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Claiming Forex losses with IRS on tax return?
I had a net loss of about $600 for 2014 at FXCM US and had difficulty finding a clear explanation on how to properly file this on a tax return. The one reference suggested filing EACH trade, but I made thousands of trades last year. Any help appreciated. Using H&R Block.
ATO Australian tax treatment for options trades 🇦🇺
I am posting this as I hope it will help other Australian options traders trading in US options with their tax treatment for ATO (Australian Tax Office) purposes. The ATO provides very little guidance on tax treatment for options trading and I had to do a lot of digging to get to this point. I welcome any feedback on this post.
The Deloitte Report from 2011
My initial research led me to this comprehensive Deloitte report from 2011 which is hosted on the ASX website. I've been through this document about 20 times and although it's a great report to understand how different scenarios apply, it's still really hard to find out what's changed since 2011. I am mainly relating myself to the scenario of being an individual and non-sole trader (no business set up) for my trading. I think this will apply to many others here too. According to that document, there isn't much guidance on what happens when you're an options premium seller and close positions before they expire. Note that the ATO sometimes uses the term "ETO" (Exchange Traded Option) to discuss what we're talking about here with options trading. Also note: The ATO discusses the separate Capital Gains Tax ("CGT") events that occur in each scenario in some of their documents. A CGT event will then determine what tax treatment gets applied if you don't know much about capital gains in Australia.
ATO Request for Advice
Since the Deloitte report didn't answer my questions, I eventually ended up contacting the ATO with a request for advice and tried to explain my scenario: I'm an Australian resident for tax purposes,I'm trading with tastyworks in $USD, I'm primarily a premium seller and I don't have it set up with any business/company/trust etc. In effect, I have a rough idea that I'm looking at capital gains tax but I wanted to fully understand how it worked. Initially the ATO respondent didn't understand what I was talking about when I said that I was selling a position first and buying it to close. According to the laws, there is no example of this given anywhere because it is always assumed in ATO examples that you buy a position and sell it. Why? I have no idea. I sent a follow up request with even more detail to the ATO. I think (hope) they understood what I meant now after explaining what an options premium seller is!
First, I have to consider translating my $USD to Australian dollars. How do we treat that? FX Translation If the premium from selling the options contract is received in $USD, do I convert it to $AUD on that day it is received? ATO response:
Subsection 960-50(6), Item 5 of the Income Tax Assessment Act 1997 (ITAA 1997) states the amount should be translated at the time of the transaction or event for the purposes of the Capital Gains Tax provisions. For the purpose of granting an option to an entity, the time of the event is when you grant the option (subsection 104-20(2) ITAA 1997).
This is a very detailed response which even refers to the level of which section in the law it is coming from. I now know that I need to translate my trades from $USD to $AUD according to the RBA's translation rates for every single trade. But what about gains or losses on translation? There is one major rule that overrides FX gains and losses after digging deeper. The ATO has a "$250k balance election". This will probably apply to a lot of people trading in balances below $250k a lot of the FX rules don't apply. It states:
However, the $250,000 balance election broadly enables you to disregard certain foreign currency gains and losses on certain foreign currency denominated bank accounts and credit card accounts (called qualifying forex accounts) with balances below a specified limit.
Therefore, I'm all good disregarding FX gains and losses! I just need to ensure I translate my trades on the day they occurred. It's a bit of extra admin to do unfortunately, but it is what it is.
This is the scenario where we SELL a position first, collect premium, and close the position by making an opposite BUY order. Selling a naked PUT, for example. What happens when you open the position? ATO Response:
The option is grantedCGT event D2 happens when a taxpayer grants an option. The time of the event is when the option is granted. The capital gain or loss arising is the difference between the capital proceeds and the expenditure incurred to grant the option.
This seems straight forward. We collect premium and record a capital gain. What happens when you close the position? ATO Response:
Closing out an optionThe establishment of an ETO contract is referred to as opening a position (ASX Explanatory Booklet 'Understanding Options Trading'). A person who writes (sells) a call or put option may close out their position by taking (buying) an identical call or put option in the same series. This is referred to as the close-out of an option or the closing-out of an opening position. CGT event C2 happens when a taxpayer's ownership of an intangible CGT asset ends. Paragraph 104-25(1)(a) of the ITAA 1997 provides that ownership of an intangible CGT asset ends by cancellation, surrender, or release or similar means. CGT event C2 therefore happens to a taxpayer when their position under an ETO is closed out where the close-out results in the cancellation, release or discharge of the ETO. Under subsection 104-25(3) of the ITAA 1997 you make a capital gain from CGT event C2 if the capital proceeds from the ending are more than the assets cost base. You make a capital loss if those capital proceeds are less than the assets reduced cost base. Both CGT events (being D2 upon granting the option and C2 upon adopting the close out position) must be accounted for if applicable to a situation.
My take on this is that the BUY position that cancels out your SELL position will most often simply realise a capital loss (the entire portion of your BUY position). In effect, it 'cancels out' your original premium sold, but it's not recorded that way, it's recorded as two separate CGT events - your capital gain from CGT event D2 (SELL position), then, your capital loss from CGT event C2 (BUY position) is also recorded.In effect, they net each other out, but you don't record them as a 'netted out' number-you record them separately. From what I understand, if you were trading as a sole tradecompany then you would record them as a netted out capital gain or loss, because the trades would be classified as trading stock but not in our case here as an individual person trading options. The example I've written below should hopefully make that clearer. EXAMPLE: Trade on 1 July 2020: Open position
SELL -1 SPY 85 PUT, exp 30 August 2020
Collect Premium USD$1 per unit, and brokerage USD$5
= USD$100 premium collected, minus USD$5
= Net amount of USD$95 collected
FX Translation rate on the date of the trade: AUD $1.00 = $USD 0.70
Net Premium Collected in $AUD
= USD$95 x (1/.7)
CGT Event D2 triggered and a capital gain of $135.71 is recorded
Trade on 15 July 2020: Close position
BUY 1 SPY 85 PUT, exp 30 August 2020
Pay Premium $0.50 per unit, and brokerage $5
= $50 premium paid, plus $5
= Net amount of USD$55 paid
FX Translation rate on the date of the trade: AUD $1.00 = $USD 0.60
Net Premium Collected in $AUD
= USD$55 x (1/.6)
CGT Event C2 triggered and a capital loss of $91.66 is recorded
We can see from this simple example that even though you made a gain on those trades, you still have to record the transactions separately, as first a gain, then as a loss. Note that it is not just a matter of netting off the value of the net profit collected and converting the profit to $AUD because the exchange rate will be different on the date of the opening trade and on the date of the closing trade we have to record them separately. What if you don't close the position and the options are exercised? ATO Response:
The option is granted and then the option is exercisedUnder subsection 104-40(5) of the Income Tax Assessment Act 1997 (ITAA 1997) the capital gain or loss from the CGT event D2 is disregarded if the option is exercised. Subsection 134-1(1), item 1, of the ITAA 1997 refers to the consequences for the grantor of the exercise of the option. Where the option binds the grantor to dispose of a CGT asset section 116-65 of the ITAA 1997 applies to the transaction. Subsection 116-65(2) of the ITAA 1997 provides that the capital proceeds from the grant or disposal of the shares (CGT asset) include any payment received for granting the option. The disposal of the shares is a CGT event A1 which occurs under subsection 104-10(3) of the ITAA 1997 when the contract for disposal is entered into. You would still make a capital gain at the happening of the CGT event D2 in the year the event occurs (the time the option is granted). That capital gain is disregarded when the option is exercised. Where the option is exercised in the subsequent tax year, the CGT event D2 gain is disregarded at that point. An amendment may be necessary to remove the gain previously included in taxable income for the year in which the CGT event D2 occurred.
This scenario is pretty unlikely - for me personally I never hold positions to expiration, but it is nice to know what happens with the tax treatment if it ultimately does come to that.
What about the scenario when you want to BUY some options first, then SELL that position and close it later? Buying a CALL, for example. This case is what the ATO originally thought my request was about before I clarified with them. They stated:
When you buy an ETO, you acquire an asset (the ETO) for the amount paid for it (that is, the premium) plus any additional costs such as brokerage fees and the Australian Clearing House (ACH) fee. These costs together form the cost base of the ETO (section 109-5 of the ITAA 1997). On the close out of the position, you make a capital gain or loss equal to the difference between the cost base of the ETO and the amount received on its expiry or termination (subsection 104-25(3) of the ITAA 1997). The capital gain or loss is calculated on each parcel of options.
So it seems it is far easier to record debit trades for tax purposes. It is easier for the tax office to see that you open a position by buying it, and close it by selling it. And in that case you net off the total after selling it. This is very similar to a trading shares and the CGT treatment is in effect very similar (the main difference is that it is not coming under CGT event A1 because there is no asset to dispose of, like in a shares or property trade).
Other ATO Info (FYI)
The ATO also referred me to the following documents. They relate to some 'decisions' that they made from super funds but the same principles apply to individuals they said.
The ATO’s Interpretative Decision in relation to the tax treatment of premiums payable and receivable for exchange traded options can be found on the links below. Please note that the interpretative decisions below are in relation to self-managed superannuation funds but the same principles would apply in your situation [as an individual taxpayer, not as a super fund].
Key quote from this decision: CGT Event D2will apply on the writing of an ETO by the Fund. The Fund as grantor of the option will make a capital gain (or loss) of the difference between the capital proceeds (that is, the premium receivable) and the cost of granting the option (for example, brokerage fees) at the time the option is granted
My take on this is that you will realise a capital gain on issuing of the selling position. I don't see how you could realise a capital loss in that scenario? Or maybe if you sell a position and the brokerage is so high that it outweighs the premium received (a dumb trade) then that would be a capital loss (a rare scenario).
Key quote from decision: When the Fund opens a position by buying an ETO, no immediate taxation consequences arise.CGT Event C2will happen to the Fund when its position under an ETO is closed out where the close-out results in the cancellation, release or discharge of the ETO
Don't forget to declare your trades on your tax return and keep a nice spreadsheet
Keep track of the exchange rates for each day you make a trade. You could do as you go and check the RBA exchange rates website for the daily number, or just do it all at once at the end of the financial year
Finally - I recommend ensuring that you save a portion of your income to pay the capital gains tax at the end of the year so you don't have to withdraw it from your portfolio and pay exchange rate fees to convert it back to Australian dollars. It will depend on your marginal tax rate what that percentage will work out to be in the end.
