JAKS: the core business is consistently bankrupt

 

Key Observations from the Table: 

1. The Core Business is Consistently Bankrupt: The EBIT is deeply negative every single year, showing that Jaks' own operations (revenue-generating activities) are fundamentally unprofitable. 

2. The Affiliate Lifeline: The "Equity in Affiliates" is the only thing preventing the company from reporting even more catastrophic losses. In 2021 and 2022, this income was so large it created a positive subtotal before other costs were applied. 

3. What Drives the Final Pre-Tax Loss: 

1. Interest Expense: This is a massive and growing burden (from MYR 21.98M in 2021 to MYR 32.02M in 2024), consistently eating away at the affiliate income. 

2. Unusual Expenses: These were extremely high in 2020-2022, indicating significant one-off costs that further worsened the bottom line. 

3. Other Non-Operating Items: This line is volatile. The large positive value in 2020 and 2024 (likely from asset sales) provided some relief but was not enough to offset the other losses. 

4. The 2024 Story: In 2024, the affiliate income (MYR 121.6M) was almost entirely consumed by the colossal operating loss (MYR 105.8M). The remaining small profit was then completely wiped out by the high interest expense and other costs, leading to the final Pre-Tax Loss of MYR 74.7 million. 

Conclusion: This table visually demonstrates that Jaks' reported financials are a "shell game." The company's survival is entirely dependent on the paper profits from its affiliates, which are used to mask the unsustainable losses and costs generated by its core business and debt structure. 

Market drops: A 2% drop (normal fluctuation), a 10% drop (market correction), a 20% drop (bear market) and a 40% drop (severe bear market or a crash)

Summary:

How frequent are these drops?

2% drop:  common

10% drop:  one every 2 years

20% drop:  one every 5 years

40% drop:  one every 25 years

A 2% drop is a normal fluctuation within a healthy market, not a crisis. Acting on emotion is the single biggest mistake an investor can make.

A 10% drop, officially considered a "market correction," is a different beast entirely from a 2% dip. It's sharper, more painful, and the sense of panic is palpable. 

Since 1950, the S&P 500 has experienced a correction of 10% or more over 40 times. That's roughly one every two years. It's a normal, albeit unpleasant, part of investing. Every single one of them, to date, has been followed by a recovery and a new high.

A 10% correction is a test of your financial plan and your emotional fortitude. For a well-prepared investor, it's an expected part of the journey and can even be an opportunity. For the unprepared, it's a crisis. Your response should be dictated by your plan, not by the screaming headlines.

A 20% drop, officially crossing into "Bear Market" territory, is a profound psychological and financial event. The sense of fear is pervasive, and the "this time is different" narrative feels overwhelmingly convincing.

More common than most people think. Bear markets are a regular, though painful, feature of the investing landscape.

• Frequency: Since World War II, there have been 14 bear markets (defined as a 20% or greater drop from peak to trough) in the S&P 500.

• That's roughly one every 5-6 years. They are an inevitable part of the market cycle, not a bizarre anomaly.

• Duration & Severity: On average, these bear markets last about 14 months and see a peak-to-trough decline of roughly 33%.

• The Crucial Context: Recovery is the Norm. While painful, every single one of these bear markets has eventually been followed by a new all-time high. The bull markets that follow are, on average, much longer and stronger, lasting about 6 years with an average gain of over 160%.

The key takeaway: A 20% drop is a severe but normal event. It feels like the end of the world, but history shows it is a valley on the long-term path upward.

A 40% drop is a catastrophic event in the financial markets, known as a severe bear market or even a crash. These events are rare, but they are seared into the collective memory of investors because of the immense financial and psychological damage they cause.  

In the modern history of the U.S. stock market (primarily using the S&P 500 and its predecessor indices as a benchmark), a peak-to-trough decline of 40% or more has occurred only a handful of times.

Since 1900, there have been five such devastating declines:

1. The Great Depression (1929-1932): The mother of all market crashes. The stock market plummeted nearly 90% at its worst point. A 40% drop was passed early on in a long, terrifying slide.

   • Cause: A speculative bubble, a banking crisis, and catastrophic economic policy (protectionist tariffs, monetary contraction).

   • Recovery Time: It took until 1954 for the market to regain its 1929 peak—over 25 years.

2. The 1937-1938 "Recession within a Depression": After a partial recovery from the lows of 1932, the market experienced another sharp drop of about -60% from its 1937 peak.

   • Cause: Premature fiscal and monetary tightening by the government and the Federal Reserve.

   • Recovery Time: The market did not sustainably exceed its 1937 peak until the post-WWII boom in the late 1940s.

