor, Kimberly-Clark is the world leader in tissue products and was once biggest in Malaysia before being displaced by NTPM. They started to enter into the sanitary napkin market in March 2003, pretty much like Kimberly-Clark what did. Its other activities included other paper related products and trading of cotton and investment holding.

Products Brand
Tissue Products: Premier (facial tissue), Cutie (toilet tissue), Royal Gold (Premium tissue), CONV
Personal Care: Intimate (sanitary napkins), Diapex (diapers), Premier Cotton
Personally, I like consumer names primarily because it is easier to do “scuttlebutt” on their products. For NTPM case, I take a visit to Tesco, Giants and Jusco. A quick glance at the shelf, I see it is mainly dominated by the names of Premier and Cutie (by NTPM) as well as Scott and Kleenex (by Kimberly-Clark). There are other brands as well just that they occupy only a small portion of the shelf. If I am not mistake, Jusco tissues are made by NTPM as well. Yeap, NTPM does seem to have establish its brand name here. So, I went on to ask some customers around including some of my friends on which one would they prefer. Some of them say “Aren’t Premier a better brand?”, “We have been using Premier all the while, they are good”, some don’t bother and some say it is cheaper. Hmm…cheaper….
Has NTPM tissue owns a piece of consumer mind? Well, I know some people like carrying facial tissue around and for most of the time, when they take it out from their bags/pockets, it’s Premier. I could say well done, NTPM.
The group expanded their product range since March 2003 by selling sanitary products (Intimate) as well as baby diapers (Diapex) which command a higher margin than its primary product. They have been intensifying marketing the Intimate brand name by having popular local Miss Fish Leong and Stacy, Akademi Fantasia 6 winner as ambassadors.

Historical Performance
NTPM did not fail making their products a well-known brand in this region.
  • Sales have been increasing at the average of 13% annually from 2005-2009 while operating income increases the rate of about 20%. Gross profit ratio remains steadily 57%-59% while operating income ratio stays around 12%-16%. That’s a pretty good margin for a manufacturer and it's consistent. This might show that it does have competitive advantage in its playground.
  • They do shown a slowdown in inventories turnover from 3.4 months to about 4.1months.

  • Historically they do show a slight illiquidity (less than 1). As of January 2010, its liquidity ratio stands at 0.79. A little illiquid for me. However, they are able to generate free cash flow at about RM25mil to RM30mil which could well cover their short term debt.
  • Probably due to their capability to generate strong cash flow, they have rather been generous with their dividend payout. For the past 5 years, their payout rate stands above 50% or in fact at the range of 57%-76%.
  • The group’s manufacturing facilities have been operating at full capacity at 75% to 80% (impossible to reach 100% btw). So, we should expect investment in new manufacturing plant shall we hope for higher growth.
  • As of 2009, export demand has surged by 21% driven by the demand by the Oceania region and the US. They are also making inroads to Vietnam and Nepal. NTPM tissue products are perceived as “greener” as they have more of their tissue composition made of recycled waste paper material instead of virgin pulp.
Now, from the description above, NTPM does look like the Coca-Cola of our own – or does it? You see, the reason Coca-Cola is able to sustain its growth for a long period of time even until now is because it has a unique taste. In fact it is so unique that it is not replicable. Now, try differentiate NTPM tissue versus the other brands. Find anything special? If Kimberly-Clark can be so easily being overtaken, so can NTPM.

One of the reason NTPM is able to dominate our local market is because they are selling it at a cheaper price. NTPM is able to achieved that by having more recycled waste paper in their tissue as compare to the one Kimberly-Clark made and thus lower its cost. This however, affected the quality of their tissue as virgin pulp made tissues are softer and at least guaranteed cleaner. I am not a big fan of those corporation who needs to win competition by selling their products at a lower price. Well there is some exception (will talk about it someday) but not NTPM. Kimberly-Clark can do the exact same way to compete. Furthermore, it’ll make NTPM difficult to adjust their price to inflation because they are ceilinged by the likes of Kimberly-Clark. All these could affect the sustainbility of their growth.
How about their other products? If you go to the supermarket to see, Intimate and Diapex is yes, cheaper (I could be wrong because I don’t buy those products, but that is what I could see so far).
However, this could be a good medium term investment as there are potential upside to the current market price. These are the assumption I made to get this valuation.
Cost of Revenue: The average COGS over the Sales over the past five years has been 41.3%.
SGA Expenses: Average SGA Expenses is about 31.4%
Depretiation: Depretiation wise is about the same as Capex at about RM18.6million
Capex: Assuming the group decided for another factory in around the next 5 years, I took the average about RM23.3million. Bare in mind, the group exports are expanding.
Revenue: Tissue market is already saturated in Malaysia and could see the group expanding into other countries. Besides, their entrance i to sanitary products seem to be doing well. For that, I am quite confident they are able to maintain their average 13% growth over the next 5 years.
With 14% discount, NTPM is valued at RM0.83.
Hey, didn’t I always stress for good-long term investment? Yes, I am still. NTPM does look like a good investment and really got me excited few months back. The only reason I got turned off is because there is still a big question mark on the sustainability of its growth over the longer term.
Will I invest in NTPM? Yes, IF, I have some extra cash and I want to invest somewhere and can’t find any good one.
This comment is based on my personal thoughts, opinions and my risk tolerance. It should not be considered as an investment advise. Please consult your financial advisor or do some research of your own before making any decision. You might have your own thoughts. I would love to here from you. You can always place your comments here and or email me privately at

Thursday, May 27, 2010

The Ugly: Proton and Tan Chong

It is ironic yesterday when I check Proton's closing stock prices and it shows this ->

courtesy of Reuters

That number in Chinese it means die, die, die or dead, dead, dead or death, death, death. Yes, it literally means dead. Proton is not dead - yet. I'm not a feng shui guy but that doesn't look like a good sign.

Proton Holdings Bhd as we all know or all Malaysian know is a 27 years old child. Well, we all know about Proton right, but my curiosity got me into them. Few weeks back my virtual broker got pretty excited about Proton - not the car; And yesterday at headline says Strong Earnings - with Proton's logo. So I went back to find out. This is what I found....

And I stop there. Time is too precious to be wasted. This is definitely not my cup of tea. Well, that's the car maker, we've heard about GM and Ford last year. What about a car distributor? So I went to check out Tan Chong Motor Holdings Bhd, a franchise holder and an exclusive distributor of Nissan and Renault vehicle (I did not check UMW because its business is more diverse). This is what I got....

Tan Chong I love your 350Z but NO, my money isn't going in there either!

Tan Chong earnings is like riding along the turbulent sea of waves; while Proton's is like a child drown in the sea hoping for his parent or someone to save him. It may be fun to speculate on this kind of stocks but not for a conservative investor. That'll put them in The Ugly list for me.

This comment is based on my personal thoughts, opinions and my risk tolerance. It should not be considered as an investment advise. Please consult your financial advisor or do some research of your own before making any decision. You might have your own thoughts. I would love to here from you. You can always place your comments here and or email me privately at

Tuesday, May 25, 2010

When to Buy and When to Sell

"Buy Low, Sell High"
Try ask anyone on the street, that's what they'll tell you. That's the strategy, they say.

Back in secondary school when I was first introduced to the concept of supply and demand in Economics class, I told my teacher "To make money in market is so easy ma, just buy when the price is low and then sell it when the price is high lo". Yeah right, it is that simple. Then my innocent mind think again "If it is really that simple, why do people lose money? If everyone does that, everyone would have been a millionaire. But someone has to lose somewhere..but why and how?"

There are thousands of answer to that question but that's not the topic for today. Today's topic is about when should we buy and when should we sell........rationally. The following comment is not only mine - well not all of them. Its is from all my readings and what I've learned plus what I think so far that I wish to share.

When to Buy
1 hour later? Tomorrow? The week after?........ I don't know. I don't what the price is going to be later, tomorrow, next week, next month or even next year. IF you know, shhhhhh...please email me, my email is at the end of this post and I promise to share with you 80% of my profits. Seriously, 80% or even 90% if you want to. The answer is there is no way to know future emotions or better known as stock prices. It baffles me when someone uses time to decide whether to buy or not. There is no right time to buy but there is right price to buy. You can buy at anytime as long as the price is right. If the business is good and the price is right, the rationale is one should buy it.

(My previous post states now is the time to go shopping. But I did say buy cheap and do your homework first. Well, normally this time around, during the bear market, things will go cheaper but not necessarily cheap)

When to Sell
I've heard of few advices on this:

  • Sell when you make maybe like 20%-50%? - What if I have gain 50% and it is still cheap versus the valuation? - Aiya, don't be so greedy la - O~kay~
If I have follow this advice, I would have lost 100 percentage point gain. Remember, if you buy 1000 units of Public Bank shares in 1967, you would have be a millionaire today! Erm...not a very good idea.

