Nextnation, Not Good

Wisdomwise wrote on Nextnation, which I had posted something a week back, and again today. Am reposting the comments for readers of this blog:

A week back:
Salvatore_Dali said...
i had highlighted this company before as the fundamentals looked solid, but the way the share has been trading for the past 2 months, esp following its bonus looks very bad... methinks something inside is rotting ala megan cos the only way the share can keep falling is insider selling all the way.... cut loss
2:39 PM

this morning:

Salvatore_Dali said...
finally out, huge jump in receivables ... after a good rebound this morning I expect the stock to slide to oblivion... when receivables jump like that, for a services based company, its not a good sign... the share price has been weakening since a few months back, only explanation is insiders are selling, they know how "good" the receivables are and how hard it is to retrieve them ... services rendered are gone, most need not reorder services if they don't pay ... not as if you are supplying cement, steel bars, etc... not good, not good at all..
10:43 AM

The company also announced to Bursa Malaysia that its wholly-owned subsidiary, Nextnation Network Sdn Bhd, had accepted a credit facility of up to RM10mil granted by Malaysia Debt Ventures Bhd for overseas expansion. That smells like teen spirit to me... gone bad! Why not a bank? A bank will gladly give you a credit facility... unless they don't want to. Why would you want a facility by MDV unless terms are better or the terms are easier to meet? Either way, not good.

Assuming RM67m in receivables taking more than 12 months to be recouped: you are already losing 4% in interest = RM2.68m a year. Plus assume a 6% cost on RM10m facility (MDV may not charge them anything but its still a cost) = RM0.6m. Add them up = RM3.28m. In 2006, the company made a net profit of RM16.714m. The "additional opportunity cost in lost profit" is almost 20% of 2006's net profit. The most important thing is the rise in receivables from RM39.6m to RM67m = RM27.4m = is 64% higher than the entire net profit for 200
6.

p/s a very important posting from one of the readers:

Yew Leun has left a new comment on your post " Nextnation, Not Good":


Content/ringtone providers (i.e. nextnation) in the past makes money by spamming sms messages and downloads to mobile phones and a lot of end users have been unwillingly charged and there is nothing they can do about it. But since MCMC cracked down on spamming, these companies' profit has been greatly affected. from the business model standpoint, unless they can come out with new business plans, we are not going to see any turnaround on their bottomline and share prices.


Comments

zuljohor said…
The company provides systems and services for both telcos and content providers. They do not spam, if you can find even 1 evidence. The misleading publicity by competitor together with 1 psycho is a typical cyber crime conducted by uncivilized mentally illed animals.

The company was a victim of 1 person's agenda which escalated to another 1 persons pride. The former is Uncle Lim Seng Boon from AKN MTech, the later is Jeff Ooi from rubbishland. Read this blogger http://mobilebedsidenews.blogspot.com/2007/05/akn-mtechs-uncle-lim-man-who-kills.html

The company nextnation provides services to China and Saudi Arab, which has very strict requirement on SMS security, they would not risk their business for few ringgit scam. As the report provided by MCMC shows that all their accusations were either innocent technology error even Microsoft cannot guarantee error free, or end consumer own mistake. It's childish for anyone to speculate and make assumption like the stupid Jeff Ooi without knowing the actual scenario.

The company as seen from their announcements is moving away from low margin market like Malaysia to higher margin countries. Some mistake they may have made is growing too fast, where more business means more receivables. Some country they went may not be as good pay master as Malaysia, example China and India. In short run they may face cash flow problem. In short run, I don't see any super progress unless their investment paid off sooner. Just like the telcos, even Maxis has to delist themselves during the heavy investment period in India and Indonesia which shows ugly results at least 1-2 years. Not to mention a small telco supplier like Nextnation.

As for a mad dog like Jeff Ooi, don't know how much he got paid as many bloggers have asked the same question, people won project and increase revenue & profit he kept quite. Project finish & revenue & profit back to normal he question people's business down because of "him". Maybe partially true because of unstable period where telcos upgrading their "preventive system" provided NOT by AKN MTech, for sure many projects have to be delayed. As long the telcos are still upgrading (usually 6-9 months), definately those relied 100% on Malaysia market will have bad results. If this does happen, consumer should blame a psycho Jeff Ooi for slowing the technology advancement in the country. When do government be more tech advance to capture such non productive psycho damaging country image? Bangun Pak, masih tengah honeymoon ke?

My 2 sen from telco point of view.

Zul TM