In its announcement to SGX, Dukang had conveniently omitted its 4Q results so as to make its performance looked sparkling. This glittering set of results was also reported in the Straits Times of 30 August 2012 and could well misled unsuspecting investors to the stock without being aware that all may not be well with the company. A closer look at the quarterly performance of the company shows that Dukang nett quarterly profit has been on a downtrend after 2Q. Below are the data – 2012 – Revenue/Nett Profits
1Q – RMB 242M/RMB 36.5M
2Q – RMB 540M/RMB 94.4M
3Q – RMB 590M/RMB 62.4M
4Q – RMB 454M/RMB 24.7M
FY 12 – RMB 1,826M/RMB 218M [+29.4%]
Potential investors should do their own due diligence before jumping into such a stock as the risk of a deterioration in its results cannot be ruled out, if economic and business condition in China do not improve and its management failed to arrest the decline in profitability.
Port – I based my facts on the “Full Year Results Financial Statement And Related Announcement” which would normally show the latest quarterly results together with the cumulative quarterly results. Companies that failed to incorporate the latest quarterly results for comparison purpose, especially if it is not good, may well have a motive for doing so.