  • Sell when it is overvalued?
What exactly is overvalued? You see, before I buy, I make an estimated valuation which serves as a guide for the price I should pay most before putting my investment at risk. Remember, my valuation is done on a conservative manner because I am risk averse. "It is easier to stay out of trouble than get out of trouble", Buffet. What if I knew the business I owned has the potential to grow more than what my valuation expected. I definitely would not project business growth of 30% annually for the next 5 years, that is far too risky. What if the business really could. It'll appear overvalued that I would sell it and I'll end up selling a good investment. No, that's a risk that I'm not willing to take either.

"The best time to sell is never", Buffett
Yes, never. Okay, you might think I'm a Warren Buffett fans, I am. But what he says make sense. Why would you sell a good business? The time when you should sell a business is when the reasons you buy it no longer exist. Or, you need the cash to buy a bigger house or something. Ah Beng might ask "You crazy ah, if you never sell how to earn?". Then, my question is what are you going to do with the cash. I bet you more than 50% of the time, he'll say "Buy other shares lo". Don't get me wrong, what Ah Beng says does make sense - If he has found a better investment. Honestly, I don't get the rationale, to sell just because its price has gone up.

It the price offered is too high, for me, I might sell a portion because it'll look risky. Eh...didn't I just say that it is risky to sell? Yes, that's why I would just sell a portion lo. I do not want to risk losing a great business and at the same I would not want to risk missing a delicious offer price. What kind of price then? The kind of price that would take 50% to infinity annual growth rate to achieve.

This comment is based on my personal thoughts, opinions and my risk tolerance. It should not be considered as an investment advise. Please consult your financial advisor or do some research of your own before making any decision. You might have your own thoughts. I would love to here from you. You can always place your comments here and or email me privately at

Sunday, May 23, 2010

Time To Go SHOPPING!!!

I do not intend to write today but one of my favorite shopping mall are having SALES! - WORLDWIDE!!

Actually what happen is, for the past few weeks I keep getting some....whines, complaints etc on the current bear stock market. And they sound like:

"It's a bear market and I can't bear looking at my stocks"
"I feel depress looking at the market"
"I do not dare to 'go in' now, cause I do not when will it stops dropping"
"Are you crazy, it is a bear market now, I'm keeping my cash"

Well, I try to make sense out from this statement and can't find any. Well maybe he feels depress now because he has no money to buy. Anyway, a picture tells a thousand words. Do you think these pictures make any sense to you?

Guys and girls, it's time to go SHOPPING!

Few shopping tips though:
  • buy branded with excellent quality goods. You don't see them selling at a discount that often.
  • be cheap but not too cheap. Don't get too hung up with that few sens that you'll end up missing that valuable item. What's the word again....thrift, yes be thrifty.
  • last but the most important of all, do your homework first. You can check out The List or Ah Boi's blog for some guides or your own.
Happy Shopping :)

Saturday, May 22, 2010

The Great: Hai-O Enterprise Bhd

Brief Business Background
Hai-O or seagull in Mandarin founded in 1975 with an initial capital of RM168K. Today it is worth about RM780millions (as of the time of writing). Hai-O as most of us know today is a Traditional Chinese Medicine (TCM) wholesaler and retailer – or most of us thought so. Actually, Hai-O Ent also involved in Multi-Level Marketing (MLM) via its subsidiary Hai-O Marketing. In fact, as of FY09, 80% of its revenue and 78.5% of its pretax earnings is contributed by its MLM division. And despite Chinese sounding name, some 90% of its direct marketers are Bumiputras.
Hai-O Marketing isn’t selling TCM to the Bumiputras but in fact an entirely different types of products. Its champions are Bio-Aura water filter, Premium Beautiful foundation lingerie as well as its new LaPraise and Bio-Ever personal care products. I’ll not go too into details about each of these products but if you were to know more you can contact one of their distributors.
Well, when we talk about MLM business it is not just about the products – of course it involves the product – but not just that. It needs its marketing business plan to work for their distributors as well. This is how they grow. MLM works for both sides leveraging on distributors for time and effort and the distributors leverage on producer (Hai-O for this matter) on its finances and products. Unlike the olden days, people are now starting to understand this idea and accepting it.
I am not selling any MLM products to you but this is just my belief. Yes, over the years there are many MLMs popping out in Malaysia and mostly are scam. Some I’ve never even heard of. But let me ask you this, are you sure your bank is not putting a scam on you? I can talk lengthy about this but I just wanted to let you know that basically any business is susceptible to scam. To avoid being cheated, please do your homework. The great Warren Buffett is a good example; he doesn’t buy businesses that he doesn’t understand.
Historical Business Performance
I would say, Hai-O Ent fell into a blue ocean by accident. If you go all the way back to 1997, things do not go really well for Hai-O. Its was plagued by internal power struggle from 1997 to 2000. Top Chinese salespersons left during the height of economy crisis in 1998. However, Managing Director Tan Kai Hee took order to revamp its MLM business. Malays salespersons who mostly stayed, turned out to be a blessing in disguised for Hai-O. YES, a vast unexplored market in this country and the rest are histories…….
Sales and earnings wise, Hai-O Ent has grown at the average rate of 32.8% annually while pre-tax earnings grows at 64.7% mainly driven by its MLM divison. I’m not sure how true this statistic is, but I was told MLM in this country has been growing 40% annually. If it is true, Hai-O is definitely riding on this growth.