The Daily Autist, By An Autist, For Autists. 03/24/20
The Daily Autist
Hot Off The Spectrum
TLDR of the News to Inform Your Moves (Monday was a lot. Even my post is long)
What’s up sluts. I’m back with another burst of autism. I’ve been Rick fuggin Rollin in the tendies (AKA not hemorrhaging money) and these posts have been fairly accurate. I’ll be adding plays to the NostraLosses section as a result to bring more clarity to my dumbass takes. FIRST THINGS FUCKING FIRST THE ORIGINAL AUTIST ARTIST WHO DREW THE OLD LOGO HAS COME TO LIGHT IM SO FUCKING HAPPY. We’ll never get it back, but sometimes closure on it’s own feels good enough. What am I a fucking teenager? The rest of the sub was shit yesterday/this morning.I was shadowbanned for posting “Fear mongering Corona Content,” and yet 75% of the sub’s hot posts are exactly that but with even less info than I had. Rest is memes. No plays or info. Honestly kinda sad. https://www.reddit.com/wallstreetbets/comments/fnpz20/hey_yall_i_drew_the_original_baby_ama/ Obligatory Corona Dump (Monday news could not stop throating COVID content) Things are in such a Twilight Zone State Amazon is getting credit for being “altruistic,” like they didn’t hike up prices since late January themselves and only altered their practices once Trump threatened Defense Production Act (DPA) notice they’re also only suspending, so once things are just slightly back to normal please price gouge errthang. https://www.scmp.com/tech/big-tech/article/3076638/amazon-suspends-almost-4000-seller-accounts-unfairly-priced-products Costco is also getting unwarranted credit. They won’t take back your tower of toilet paper or tub of hand sanitizer, which COSTS them money they already made. Did they have any problem hiking the price, refusing to limit sales per person, not give their employees PPE, or donate any relief from their excess food products due to banning eating at the location and numbers going down? Nah? ok. So the good guy is the company that profited off of fear and won’t provide the minimum financial relief to those who thought it was that extreme. Stop demonizing your fellow worker citizens. https://brobible.com/culture/article/costco-toilet-paper-returns-hoarders/ Companies getting high praise and both articles implying a return to normalcy soon. How does that affect the markets? Normies are being told everything is okay and they will follow suit. Is everything okay? Absolutely not. These MFs in charge just announced unlimited QE yesterday nothing’s okay financially. Retard normie pump coming in. Financial News: Trump is saying that unless 10,000 die in the streets soon he’s gonna “re-open” the economy after the 15 days. At this point it’s a bit of a walking Onion article. Thursday?” ITS A WAR WE WILL CAPTURE AND KNIFE COVID’S ASSHOLE”. Friday? “This is serious. I do not want to use any drastic measures but I will. This is very verry serious.” Monday? “Isn’t being stuck inside fucking wack? Let’s open the pit up bro” I recommend watching the video with subtitles to get a transcript of his speech patterns. https://www.reuters.com/video/watch/america-will-again-and-soon-be-open-for-id701434357?chan=9qsux198 I predicted the Fed couldn’t devalue the dollar as fast as other countries could want it and it seems to be holding up. A very small dip from the news they’re willing to print unlimited moneys? The global economy is in trouble if that's still the stability bearer. Puts are lookin good, but they need to be farther out. 04/17 soonest for my comfort. Especially with the temporary re-open of the US economy. Seeing Reuters use “money bazooka,’ multiple times in the last week has been fantastic. https://www.reuters.com/article/global-forex/forex-dollar-slips-as-feds-money-bazooka-raises-hopes-of-easier-cash-supply-idUSL4N2BH2AF Italy’s debt, tax, and unemployment relief are all being held up by congressional disputes and an ability to only handle a tenth of the paperwork that comes in. Sound familiar? Maybe ominous? The population density in regions of Italy is our closest analog to how a free (eat my dick South Korea) country is gonna get hit. Their healthcare system is also tainted by for-profit companies and insurance so it’s also pretty similar medical coverage wise per capita. https://www.reuters.com/article/us-health-coronavirus-banks-insight/banks-struggle-to-ride-to-the-rescue-in-europes-cash-crunch-battle-idUSKBN21B0OE United Airlines is threatening to fire workers if they don’t get a bailout. I hope to fuck this is the tipping point and the government forces United to hand over their payroll list so the gov. Provide financial relief to their employees while United liquidates their assets or sells to some Saudi Conglomerate. Effect on market? PUTS ON UNITED BITCH THEY GOIN OUT https://www.npr.org/sections/coronavirus-live-updates/2020/03/20/819401028/united-airlines-threatens-to-cut-jobs-if-coronavirus-aid-package-isnt-passed(From 03/20 but was drowned out by other news. Looks more and more likely airlines won’t be bailed out) Everyday Fox business posts something for Boomers to buy more Ford or Dine stocks (idk what old people buy) and today they have some good ammo. Overnight futures were up. Pre-market today as of 06:31 EST is $234.72 after touching 238. Looks like today is going to be the bull trap day as the rumors of stimulus are hot again. If it gets passed I expect a 245-248 top before the unemployment numbers Thursday fist everyone. Market effect? Short term calls as everyone gets high on optimism and long term puts for when they come down. https://www.foxbusiness.com/markets/stock-futures-gain-ground-as-congress-moves-closer-to-a-stimulus-deal Crypto is taking off after tanking yesterday. Overnight rally (NZ markets followed by Asian markets) carried it up 14% in the last 16 hours. It started to rise slowly after the QE announcement but really flew overnight and this morning. Cooling off now but already had a dip to 6650 and right back up to 6700+ While not always correlated, crypto is a key indicator right now in speculative confidence while people are budgeting for maintaining their lives versus increasing their future wealth. No link because every crypto site is owned by a Ponzi schemer. Fight me and my tinfoil fucking hat. Here are some squigglies and bars https://www.tradingview.com/symbols/BTCUSD/?exchange=BITBAY My NostraLosses Prediction? The rumors of stimulus and the passed unlimited QE will provide market optimism today and tomorrow. Thursday’s unemployment numbers is the next scheduled big news so I wouldn’t get any short term puts unless scalping. If anything unexpected news could bring the market even higher with it being random good news versus any random catastrophic news. Market open will be up about 6% from the previous day’s close, so I expect a short term dip at open which would be a good spot to get quick calls to then ride the pump. Market closes above 235 and if stimulus passes along with more false optimism statements by Trump there’s possibly a sharp bull run to 245-248 by end of Wednesday. Plays to follow: SPY: 240c 03/27 once the first dip of day happens. If your bankroll allows for a few days farther out I would go for it. If SPY does hit 240, SELL call and BUY put for 228 04/01 at soonest. DIA: 190P 04/17 It hasn’t fallen nearly as hard as it should (another 5% imo) and the industries making it up are going to have numbers showing how bad the payroll cuts and profit loss has been. During today’s pump get some not so fucking expensive puts (made sure not to say cheap) Any Stupid Tech Company: Retarded OTM call for 03/27 or later. With so many people being stuck at home the last week or so the tech companies are outperforming the market with the idea that: The high user rate means more $$$, but if there’s more people on because they are not working or laid off, how do they have the money to buy shitty sponsored products on their feed? The kicker here is ads have always had near useless efficacy rates on social media so the fact they will continue to do a shit job might not change much. Anyway people are fucking dumb and tech gonna continue to rally this week. Signed, someone with 1.5k in TWTR Puts expiring over next 4 weeks. Most people don’t even give you one play. I’m giving you multiple ways to lose your money. TLDR of my TLDR: Companies who profited off the crisis getting karma points for no reason. Normies think the crisis will be over next Friday. International currencies are still erratic but the markets are rallying today globally (sign of lacking underlying stability for said rally). Italy can’t pass anything or handle the paperwork from their previously set up process (AKA USA in 7-10 days under current stimulus proposals) and they don’t have a solution in sight. Stimulus has everyone rock hard for calls again, ride the short term rise and pick up puts while you’re up there. Just be a long term gay bear experimenting with bulls depending on the day. Results on my thoughts from last post 03/23: I was incorrect on circuit breaker open but was only 1% away and it did run up mid-day as called. So if you sold at 218 to buy calls to sell a few hours later, we nailed it boys. If you were aiming for price instead of time, it never hit 234 again which was a key test and you’re likely sitting on a fat red option right now. I was about half right which is all you need to be. I’ve also switched up Market affect and effect because I’m retarded and am unsure which is right anymore. Nvm grammarly fixed it. And again, I mean this sincerely,
https://preview.redd.it/gp18bjnlabr41.jpg?width=768&format=pjpg&auto=webp&s=6054e7f52e8d52da403016139ae43e0e799abf15 Download PDF of this article here:https://docdro.id/6eLgUPo In light of the recent fall in oil prices due to the Saudi-Russian dispute and dampening demand for oil due to the lockdowns implemented globally, O&G stocks have taken a severe beating, falling approximately 50% from their highs at the beginning of the year. Not spared from this onslaught is Hibiscus Petroleum Berhad (Hibiscus), a listed oil and gas (O&G) exploration and production (E&P) company. Why invest in O&G stocks in this particularly uncertain period? For one, valuations of these stocks have fallen to multi-year lows, bringing the potential ROI on these stocks to attractive levels. Oil prices are cyclical, and are bound to return to the mean given a sufficiently long time horizon. The trick is to find those companies who can survive through this downturn and emerge into “normal” profitability once oil prices rebound. In this article, I will explore the upsides and downsides of investing in Hibiscus. I will do my best to cater this report to newcomers to the O&G industry – rather than address exclusively experts and veterans of the O&G sector. As an equity analyst, I aim to provide a view on the company primarily, and will generally refrain from providing macro views on oil or opinions about secular trends of the sector. I hope you enjoy reading it! Stock code: 5199.KL Stock name: Hibiscus Petroleum Berhad Financial information and financial reports: https://www.malaysiastock.biz/Corporate-Infomation.aspx?securityCode=5199 Company website: https://www.hibiscuspetroleum.com/
Hibiscus Petroleum Berhad (5199.KL) is an oil and gas (O&G) upstream exploration and production (E&P) company located in Malaysia. As an E&P company, their business can be basically described as: · looking for oil, · drawing it out of the ground, and · selling it on global oil markets. This means Hibiscus’s profits are particularly exposed to fluctuating oil prices. With oil prices falling to sub-$30 from about $60 at the beginning of the year, Hibiscus’s stock price has also fallen by about 50% YTD – from around RM 1.00 to RM 0.45 (as of 5 April 2020). https://preview.redd.it/3dqc4jraabr41.png?width=641&format=png&auto=webp&s=7ba0e8614c4e9d781edfc670016a874b90560684 https://preview.redd.it/lvdkrf0cabr41.png?width=356&format=png&auto=webp&s=46f250a713887b06986932fa475dc59c7c28582e While the company is domiciled in Malaysia, its two main oil producing fields are located in both Malaysia and the UK. The Malaysian oil field is commonly referred to as the North Sabah field, while the UK oil field is commonly referred to as the Anasuria oil field. Hibiscus has licenses to other oil fields in different parts of the world, notably the Marigold/Sunflower oil fields in the UK and the VIC cluster in Australia, but its revenues and profits mainly stem from the former two oil producing fields. Given that it’s a small player and has only two primary producing oil fields, it’s not surprising that Hibiscus sells its oil to a concentrated pool of customers, with 2 of them representing 80% of its revenues (i.e. Petronas and BP). Fortunately, both these customers are oil supermajors, and are unlikely to default on their obligations despite low oil prices. At RM 0.45 per share, the market capitalization is RM 714.7m and it has a trailing PE ratio of about 5x. It doesn’t carry any debt, and it hasn’t paid a dividend in its listing history. The MD, Mr. Kenneth Gerard Pereira, owns about 10% of the company’s outstanding shares.
