All in a day's work

I think I started off on the wrong foot by choosing a construction company to start my valuation. But I do admit that through it's Financial Statements, I get a pretty good sense of it's business. Before this, I bought it as it was trending above 200MA but I think this is going to be another sinking ship soon. Ha!



From the P&L, I do see a lot of questions. Perhaps my inexperience and lack of knowledge, but to answer the questions that I have, I'd be mailing them my queries. Hopefully, they would be like Aztech, prompt in answering, but then again Aztech is awarded Gold for Investor Relations. Ha!

1. The most pressing question that I have is, why is there a loss from discontinued operations amounting to about $2.6m. This amount is substantial, taking out about 20%from their profits. Ouch!

2. Stated in the other income are 2 entries of Gains on sale from Plant and Equipement and also, Negative Goodwill. Why should Goodwill be calculated into Other Operating Income. Net Gains from sales is non business, in this sense, and being prudent, I'd take these amount out, which adds to around $1.2m. Ouch!

As declared, they have an EPS of 77 cents for FY07 but then again, if I were to calculate, their EPS is only around 49 cents. Still, an increase from FY06 of about 9 cents which is still not too bad, increase of about 22%.

One unfriendly aspect of their FS is that I have to do my own % calculation, unlike some companies which I've browsed through, stating clearing the +ve or -ve % compared to the previous FY.

Revenue has came down 17% and Gross Profiut is naturally affected 2%. Isn't this interesting, a big drop in Revenue but only a 2% drop in GP. There could be many reasons to it, which I might not want to speculate into.

I need help on this. I did a NAV on this company to see the Share Price and, "Wa-la", I got the figure of around 6 cents. I did it using the given figures w/o going into details. But why is the Share price so low? Is this normal?? HELP!!! I need enlightenment!! =)

Construction contracts in general, according to FRS 11, is really hard to estimate the exact profts they might make in the year but as the company is paid by % completion. However, One thing I like about Lian Beng is that it is pretty diversified but their core income of more than 80% still comes from it's core business. Not a bad thing but, it might be better if the other streams of income can be improved.



In this valuation, I did not go into the many details like cashflow or BS, but just on their P&L.
My apologies but I'm still learning, but in my coming analysis, I do believe that I should improve.

Maybe I'll touch on this company again but then again, I do have queries on it to carry on.