Gross profit ratio is consistent around 30%-35% (Higher than Amway which is around 25%-31%). Net profit ratio has improved to about 17.6% - likely due to restructing process. Some may want to this to Zhulian. Zhulian has way higher margin because they manufactured their products in-house. There is a BUT…I’ll write about that next time.
Hai-O sales force seem to be more productive versus the likes of Zhulian – they compete in the same market. A rough figures shows that Hai-O members produce RM3400/member while Zhulian made RM788/member. Probably due to its higher cost of entry to join Hai-O distributors force which is around RM28K each. With this, Hai-O able to recruit more serious members. You won’t pay that much of money unless you are serious right?
Its Balance Sheet looks pretty healthy as well for the past 5 years. With my extreme liquid test where liquid assets = current assets – inventories – receivables, it look like the table below 0.86 – 1.35. For business like Hai-O, the receivables portion might not seem necessary but I just wanted to show you how strong they are.

Yea,with this much of cash, they must have retain lots of their profits lo. Err…yes and no. Hai-O has a dividend policy of returning 50% of their profits as dividend. So, this shows that they are really good at generating cash. With current price weakness, you’ll get dividend yield at about 3%-3.3%.(correction on dividend yield)
Inventories turnover takes about 1-3 months while receivables turnover takes less than 2 months for the past 5 years. Not bad at all. Hai-O doesn’t seem to like keeping debts for too long so their credit repayment period takes less than 2 months. That’s good.
ROE is improving over the years and in FY09 its ROE stands at 34.2% slightly lower than FY08 at 34.9%.
Management wise, they have made few bad investments actually in the past. But they seem to have learn from it. Unlike others, they don’t jump into expansion plan quickly. They do look more careful nowadays. Indonesia is their first foreign market and are slowly looking into China. Current shareholders and potential buyers should scrutinise closely about their plan in China. Yes, China’s market is enormous so as the competition. Many have gone there and fail. Indonesia will be a new source of growth for Hai-O. Like China, Indonesia’s market is its private consumption. Its population is 10 times the size of Malaysia. If it turns out well, it is gonna be HUGE.
How much should you pay for Hai-O?
The big question is, is 30% growth sustainable. Well, I doubt UNLESS their Indonesia business turns out well. To stay conservative, I’ll exclude the operations in Indonesia and focus solely on Malaysia. For Malaysia, my valuation will be based on forecast over the next 5 years as Malaysian market is saturating.
  • Cost of Revenue: Cost of revenue stays around 67% for the past 5 years so I’ll stick to this. Hai-O are beginning to manufacture more products themselves and that should improve margins. But I’ll stick with 67%.
  • SGA Expenses: 20% of revenue.
  • Depretiation: Maybe about RM2.5millions.
  • Changes in Working Capital: This has actually correlates with its revenue over the years.
  • Capex: After their Indonesia expansion, it should stays back to about RM2.5millions.
  • Income Tax: 25%
  • Revenue: This is the tough part. Historically, you’ll see that it has grown at about 32.8% annually. Well, this number is a bit too high for me to do a valuation. Just wanted to stay conservative to get the best price. I wasn’t sure which economy data correlates with MLM businesses. Anyway,I’ll use the average GDP growth of 12% over the next 5 years and 3% for terminal value after. Maybe I could come out with a better way someday.
What do I get from here? Since revenue growth is estimated base on average GDP growth, I might over estimate it. So, I’ll use a higher discount factor of 12% (considering I’ve yet to include operations in Indonesia 12% is actually 40% of risk in my risk profile). With 20% margin of error, Hai-O Enterprise is valued at RM5.30 - 5.60.
For a business with such huge potential growth, I would BUY it below RM5.30.