Reserves (Total recoverable oil) & Production (bbl/day)
To begin analyzing the company, it’s necessary to understand a little of the industry jargon. We’ll start with Reserves and Production. In general, there are three types of categories for a company’s recoverable oil volumes – Reserves, Contingent Resources and Prospective Resources. Reserves are those oil fields which are “commercial”, which is defined as below: As defined by the SPE PRMS,Reservesare “… quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions.” Therefore, Reserves must be discovered (by drilling, recoverable (with current technology), remaining in the subsurface (at the effective date of the evaluation) and “commercial” based on the development project proposed.) Note that Reserves are associated with development projects. To be considered as “commercial”, there must be a firm intention to proceed with the project in a reasonable time frame (typically 5 years, and such intention must be based upon all of the following criteria:) - A reasonable assessment of the future economics of the development project meeting defined investment and operating criteria;- A reasonable expectation that there will be a market for all or at least the expected sales quantities of production required to justify development;- Evidence that the necessary production and transportation facilities are available or can be made available; and- Evidence that legal, contractual, environmental and other social and economic concerns will allow for the actual implementation of the recovery project being evaluated. Contingent Resources and Prospective Resources are further defined as below: -Contingent Resources: potentially recoverable volumes associated with a development plan that targets discovered volumes but is not (yet commercial (as defined above); and)-Prospective Resources: potentially recoverable volumes associated with a development plan that targets as yet undiscovered volumes. In the industry lingo, we generally refer to Reserves as ‘P’ and Contingent Resources as ‘C’. These ‘P’ and ‘C’ resources can be further categorized into 1P/2P/3P resources and 1C/2C/3C resources, each referring to a low/medium/high estimate of the company’s potential recoverable oil volumes: - Low/1C/1P estimate: there should be reasonable certainty that volumes actually recovered will equal or exceed the estimate;- Best/2C/2P estimate: there should be an equal likelihood of the actual volumes of petroleum being larger or smaller than the estimate; and- High/3C/3P estimate: there is a low probability that the estimate will be exceeded. Hence in the E&P industry, it is easy to see why most investors and analysts refer to the 2P estimate as the best estimate for a company’s actual recoverable oil volumes. This is because 2P reserves (‘2P’ referring to ‘Proved and Probable’) are a middle estimate of the recoverable oil volumes legally recognized as “commercial”. However, there’s nothing stopping you from including 2C resources (riskier) or utilizing 1P resources (conservative) as your estimate for total recoverable oil volumes, depending on your risk appetite. In this instance, the company has provided a snapshot of its 2P and 2C resources in its analyst presentation: https://preview.redd.it/o8qejdyc8br41.png?width=710&format=png&auto=webp&s=b3ab9be8f83badf0206adc982feda3a558d43e78 Basically, what the company is saying here is that by 2021, it will have classified as 2P reserves at least 23.7 million bbl from its Anasuria field and 20.5 million bbl from its North Sabah field – for total 2P reserves of 44.2 million bbl (we are ignoring the Australian VIC cluster as it is only estimated to reach first oil by 2022). Furthermore, the company is stating that they have discovered (but not yet legally classified as “commercial”) a further 71 million bbl of oil from both the Anasuria and North Sabah fields, as well as the Marigold/Sunflower fields. If we include these 2C resources, the total potential recoverable oil volumes could exceed 100 million bbl. In this report, we shall explore all valuation scenarios giving consideration to both 2P and 2C resources. https://preview.redd.it/gk54qplf8br41.png?width=489&format=png&auto=webp&s=c905b7a6328432218b5b9dfd53cc9ef1390bd604 The company further targets a 2021 production rate of 20,000 bbl (LTM: 8,000 bbl), which includes 5,000 bbl from its Anasuria field (LTM: 2,500 bbl) and 7,000 bbl from its North Sabah field (LTM: 5,300 bbl). This is a substantial increase in forecasted production from both existing and prospective oil fields. If it materializes, annual production rate could be as high as 7,300 mmbbl, and 2021 revenues (given FY20 USD/bbl of $60) could exceed RM 1.5 billion (FY20: RM 988 million). However, this targeted forecast is quite a stretch from current production levels. Nevertheless, we shall consider all provided information in estimating a valuation for Hibiscus. To understand Hibiscus’s oil production capacity and forecast its revenues and profits, we need to have a better appreciation of the performance of its two main cash-generating assets – the North Sabah field and the Anasuria field. North Sabah oil field https://preview.redd.it/62nssexj8br41.png?width=1003&format=png&auto=webp&s=cd78f86d51165fb9a93015e49496f7f98dad64dd Hibiscus owns a 50% interest in the North Sabah field together with its partner Petronas, and has production rights over the field up to year 2040. The asset contains 4 oil fields, namely the St Joseph field, South Furious field, SF 30 field and Barton field. For the sake of brevity, we shall not delve deep into the operational aspects of the fields or the contractual nature of its production sharing contract (PSC). We’ll just focus on the factors which relate to its financial performance. These are: · Average uptime · Total oil sold · Average realized oil price · Average OPEX per bbl With regards to average uptime, we can see that the company maintains relative high facility availability, exceeding 90% uptime in all quarters of the LTM with exception of Jul-Sep 2019. The dip in average uptime was due to production enhancement projects and maintenance activities undertaken to improve the production capacity of the St Joseph and SF30 oil fields. Hence, we can conclude that management has a good handle on operational performance. It also implies that there is little room for further improvement in production resulting from increased uptime. As North Sabah is under a production sharing contract (PSC), there is a distinction between gross oil production and net oil production. The former relates to total oil drawn out of the ground, whereas the latter refers to Hibiscus’s share of oil production after taxes, royalties and expenses are accounted for. In this case, we want to pay attention to net oil production, not gross. We can arrive at Hibiscus’s total oil sold for the last twelve months (LTM) by adding up the total oil sold for each of the last 4 quarters. Summing up the figures yields total oil sold for the LTM of approximately 2,075,305 bbl. Then, we can arrive at an average realized oil price over the LTM by averaging the average realized oil price for the last 4 quarters, giving us an average realized oil price over the LTM of USD 68.57/bbl. We can do the same for average OPEX per bbl, giving us an average OPEX per bbl over the LTM of USD 13.23/bbl. Thus, we can sum up the above financial performance of the North Sabah field with the following figures: · Total oil sold: 2,075,305 bbl · Average realized oil price: USD 68.57/bbl · Average OPEX per bbl: USD 13.23/bbl Anasuria oil field https://preview.redd.it/586u4kfo8br41.png?width=1038&format=png&auto=webp&s=7580fc7f7df7e948754d025745a5cf47d4393c0f Doing the same exercise as above for the Anasuria field, we arrive at the following financial performance for the Anasuria field: · Total oil sold: 1,073,304 bbl · Average realized oil price: USD 63.57/bbl · Average OPEX per bbl: USD 23.22/bbl As gas production is relatively immaterial, and to be conservative, we shall only consider the crude oil production from the Anasuria field in forecasting revenues.
Valuation (Method 1)
Putting the figures from both oil fields together, we get the following data: https://preview.redd.it/7y6064dq8br41.png?width=700&format=png&auto=webp&s=2a4120563a011cf61fc6090e1cd5932602599dc2 Given that we have determined LTM EBITDA of RM 632m, the next step would be to subtract ITDA (interest, tax, depreciation & amortization) from it to obtain estimated LTM Net Profit. Using FY2020’s ITDA of approximately RM 318m as a guideline, we arrive at an estimated LTM Net Profit of RM 314m (FY20: 230m). Given the current market capitalization of RM 714.7m, this implies a trailing LTM PE of 2.3x. Performing a sensitivity analysis given different oil prices, we arrive at the following net profit table for the company under different oil price scenarios, assuming oil production rate and ITDA remain constant: https://preview.redd.it/xixge5sr8br41.png?width=433&format=png&auto=webp&s=288a00f6e5088d01936f0217ae7798d2cfcf11f2 From the above exercise, it becomes apparent that Hibiscus has a breakeven oil price of about USD 41.8863/bbl, and has a lot of operating leverage given the exponential rate of increase in its Net Profit with each consequent increase in oil prices. Considering that the oil production rate (EBITDA) is likely to increase faster than ITDA’s proportion to revenues (fixed costs), at an implied PE of 4.33x, it seems likely that an investment in Hibiscus will be profitable over the next 10 years (with the assumption that oil prices will revert to the mean in the long-term).
Valuation (Method 2)
Of course, there are a lot of assumptions behind the above method of valuation. Hence, it would be prudent to perform multiple methods of valuation and compare the figures to one another. As opposed to the profit/loss assessment in Valuation (Method 1), another way of performing a valuation would be to estimate its balance sheet value, i.e. total revenues from 2P Reserves, and assign a reasonable margin to it. https://preview.redd.it/o2eiss6u8br41.png?width=710&format=png&auto=webp&s=03960cce698d9cedb076f3d5f571b3c59d908fa8 From the above, we understand that Hibiscus’s 2P reserves from the North Sabah and Anasuria fields alone are approximately 44.2 mmbbl (we ignore contribution from Australia’s VIC cluster as it hasn’t been developed yet). Doing a similar sensitivity analysis of different oil prices as above, we arrive at the following estimated total revenues and accumulated net profit: https://preview.redd.it/h8hubrmw8br41.png?width=450&format=png&auto=webp&s=6d23f0f9c3dafda89e758b815072ba335467f33e Let’s assume that the above average of RM 9.68 billion in total realizable revenues from current 2P reserves holds true. If we assign a conservative Net Profit margin of 15% (FY20: 23%; past 5 years average: 16%), we arrive at estimated accumulated Net Profit from 2P Reserves ofRM 1.452 billion. Given the current market capitalization of RM 714 million, we might be able to say that the equity is worth about twice the current share price. However, it is understandable that some readers might feel that the figures used in the above estimate (e.g. net profit margin of 15%) were randomly plucked from the sky. So how do we reconcile them with figures from the financial statements? Fortunately, there appears to be a way to do just that. Intangible Assets I refer you to a figure in the financial statements which provides a shortcut to the valuation of 2P Reserves. This is the carrying value of Intangible Assets on the Balance Sheet. As of 2QFY21, that amount was RM 1,468,860,000 (i.e. RM 1.468 billion). https://preview.redd.it/hse8ttb09br41.png?width=881&format=png&auto=webp&s=82e48b5961c905fe9273cb6346368de60202ebec Quite coincidentally, one might observe that this figure is dangerously close to the estimated accumulated Net Profit from 2P Reserves of RM 1.452 billion we calculated earlier. But why would this amount matter at all? To answer that, I refer you to the notes of the Annual Report FY20 (AR20). On page 148 of the AR20, we find the following two paragraphs: E&E assets comprise of rights and concession and conventional studies. Following the acquisition of a concession right to explore a licensed area, the costs incurred such as geological and geophysical surveys, drilling, commercial appraisal costs and other directly attributable costs of exploration and appraisal including technical and administrative costs, are capitalised as conventional studies, presented as intangible assets. E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an E&E asset may exceed its recoverable amount. The Group will allocate E&E assets to cash generating unit (“CGU”s or groups of CGUs for the purpose of assessing such assets for impairment. Each CGU or group of units to which an E&E asset is allocated will not be larger than an operating segment as disclosed in Note 39 to the financial statements.) Hence, we can determine that firstly, the intangible asset value represents capitalized costs of acquisition of the oil fields, including technical exploration costs and costs of acquiring the relevant licenses. Secondly, an impairment review will be carried out when “the carrying amount of an E&E asset may exceed its recoverable amount”, with E&E assets being allocated to “cash generating units” (CGU) for the purposes of assessment. On page 169 of the AR20, we find the following: Carrying amounts of the Group’s intangible assets, oil and gas assets and FPSO are reviewed for possible impairment annually including any indicators of impairment. For the purpose of assessing impairment, assets are grouped at the lowest level CGUs for which there is a separately identifiable cash flow available. These CGUs are based on operating areas, represented by the 2011 North Sabah EOR PSC (“North Sabah”, the Anasuria Cluster, the Marigold and Sunflower fields, the VIC/P57 exploration permit (“VIC/P57”) and the VIC/L31 production license (“VIC/L31”).) So apparently, the CGUs that have been assigned refer to the respective oil producing fields, two of which include the North Sabah field and the Anasuria field. In order to perform the impairment review, estimates of future cash flow will be made by management to assess the “recoverable amount” (as described above), subject to assumptions and an appropriate discount rate. Hence, what we can gather up to now is that management will estimate future recoverable cash flows from a CGU (i.e. the North Sabah and Anasuria oil fields), compare that to their carrying value, and perform an impairment if their future recoverable cash flows are less than their carrying value. In other words, if estimated accumulated profits from the North Sabah and Anasuria oil fields are less than their carrying value, an impairment is required. So where do we find the carrying values for the North Sabah and Anasuria oil fields? Further down on page 184 in the AR20, we see the following: Included in rights and concession are the carrying amounts of producing field licenses in the Anasuria Cluster amounting to RM668,211,518 (2018: RM687,664,530, producing field licenses in North Sabah amounting to RM471,031,008 (2018: RM414,333,116)) Hence, we can determine that the carrying values for the North Sabah and Anasuria oil fields are RM 471m and RM 668m respectively. But where do we find the future recoverable cash flows of the fields as estimated by management, and what are the assumptions used in that calculation? Fortunately, we find just that on page 185: 17 INTANGIBLE ASSETS (CONTINUED) (a Anasuria Cluster) The Directors have concluded that there is no impairment indicator for Anasuria Cluster during the current financial year. In the previous financial year, due to uncertainties in crude oil prices, the Group has assessed the recoverable amount of the intangible assets, oil and gas assets and FPSO relating to the Anasuria Cluster. The recoverable amount is determined using the FVLCTS model based on discounted cash flows (“DCF” derived from the expected cash in/outflow pattern over the production lives.) The key assumptions used to determine the recoverable amount for the Anasuria Cluster were as follows: (i Discount rate of 10%;) (ii Future cost inflation factor of 2% per annum;) (iii Oil price forecast based on the oil price forward curve from independent parties; and,) (iv Oil production profile based on the assessment by independent oil and gas reserve experts.) Based on the assessments performed, the Directors concluded that the recoverable amount calculated based on the valuation model is higher than the carrying amount. (b North Sabah) The acquisition of the North Sabah assets was completed in the previous financial year. Details of the acquisition are as disclosed in Note 15 to the financial statements. The Directors have concluded that there is no impairment indicator for North Sabah during the current financial year. Here, we can see that the recoverable amount of the Anasuria field was estimated based on a DCF of expected future cash flows over the production life of the asset. The key assumptions used by management all seem appropriate, including a discount rate of 10% and oil price and oil production estimates based on independent assessment. From there, management concludes that the recoverable amount of the Anasuria field is higher than its carrying amount (i.e. no impairment required). Likewise, for the North Sabah field. How do we interpret this? Basically, what management is saying is that given a 10% discount rate and independent oil price and oil production estimates, the accumulated profits (i.e. recoverable amount) from both the North Sabah and the Anasuria fields exceed their carrying amounts of RM 471m and RM 668m respectively. In other words, according to management’s own estimates, the carrying value of the Intangible Assets of RM 1.468 billionapproximates the accumulated Net Profit recoverable from 2P reserves. To conclude Valuation (Method 2), we arrive at the following:
