The Equine Capital Bhd Crash: Coming Soon to A Cinema Near You
Excerpt:
As Businessweek puts it:
In 2007, cash reserves at Equine Capital Bhd fell by 15.9M. As a percent of revenues, this was among the worst results by any company in the Real Estate Management and Development industry.
This is a story seen many times before.
Earlier versions of this story were titled, MRCB, Berjaya Land , RHB etc etc.
The storyline was always the same:
a) Listed company comes from nowhere, and listed company and/or associate is given prime land to play with (eg Brickfields Railway Yard, Sentul Railway Quarters, land opposite Pudu Prison etc etc)
b) Huge billion dollar project is announced, project usually featuring foreign names-or at least foreign sounding names eg "Times Square", "Central", "Sentral"(last example is not meant to be proof that Sdr "Dr" Anwar cannot spell)
c) Project appears to commence, but then listed company discovers that dreams are built on cash-flow, of which it has very little.
Sometimes one can get lucky, for instance luck could come in the form of Sports Toto, standing ready willing an able to provide inter-company loans.
Other times, it could be pre-planned-eg KLCC and Petronas, where big plans were grounded on the fact that Petronas would oil the deal(pun intended).
d)Listed company collapses, CEO and major shareholders continue to pretend to have money; often times bailed-out by Government, in the National Interest; naturally.
Whcih brings me to Equine Capital Bhd.
As reported by Bernama:
Billed as one of the high impact projects of the Northern Corridor Economic Region (NCER) the PGCC will become the new landmark for Penang island.To be developed by Abad Naluri Sdn Bhd, a subsidiary of Equine Capital Berhad, on a 104ha site, the first phase involving the construction of roads and a public park, is expected to kick off within the next 12 months.Equine Capital Berhad executive chairman Datuk Patrick Lim, in a media briefing recently, said the PGCC would have five-star hotels, a Penang Performing Arts centre (PenPAC), high-end retail outlets, two iconic towers, residential and commercial properties and a world-class meeting and convention centre.On the first phase, Lim said the company would invest RM70 million to build two flyovers to connect the centre to the Penang Outer Ring Road (PORR) and an underground tunnel to mitigate traffic congestion from Jalan Scotland to the project site.He said the public park would involve the development of 40ha for greenery, comprising a 10.4ha one-kilometre linear Central Park and another 29.6ha of hilly land called Penang Hill Park.The 40ha in the public realm will be linked to the existing Municipal Youth Park and Penang Botanical Garden with pathways to create a whopping 344ha of park lands, one of the biggest in the country, on the island, which is tentatively named Penang Metropolitan Park."We wanted to make these parks like the Kuala Lumpur City Centre (KLCC) park and the Central Park in New York, a place where the people can always look forward to going to. We want to make these parks one of the great public parks where the residents can benefit from the recreational activities there, which they can be proud of........He said the development of the Central Park alone will cost around RM40 million.
(http://www.bernama.com.my/bernama/v3/news.php?id=284277)
And the basis for all of this-note the amounts required for infrastructure and other such works which cannot be financed by selling of the plan(ie pay first , build later):
CASH FROM OPERATIONS
Mar 31 2004: RM -8.2 million
Mar 31 2005: RM -2.1 million
Mar 31 2006: RM -30.2 million
Mar 31 2007: RM 20.1 million
The Mar 31 2007 figure appears to be turnaround , but only until one looks at the change in the Net Cash Position , which as RM -15.9 million.
As Businessweek puts it:
In 2007, cash reserves at Equine Capital Bhd fell by 15.9M. As a percent of revenues, this was among the worst results by any company in the Real Estate Management and Development industry.
Also, the net income for the year ended Mar 31 2007 was only RM 3.6 million, compared to RM 9.3 , 30.1 and 17.1 million in the prior years listed. Therefore the seeming increase in cashflow from operations is likely due to accounting changes.
For more financial detail see http://investing.businessweek.com/businessweek/research/stocks/financials/ratios.asp?symbol=EQUE.KL
As Businessweek puts it:
In 2007, cash reserves at Equine Capital Bhd fell by 15.9M. As a percent of revenues, this was among the worst results by any company in the Real Estate Management and Development industry.
