Business Description:
Nam Fatt Corporation Berhad. The Group's principal activities are constructing bridges, heavy concrete foundations, roads, factory complexes and other similar construction activities. Other activities include building, maintaining and operating the Jiangjin Bridge on a built-operate-transfer basis, constructing projects in the oil, gas and petrochemical related industry, steel fabrication, structural steel engineering, manufacturing and trading steel doors and industrial boilers, researching, developing, producing, selling, installing and maintaining metal roofing and wall cladding, manufacturing galvanised iron roofing sheets, property development; owning and developing golf resort and its recreational amenities, property developer and property manager, resort and development, managing a golf resort and recreational clubs and investment holding. The Group operates in Malaysia, Africa and Asia.
Currency: Malaysian Ringgits
Market Cap: 28,763,370
Fiscal Yr Ends: December
Shares Outstanding: 319,593,000
Share Type: Ordinary
Closely Held Shares: 35,229,890 (11%)
16/03/2010
NAMFATT - New admission into PN17
Wright Quality Rating: LCNN
A quick look at Nam Fatt - PN 17 (1.5.2010)
http://spreadsheets.google.com/pub?key=tAskkNgs3uU8eyk_WrTFcSw&output=html
Some RED FLAGS (hindsight) in the accounts of Nam Fatt at end of 2008 to note are:
Share price
RM 0.19 or market capitalisation of 34.16 m. (The price rose to RM 0.30 from March 2009 and dropped precipitously to RM 0.09 when the news of the company's financial problem was known.)
Income statement
Negative earnings -14.09 m
Interest expense -18.73 m
Cash flow statement
Negative CFO -41.27 m
Neglible CFI
Negative FCF -44.10 m
CFF -34.11 m (Borrowings increased significantly)
Balance sheet
Total Debt 499.69 m
Account Payables' Days 206.58 days (This then increased to 714.24 days in end of 2009)
Interest cover 0.66
Total Debt/Equity 0.82
Net Debt to EBITDA 26.64 (Ideally, this should be less than 5. Bankers do not lend if this ratio exceed this figure.)
Of interest, these commonly used parameters DID NOT raise any red flags at end of 2008:
Equity 607.44 m (What is the actual value?!)
NAV 1.59
Current ratio 1.54
Quick ratio 1.51
Account Payables' Days 82.22 days (Though this subsequently ballooned to 307.08 days in end of 2009)
LTD/Equity 0.34
Dividend 2.08 m
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Liquidation value is the net realizable amount that could be generated by selling a company’s assets and discharging all its liabilities.
When valuing a business for liquidation, most assets are marked down and the liabilities treated at face value.
This valuation method is useful for companies being dissolved.
When valuing a business for liquidation, most assets are marked down and the liabilities treated at face value.
- Cash and securities are taken at face value.
- Receivables require a small discount (perhaps 15 percent to 25 percent off).
- Inventory a larger discount (perhaps 50 percent to 75 percent off).
- Fixed assets at least as much as inventory.
- Any goodwill should probably be ignored.
- Most intangible assets and prepaid expenses should beignored.
This valuation method is useful for companies being dissolved.