Accumulated Net Profit from 2P Reserves
RM 1.452 billion
RM 1.468 billion
By now, we have established the basic economics of Hibiscus’s business, including its revenues (i.e. oil production and oil price scenarios), costs (OPEX, ITDA), profitability (breakeven, future earnings potential) and balance sheet value (2P reserves, valuation). Moving on, we want to gain a deeper understanding of the 3 statements to anticipate any blind spots and risks. We’ll refer to the financial statements of both the FY20 annual report and the 2Q21 quarterly report in this analysis. For the sake of brevity, I’ll only point out those line items which need extra attention, and skip over the rest. Feel free to go through the financial statements on your own to gain a better familiarity of the business. https://preview.redd.it/h689bss79br41.png?width=810&format=png&auto=webp&s=ed47fce6a5c3815dd3d4f819e31f1ce39ccf4a0b Income Statement First, we’ll start with the Income Statement on page 135 of the AR20. Revenues are straightforward, as we’ve discussed above. Cost of Sales and Administrative Expenses fall under the jurisdiction of OPEX, which we’ve also seen earlier. Other Expenses are mostly made up of Depreciation & Amortization of RM 115m. Finance Costs are where things start to get tricky. Why does a company which carries no debt have such huge amounts of finance costs? The reason can be found in Note 8, where it is revealed that the bulk of finance costs relate to the unwinding of discount of provision for decommissioning costs of RM 25m (Note 32). https://preview.redd.it/4omjptbe9br41.png?width=1019&format=png&auto=webp&s=eaabfc824134063100afa62edfd36a34a680fb60 This actually refers to the expected future costs of restoring the Anasuria and North Sabah fields to their original condition once the oil reserves have been depleted. Accounting standards require the company to provide for these decommissioning costs as they are estimable and probable. The way the decommissioning costs are accounted for is the same as an amortized loan, where the initial carrying value is recognized as a liability and the discount rate applied is reversed each year as an expense on the Income Statement. However, these expenses are largely non-cash in nature and do not necessitate a cash outflow every year (FY20: RM 69m). Unwinding of discount on non-current other payables of RM 12m relate to contractual payments to the North Sabah sellers. We will discuss it later. Taxation is another tricky subject, and is even more significant than Finance Costs at RM 161m. In gist, Hibiscus is subject to the 38% PITA (Petroleum Income Tax Act) under Malaysian jurisdiction, and the 30% Petroleum tax + 10% Supplementary tax under UK jurisdiction. Of the RM 161m, RM 41m of it relates to deferred tax which originates from the difference between tax treatment and accounting treatment on capitalized assets (accelerated depreciation vs straight-line depreciation). Nonetheless, what you should take away from this is that the tax expense is a tangible expense and material to breakeven analysis. Fortunately, tax is a variable expense, and should not materially impact the cash flow of Hibiscus in today’s low oil price environment. Note: Cash outflows for Tax Paid in FY20 was RM 97m, substantially below the RM 161m tax expense. https://preview.redd.it/1xrnwzm89br41.png?width=732&format=png&auto=webp&s=c078bc3e18d9c79d9a6fbe1187803612753f69d8 Balance Sheet The balance sheet of Hibiscus is unexciting; I’ll just bring your attention to those line items which need additional scrutiny. I’ll use the figures in the latest 2Q21 quarterly report (2Q21) and refer to the notes in AR20 for clarity. We’ve already discussed Intangible Assets in the section above, so I won’t dwell on it again. Moving on, the company has Equipment of RM 582m, largely relating to O&G assets (e.g. the Anasuria FPSO vessel and CAPEX incurred on production enhancement projects). Restricted cash and bank balances represent contractual obligations for decommissioning costs of the Anasuria Cluster, and are inaccessible for use in operations. Inventories are relatively low, despite Hibiscus being an E&P company, so forex fluctuations on carrying value of inventories are relatively immaterial. Trade receivables largely relate to entitlements from Petronas and BP (both oil supermajors), and are hence quite safe from impairment. Other receivables, deposits and prepayments are significant as they relate to security deposits placed with sellers of the oil fields acquired; these should be ignored for cash flow purposes. Note: Total cash and bank balances do not include approximately RM 105 m proceeds from the North Sabah December 2019 offtake (which was received in January 2020) Cash and bank balances of RM 90m do not include RM 105m of proceeds from offtake received in 3Q21 (Jan 2020). Hence, the actual cash and bank balances as of 2Q21 approximate RM 200m. Liabilities are a little more interesting. First, I’ll draw your attention to the significant Deferred tax liabilities of RM 457m. These largely relate to the amortization of CAPEX (i.e. Equipment and capitalized E&E expenses), which is given an accelerated depreciation treatment for tax purposes. The way this works is that the government gives Hibiscus a favorable tax treatment on capital expenditures incurred via an accelerated depreciation schedule, so that the taxable income is less than usual. However, this leads to the taxable depreciation being utilized quicker than accounting depreciation, hence the tax payable merely deferred to a later period – when the tax depreciation runs out but accounting depreciation remains. Given the capital intensive nature of the business, it is understandable why Deferred tax liabilities are so large. We’ve discussed Provision for decommissioning costs under the Finance Costs section earlier. They are also quite significant at RM 266m. Notably, the Other Payables and Accruals are a hefty RM 431m. What do they relate to? Basically, they are contractual obligations to the sellers of the oil fields which are only payable upon oil prices reaching certain thresholds. Hence, while they are current in nature, they will only become payable when oil prices recover to previous highs, and are hence not an immediate cash outflow concern given today’s low oil prices. Cash Flow Statement There is nothing in the cash flow statement which warrants concern. Notably, the company generated OCF of approximately RM 500m in FY20 and RM 116m in 2Q21. It further incurred RM 330m and RM 234m of CAPEX in FY20 and 2Q21 respectively, largely owing to production enhancement projects to increase the production rate of the Anasuria and North Sabah fields, which according to management estimates are accretive to ROI. Tax paid was RM 97m in FY20 and RM 61m in 2Q21 (tax expense: RM 161m and RM 62m respectively).
There are a few obvious and not-so-obvious risks that one should be aware of before investing in Hibiscus. We shall not consider operational risks (e.g. uptime, OPEX) as they are outside the jurisdiction of the equity analyst. Instead, we shall focus on the financial and strategic risks largely outside the control of management. The main ones are: · Oil prices remaining subdued for long periods of time · Fluctuation of exchange rates · Customer concentration risk · 2P Reserves being less than estimated · Significant current and non-current liabilities · Potential issuance of equity Oil prices remaining subdued Of topmost concern in the minds of most analysts is whether Hibiscus has the wherewithal to sustain itself through this period of low oil prices (sub-$30). A quick and dirty estimate of annual cash outflow (i.e. burn rate) assuming a $20 oil world and historical production rates is between RM 50m-70m per year, which considering the RM 200m cash balance implies about 3-4 years of sustainability before the company runs out of cash and has to rely on external assistance for financing. Table 1: Hibiscus EBITDA at different oil price and exchange rates https://preview.redd.it/gxnekd6h9br41.png?width=670&format=png&auto=webp&s=edbfb9621a43480d11e3b49de79f61a6337b3d51 The above table shows different EBITDA scenarios (RM ‘m) given different oil prices (left column) and USD:MYR exchange rates (top row). Currently, oil prices are $27 and USD:MYR is 1:4.36. Given conservative assumptions of average OPEX/bbl of $20 (current: $15), we can safely say that the company will be loss-making as long as oil remains at $20 or below (red). However, we can see that once oil prices hit $25, the company can tank the lower-end estimate of the annual burn rate of RM 50m (orange), while at RM $27 it can sufficiently muddle through the higher-end estimate of the annual burn rate of RM 70m (green). Hence, we can assume that as long as the average oil price over the next 3-4 years remains above $25, Hibiscus should come out of this fine without the need for any external financing. Customer Concentration Risk With regards to customer concentration risk, there is not much the analyst or investor can do except to accept the risk. Fortunately, 80% of revenues can be attributed to two oil supermajors (Petronas and BP), hence the risk of default on contractual obligations and trade receivables seems to be quite diminished. 2P Reserves being less than estimated 2P Reserves being less than estimated is another risk that one should keep in mind. Fortunately, the current market cap is merely RM 714m – at half of estimated recoverable amounts of RM 1.468 billion – so there’s a decent margin of safety. In addition, there are other mitigating factors which shall be discussed in the next section (‘Opportunities’). Significant non-current and current liabilities The significant non-current and current liabilities have been addressed in the previous section. It has been determined that they pose no threat to immediate cash flow due to them being long-term in nature (e.g. decommissioning costs, deferred tax, etc). Hence, for the purpose of assessing going concern, their amounts should not be a cause for concern. Potential issuance of equity Finally, we come to the possibility of external financing being required in this low oil price environment. While the company should last 3-4 years on existing cash reserves, there is always the risk of other black swan events materializing (e.g. coronavirus) or simply oil prices remaining muted for longer than 4 years. Furthermore, management has hinted that they wish to acquire new oil assets at presently depressed prices to increase daily production rate to a targeted 20,000 bbl by end-2021. They have room to acquire debt, but they may also wish to issue equity for this purpose. Hence, the possibility of dilution to existing shareholders cannot be entirely ruled out. However, given management’s historical track record of prioritizing ROI and optimal capital allocation, and in consideration of the fact that the MD owns 10% of outstanding shares, there is some assurance that any potential acquisitions will be accretive to EPS and therefore valuations.
As with the existence of risk, the presence of material opportunities also looms over the company. Some of them are discussed below: · Increased Daily Oil Production Rate · Inclusion of 2C Resources · Future oil prices exceeding $50 and effects from coronavirus dissipating Increased Daily Oil Production Rate The first and most obvious opportunity is the potential for increased production rate. We’ve seen in the last quarter (2Q21) that the North Sabah field increased its daily production rate by approximately 20% as a result of production enhancement projects (infill drilling), lowering OPEX/bbl as a result. To vastly oversimplify, infill drilling is the process of maximizing well density by drilling in the spaces between existing wells to improve oil production. The same improvements are being undertaken at the Anasuria field via infill drilling, subsea debottlenecking, water injection and sidetracking of existing wells. Without boring you with industry jargon, this basically means future production rate is likely to improve going forward. By how much can the oil production rate be improved by? Management estimates in their analyst presentation that enhancements in the Anasuria field will be able to yield 5,000 bbl/day by 2021 (current: 2,500 bbl/day). Similarly, improvements in the North Sabah field is expected to yield 7,000 bbl/day by 2021 (current: 5,300 bbl/day). This implies a total 2021 expected daily production rate from the two fields alone of 12,000 bbl/day (current: 8,000 bbl/day). That’s a 50% increase in yields which we haven’t factored into our valuation yet. Furthermore, we haven’t considered any production from existing 2C resources (e.g. Marigold/Sunflower) or any potential acquisitions which may occur in the future. By management estimates, this can potentially increase production by another 8,000 bbl/day, bringing total production to 20,000 bbl/day. While this seems like a stretch of the imagination, it pays to keep them in mind when forecasting future revenues and valuations. Just to play around with the numbers, I’ve come up with a sensitivity analysis of possible annual EBITDA at different oil prices and daily oil production rates: Table 2: Hibiscus EBITDA at different oil price and daily oil production rates https://preview.redd.it/jnpfhr5n9br41.png?width=814&format=png&auto=webp&s=bbe4b512bc17f576d87529651140cc74cde3d159 The left column represents different oil prices while the top row represents different daily oil production rates. The green column represents EBITDA at current daily production rate of 8,000 bbl/day; the orange column represents EBITDA at targeted daily production rate of 12,000 bbl/day; while the purple column represents EBITDA at maximum daily production rate of 20,000 bbl/day. Even conservatively assuming increased estimated annual ITDA of RM 500m (FY20: RM 318m), and long-term average oil prices of $50 (FY20: $60), the estimated Net Profit and P/E ratio is potentially lucrative at daily oil production rates of 12,000 bbl/day and above. 2C Resources Since we’re on the topic of improved daily oil production rate, it bears to pay in mind the relatively enormous potential from Hibiscus’s 2C Resources. North Sabah’s 2C Resources alone exceed 30 mmbbl; while those from the yet undiagnosed Marigold/Sunflower fields also reach 30 mmbbl. Altogether, 2C Resources exceed 70 mmbbl, which dwarfs the 44 mmbbl of 2P Reserves we have considered up to this point in our valuation estimates. To refresh your memory, 2C Resources represents oil volumes which have been discovered but are not yet classified as “commercial”. This means that there is reasonable certainty of the oil being recoverable, as opposed to simply being in the very early stages of exploration. So, to be conservative, we will imagine that only 50% of 2C Resources are eligible for reclassification to 2P reserves, i.e. 35 mmbbl of oil. https://preview.redd.it/mto11iz7abr41.png?width=375&format=png&auto=webp&s=e9028ab0816b3d3e25067447f2c70acd3ebfc41a This additional 35 mmbbl of oil represents an 80% increase to existing 2P reserves. Assuming the daily oil production rate increases similarly by 80%, we will arrive at 14,400 bbl/day of oil production. According to Table 2 above, this would yield an EBITDA of roughly RM 630m assuming $50 oil. Comparing that estimated EBITDA to FY20’s actual EBITDA:
FY21 (incl. 2C)
Daily oil production (bbl/day)
Average oil price (USD/bbl)
Average OPEX/bbl (USD)
EBITDA (RM ‘m)
Hence, even conservatively assuming lower oil prices and higher OPEX/bbl (which should decrease in the presence of higher oil volumes) than last year, we get approximately the same EBITDA as FY20. For the sake of completeness, let’s assume that Hibiscus issues twice the no. of existing shares over the next 10 years, effectively diluting shareholders by 50%. Even without accounting for the possibility of the acquisition of new oil fields, at the current market capitalization of RM 714m, the prospective P/E would be about 10x. Not too shabby. Future oil prices exceeding $50 and effects from coronavirus dissipating Hibiscus shares have recently been hit by a one-two punch from oil prices cratering from $60 to $30, as a result of both the Saudi-Russian dispute and depressed demand for oil due to coronavirus. This has massively increased supply and at the same time hugely depressed demand for oil (due to the globally coordinated lockdowns being implemented). Given a long enough timeframe, I fully expect OPEC+ to come to an agreement and the economic effects from the coronavirus to dissipate, allowing oil prices to rebound. As we equity investors are aware, oil prices are cyclical and are bound to recover over the next 10 years. When it does, valuations of O&G stocks (including Hibiscus’s) are likely to improve as investors overshoot expectations and begin to forecast higher oil prices into perpetuity, as they always tend to do in good times. When that time arrives, Hibiscus’s valuations are likely to become overoptimistic as all O&G stocks tend to do during oil upcycles, resulting in valuations far exceeding reasonable estimates of future earnings. If you can hold the shares up until then, it’s likely you will make much more on your investment than what we’ve been estimating.
