tag:blogger.com,1999:blog-37872616.post7405341707433731932..comments2024-03-29T05:45:54.272+08:00Comments on BULLy the BEAR: Reply to Ossia's postla papillionhttp://www.blogger.com/profile/01372278083694506953noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-37872616.post-56258411580536525002008-03-01T14:48:00.000+08:002008-03-01T14:48:00.000+08:00Hi LP,Seeing that Yong has given such a spirited r...Hi LP,<BR/><BR/>Seeing that Yong has given such a spirited reply to your original Ossia post, allow me to just make a few minor comments. Also do note that I am not familiar with the retail industry nor do I know many of the brands which Ossia is promoting/distributing. I am merely commenting from a financial perspective and what I am reading from the replies from Yong and your own analysis too.<BR/><BR/>First off, I noted that a net profit of S$75 million was achieved but that gain from disposal was S$85.2 million and gain from disposal of investment property was S$3.4 million. Stripping those away, this means that Ossia had made a net loss of S$11.7 million for FY 2007 ! Please verify the numbers because you did mention that "margins were very low compared to FJ Ben", but from a first glance I computed a net loss, not a net profit.<BR/><BR/>The retail business has always been cutthroat anywhere in the world and I am not surprised that the Management of Ossia decided to sell out the business before cost pressures eroded their business profits. After all, if one is given such a good price for the business, it's hard to resist ! (Look at Labroy Marine's Tan Boey Tee hehe). The fact that they are sitting on a pile of cash now without knowing exactly what to do with it (other than doing share buybacks) is worrying. There is the usual prattle about "exploring business opportunities" but if there is no firm plan and no concrete strategy then I would advise an "avoid" till the company figures out exactly what it's going to do. A cash rich company is only good if it already has a sustainable and growing CORE business (an example I can think of is Boustead which I am vested in), because it can deploy the cash to grow their business further or for acquisitions which would enhance or complement their current one.<BR/><BR/>Perhaps I do not know the business well enough, so Yong can correct me on the above para.<BR/><BR/>I also concur with you that share buybacks do not necessarily mean that a company is under-valued. Some examples are Aztech and Trek 2000 which have been buying back shares for quite some time but have not been able to increase shareholder value because their core business is declining.<BR/><BR/>Regards,<BR/>MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.com