This is based on my personal thoughts, opinions and my risk tolerance. It should not be considered as an investment advise. Please consult your financial advisor or do some research of your own before making any decision. You might have your own thoughts. I would love to here from you. You can always place your comments here and or email me privately at

The Great List: JobStreet Corporation Bhd (Update)

You might wonder why would I cover JobStreet again though I just wrote about it almost 2 weeks ago. Well, in fact I have been holding JobStreet shares for quite some time now and I felt it is good share some of my research on this corporation. That is also a reason why I did not come out with a valuation or decision last post but today, you’ll get one.

Okay, the big question is how much would you pay for JobStreet?

Their 2009 Annual Report has just been released; let’s do a little recap on how it got into my Great List.

  • Moat in Malaysia and Phillipines (the kind of business the Buffett likes), 2nd in Singapore but catching up quickly behind JobsDB. Recently, expanded into Thailand (Just launched in June 2009) and Indonesia. A quick check on Google shows that JobStreet would be the first to step into these countries. Operations in Indonesia especially is picking up fast.
  • JobStreet has a unique barrier of entry. Their large database creates a barrier for their competitors to obtain employers. And their vast varieties of employers and jobs create a barrier for their competitors to grow their database. With their initiatives to be the first to provide such services in Indonesia and Thailand as well as their experiences of operating such business for more 10 years, you can be assured that they’ll have these 2 countries once they establish their ground. (Yes, I know political trouble in Bangkok is a concern but what we are looking at is the long term)
  • Synergy and Strategy: They hit the 20% holdings threshold in 104 Corp and that makes them an associate. From the CEO’s statement, they’ll be leveraging on 104 Corp dominant positions in Taiwan and penetrate China’s market while JobStreet will concentrates on SEA operations. One of the largest similar company from Australia, SEEK Ltd has raise its stake to 22.4%, we should see more tangible synergies between them
Okay, Okay I got it so how much should I pay?

Well, its FY09 PE over 20 (versus RM2.00), it certainly does look expensive. Should we pay that much for its potential growth? We know the dip in earning last year is largely caused by the general world economy. If you do a little guesstimate say FY10 it grows back to the same earnings as in FY08 (they are certainly on track from the Q1FY10 report), we’ll see a PE of around 16. Still not cheap enough?

Actually, I am not a fan of valuating using PE method. I prefer DCF valuations. Anyway, there is no harm looking at both methods.

What is its value from my DCF valuation then?

I really like business like JobStreet as their business is simple and most “numbers” are predictable. Probably I should start with revenue forecast but I’ll keep it later after these:

  • Cost of Revenue: RM15millions over the next 5 years and increase by 10% for the 6th to 10th year. (Whoa, 10 years forecast a? I’ll let you know why later)
  • SGA Expenses: will be kept at 30%. Historically, we could see the management controlling this cost tightly over the years.
  • Depreciation: RM 1.5 millions.
  • Income Tax: Assuming 25% (Save the complexity of deferred tax and stuff)
  • Discount Factor: Yes, this is a smaller corporation in market capitalization but from top to bottom, it looks like blue chip for me. So, a 10% discount.
  • Revenue: Alright, this is the hard part. This is a business that highly correlates with the economy. (That’ll make things easy; most data are available on the Internet). Rather than looking at the GDP I’ll base on estimates on Total Employment , Internet Penetration and Population data.
Total Employment Growth (1982-2006): 3%
Internet Penetration Growth (1998-2008): 29%
Population Growth (1998-2008): 2.6%

Total Employment Growth (1999-2006): 4.2%
Internet Penetration Growth (1998-2008): 18%
Population Growth (1998-2008): 2.3%

Total Employment Growth (1997-2006): 3.1%
Internet Penetration Growth (1998-2008): 23.8%
Population Growth (1998-2008): 2.6%

Assuming Internet penetration in the US and Korea has hit saturation level. Both them stand at 75.7% (how coincident). So I’ll assume these 3 countries to hits saturation level at 75.7%. So with my a little complex calculation, Malaysia will hit saturation level in 2011, Singapore in 2012 (not bad huh we are quicker than them), Philippines in 2023!! See why I predict 10 years. And with such information I guesstimate the total revenue growth from all these 3 countries combine at CAGR 9% (9% only meh? I took 9% to stay a little more conservative vs its 20% growth rate). 9% is projected from FY09 data, not the best data but the more conservative the safer ma. What is the worst that can happen if I am too conservative ha? Miss the boat lo.

