@Chinwi wrote:I think you have missed the important point in this announcement.
This capitalization is done using revaluation of lands only. They have not used the revaluation of living assets for this, which is under question in the law case. In that sense its good.
Mean time there is no real cash is involved in this capitalization. No cash in their reserves you can not expect a dividend from this company. If they give a such, it is like Sakvithi paying B from A. ( I think last year they paid 10 cents)
They show over billion in y/y revenue and only 20% of that figure is real cash.
Even that is obtained by selling plantation agreements to the investors and not from selling any real timber. 80% of the shown revenue is just revaluation of trees including 2-3 year old baby sandalwood plants.
Very important thing is that their cash outflow by admin & selling expenses is higher than their real cash inflow. That may be the reason for the accumulating losses in their income statements although they show positive EPS & profit at bottom line.
You can see this in 5 year summary. Page 7 of Annual report, Retained losses accumulated from 11 million in 2008 to 364 mil in 2012.
Again, If you just glance the revenue line you may see their revenue has grown from 593 million in 2008 to a healthy fig of 1.19 billion in 2012.
That is actually the growth of trees and not transactions in cash as in other businesses.
We know any new plantation company has to face this phenomenon. For tea, palm oil or coconut maturing time is shorter and withing 4-5 years we can get in to a healthy position. When you deal with timber it is different.
I just pointed out some observations (repeated) and do not wanted to come into any argument here.
Somehow I hope they will maintain this journey until they get real cash by felling actual trees. ( after how many years?)
The time period between that and this is critical.
Thanks chinwi, for the great insight of accounting.
I bought TWOD only for trading purposes. I don’t think it is a good counter for buy and hold like VONE and REEF.W19.
Btw, I can remember you had a TWOD lot bought at 35. Did you sell that? One time, it was a risk free investment to you and mono (long time no see friend).