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Moolah
Forum Whacko
| Joined: | Sun Jul 9th, 2006 |
| Location: | Moo Moo Land |
| Posts: | 12813 |
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Posting #1: Thu Sep 27th, 2007 03:09 |
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1. Earnings Track Record
2. PROS
1. The sales and earnings growth has simply being impressive.
2. the following depicts what a wonderful stock, VADS has been. click here
3. CONS
The complexity of the majority shareholder (TM) being the single largest customer poses a huge question mark over the business.
From a business perspective, would you want to be a business partner of such a business?
Think about this issue for a minute.
Ok, maybe for than a minute.
Let me give a story, hope it is not too poor.
Say Ramlee offered you a stake in his burger franchise. However, Ramlee is rather strange. He loves his burger way too much. Hence, Ramlee is also his own biggest customer. Now, despite Ramlee booming franchise, the scenario of the biggest shareholder being the biggest customer could pose a stumbling factor. No one would criticize you if you had doubts over the existence over complexity of the related transactions. For example, when Ramlee buys his own burger, is he given a special pricing? What about payment? Could you even trust Ramlee? I am sure that you could think of way too many insider cliches here.
Now I am not implying anything on VADS.
However, these are probably the main concern when you have this current scenario of the main customer being the main shareholder!
Let's look at VADS balance sheet.
Now my concerns would be the receivables. Which are slightly on the high side.
Then I would be concern with the following.
a. Amount due from Holdings company is now at 90.555 million
b. Amount due from Related company is now at 34.453 million
c. Amount due to holding company is 38.930 million.
See the complexity here?
Would this be a concern for you?
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