19 December 2017 - Construction and road maintenance company Protasco
Bhd (Bursa 5070) once again announced the date of dividend payout as
follows.
First Dividend of 3 sen per share. Kindly be advised of the following :
1) The above Company's securities will be traded and quoted "Ex - Dividend” as from: 9 Jan 2018
2) The last date of lodgment : 11 Jan 2018
3) Date Payable : 26 Jan 2018
Presume the share price of RM1.03 as at 18 December 2017 market
closing. The 3 sen dividend seems too good to be true, where
off-dividend share price might just be quoted at RM1.00 on 9 January
2018. Any share price above RM1.00 after 9th until 26th January 2018,
would be a "profit". Very "generous", wasn't it?
Looking back at Protasco Bhd's past dividend record vs share price
performance, the "long-term" investors might have a more sour
experience. Protasco Bhd share price has been adjusted down from
post-dividend records but sustained lower and lower as seem from the
last 12 quarters results. Why is this happening?
There is much fundamental analysis pertaining to Protasco Bhd, which
might explain why smart investors do not buy the "fat dividend" illusion
story as if Protasco Bhd is very healthy and generous, with an "honest
& competent" management team.
"Fat Dividend Cash from where? "
3 sen dividend means about RM13mil cash will be paid out (again). Zoom
into the Q3 report, Protasco Bhd cash left about RM11mil, so the
shortfall for dividend might be coming from bank overdraft or gearing
(as usual). Protasco cash Y-to-Y was RM49mil (2016), and the
year-earlier was RM110mil (2015). Number speaks.
The Q3 report shows bank overdraft and financial cost ballooned to over
RM37mil and Rm14mil respectively, compared to RM21.7mil and RM5.6mil
(2016) on Y-to-Y comparison. Look deeper into the year 2015, would find
bank overdraft of RM10.5mil is relatively small compared to Q3 2017.
In summary, Protasco Bhd has been "feeding on own flesh" by borrowing
heavily (almost 100% of dividend matches 100% increase of bank borrowing
amount), despite the artificial "profits" and misleading public
relation using research reports and press releases shown during year
2014-2017 (12 quarters from Sep 2014 - Sep 2017).
" Good News vs Bad News. What is true? "
The company, led by current management after the change of major
"controlling" shareholders, twice in the year 2012 and year 2015, had in
the last 12 quarters delivered very strange financial results. Here are
some key points in layman terms worth notice. Good news or bad news is
explained below:
Good ones:
1. majority income "still the same" coming from one source - Road Maintenance.
2. diversify to property development.
3. construction very busy with PPA1M.
4. bidding for mega projects and going into Sri Lanka.
5. ED/Deputy-chairman (Dato Sri Chong Ket Pen) and board of directors remain in power.
6. After 10 years, Protasco Bhd still the same - relied on government concession, so as the profit close to RM40mil/year.
7. Dividend paid out intensified. 3 sen latest quarter.
8. Cash still positive.
Bad ones:
1. Road Maintenance margin drop to a single digit.
- Protasco strangely divested half of road maintenance company shares to an external party, reason unknown.
- Margin strangely drop to half, reason unknown.
- Divest & margin drop (half and further halved), money whereabout unknown.
2. property development no income.
3. construction sector booked loss.
- Variation dispute and finance cost not justify.
- Made a loss, and more variation dispute to surface in the next 24 months post-delivery.
4. Megaproject and Sri Lanka with the thunder-cloud news but no rain.
5. 1 ED/Deputy-chairman (Dato Sri Chong Ket Pen) increase salary
1,000% to over RM4 mil per year, while the board of directors taking
RM10 mil fees. Up 1,000% compared to a good year when Protasco Bhd was
making RM40mil net profit/year.
6. After 10 years, the (current) management losses money in Syria,
Libya, China Hainan, Indonesia, and South Africa. Latest venture into
Sri Lanka is questionable. Past records speak.
7. Dividend derives from Protasco loan (bank overdraft) - is actually eating own flesh.
8. Cash Position is positive but drops to RM11mil vs RM49mil (2016) and RM110mil (2015). Earlier, cash was once RM260mil!
More surgical insight, proven that Protasco Bhd after 10 years from
IPO, the core business is still "road maintenance business" and "profit"
is almost flat; but the board of directors salaries had skyrocketed.
