Quarterly rpt on consolidated results for the financial period ended 30/9/2008
See pg 17 for its loans:
See pg 13, for its segmental reporting.
** note the earnings from their property division.and note the 'translation loss on USD denominated borrowings (bonds)
101's management notes on its earnings performance.
Man... I left out the ASSets!!!
ROFLMAO!
Here it is...
10 comments:
moomoo, unless one expect RM to collapse against USD, forex loss could be cushioned with 1. future or past forex gain, 2. the net return from the asset bought through the denominated loan after deducting costs of borrowings 3. the appreciation of the asset itself. I dont know how risky is the asset that IOI bought with the borrowings nor do I expect RM to crash another 30-50% from here which is why I view this as a temporary blip. Furthermore I believe the borrowings could have incurred quite early when RM was still pegged and IOI could have enjoyed some significant forex gain too in the past year and the current loss is just cancelling the past gain. Same here, if IOI were to make forex gain in the past, I would strip those as well when i make qoq comparison. That's why i said i prefer to look at the core business now which is the cpo. The real alert might occur when ringgit drops below 4 persistently for long time. anyway just my crap opinion.
Actually you can refer to this posting. Same issue: http://whereiszemoola.blogspot.com/2008/11/regarding-airasia-forex-losses.html
:D
LOL!!!
I will try.
Here's my feeble attempt to answer you point by point, ok?
1) unless one expect RM to collapse against USD, forex loss could be cushioned with 1. future or past forex gain,
Points A.
In all honesty, in the future anything can happen. IOI could have back its forex gains but it could also have more forex losses.
Cushioning it versus past forex gains or future??
Man, that would be real funky attempt in accounting.
No?
Just imagine, some corporations might 'future or past earnings' should cushion out the present losses suffered by the company.
Would such an excuse be acceptable?
Would that be acceptable to you?
I do not know BUT in my own personal opinion, my views, such funky method is CLEARLY not accepetable to me. I am sorry.
( point by point first la)
my funky opinion again.
the issue i want to bring up is not about how they account the "unrealised" forex gain nor loss since in accounting they have to book this in advance. just like WB, he has to book the loss early for his derivatives bet due to accounting but do u think WB will really lose money on the final day of his bet?
Anyway, when one borrows in other currency I believe one is looking for stability and its low cost. For instance when RM was pegged, USD bond was considered stable, so one need not to worry about the fluctuation but the cost only. And since one book it at 3.8 so why one worries even if RM touches 3.8 again? If one make extra bonus from that forex loan, I still considered a bonus, simple as that. It was not the primary agenda when one borrows and why should it be now?
Naruto,
I can only answer you point by point and I cannot and will not answer you if you switch to another new point.
So in regarding to your point 1 and point 1 alone, would you like to add other comments in regarding to point 1?
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If no, here is YOUR point 2.
2. the net return from the asset bought through the denominated loan after deducting costs of borrowings
Sorry but I do not understand your point at all. I really don't.
For most corporate, loans in other currencies are mere banking facilities.
Would I sit down and attempt to decipher where EXACTLY the money went?
Would you?
I dunno but I personally would not be insane to attempt to bother.
And even if you could, say IOI had purchase a land or a company using USD denomited bonds. How would you calculate "the net return from the asset bought through the denominated loan after deducting costs of borrowings"?
How do you define the net return?
How do you define the exact cost of borrowings when the loans are still existing?
What if the asset depreciates?
How?
My second comment is on point 1, to be precise on the massive USD bonds you pointed, in which again based on my assumption (it was done during ringgit peg) and stay valid on that.
As for remaining points, rather pointless to argue what IOI did with those money right? Corporates borrow when they are distressed or when they feel "expansion" provides better return than borrowing costs. It's not as clear as in Airasia in this case.
Exactly like what you said in your previous comment, if I don't know why I judge?
To why I treat this as a secondary issue is simply because of assumption in point 1 and the inability of me to judge the borrowings used as queried in points 2 and 3. At the moment, I prefer to concentrate on its cpo and its cashflow.
December 2, 2008 7:08 PM
by the way, shouldn't one be more worried by the huge borrowings instead of the forex gain or loss?
LOL!
Seriously.. i tried not to comment on your initial post. But since you asked me to, I only but obliged. And all my comments were based on what you had mentioned.
Anyway you said..
Quote: " by the way, shouldn't one be more worried by the huge borrowings instead of the forex gain or loss? "
Remember, if you look at the initial post, all I did was highlight the issues within this company.
And if you look at the very first picture, http://3.bp.blogspot.com/_nDt1odcHv2g/STTLqiTaoOI/AAAAAAAABYc/Xo8-_LElj44/s1600-h/ioi.JPG
what do you see?
The size of the total loans is huge and what's most worth noting is that the loans is in USD.
Now ask yourself a simple question..
What is the USD doing against the RM now?
Isn't the USD worth much more against the RM compared to say 6 months ago?
And what's the impact?
For me, the answer is simple. As long as the RM remains weak against the USD, there will be forex losses and if I am a shareholder or potential investor, it's best that I address this issue.
rgds
Naruto,
Quote: I suppose cow wants to tell this to IOI management - "Hey I think you have too much loans in USD and since ringgit is trending downward against USD, it is in the best interest of everyone to pare down those loans."
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Sigh.
So what's your point?
Seriously, do you think these comments are called for?
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