Who do you want to fool, Mr Lin?

LITRAK-Why Lin Yun Ling’s crying poor is disingenuous at best  

by Ganesh SahathevanLin Yun Ling of Litrak and Gamuda is reported to have said:

The public should not misconstrue Litrak’s RM80mil net profit for the year ended March 31, 2006 as being a huge profit, he said, given that the net cash that flowed into Litrak’s coffers in fiscal 2006 only came to RM6mil.  “The true measure of Litrak’s financial performance is in the cash flow. It shows how much revenue was collected, how much was operation expenses and how much debt was repaid,” he told reporters after the company AGM yesterday. He said despite the toll hike, the bulk of the revenue would go towards repaying Litrak’s loans over the next eight years. The concessionaire’s loans presently stand at some RM800mil.   

 http://biz.thestar.com.my/news/story.asp?file=/2007/1/17/business/16590691&sec=business

The statement is  disingenuous  at best for THREE  reasons:

First,Litrak’s margin’s as shown below, beat even those gaming companies:

Litrak Bhd(toll road operator) Quarterly
(Sep ’06)
Annual
(2006)
Annual
(TTM)
Net Profit Margin 28.64% 32.82% 31.55%
Operating Margin 78.22% 78.04% 77.88%

 http://finance.google.com/finance?q=KUL:LIHL

Second, “the net cash that flowed into Litrak’s coffers in fiscal 2006 only came to RM6mil” AFTER about RM 35 MILLION was paid in dividends to shareholders, of which Ling’s GAMUDA is THE LARGEST, and in which he is among the largest shareholders.

(see http://www.litrak.com.my/cms/resources/fm_uploads/069141_litrakfinancialstat01.pdf)

In any case, cash generated from operations was RM 197,445,000 up from RM 64,953,000 the year before.  Cash generated from operations in 2006 compares to profits from operations of RM 116,078,000 -ie LITRAK is one of few companies whose cash flow from operations actually EXCEEDS its profits,and as shown above this is an already substantial margin on earnings.

THIRD, Ling cries that despite the toll hike, the bulk of the revenue would go towards repaying Litrak’s loans over the next eight years.

Poor man seems to have forgotten that these loans went to pay for construction costs, which at  about RM26 million per kilometre was  6.5 to 2.6 times HIGHER than the  RM4 million to  RM11 million spent constructing  the North-South Highway (see story below)

And the name of the contractor? Gamuda Bhd-see http://www.gamuda.com.my/GAMUDA03/projects_expressway.htm

One Response to “Who do you want to fool, Mr Lin?”

  1. kittykat46 Says:

    Hi Friend,
    This Litrak guy thinks we all don’t know basic accounting.
    Cash flow from Operations is a truer measure of a company’s financial performance, and in Litrak’s case I would describa it as Extremely healthy.

    Net retained cash doesn’t mean much. It may just mean its parent company has been very demanding with dividends.
    Litrak is just a highway operator subsidiary – doesn’t make sense for its parent company to park a large amount of cash there, especially as it has very limited need for any new cash, apart from settling the loan repayments, which are predictable.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: