Wednesday, July 23, 2008

New news

Hmm, I realised it's been such a long while since I commented on the market or the announcement which I read daily from sgx website. I haven't commented on such things since I stopped blogging daily. Hoho, to think that I once used to blog daily...where got time now? :)

Today, several news caught my eyes as I was roaming through the announcement website.

1. Singtel announces the first-in-the-world landmark deal with major US studios, Disney ABC International TV, 20th century fox and Warner Bros International TV, which enables Singtel to screen over 50 top US tv series as early as 24 hrs after their US premiere for its mio TV service. Thus, Singtel became the first Internet protocol TV operator in the world to offer a model.

My take:

Well, I don't watch tv at all. The last tv series I watch is maybe 6-8 yrs ago? I have no idea how people are addicted to tv shows. In either case, there are so many free shows in the internet, so I'm wondering why people even want to pay. Either case, it sounds pretty important for Singtel's fight over cable tv with Starhub.

2. Ecowise is going to give a special interim dividend cash dividend of $0.01 per ordinary share for the financial year ending 31st Oct, 2008. At the same time, they are proposing a rights issue of 214,165,181 new shares at an issue price of $0.01 for each proposed right shares, on the basis of 1 rights share for every 2 shares held, disregarding fractional entitlements.

My take:

Hmm, didn't Ecowise did such a thing not too long ago? Digging out the old archives, I found that on 24-Jul-2007, they did put an announcement to propose a cash dividend and rights cum warrants issue. Back then, the special interim tax exempt cash dividend for the financial year ending 31st Oct, 2007, is $0.03 net per ordinary share. They also proposed a rights issue of 249,975,000 new shares at an issue price of $0.01 per rights share with detachable free warrants. Each warrant carries the right to subscribe for 1 new share at an exercise price of $0.05. So back then, every 1 share held entitles the holder to 3 rights share and 1 warrant. Complicated? Yes, I thought so too.

Oh, so now, after nearly 1 year, they wanted to give out another 'special' interim dividend, coupled with rights shares but no warrants. It's not so 'special' if they did it for two successive years!

This is seriously going to dampen their share price in the short term. But it begets a more serious question - what do they need the new capital for? Are they concerned about existing shareholders by diluting their share holdings again and again? Take a look below:

Based on today (date of announcement):
Share capital: 376,067,246
Outstanding warrants: 52,263,116
Potential rights issue: 249,975,000

This can seriously affect EPS, considering the huge dilutive effect of the rights issue. It's going to nearly half the EPS ... goodness.

3. Yellow pages announces initiatives to drive revenue growth - it plans to partner government agencies and related organisations to launch new products and services. Value added services for SME customers to target niche groups via print and online platforms are also planned

My take:

Sigh...I was once into Yellow pages for quite some time. I bought at $1.670 on 3rd April, 2006 (luckily only 1 lot!!). It's now $0.675 now, tsk tsk tsk...

I sympathize with them. The real society had moved its searching online and it's only recently that Yellow pages poured more money in IYP (Internet yellow page). There are lower sales contract value compared to last year (a drop of 3.1%) but they consoled themselves that their average revenue per advertiser increase by 4.3%, even as the number of advertising accounts declined 7.8%. They are operating in a competitive environment, and I think nothing of their branding, which they think it's an intangible asset. Seriously, when is the last time anyone flipped the yellow pages to look for stuff? I think greenbook seems more commonplace than yellow pages.

This statement sounds quite funny:

"Backed by the Group's core assets: a proprietary comprehensive database and the established Yellow Pages brand name, we believe the Group is poised for growth, as illustrated by the pages intentionally left blank to accommodate our growth in our FY2007 Annual report"

That was said by Mr Chow, CEO of Yellow pages. I even went to search for their annual report and viola!

Pages 124 (of 148) to 146 are 'left blank intentionally to accommodate our growth'. A total of 23 pages are left intentionally blank. The total number of pages for the statements, inclusive of notes to financial statements, took up over 50 pages only. It seems that there are PLENTY to grow for yellow pages with 23 pages are left blank for that. Lame lame lame...


Sgbluechip said...

What a silly an enviromentally unfriendly method for yellow pages to show it's commitment on growth! The chinese saying of discussing war strategies on paper really fit the bill!

I am actually quite surprise to see it deriving 50m revenue, 10m profits from this sunset industry.

la papillion said...

Hi sgbluechip,

Haha, I thought they are being silly too. Do they mean it as a marketing strategy? I find it rather bad taste :)

Ee Chuan said...

Hi La Papillion

Thanks for participating in the name your most influential personal finance book contest at my blog.

The winner is Drizzt and appreciate you taking time to participate.

Be well and prosper!

On your review of yellow pages, I think their business model is definitely to squeeze more $$$ out of existing accounts, i.e. customers who are still very much bricks and mortar and rely on their customers who are into flipping directories.

In another 5-10 years' time when Gen X, Y and Z start becoming procurement managers/marketing directors, unless Yellow Pages goes into PPC, CPM and online advertising, they may not exist as a profitable growing concern.

la papillion said...

You know what, PG, I think you should sit on the board of yellow pages to tell them which direction to move in the future. You got it right, while some companies still use yellow pages, most had moved to include internet as a viable source of advertising. Most younger generations do everything online, perhaps only recently did Yellow pages realised that.

Still, I stick to my views that green book seems to be more dominant in this business. I might be wrong - it's just what I see around me. We'll see how Yellow pages grow out of their current predicament. Who knows they might venture into new business fields - like what popular did when they ventured into property business, or aztech into construction materials :)

Anonymous said...

Face it, how many shareholders actually scrutinize the entire AR? I will rather have it in a soft copy so that I can read it anywhere in my PDA and do a 'ctrl+f" than lugging around a big thick book and wasting time searching for the particular section or figure.

I wonder which company will be the first to send out their AR only in soft copy. For those who wants a hard-copy, they will have to pay a fee or maybe SGX should implement a rule that state all companies' AR must be in soft-copy.

la papillion said...

Hi Derek,

Haha, i hope your scenario does not really play out! I hate reading online, it's rather hard to read anything for long periods of time online as it strains the eye. I'm the sort who would read in the comfort of the bed, with the pillow behind the bed, listening to soft music and reading AR :) hoho!

But it does save a lot of trees and cut a lot of costs :)

PanzerGrenadier said...

Regarding annual reports, I think only 1% (or less?) of shareholders read it.

I am an accountant by training, I always tell myself I want to go thru the numbers but end up keeping the annual reports for a few mths and putting them to recycle bin because NO TIME TO READ!!! hahaha....

Be well and prosper.

la papillion said...

Hi PG,

Not sure if it's 1%, but I'm pretty sure most don't read it. In fact, none of my friends read annual reports.

Haha, PG, at least browse through loh :) If I'm pressing for time, I'll even bring it along with me to read on trains or while waiting :)