Hi Dele - There are abt 150 S-Chips or abt 20% of SGX counters. Too many to second guess audited ann reports, so I assume the external auditors have done their job. If not, too bad for me though I think it is obvious they'd thoroughly check the impt stuff such as cash balance, sales, acc. receivables etc. As I am just a retail investor, your guess is as good as mine. However I revisted NextInsight report 20Apr11 on DAPAI AGM, and this quote from the auditor is good enough for me. > (
www.nextinsight.net/index.php/story-arch...ion-via-fund-raising
)
Hi relaxing, I tend to agree with your view ==== the external auditors have a heavy responsibility and we should trust that they do their work well. However, it's a psychological condition .... it's hard to avoid being wary. And for Dapai, there is an investor who has crystallised his views on why he is uncomfortable with it.
Musicwhiz wrote shortly after the rights issue announcement: ".....a case in point is Dapai Holdings, a backpack and luggage manufacturer. Despite having RMB 539 million (S$102.87 million) cash in its books as at March 31, 2011, the Company has announced a rights issue of 1 for 4 shares at $0.08 per share (a heavy discount to last done share price of 14 cents) to raise a paltry sum of S$19.3 million. This is purportedly for an acquisition but if the acquisition does not go through then the money will be used for “general working capital purposes”.
"It is quite inconceivable for a Company to raise such little money using such an EPS-dilutive method when it has a large cash hoard sitting around. Unless they have massive capex plans for that S$102.87 million which I am unaware of, I would say this exercise seems highly suspicious."
Hi Dele - Agree with your points. But I thought it was a good bet at 8 cts , the same risk as the underwriter haha. If the risks are low , they'd not be sold at PE 1.75. It's just a case of upside vs downside risk. If you are interested to find out more , check out their website (
www.dapai-bag.com/en2011/competition/terminal_image.html
) For all SGX counters, I generally accept their annual reports after they are signed off by a top tier auditor, as too lazy to second guess. But I try to be deligent when it comes to their unaudited quarterly results, but frankly retail investors are on the losing end.
I attended their AGM in April but management gave no hint of rt issue. In fact, we appealed to their good sense to pay out a dividend which they said will consider in near future (hoping it will be at interim). Assuming Dapai propose a 1-ct dividend (of course very unlikely now) then this rt issue came along.....you guess it.....shareholders going to cough out a nett 7-ct instead of expecting return this FY! So disappointing!
hi hh488, i share your disappointment with dapai. however, yr calculation is not correct.
if they gave 1 cent div, it wld 4 cents for 4 shares right.
the rights issue was supposed to be 1 rights share for 4 ordinary shares.
So u wld hv to come up with 8 cents to exercise 1 rights share u receive for every 4 ordinary shares u hold.
Net is u come up with 8 cents (for rights) minus 4 cents (theoretical dividend collected) = 4 cents.
It's 4 cents , not 7 cents. Which isnt so bad, but still bad. . ... (-:
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