Monday, August 24, 2009

Troubled Company: TRI-M Technologies (T13)

Continuing my contrarian approach and reluctant to invest, I filter troubled companies with decreasing revenues and got TRI-M as one of the many companies.


Company Info: We are a diversified Electronics Manufacturing Services ("EMS") provider of manufacturing and testing of high quality electronics products to the global market. Our core business competencies are Printed Circuit Board Assembly ("PCBA") Manufacturing and Box-Build (final assembly). Our services include prototyping, full turnkey and consignment manufacturing, and total supply chain management.

In 2008, the Group announced our plans to diversify into the oil and gas industry to enhance shareholder value. We believe our proposed oil and gas venture will create a new revenue stream for us and improve the Group’s financial condition.

No IPO Details and not meaningful since IPO was in 1993, 16 years ago.




I look through the chart using ChartNexus and news announcement from SGX starting from 14th August 2007 for significant events.

Aug to Oct 2007. The company was not profitable (since 2004, not sure how far back since it shows only data till 5 years ago based on Reuters data), and trading around 0.11 cents. It was very illiquid with no trading for month. The company announces it HY2007 and as usual SGX queries troubled companies with questions. The major shareholder Surreyville Pte Ltd show committement and the company mention early success getting new customers despite losing a key customer to another contract manufacturer and another key customer suffering business downturn.

Nov to Dec 2007. There was a period of wild swing seeing the stock double in 3 days to 0.21 and bouncing back to 0.11 cents. It was probably due to the CEO and CFO, Mr. Chia Wei Ho leaving to pursue his own interests. The company also consolidated the Shenzhen plants costing 1.49 cents per share of earning and reducing its NTA.

Jan to Feb 2008. The company, still without a CEO, announce its FY2008 results. It was also placed on the SGX watch list at 28 February due to SGX ruling for companies with market cap. < S$40m and 3 consecutive years of pre-tax losses.

Mar 2008. The company issue 40m shares at 9% discount to raise fund and convert its business focus to producing crude oil. Somehow, the share doubled to 0.33 cents during this period without any known reasons to management after query from SGX.

Apr 2008. The company doubled its price again to 0.72 cents. As usual, no known reasons by the Board after the SGX query. The company clarifies the report by Business Times about the company eyeing earnings turnaround in the next 2 years. It mentions the company oil and gas investment will require another round of funding and also it is still keeping the electronic business, mainly for European automotive gadget market as a new market.

May to Dec 2008. Little announcement except for a not surprising profit guidance. The company reach its high of 1.00 cents at 12th Aug 2008. The acqusition of the oil & gas company, Kingworld Resources Limited was confirmed and completed by using further issuing of shares. Norton Appraisals Limited appraises the company at S$1.37b and the purchase was completed with only S$203m. There are quite a few technical jargon I cannot comprehend regarding the business outlook of Kingworld Resources Limited.

Investment Tips: A quick search of Mr. Tiong Hiew King, owner of Kingworld Resources, shows him as in Forbes #1014 richest in 2008. If you have invested the company at 0.11 cents 2 years ago, you will have profited around 800%. To be even more drastic, you could have made 700% in the March and April 2008 period. Based on financial statement alone, I will have ignored this company immediately. Without the support of the Mr. Tiong Hiew King, the company will probably be delisted and shareholders holding to worthless stock. But, I will still be eager to see how long company electronic sector survive and the impact of the acquisition in the future.

References:

  1. TRI-M Technologies homepage
  2. ChartNexus - Free Software for technical analysis
  3. Reuters - Financial Statement for TRI-M
  4. Acquistion of Kingworld Resources Limited
  5. Acquisition Press Release Presentation
  6. Wikipedia - Tiong Hiew King

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