Wrapping up what we’ve discussed so far, we can conclude that Hibiscus’s market capitalization of RM 714m far undershoots reasonable estimates of fair value even under conservative assumptions of recoverable oil volumes and long-term average oil prices. As a value investor, I hesitate to assign a target share price, but it’s safe to say that this stock is worth at least RM 1.00 (current: RM 0.45). Risk is relatively contained and the upside far exceeds the downside. While I have no opinion on the short-term trajectory of oil prices, I can safely recommend this stock as a long-term Buy based on fundamental research.
On Tuesday 16th July, just a few weeks ago I was invited to attend a Karatbit, Karatbars/Karatbank presentation. The presentation was touting everything including a blockchain mobile phone. Someone had approached me over the weekend to investigate an investment, they had made with Karatbit/Karatbars. I attended the presentation with some research which, to be honest, was not that favourable to the company but nevertheless still went with an open mind. KaratBank, a Singapore-based financial organization, has propelled another digital currency that it claims is bound to real physical gold. Is this a progressive thought – or a trick? KaratBank, an organization located in Singapore, has quite recently declared the dispatch of KaratBank Coins (KBC), another digital currency it said is attached to gold. Be that as it may, not just the cost of gold, as different monetary forms — to real bits of gold: they're embedded in plastic cards or banknotes. In any event, that is the way it appears upon first sight. KaratBank is a sister company of KaratBars International, located in Germany. KaratBars really sells gold in exceptionally small quantities (like 0.1g to 1g bullions), inserted into plastic cards (Karatbars) or money like notes (CashGold). The notes are famously overpriced: back when 1 gram of gold was $40, the 1g CashGold note cost $65. As per KaratBank whitepaper, 10,000 KBC can be traded for 0.1g CashGold notes. The initial coin offering kicked off earlier this year and proceeded until March 21, with the ICO starting March 22 (1 KBC = $0.05), Coin Telegraph reports. Be that as it may, KaratBars International as an organization is emphatically connected with scams. A basic search for KaratBars on Google returns three connections with the word "scam" in them on the first page. KaratBars was prohibited in Canada in 2014 over an Autorité des marchés agents (AMF) with a Scam warning. The Canadian government found that KaratBars executes some kind of multi-layered marketing (MLM), or "pyramid" scheme organisation that urged individuals to get new recruits and profit from their sales, promising a return of $15,000 to $136,000 every month. In any case, Is KaratBank is a different story? All things considered, yes and no. Upon a more intensive look at the organization's whitepaper, one finds the following: "United States of America citizens, residents (tax or otherwise) or green card holders, as well as residents of Canada, the People's Republic of China or the Republic of Singapore, are not qualified to partake in the KaratBank ICO." As indicated by the Behind MLM site, the explanation behind this may lie in the way that those nations have actualized strict regulation on ICOs, and KaratBank does not have any desire to have anything to do with them. "ICOs are not unlawful in the US or Canada. In the US, however, ICOs are ordinarily viewed as securities and require registration with the [Securities and Exchange Commission]," the site reads. "Singapore hasn't prohibited ICOs however it is one of the nations KaratBars International works in through the shell companies KaratPay and KaratBars Singapore. Singapore regulators closing those organizations down would cripple KaratBars International. The board most likely figure it's best not to take any risks." To work lawfully in any purview, KaratBars International would need to register itself with the proper securities regulator in that jurisdiction, which the organization appears to need to abstain from, raising doubts. From one's point of view what is disheartening is that blockchain is a great new technology and companies like this seem to mix their existing business with cryptocurrencies. Knowing full well that the general public does not really understand cryptocurrencies, let alone blockchain or Distributed Ledger Technology (DLT). As a blockchain consultant, one feels obligated to pose some questions anyone thinking of getting involved should be asking. At the presentation, I heard the presenters say “ Karatbars is giving its members the opportunity to buy gold in small quantities. They also encourage you to save in gold instead of paper money. This can easily be done by buying as little as 0.1 gram of gold or 1 gram - 2.5 gram or 5 grams.” They said members can keep their gold in Karatbars' vault or ask them to send it to you. Cash gold is the most popular form of buying gold as the gold is embedded in a banknote. 24kt gold 99.9% pure makes it easier for anyone to accumulate wealth. Karatbars is also involved in cryptocurrency and got their own coins, namely KBC and KCB coins. I'm going to get very deep into this, but the main thing to remember is that they say, “these coins are increasing in value and that it is backed by gold”. whereas and another Cryptocurrency is backed by nothing. As a self-proclaimed proponent of blockchain and a graduate of Digital Forensics, I feel obligated to say a few words about this presentation on Karatbit or at least as a conscious citizen of this global world of technology users. Blockchain is a magnificent emerging technology that can be harnessed to do so many things. But most importantly it is a technology that provides one single source of truth. If groups are using this single source of truth technology to spread untruths, someone concerned must come out to say something. Blockchain is a technology that can put everyone on an even playing field but it seems very few understand it. The individuals with even the fleeting basic understanding can influence the general public perception of cryptocurrencies. This leads me to ask a great quote from a book called Richest Man in Babylon …. “if you want advice on investing in expensive jewels, why would you go to a butcher?” The following is what the masses are being manipulated to attach their hopes and dreams. It is that “a further drop in the value of Bitcoin and other cryptocurrencies has recently left investors nursing heavy losses. Many proponents are holding out for a new breakout “if their digital assets can go mainstream.” The most important part of that statement is “if their digital assets can go mainstream”. This made me ask some questions about Karatbit and this is what I came up with. Something is fishy!! Can someone clarify the following? Claim 1: Gold mine worth $900 million provides security. Can’t find any official source as proof. Reference: https://www.youtube.com/watch?v=TyKQIckXyIU Claim 2: Backed by a gold mine in Africa Can’t find any official source as proof. Reference: https://www.youtube.com/watch?v=d5Q3ZvR4b04 Claim 3: Audit report by MM Revisors for a gold mine in Madagascar Can’t find proof that MM Revisors exists. Not sure if this report was published by Karatbars Int (can’t find it on their official website), but this is being circulated by some investors as if it were. Reference: https://karatbars-me.webnode.es/\_files/200000070-01d6002d18/audit.pdf Claim 4: Karatcoin Bank is a fully licensed crypto bank and is situated in Miami Can’t find proof that they are registered as a licensed financial institute in Miami, Florida. Can’t find Karatcoin Bank as a registered corporation, but found Karat Coin Corp. Reference: http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResults?inquiryType=EntityName&searchNameOrder=KARATBANK&searchTerm=Karatbank Reference: https://www.youtube.com/watch?v=YXip2Fizz5U&t=152s Claim 5: Not a pyramid scheme Karatbit describes this as an affiliate program but clearly is a pyramid scheme at best, see links below; Canada: https://www.newswire.ca/news-releases/karatbars-quebec-activities-covered-by-prohibition-orders-514201571.html Namibia: https://economist.com.na/43874/extra/karatbars-international-is-a-scamsays-central-bank/ Netherlands: https://www.afm.nl/en/nieuws/2014/mei/waarschuwing-karatbars Claim 6: 100KBC = 1g of Gold at $40 per gram (1 KBC = $0.40) (guaranteed) Total supply = 12,000,000,000 KBC (can’t find figures of circulating, so using supply instead) Total gold needed to cover buy back of all coins: 12,000,000,000 / 100 = 120 000 000g = 120 tons (South Africa as a whole produced 139.9 tons of Gold in 2017). Total money needed to buy back all the coins: 120 000 000g x $40 = $4.8 Billion Can’t find proof that they have 120 tons of gold in storage (or backed up by the mines as claimed) or that they are at least worth $4.8 Billion to buy the gold? Taking a more conservative approach: According to icobench.com, they raised $100 000 000 with their ICO from 60% of the total supply. Let’s assume the 60% of 12,000,000,000 is in circulation. This equals to 7,200,000,000 KBC. Total gold needed for the buyback of 7,200,000,000 KBC: 7,200,000,000 / 100 = 72 000 000g = 72 tons Total money needed to buy back all coins: 72 000 000g x $40 = $2.88 Billion Loss for buying back the KBC that were sold during the ICO: $100,000,000 - $2,880,000,000 = - $2,780,000,000 A potential loss of $2,78 Billion!!! Or am I taking crazy pills? Reference: https://www.youtube.com/watch?v=KgeHjhlMfn0 Reference: https://icobench.com/ico/karatgold-coin Claim 7: This Forbes.com article gives credibility to the KBC coin This article was written by a Contributor. Reference: https://www.forbes.com/sites/joresablount/2019/05/31/10-blockchain-companies-to-watch-in-2019/#308b507e543f There is no traditional editing of contributors’ copy, at least not prior to publishing. If a story gets hot or makes the homepage, a producer will “check it more carefully,” DVorkin said. Reference: https://www.poynter.org/reporting-editing/2012/what-the-forbes-model-of-contributed-content-means-for-journalism/ “Blogging for Forbes requires being what is commonly referred to as a "self-starter." So far, nobody has said, "Um, you can't do that," or, "Oh, my God, no!" Reference: https://www.forbes.com/sites/susannahbreslin/2011/04/06/how-to-become-a-forbes-blogge#231bb9972862 “Warning over 'scammers paradise' as watchdog reveals victims lost £27m to bitcoin, cryptocurrency and forex frauds last year” • Some 1,850 cases were reported to Action Fraud, a 250% increase on 2017-18 • Victims lost an average of £14,600 - with fewer than 1 in 20 getting money back • Investors are often initially told they've made a profit • They are then encouraged to put in more money - at which point the fraudsters run off with their cash Potential victims have been warned over bogus online 'get rich quick' schemes as it emerged people lost more than £27million to cryptocurrency and foreign exchange scams last year. Fraudsters promise high returns to those who invest, according to Action Fraud and the Financial Conduct Authority. Victims lost an average of £14,600 in 2018-19 and stand little chance of getting their money back. Reports of cryptocurrency and forex investment scams increased by nearly 250 per cent in 2017-18, from 530 to nearly 1,850. The scams work by criminals promoting get-rich-quick online trading platforms through social media. Posts often use fake celebrity endorsements and images of luxury items like expensive watches and cars. Beat the scammers: These then link to professional-looking websites where consumers are persuaded to invest. Often investors are led to believe their first investment has successfully returned a profit, and are then enticed to invest more money or introduce friends in return for greater profits. But the returns stop, the customer account is closed, and the scammer disappears with no further contact. 'Anyone handing over their hard-earned cash should make sure they understand what they're getting into, they've checked it's a legitimate investment, and not rely on hype and excitement from friends or social media. 'Investing isn't a get-rich-quick scheme - and anything that uses fear of missing out or requires you to invest before thinking is best to be avoided.' Those considering an investment to check the following for tips on how to avoid investment fraud at www.fca.org.uk/scamsmart. Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal. 'It's vital that people carry out the necessary checks to ensure that an investment they're considering is legitimate. UK consumers are being increasingly targeted by crypto asset-related investment scams. Certain crypto assets, like Bitcoin and Ether (also known as cryptocurrencies), are not regulated in the UK. This means that buying, selling or transferring these crypto-assets falls outside FCA remit. The same is true for the operation of a cryptocurrency exchange. However, some types of crypto-asset products may be or may involve regulated investments depending on their nature and how they are structured. For example, firms that sell regulated investments with an underlying crypto asset element may need to be authorised by the FCA to do so. In recent months, the FCA claims it has received an increasing number of reports about crypto-asset investment scams. Some of them may involve regulated activities, others don’t, but all use similar tactics. How crypto-asset investment scams work Cryptoasset fraudsters tend to advertise on social media – often using the images of celebrities or well-known individuals to promote cryptocurrency investments. In this case, laughably they said KaratBit was endorsed by Barak Obama’s sister. Who is she and what does she know about cryptocurrencies and blockchain? The ads then link to professional-looking websites. Consumers are then persuaded to make investments with the firm using cryptocurrencies or traditional currencies. The firms operating the scams are usually based outside the UK but will claim to have a UK presence, often a prestigious City of London address. Scam firms can manipulate software to distort prices and investment returns. They may scam people into buying the non-existent crypto asset. They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred. Action Fraud has also issued a warning on cryptocurrency scams. How to protect yourself Be wary of adverts online and on social media promising high returns on investments in a crypto asset or crypto asset-related products. Most firms advertising and selling investments in crypto-assets are not authorised by the FCA. This means that if you invest in certain crypto assets you will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong. The FCA doesn’t regulate crypto assets like Bitcoin or Ether which are vastly the most recognized cryptocurrencies, let alone KBC, they do regulate certain crypto-asset derivatives (such as futures contracts, CFDs and options), as well as those crypto assets I would consider securities. A firm must be authorised by FCA to advertise or sell these products in the UK – check FCA Register to make sure the firm is authorised. You can also check the FCA Warning List of firms to avoid. You should do further research on the product you are considering and the firm you are considering investing with. Check with Companies House to see if the firm is registered as a UK company and for directors' names. To see if others have posted any concerns, search online for the firm's name, directors' names and the product you are considering. If you’ve already decided you want to invest in gold, this might not be a bad company to side with. But if you’re just looking for an opportunity to earn a sustainable income and become financially independent, there are better options out there.
