LONDON BISCUITS BERHAD (LBB): There is rainbow after fake thunderstorm?
At the end of November 2018, LLB announced its FY18 net profit of RM13.9mil, growing 60% from its FY17 net profit of RM8.73mil. The stronger-than-expected quarter was mainly due to lower materials costs on top of better margins from its product mix.
The audited annual report was published on 31 January 2019. In the report, auditors raised some qualified opinions on the company.
What is qualified opinion? Here is a definition from Investopedia:
A qualified opinion states the financial statements of a corporate client are, with the exception of a specified area, fairly presented.
In this kind of case, normally the management of the company will have to address and resolve the concern of auditor within a certain period. All right, there are normal in the business world.
Sounds nothing serious right? In fact, the share price of LBB rose from RM0.595 to RM0.615 in five trading days.
When time is ticking, we are heading towards results announcement season, the final week of February.
However, at this crucial moment before the result announcement week (last friday), the Board of Directors of LBB has published an announcement on Bursa Malaysia to highlight to its shareholders again on the qualified opinion. They are seeking to fix the audit concerns with an interim limited re-audit/assessment.
Well, reiterate on something which has been publicly available for a few weeks?
I viewed through the audited report, focusing on the comment of the auditors. Guess what?
The auditors of the company were newly appointed on 28 December 2018!
Huh? The audited annual report was published on 31 January 2019. It means the new auditors have less than a month to perform its independent auditing.
Less than a month. Ermmm, it is too short a period to form an opinion.
My guess on this case – the auditors are trying to save their own ass by issuing qualified opinion.
Why I say so? The words, unable had appeared in the audited report for 6 times. Unable to determine, unable to ascertain and unable to satisfy.
Sounds fishy.
To build on the momentum of the excellent financial results from the past few quarters, the market has been forecasting a good quarter result announcement later this week.
It looks like it is well scripted.
Announcing negative news to the market, try to pick up some stocks from the panic sellers. Gain some handsome profit after the result announcement next week?
https://klse.i3investor.com/blogs/kokokai/194792.jsp