Technically Protasco directors & management is feeding not only on
Protasco own flesh, but they are also "civil servants" since road
maintenance technically belongs to Malaysian. These huge changes (cash
payout to inflated salaries and dividend) raise eyebrows.
1. Protasco still relied on government concession but came with "half
& halved" margin. Profit amount (about RM40mil/year) same as 10
years ago but "artificially inflated" with low-margin construction
numbers, a time bomb yet to surface the next 24 months.
2. ED/Deputy-chairman and the management shows NO improvement yet
self-rewarded at the cost of the company by taking higher risk.
3. Cash position depleted from RM260mil to RM11mil the same period.
4. Bank overdraft shoots up the roof to RM37mil, compared to (2016) of
RM21.7mil and (2015) RM10.5mil. The increase almost matches 100% of
dividend cash being paid out.
" feed on own flesh - Legalised self-cannibal? "
If taking into consideration of "director's loan" being the case study
in the developed country "Law of Corporate Crime", where shareholder cum
director gearing up the company to pay money out and eventually ended
up in the said director's pocket, is a form of "director loan". Same
goes for substantially increased salary, which is a form of
self-gratification, having the company results did not actually generate
"Free Cash Flow" despite "accounting-profit" on paper. Artificially
inflated accounting-profit from construction sector is one of the
reasons "bank loan" has to be used to raise cash to pay high salaries
and dividend, and the majority of the dividend went to selected
controlling shareholders pocket.
The reasons above perhaps answers the minority shareholders questions
of why such a "good dividend stock" the share price keep coming down.
" Who Took The Cheese in Protasco? Number Speaks "
Artificially, by pocketing so much money, someone would be very very
cash rich, regardless of the "net profit" is real or not, or the "cash
vs bank overdraft" is sustainable or not. The FY2017 Q3 report shows the
Cash position is at RM11mil yet Dividend "must be paid out" in exceed
of RM13mil. net Profit plunged to just RM21mil combined Q1-Q3, and Q4
"window dressing" likely will push up some profits to buy time until
next dividend, or perhaps another 2 more quarters of dividends.
The very question of "what if" the current Executive Director cum
controlling shareholders and the management ran away when the sky falls?
Is the dividend paid to them be crawled back to pay for "Right Issue"
(and dilute your shares)? What if the other way round, when the sky
falls the current Executive Director cum controlling shareholders will
still be sitting on the sunken ship and suddenly flush with money
subscribing to Protasco Bhd cash call exercise, while he will tell
newspapers "The Hero Saving Protasco" subscribing to bond or shares?
Wonder who dried up Protasco blood in the first place? Would the
minority shareholders be diluted and all the years of dividend flushed
down the pipe suffering capital (share price) loss?
What if the questionable profits hit with the tax invasion bill, and
disappearing "profit margin" paid to "external parties" were captured by
MACC or other authorities? What would be the risk factor costing the
company and the minority shareholders?
Until the relevant authorities obtained their Ph.D. from developed
countries on how to spot the virus within the system and came up with
brilliant measures to protect the minorities, drink your own blood and
eat your own flesh is self-declared "legalized" in Bursa
Malaysia. Before anything cooking within (the company) shoot off the
roof, take your sweet dividend and enjoy the taste of your own blood
while you still can.
Maybe this last piece of facts would save you (the minority
shareholders) some sleepless nights. Some cash-rich controlling
shareholders will use some of the (questionable) cash to buy up Protasco
shares. The share price is at least sustained. What a hero and you feel
good and confident right? EPF though so, but not Hong Leong Bank. What
do you think?
"BizSchool analysis 101"
reference source: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5627797
| PROTASCO BERHAD |
First Dividend of 3 sen per share.
Kindly be advised of the following :
1) The above Company's securities will be traded and quoted "Ex - Dividend” as from: 9 Jan 2018
2) The last date of lodgment : 11 Jan 2018
3) Date Payable : 26 Jan 2018
2) The last date of lodgment : 11 Jan 2018
3) Date Payable : 26 Jan 2018
Remarks:- The "zero" par value is arising from the
migration to the no par value regime pursuant to the Companies Act 2016,
thus par value is no longer relevant
http://klse.i3investor.com/blogs/bursacannibal/141944.jsp
Announcement Info
| Company Name | PROTASCO BERHAD |
| Stock Name | PRTASCO |
| Date Announced | 05 Dec 2017 |
| Category | Listing Circular |
| Reference Number | ILC-05122017-00013 |