While I am writing this today,on 9th Sep 2018, a litre of petrol now costs Rs. 80.50 in New Delhi, Rs. 83.39 in Kolkata, Rs. 87.89 in Mumbai, and Rs. 83.66 in Chennai, according to IOC's website. A litre of diesel costs Rs. 72.61 in New Delhi - the highest ever. In Kolkata, diesel is priced at Rs. 75.46/ litre, in Mumbai Rs. 77.09/ litre, and Rs. 76.75/ litre in Chennai. Some are cursing the Govt. and saying that same people protested against rising prices when they were in opposition and during UPA there was not too much price hike even when crude oil prices increased exponentially. Correct folks!! but what were the conditions that make both protest two completely different scenario..here we do mistake in checking it. There are some points which are to be considered before starting this blame game. Blame no.1: Price hike was not as much by UPA even if the Global Oil prices were rising. Fact: Manmohan Singh lead UPA Govt. wanted to have lesser impact of rising crude oil prices on common people so they did two things: (a) Raised almost 1.44 lakh crore rupees in terms Oil bonds to majorly bypass the impact of increasing crude oil prices and to lower the losses of oil companies (b) modest increase of 3-5 Rs in Petrol/Diesel prices. Even ex PM Manmohan Singh said that they are not doing right thing as someone has to repay the bonds.This is what PM Dr. Manmohan Singh said in his address to the nation on Jun 4, 2008. "My Fellow Citizens, I know that the price increases we have had to announce today will not be popular, even though they are only modest. You must remember that the Government is bearing the burden of issuing oil bonds. Our oil companies are making a large sacrifice and are under severe stress. However, I would like the nation to remember that issuing bonds and loading deficits on oil companies is not a permanent solution to this problem. ***We are only passing on our burden to our children who will have to repay this debt.***Cutting down on the returns of our oil companies will choke a sector vital for the growth of the economy. We need more corrective measures in future on many fronts. In the long term, our country must have a sound strategy for energy security." Link: Prime Minister of India - Dr. Manmohan Singh May be they issued these oil bonds as as burden on the country as they knew that they are not going to pay this enromous amount as they were not going to re-elected being the most corrupted Govt, the country has ever seen. Same money has been repaid by PM Narendra Modi led NDA Govt along with interest of 70K Crore that too from the foreign reserves of this Govt. During NDA one year central excise collection is almost 2-3 lakh crore so almost an year tax collection has been used for repayment of oil bonds. The strict spending and zero corruption of Modi government enabled this. link: Govt repaid over Rs 2 lakh cr on account of oil bonds taken: Pradhan Blame no.2: Govt. didn't passed benefit of reduced crude oil prices to consumers instead it increased Central Excise & State VAT. Fact: Crude Oil prices fell considerably after 2014 but Govt. didn't passed this benefit to common people as it wanted to inculcate the habit of financial discipline in economy. Govt. used additional tax collection from Cebtral Excise wisely to fuel it's Capital intensive projects to Sagarmala (Port), Bharatmala (Roads) and to boost Waterways and Airport connectivity. Along with this various social-securiy schemes were running be it PMJJY, PMSBY, Ujjwala Yojana (Free LPG connection to poor families) which already marked 5 Cr beneficiary, Ujala (LED distribution) which marked almost 30 Cr LED bulbs (upto 9th September 2018) distributed resulted in savings of 16000 Cr savings and reduced peak load demand, Jan-dhan account for financial inclusion of every household, PM Jan-Aushadi Kendra where one can purchase generic medicine instead of branded high value medicines and last but not the least 'AysushMaan Bharat' which will be milstone in healthcare as it will provide Medi-claim facility up to 5 lakhs for 50 Cr people of poor households. So ultimately the benefit of reduced crude oil prices passed to the person who is standing in the last line...the real execution of 'Antyodaya Concept' by Pandit Deen dayal Upadhyaya. Blame no.3: Same people who were protesting earlier for increased oil prices are now in Govt and not saying anything.. hypocrisy?? Fact: When I say that this Govt. is inculcating financial discipline in the ecomomy, there are reasons. While there is too much investment by the Govt in new Capital intensive and social security schemes along with running old schemes like MANREGA and food security scheme which act as a big subsidy based schemes, India Current Account Deficit (CAD) has decreased instead of increasing. Currently CAD is in the range of 2-3% of GDP during NDA compared to nearly 4-5% of GDP during UPA. Isn't it a good thing? Here Govt. shown that how to use favorable situations for benefit of the country. UPA OR NDA: Who's better for the economy? - Times of India UPA govt were having high deficit, unpaid oil bonds, gulped over 20 Lakh crore rupees in Scams ( Coal Scam was itself around 10 lakh crore) and they doomed the economy, this is how it is different from the protest of opposition at that time. All things are in India's favour be it inflation, FDI, Forex reserves, GDP as on today except falling Rupee which is due to US-China trade war and Increasing Crude Oil prices, over which Govt should take some serious actions. Do you want a Govt which gives you subsidies in terms of freebies and at the backdoor it takes away all the benefits in terms of increased financial burden of fiscal deficit and ultimately putting interest burden on Indian govt to repay it ? This is the real question. Is it your money going to scams like previous one?, NO, it is returning to the society ultimately!! This Govt is doing what it right for the country and not for appeasing people for vote bank politics. As 2019 will come near people will try their best to defame the good work by false allegations. Don't be a fool, use your rationality, analyse the conditions before accepting the allegations as it is.
-Pakistan to host ‘AdAsia – Asian Advertising Congress’ this year In a logo unveiling ceremony held at Faletti’s Hotel Lahore, on Sunday, it was revealed that AdAsia 2019 —Asian Advertising Congress is going to be held in Pakistan this year. AdAsia is the largest and most prestigious advertising congress in Asia, organized bi-annually by the Asian Federation of Advertising Associations (AFAA). The AdAsia 2019 Congress will be held in Lahore at the Lahore International Expo Centre from December 3 to 5. The theme for the Congress is ‘Celebrasian: Celebration of Advertising and Creativity in Asia’. -IDB to lend Pakistan oil worth $4.5 bn The spokesperson for the Ministry of Finance on Saturday claimed that the Saudi-backed Islamic Development Bank (IsDB) will lend Pakistan oil worth $4.5 billion. “The IsDB will lend Pakistan oil worth $4.5 billion over three years. The oil will be lent in three installments of $1.5 billion each every year,” the spokesperson added. The Ministry of Finance spokesperson further said that in the first phase they have received oil worth $100 million and oil worth $270 million will be lent in the second phase. “We are also in talks with the IsDB regarding lending of liquefied natural gas (LNG),” the spokesperson added. -Economic revival: PTI government relief package earns Rs 125 billion immediately The federal government’s relief package for the stock market in the ‘Mini-budget’ on January 23 has brought positive impact. KSE-100 index settled at 40,254 points with a rise of 958 points within one week. The business-friendly concessions including abolition of the advance tax of 0.02pc on share trading under Presumptive Tax Regime and super tax in the mini-budget have been welcomed by the stockbrokers and industrialists altogether. -69 women constables complete elite commando training in K-P Over 7,000 personnel of the Khyber-Pakhtunkhwa (K-P) police, including 69 women constables, have successfully completed a grueling Elite Commando Training Course. As per a statement issued by K-P police’s public relations, the police personnel completed training in 15 basic courses conducted at different training centres. Most policemen, including the women constables, voluntarily opted for the tough four-month long course. The communique also said another batch of women commandos is currently being trained and shall soon be elevated to the rank of elite commandos. -Karachi police chief makes surprise visits, suspends four police officials In a surprise move, Additional Inspector General Police Dr Amir Shaikh on Saturday visited different areas of the city, disguising himself as a common citizen to witness the performance the police force. A police spokesperson said that the Karachi police chief suspended four police officials, including two ASIs over violation of duty rules and harassing public. He said that the police officials were found harassing people instead of controlling traffic at MT Khan Road in Sultanabad. The officials were from Jackson and Sultanabad police stations, said the spokesperson and added that the police chief had directed SP Traffic city and DSP to submit report over the issue. In-charges of Jackson and Sultanabad police stations along with record keepers were also summoned by the AIG Dr Amir Shaikh, said the spokesperson. -In a historical move, Pakistan elected as Vice Chair of Asia Pacific Ministerial Forum Pakistan was elected as the vice chair at the third UN Environment’s Forum of Ministers and Environment Authorities of Asia Pacific that was held in Singapore from January 23 till January 25. The newswas revealed in a tweet by Adviser to Prime Minister on Climate Change Malik Amin Aslam. He said Pakistan got elected to the position owing to the country’s ‘sincere and dedicated’ environment preservation endeavours. -Pakistan Army achieves historic milestone on Pakistan Afghanistan border fencing Director General of Inter-Services Public Relations (ISPR) Major General Asif Ghafoor Sunday said work on about 900 kilometer fence along the Pakistan-Afghanistan border had been completed. Briefing a team of journalists and anchor-persons at Ghulam Khan, a bordering village in North Waziristan Agency,he said the work on erection of about 1200 km chunk, the most sensitive portion out of the total 2600 km long border with the neighbouring country, had commenced last year. Zero Point is the entry and exit point of Pakistan from Afghanistan where a formal border post was constructed last year Major Gen Asif Ghafoor said the project would cost about Rs 70 billion, which also included the cost of gadgets and surveillance equipment to keep strict vigil on the illicit movement from across the border. He said the fence had amply helped check the movement of terrorists from across the border and it would further assist after completion of the project which was expected to culminate next year. The visit of media-persons was conducted for the first time in the country's history as no such activity could have happened as all the area had been “no go area” for the civilians or even by the security forces themselves. -Foreign Media representatives visit North Waziristan, stunned with Pakistan Army successes against terrorism Local and foreign media representatives on Sunday visited Peshawar, Miranshah, and Ghulam Khan Border terminals along with Director General ISPR Major General Asif Ghafoor for the first time after military operations. It was the first direct interaction of the media with local people, who while standing in Miranshah Bazar, talked to reporters about improved peace situation and administrative issues in the area. They lauded Pakistan Army for its efforts in restoring peace and development. -Pakistan Cement Exports register significant rise in first half of FY 2018 - 19 The export of cement from the country witnessed increase of 32.4 percent during first half of current fiscal year as compared to same period of last year. The export of the commodity increased to $157 million in July-December (2018-19) against the export worth of $118.586 million in sameperiod of last year, a latest data released by Pakistan Bureau of Statistics (PBS) said. In term of quantity, the cement export recorded 55.52 percent increase to 3.671 million Metric Ton (MT) during the period under review as compared to export of 2.36 million MT cement during same period of previous year. On year-on-year basis, the cement export jumped by 78.02 percent to $25.89 million in December 2018 from $14.54 million of cement export during December 2017, the data revealed. The overall export of goods during first half of current fiscal year recorded an increase of 2.19 percent to $11.216 billion against the exports of $10.976 billion recorded during same period of last year. -KP Tourism. Potential stuns audience at International Tourism Fair in Europe A large number of visitors, tourists and investors thronged the stall of Tourism Corporation Khyber Pakhtunkhwa (TCKP) at the tourism trade fair at Feria de Madrid, Spain, and showed keen interest in the KP’s tourism potential. The TCKP team highlighted salient features of the cultural and tourist resorts through video documentaries, pictures, brochures and posters. The visitors were informed that 70 percent of tourist resorts were located in KP and the foreign tourists can now visit any place without any restriction and obtaining Non-Objection Certificate. The KP participation in fair encouraged the international tour operators to bring cultural and mountaineering expeditions to the province, which will highlight