[Details: Revenue is assumed to grow at internet penetration rate. After saturation revenue is assumed to grow at total employment rate]

And what do I get? TADA! Yes, JobStreet Corp Bhd is valued at RM3.20. This is no rocket science so giving about 20% margin of error I'll get around RM2.60. Bare in mind, 9% revenue growth is pretty conservative as I only encounted for Malaysia, Singapore and Philippines (excluding potential growth from Indonesia, Thailand and Far East)

It is no secret that SEEK Ltd accumulated JobStreet shares at RM2.05. Now you see why. With its current price ranging from RM1.89 to RM2.05 recently, it is trading at 23%-27% discount. For the company of this quality, it is a BUY below RM2.60.

"I'd rather be approximately right than precisely wrong": Warren Buffett

This is based on my personal thoughts, opinions and my risk tolerance. It should not be considered as an investment advise. Please consult your financial advisor or do some research of your own before making any decision. You might have your own thoughts. I would love to here from you. You can always place your comments here and or email me privately at

Friday, May 21, 2010

The Ugly: LCL Corporation Bhd

Yes, this company is already in PN17 and yea definitely in The Ugly list. But, what I wanted to write today is the lesson that we could learn from this.

A little background:
LCL involves in interior-fit services which included design, consultancy and construction. They also manufacture generic and customized wood furniture with their in-house manufacturing facilities. They have projects all around the world (yes including that Dubai project)in a variety of industries including hospitality, corporate, commercial, to civil and administration sectors.

Let's take a look at its financial:
  • if you look at their EPS before crisis, it is growing at the compounded rate of 29.6%. That is pretty good. Meaning earnings could double in about 3 years.
  • even during the 2008 crisis which we would normally expect project-based company goes into red, but for LCL, its earnings only drops 29%. Not bad still.

  • even OSK have LCL in their top100 gem list.
  • they have project all over the world and their biggest is the Dubai World project. They must be really good if they are able to beat off so many competitors for the project. And we would expect there'll be lots of bidders for project like this.
  • let's check their liquidity. Their total liabilities/total assets ratio is 0.8 and Quick ratio is 0.73 in FY2008 just before crisis. This should show they'll have no problem paying off their debts.
But what the heck went wrong?
  • let's take a look closer to their balance sheet. Assuming the worst case where all sales are in credit, their receivables turnover takes 12-13 months over the period 2005-2008. Put is this way, a strong and a company with the upper hand in competitiveness does not usually have such huge receivables. Even an average project-based company takes 6 to 9 months Max. Now we see how they are able to win the project.

  • 80% of their earnings reported are from Dubai project so we could assume 80% of that receivables came from Dubai. Well, so much for diversification. So if Dubai defaulted their payment, their quick ratio will turn horrifically 2.3. And that is what got them into so much trouble.
  • Another thing that we should look at is its increasing debt. Their total debts has increased from RM87.3million to RM379.5million from 2005 to 2008. And it is pretty likely the sudden increase in debt (almost 150% increase in total debt) in 2008 is to finance their. project in Dubai. That is pretty ambitious considering their net cash during that period is only RM14.8million.
Some might have consider the once profitable (apparently) company selling at a pretty cheap valuation since its announcement to being listed as a PN17 company. Shares price has drop from ~RM0.70 to ~RM0.17. Well, like I said before such price changes does not tell the "cheapness" of the company. In fact, it requires more than that to value LCL Corp. I did not calculate the valuation of LCL because the main question is, are they able to repay their debts.

Analyst has suggest that lenders (bankers) might give them a lifeline given that it is once profitable business - apparently. But think again, their profits aren't not real cash. It has been accrually reported. And, from where would you think they'll get the cash if Dubai continues to default? We all know that they needs cash in hand for them to do business (buying raw materials, equipments and stuffs) and at the same time, they'll need to repay bankers. I can assume that their business is pretty much dead now and focusing on repaying debts. They do not have valuable assets to sell like TALAM and I have a little doubt that banks would help given that they aren't really generating much cash. So I would suggest a SELL and do not buy again if already sold. It is not worth the risk.
So what do we learn from here? Well, don't ignore the threat of receivables, check their debt levels, recent business activities and more a little bit more research. A general guide would be a receivables turnover of about 3 months is consider good where more than 6 months is alarming. How about in between leh? In between both lo.