This is a story seen many times before.
Earlier versions of this story were titled, MRCB, Berjaya Land , RHB etc etc.
The storyline was always the same:
a) Listed company comes from nowhere, and listed company and/or associate is given prime land to play with (eg Brickfields Railway Yard, Sentul Railway Quarters, land opposite Pudu Prison etc etc)
b) Huge billion dollar project is announced, project usually featuring foreign names-or at least foreign sounding names eg "Times Square", "Central", "Sentral"(last example is not meant to be proof that Sdr "Dr" Anwar cannot spell)
c) Project appears to commence, but then listed company discovers that dreams are built on cash-flow, of which it has very little.
Sometimes one can get lucky, for instance luck could come in the form of Sports Toto, standing ready willing an able to provide inter-company loans.
Other times, it could be pre-planned-eg KLCC and Petronas, where big plans were grounded on the fact that Petronas would oil the deal(pun intended).
d)Listed company collapses, CEO and major shareholders continue to pretend to have money; often times bailed-out by Government, in the National Interest; naturally.
Whcih brings me to Equine Capital Bhd.
As reported by Bernama:
Billed as one of the high impact projects of the Northern Corridor Economic Region (NCER) the PGCC will become the new landmark for Penang island.To be developed by Abad Naluri Sdn Bhd, a subsidiary of Equine Capital Berhad, on a 104ha site, the first phase involving the construction of roads and a public park, is expected to kick off within the next 12 months.Equine Capital Berhad executive chairman Datuk Patrick Lim, in a media briefing recently, said the PGCC would have five-star hotels, a Penang Performing Arts centre (PenPAC), high-end retail outlets, two iconic towers, residential and commercial properties and a world-class meeting and convention centre.On the first phase, Lim said the company would invest RM70 million to build two flyovers to connect the centre to the Penang Outer Ring Road (PORR) and an underground tunnel to mitigate traffic congestion from Jalan Scotland to the project site.He said the public park would involve the development of 40ha for greenery, comprising a 10.4ha one-kilometre linear Central Park and another 29.6ha of hilly land called Penang Hill Park.The 40ha in the public realm will be linked to the existing Municipal Youth Park and Penang Botanical Garden with pathways to create a whopping 344ha of park lands, one of the biggest in the country, on the island, which is tentatively named Penang Metropolitan Park."We wanted to make these parks like the Kuala Lumpur City Centre (KLCC) park and the Central Park in New York, a place where the people can always look forward to going to. We want to make these parks one of the great public parks where the residents can benefit from the recreational activities there, which they can be proud of........He said the development of the Central Park alone will cost around RM40 million.
(http://www.bernama.com.my/bernama/v3/news.php?id=284277)
And the basis for all of this-note the amounts required for infrastructure and other such works which cannot be financed by selling of the plan(ie pay first , build later):
CASH FROM OPERATIONS
Mar 31 2004: RM -8.2 million
Mar 31 2005: RM -2.1 million
Mar 31 2006: RM -30.2 million
Mar 31 2007: RM 20.1 million
The Mar 31 2007 figure appears to be turnaround , but only until one looks at the change in the Net Cash Position , which as RM -15.9 million.
As Businessweek puts it:
In 2007, cash reserves at Equine Capital Bhd fell by 15.9M. As a percent of revenues, this was among the worst results by any company in the Real Estate Management and Development industry.
Also, the net income for the year ended Mar 31 2007 was only RM 3.6 million, compared to RM 9.3 , 30.1 and 17.1 million in the prior years listed. Therefore the seeming increase in cashflow from operations is likely due to accounting changes.
For more financial detail see http://investing.businessweek.com/businessweek/research/stocks/financials/ratios.asp?symbol=EQUE.KL
dunno if this sounds absurd, but i recon, all major scale projects hv to come with a requirement that an independent audit comittee, should be in place to oversee the project from commencement till end (m sure it will be more cost effective then a failed project)
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