Pakistan as one of the best tourist destinations for international tourists. -Foundation stone laid for $200 million knowledge city in Pakistan, first ever in County's history Prime Minister Imran Khan Sunday inaugurated the first academic block of the NAMAL Knowledge City. The vision behind Namal Knowledge City is to create a hub of knowledge exchange and research in Mianwali. The Knowledge City will include academic blocks, a knowledge center, a sports complex, sports grounds, a hospital, technology parks, business centers, shopping malls, a dairy farm, a resort, software houses, hotels, a primary school, and a housing colony for the faculty. A total of US$ 200 million will be spent on the construction of the Knowledge City which will be built on the concept of a zero carbon foot print and completed by the year 2027. It will have a population of 11,000 with construction spread over 4 million square feet. It will accommodate 7,000 students with 600 faculty members. -E Rozgar Programme launched, Click for Registration The Punjab IT Board and Ministry of Youth Affairs has jointly launched a three-month free E-Rozgar Training Programe for the youth, aimed at imparting vocational training to the jobless, enabling them to earn their livelihood honourably. In this regard, the admission has started for enrollment in these technical courses and the last date for the on-line registration is the 9th of the next month. The requisites of getting admission include that the applicant should have an NCIC, his minimum age 16, maximum age 35 and should be jobless. -Pakistan China ink deal worth billions of dollars today: Report A Chinese company will invest billion of dollars in mineral exploration and processing projects in Khyber Pakhtunkhwa. A Memorandum of Understanding in this regard has been signed in China today. According to Khyber Pakhtunkhwa Minister for Mineral Development Dr. Amjad Ali, the Chinese company will setup mineral industrial park in Rashakai Special Economic Zone. -Pakistan's NESPAK completes 3,900 mega projects in Pakistan and across 37 countries of World worth Rs 19,000 billions National Engineering Services Pakistan (NESPAK) has successfully completed 3,900 development projects within Pakistan and 37 in other countries with an accumulative cost of Rs 19,000 billion since its establishment, 45 years ago. NESPAK Managing Director Dr. Tahir Masood told media here Saturday that foreign countries where NESPAK has extended engineering consultancy services were mostly located in the Middle East, Far East, Central Asia and Africa. In this way, he added, NESPAK had placed the country on the export map of the world and was committed to provide multi-disciplinary engineering consultancy services with the highest level of professionalism and dedication. -Government launches Dominted Bank bond PTI government is launching yet another economic initiative for overseas Pakistanis to attract billions of dollars for balance of payment and enhancing reserves. PTI government is launching dollar-denominated diaspora bond named Pakistan Banao Certificate (PBC) on January 31st. The diaspora bond is being launched to take advantage of international savings of overseas Pakistani’s and bolstering its foreign exchange reserves. According to details shared by the Finance Minister Asad Umar , the certificates would be of two types, one of three years offering 6.25% return and the other with five-year maturity offering 6.75% return. Mr Umar said four banks had been selected to complete the transactions. -Rupee hits seven-week high at 138.78 Pakistani currency has recovered to a seven-week high at Rs138.78 against the US dollar in inter-bank market on Friday, according to the State Bank of Pakistan, after the country successfully mitigated the risk of default following receipt of $2 billion from friendly countries. Simultaneously, the rupee revived to a four-week high at retail market to 139 against the greenback on Saturday, according to a forex website. “The $2 billion inflows from the UAE and Saudi Arabia (on Thursday and Friday) has partially eased the panic at currency markets,” said a banker on condition of anonymity. -PM Imran discusses major proposals to revive PIA As Pakistan International Airlines (PIA) struggles to rein in mounting losses, Prime Minister Imran Khan discussed major proposals presented at a high-level meeting to turn around the financially troubled national flag carrier. The prime minister chaired the meeting at the PM Office earlier this month, which was attended by top cabinet members, civil bureaucracy and military officers. The premier directed the authorities to arrange additional guarantees of Rs15 billion as interim relief for PIA. A proposal was endorsed to freeze PIA’s outstanding dues, amounting to over Rs80 billion, which were payable to the Civil Aviation Authority (CAA) along with late payment surcharge, according to minutes of the meeting available with The Express Tribune. -World Bank releases $58m for house financing The World Bank has disbursed $58 million for house financing in Pakistan and the federal cabinet has approved the transfer of the fund to Pakistan Mortgage Refinance Company (PMRC). “It ($58 million – Rs7.8 billion) is a World Bank credit line for PMRC,” PMRC Managing Director and Chief Executive Officer Mudassir Hussain Khan told The Express Tribune. “The cabinet has approved the transfer of the fund. It will take around a week to 10 days before the money reaches PMRC account.” -Talks between Pakistan, China for FTA to begin next month Federal Secretary for Trade, Younus Dagha has said that the talks between Pakistan and China for a Free Trade Agreement (FTA) will commence next month. Talking to a delegation of the Trade Development Authority’s officials in Lahore, he expressed optimism that the new trade agreement with China will help thrive national economy and would be in the best interests of both the friendly countries. “The trade deficit of Pakistan has decreased by five per cent during the incumbent government and our exports are increasing day by day.” He said the expansion of the trade volume with India depends on the decisions of the governments of both the countries. He informed that trade with Afghanistan is also improving. -Amended finance bill to reduce cost of doing business: PEW The Pakistan Economy Watch (PEW) on Sunday said the recently amended finance bill will reduce the cost of doing business which in turn, will reduce the prices of many items. The move will support businesses and help exporters regain ground in the international market as the government has reduced and abolished several taxes to lift economic activities, it said. The government will lose almost seven billion rupees in revenue but it will gain more in the shape of foreign exchange, said PEW President Dr. Murtaza Mughal. He said the recommendations will be applicable from the next fiscal term but it has already elevated business sentiments as many leading business groups are planning to boost investments. -Economic reforms help PSX gain 958 points in week The benchmark KSE-100 index accelerated by 958 points in the outgoing week and settled at 40,265 points, providing a weekly return of 2.44pc, owing to improved sentiment on account of the economic reforms package announced by the government. The Finance Supplementary (Second Amendment) Bill, 2019 was broadly focused on improving ease of doing business, incentivizing export-oriented/industrial sectors and elimination of domestic growth hampering impediments. A key demand from the stock market to abolish the advance tax of 0.02pc was accepted, while the government also allowed capital losses to be carried forward for three years, thereby impacting the investor sentiment positively. -Govt to announce medium-term economic framework in coming week: Hammad Azhar The Minister of State for Revenue Hammad Azhar on Friday said the government will announce a medium-term economic framework in the coming week. The forthcoming medium-term economic framework will bring measures that will enhance exports and investments, said Azhar while speaking at a seminar on “Economic Reforms: Way forward”, organised by the Sustainable Development Policy Institute (SDPI), reports an English daily. He shared the government is moving towards execution a direct taxation regime whilst gradually restricting indirect taxes. Mr Azhar underlined that the supplementary budget which was announced on Wednesday didn’t target fiscal and monetary measures but was an economic reforms package to resuscitate and enhance growth and investment. -Economic reforms package to help boost exports, trade and investment State Minister for Revenue Hamad Azhar on Friday said that economic reforms package announced by the PTI government will help in boosting exports, trade and investment. Talking to a private news channel, he said the economic reforms package will prove to be helpful in overcoming the trade and fiscal deficit. Mr Azhar said due to effective economic policies of the Pakistan Tehreek-e-Insaf (PTI) government, the international investors are desirous of investment in Pakistan. The government is taking many steps for the revival and betterment of the economy, he added. -Tale as old as time: Labyrinth of tunnels discovered under Lahore Fort A labyrinth of underground tunnels, as well as hidden basements, has been discovered under Lahore Fort. Immortalised in short stories, these passages have always been hidden from the naked eye. However, during excavation, the Walled City of Lahore Authority (WCLA) has discovered two underground tunnels and an arsenal which are currently under restoration. A symbol of the opulence of the Mughals, Lahore Fort has kept many a secret for hundreds of years; secrets which are now slowly being revealed. During excavation and restoration work, WCLA recently discovered a passage of underground tunnels which run underneath the fortress. This has caused tourists, hungry for information on the underground tunnels, to throng to the citadel and present their own theories on how the passages were used. -Indonesia, Pakistan ties poised for a quantum leap, says envoy Counsellor and head of cultural section Embassy of Republic of Indonesia Deny Tri Basuki has said Indonesia and Pakistan share strong socio-cultural and religious bond rooted in history. Pakistan and Indonesia stand proudly together as two of the largest Muslim populated countries and emerging economies of creative and talented people. He expressed these views on the occasion of a business gathering organised by tourism ministry of Indonesia in collaboration with the Indonesian embassy. A large number of stakeholders hailing from the travel and aviation industry of Pakistan attended the event. -Japanese aircraft take part in pre Aman-19 exercise The Pakistan Navy is hosting the 6th series of AMAN-19 – a Multinational Maritime Exercise – in February 2019 in Karachi, and two Japanese Naval P3C aircrafts of Deployed Maritime Force for Anti-Piracy Enforcement (DAPE) visited the PNS Mehran in Karachi for the pre-AMAN-19 exercise. According to a press statement issued by the navy’s Director General Public Relations (DGPR) on Saturday, the Japanese aircrew participated in various events including search and rescue (SAR) and counter piracy (CP) exercises along with the navy aircrew. The Japanese contingent also visited maritime and Pakistan Air Force (PAF) museums to learn about the historic achievements of the two forces. -‘Chinese, Russian firms keen to invest in PSM’ Adviser to Prime Minister on Commerce Abdul Razak Dawood revealed that three Chinese and three Russian firms have shown interest in investing in Pakistan Steel Mills (PSM). Addressing a ceremony held for the inauguration of International Steels Limited’s new plant, he said that the committee tasked with revival of PSM has drafted its recommendations and the Economic Coordination Committee (ECC) will make a decision by March. -China has given Pakistan additional access to its market: Dawood Prime Minister’s Adviser for Trade and Industry Abdul Razzak Dawood on Saturday said the government is working to hammer out national industrial and tariff policies, ARY News reported. Dawood while talking to industrialists in Karachi, said that China has granted Pakistan an additional access to its market. “We are working to slash unnecessary imports and increase exports”. He said unnecessary items will be removed from shelves of super markets and precious foreign exchange will not be spent on such imports. The adviser said the government has taken effective steps to facilitate business in mini budget, which will be approved in next seven day. -Pakistani Teacher Shortlisted for Cambridge’s Most Dedicated Teacher Award Cambridge University Press has shortlisted a Pakistani teacher, Ahmed Saya, for the ‘Most Dedicated Teacher’ award. Ahmed Saya, an A-level teacher from Karachi, is one of the six brilliant minds around the world to be shortlisted for the prize. The competition included entries of 3500+ teachers from over 140 countries for the prestigious award. Cambridge’s official Twitter handle said it was a tough call, but they shortlisted six teachers for this year’s Dedicated Teacher Awards. -Swiss Investor to Open A Chain of Luxury Hotels in Pakistan Swiss International Hotels & Resorts is mulling to open a chain of its luxury hotels in different cities of Khyber Pakhtunkhwa (KP). The President and CEO of Swiss International Hotels & Resorts, Henri (Hans) WR Kennedie informed this to Chief Minister KP Mahmood Khan during a meeting on Friday. During the meeting, Henri told CM Khan that they were already working on a plan to establish luxury hospitalities in various parts of the province.