3. The 1973-1974 Bear Market: A brutal, grinding bear market where the S&P 500 fell -48%.

   • Cause: The OPEC oil embargo, skyrocketing inflation ("stagflation"), and the collapse of the "Nifty Fifty" blue-chip stocks.

   • Recovery Time: It took 7.5 years for the market to reach a new inflation-adjusted high in 1982.

4. The 2000-2002 Dot-Com Crash: After the implosion of the tech bubble, the S&P 500 fell -49%.

   • Cause: Speculative mania in internet and technology stocks with no earnings, followed by a severe recession and the 9/11 attacks.

   • Recovery Time: The S&P 500 reached a new nominal high in 2007, but when adjusted for inflation, it did not fully recover until 2013.

5. The 2007-2009 Financial Crisis: The S&P 500 plunged -57% at its nadir.

   • Cause: A housing bubble, a crisis in subprime mortgages, and a resulting global financial system meltdown.

   • Recovery Time: The S&P 500 reached a new nominal high in 2013, about 5.5 years after the peak.

Tencent Q3 2025 income statement

Tencent's Q3 2025 income statement compared to the previous quarter and the same period last year.

Tencent Condensed Consolidated Income Statement

Key Takeaways:

• Top-Line Growth: Revenue grew 15% year-over-year.

• Bottom-Line Surge: Profit for shareholders grew 19% YoY.

• EPS Outperformance: EPS grew 21% YoY, boosted by share buybacks.

• High Profitability: Gross margin expanded significantly, and operating margin remained strong.

Conclusion

Tencent's Q3 2025 earnings report is overwhelmingly positive and exceeds expectations. It confirms that the strategic shifts towards efficiency, high-margin businesses, and capital returns are paying off handsomely. The company is firing on all cylinders, showing robust growth, expanding profitability, and delivering superior returns to shareholders.

Tencent's wealth comes from two powerful engines:

1. Operational Engine (Retained Earnings): Adds ~RMB 73 billion through selling services and products.

2. Investment Engine (Other Reserves): Adds ~RMB 112 billion through the rising market value of its strategic investments.

This highlights a critical aspect of Tencent: it is not just a technology operating company; it is also a massive and highly successful investment fund. The performance of its investment portfolio has a direct and substantial impact on its overall equity and book value.

Tencent Key Cash Flow Metrics (9M 2025)

(RMB in millions, Estimated)

Line Item	Amount (RMB)	Calculation / Source
Net Earnings (Profit for the Period)	~130,000	Sum of Q2 (56,044) and Q3 (64,943) Profit; Q1 estimated.
+ Depreciation & Amortization	~25,000	Non-cash add-back from income statement adjustments.
+ Other Non-Cash Adjustments	~25,000	Share-based comp, gains/losses from investments, etc.
= Operating Cash Flow (Pre-Working Capital)	~180,000
- Change in Working Capital	~(+10,000)	Net effect of A/R (use), A/P (source), Deferred Revenue (source).
= Net Cash From Operating Activities	~152,340	Primary cash generated from core business.
- Capital Expenditures (CapEx)	~(76,610)	Increase in PP&E (60,278) + Intangible Assets (16,332).
= Free Cash Flow (FCF)	~75,730	Cash available for investors after reinvesting in the business.
- Dividends Paid	~(25,000)	Estimated cash outlay for shareholder dividends.
= Free Cash Flow after Dividends	~50,730	Cash remaining for share buybacks, M&A, or adding to the balance sheet.

Key Takeaways from this Top-Down View:

1. Strong Core Profitability: The starting point of ~RMB 130 billion in net earnings shows a highly profitable core business.

2. High-Quality Earnings: The addition of ~RMB 50 billion in non-cash items (D&A, share-based comp) indicates that earnings are heavily backed by actual cash generation.

3. Efficient Operations: The net change in working capital was a source of cash, meaning Tencent's operations are so powerful that it collects from customers and defers payments to suppliers more than it ties up cash in growing receivables and inventory.

4. Significant Reinvestment: The CapEx of RMB 76.6 billion is massive and confirms Tencent is in a heavy investment cycle, likely for AI and cloud infrastructure.

5. Substantial Free Cash Flow: Despite huge reinvestment, the company still generated an estimated FCF of ~RMB 76 billion, demonstrating the immense scale of its cash machine.

6. Shareholder Returns: The company returns a significant portion of its FCF to shareholders, with an estimated RMB 25 billion in dividends, leaving plenty for its ongoing share buyback program.n dividends, leaving plenty for its ongoing share buyback program.