Kuvera Global is a pyramid scheme (scam)! 99% of distributors lose money. FOREX is high risk and not for casually putting in your University loan money
EDIT: Kuvera Global is not to be confused with Kuvera, the Indian mutual fund investing company I can’t believe ppl are buying into this scam. It sickens me that university ppl who know nothing about trading and managing money are targeting innocent students (probably mainly international and first year students). They claim to be experts after 6months, but just sound like sales people roping you into another pyramid scheme. I asked one of their head persons a basic question regarding the impact of the Forex market on Trump’s tariffs which was big news, and they fumbled and couldn’t give me an answer. When I told them this sounds like a pyramid, they proceeded to tell me that I’m uneducated and I will be another loser working a 9-5 job. They even started making personal jabs at me. To speak on Kuvera, it has a complex compensation plan that results in money going back to the mentors. Their product is extremely overpriced at $220/month. You can use Intuit Turbo Tax for like $20 a year and find better videos on how to trade on YouTube. This just incentivizes people to recruit and make money off of signing people up bc that is the only way to make money (Pyramid scheme). Also the distributors on Instagram are posting these results of them making $100+ overnight or while they’re watching the basketball game. They are promoting this lifestyle of flashy cars, fancy hotels, money and 6 figure salaries at age 20 is everything and telling everyone else not in the program they are a chump working 9-5 and missing out. They don’t promote how risky FOREX, cryptocurrency and buying equities can be. You can end up at square one and lose tons of cash overnight as well. Stop losses only protect you for one trade, but once you keep putting money in and trying to win, you will end up losing eventually and you may not have enough cash to get back in the game. On top of that you are paying this $220 fee. So you are already starting at a loss. FOREX is no joke. Hedge funds and other investment banks filed for bankruptcy when the Swiss Franc took away it’s cap limit over the Euro in 2015. Foreign exchange trading results in major risks such as counterparty risk, market liquidity risk, leverage risks, etc. Kuvera telling us that you can make money through your phone with little risks and by working a few hours a week whenever you feel like it when Wall Street bankers are working 60-80 hours per week? That seems fishy. Also, what baffles me is this giant disclaimer they use. They say that they are not registered financial advisors, but they are teaching us how where to put our hard earned money? Seems contradictory to me. Furthermore, you have to report all your gains/losses when you file your taxes, otherwise you are committing a federal crime. I hope they are issuing T5s and teaching their followers how they can file this on their tax return. Speaking of taxes, they also mentioned that you will save more in taxes by becoming self-employed so you can have more deductions. WOW. They are legit scamming you to sign up, become a self-employed Kuvera distributor and you will save money on taxes. However, this just means Kuvera does not have to pay CPP, EI, withholding taxes, and can avoid any other liabilities of hiring employees (wrongful dismissal, severance, you name it). This is a classic pyramid scheme resulting in earlier backers making tons of money off of suckers, and using tactics to make it appear legit. Oh and the whole Kuvera being traded publicly and that means it’s legit thing, that does not mean they are legit! They were formerly called WealthGenerators which, if you check on Google, was a major scam selling stocks illegally. They just changed their name to Kuvera. Investview purchased them and the annual audits (required by the SEC) just determine whether the financials are presented fairly, not whether they are coming from a legitimate source. I think it’s the FDC that determines a legitimate company. They will come crashing down soon and if not, well, 99% of people who join MLMs (fancy name for pyramid schemes) lose money. This is a legit joke and I can’t believe this is going on at YorkU. General rules: when you see:
People promoting The Movement
21 year olds (who look immature and still act like they’re in high school) saying they make over $100k and have a new fancy car
A compensation plan where you can recruit to make money (or save on the obscene fees)
People within the company assuring you this is not a pyramid scheme
Acquaintances you hardly know messaging you on FB or Instagram about an opportunity
Unusally large fees to join in (whether it is a sign up fee or masked as a service), and finally
It sounds too good to be true, then
IT IS MOST LIKELY A PYRAMID SCHEME. Yes, most MLMs are disguised as pyramid schemes as it is insanely easy to appear like you are a legitimate company. Don’t join these schemes. Please pass this on to 3 more people and encouraging them to do the same.
I'm doing a tribute to the 24 days of Christmas by going over the financial statements of 24 companies that are considered downrange, speculative, and just plain high risk. The legal cannabis industry already has a ton of risk in it - but this stuff - is only for thrill seekers. All opinions are my own, and certainly not a recommendation for or against any of them, or to buy or sell. I've limited myself to 45mins to each, and kept to most recent financial statements You'll likely know more about the company than me if you're following them. This is only my reactions with a brief commentary about what I see in their financial statements. I haven't been consistent in following them all over the past year: some I have, others not. The first one this year.....is here LDS - Lifestyle Delivery Systems Price Then: $0.34 - Price Now: $0.37
They call themselves a pharmaceutical company. Ok. Yet R&D as a percentage of expenses is less than 5% of total. Guessing they discovered what they were looking for.
SBC $1.8MM last quarter.
Revenues have been languishing until this quarter. $600k reported, double the first 6 months of their year.
Gotta say, related party transactions seem to be an emerging theme of this year’s crawl. Note 7.
At the burn rate they have (consulting fees per note 7), they’re gonna have to go back to the well pretty quick.
PP&E increased by $6MM, to $16MM.
Capital structure is a steaming pile (Note 8). Should have a warning statement in front of it before reading.
Speaking of which, immediate vesting of stock options for management is waaay cute.
And unlike most of the year, share price decay is going to be shutting down any fun that could’ve been had.
Almost all o/s warrants exercised. Only 5MM left now.
Bleh. Still looks like a very expensive front office for a million a year in revenue and 50% margin. Leverage is nose bleed inducing, $26MM in accumulated deficit, and no real end in sight. If I was a shareholder - I’d be all over mgmt. As in: ‘when will a business actually emerge here?’. Still looks like an ATM for mgmt. RTI - Radient Technologies Price Then: $1.54 - Price Now: $0.77
Buckets and buckets of cash. $47MM. 2 large raises, one each previous quarter.
Revenue flat yoy. $3.5MM in operating expenses last quarter. Expenses suggest operational build out occurring.
Given quarterly sales of $100k - that build out will need to do something. Sometime. Soon.
SBC is down from $4.2MM to $800k same period. Hmm.
Margin no hell.
Share printer on overdrive (glowing white hot really. Probably could be deployed as a cogen for heat recapture).
Long term debt is cheap.
Share capital in Note 10: an abominable snowman. Really. And since so many of these seem to land in the #10 slot, I’m going to avoid that number on all lotto tickets I buy from here on out.
Take out the bank balance, the market is valuing the business at about $0.50. For 2 years of stagnant revenue and billowing losses...$7MM last 2 quarters alone...meh. They do look to be operationalizing, perhaps that’s the dev cycle this industry business model is within. If that’s the case, I’m looking to see what happens over the next year - and if the spend justifies the returns. Investors should be hoping their sales pipeline doesn’t turn into a TransMountain. TNY - Tinley Beverage Company Price Then: $0.85 - Price Now: $0.46 Funny enough, Tinley came across the radar a few months ago, and the elves took a stab at it. A couple of fans of this outfit took umbrage with their characterization at the time. They still didn’t put up any math though. Nor referenced the financials. I was talking with u/GoBlueCdn the other day on the phone, and in conversation, he said: ‘fundamentals will always bear out.’ I couldn’t agree more. The noise and heat and smoke and knees and elbows of the intra-houday/week/month price moves….will always get throat-punched by solid ops. Never a question of it. It’s simply a function of time. The question of whether fanboys (and their accusations) will still be there when night turns to day….is an answerable one. They usually melt like toilet paper put into water. I stick to financials. If they're rocking it, I'll say so. If they're not......same deal. I haven’t looked at these guys since then. Let’s do it again…..
Cash issues on back burner, they have some now. Given they need it to operate, that’s a good thing.
Intangibles mercifully low (fresh as a spring rain in this crowd).
$30MM deficit in S/E. A pretty large bump under the corner of the rug.
Lost $1.1MM on $52k of sales. Been a year now. And they’ve had the margaritas out now for a quarter. Maybe haven't shown up yet.
Net $100k loss on forex. Sigh. Just like the good ol’ days of last year's Crawl.
Props to them for a SBC and G&A. If this thing looked like an actual business, I suspect it’d be higher.
Shares o/s metastatic. Shares that are issued are seemingly born pregnant.
Godammit. Another Note ’10’. This one is like staring at the sun. Where’d I put those welding glasses…..
CFO is cheap relative to others in c-suite. Bad negotiator, or, value for money? Your choice.
G&A inelegant. See for yourself….Note 15. Honest.
Ok. I could wax poetic for awhile on this, nothing other than incremental at this point really. I don’t have anything against it. I like the idea of drinkables, but I've never tried one. And….I’m woefully ignorant about emulsions and such. If it’s a good product: I’m there. Probably like most people. The reality is that these guys have tripped and slipped and reset several times…and aren’t delivering. Maybe I have expectations that are unreasonable (like the one’s they’ve established in the investor decks?). One way or the other, limping along with no sales will eventually catch up with you. Despite the pitch. Revenues fix almost everything. Onward: iAn - Ianthus Capital Holdings Scratched! Now post merger with MPX - and that I’ve already done that one - means redundancy at this juncture. We’ll skip this, and add a newcomer to the list at the end. Xmas surprise time! CHV - Canada House Wellness Group Inc Price Then: $0.37 - Price Now: $0.13
Lots of cash atm. That’s definitely gonna be needed as we’ll see. Sales Tax rec’ble says they’ve had sales too. They're gonna need every cent.
Liabilities remain as big of yoke as last time. An ox pulling a dull plough through compacted soil is the mental image I get.
$32MM in accumulated deficit in S/E. Plenty of ‘junk in the trunk’.
$1.2MM in revenue. $1.4MM in salaries.
That $1.4MM in salaries is only 38% of total operating expense.
Love the detail in financials. Remember it from last year. All companies can do this. And it’s appreciated.
Interest expenses are from another planet. A very, very big planet.
These guys need a tourniquet. Hemorrhaging from every limb, orifice, window, door, niche and crevice.
Seeing SBC of $1.4MM - in this operational state - C’mon. Seriously. There’s pushing envelopes, and then there’s that.
Added $1.1MM in ‘intellectual property’ - but it’s not itemized. WTF. Did I miss it? Curious if actually omitted. ?
Another Note 10 setting new benchmarks of vulgarity….I got light headed reading it.
This one could have a sign over it’s Note 10 portcullis: ’Abandon all Hope Ye Who Enter Here.’
Interest free loans to a director (when an outfit is in this shape????)
“You are now entering Liquidation City” Population: CHV Home of the ‘cash only’ auction. All purchases must be removed by 5PM or goods and purchase price will be forfeited From doing these guys last year, I recall vividly how much I appreciate good disclosure. With it, there’s not only many more items to divine the entrails of - it also allows one to get a 3D look at an outfit. Often, business dislikes this for obvious reasons (it signals activities/plans/competitive advantages), but also because many people are uncomfortable taking a shower in public. I took my foot off the throttle though after a certain point with these guys - there’s much more to speak to. All of it negative. I went a little overtime on this one, because I like the idea of a patient-centric Canadian producer. But. If these guys last a year….there’s going to have to be capital infusion, and Note 10 will probably expand to the size of a large city’s phone book. It’s looking as proof that c-suite changes don’t change underlying business realities. And these guys need major changes, in far more than management. LIB - Liberty Leaf Holdings Price Then: $0.48 - Price Now: $0.10
not much cash, all they had seems to have gone into ‘facility equipment’.
Since they don’t seem to have a facility (on their books anyhow) that makes sense.
Appears to have pivoted (the elves always chuckle hearing that word) from aspiring producer, to ‘cannabis business accelerator’.
I read this as that they took a couple of runs at getting a grow op up, but got high centred on the meridian of ACMPR licensing delays (Pivot Time!)
Note 8 & 9 cover their ‘investing activities’. But it’s mainly transactional. If they’re ‘building value’ for shareholders, odd way to do it using paper on non-operating assets, and no apparent uplift able to be predicted.
CEO has gotten some help - he’s gone from ‘Chief Cook & Bottle Washer’ to mainly big chair activities.
SBC of a million dwarfs all other income statement spends
60% of assets is their own paper, issued as ‘investment in associate’
$26MM of S/E? Please meet $26MM deficit in S/E. LIB’s capital is ostensibly only paper, and more paper.
If liquidated on hard assets, company would realize $2MM. I didn't have time to look into unconsolidated subs.
The loading of optionality in 2019? Pretty much all struck. Most of management's fruit has been shaken from the tree.
Whoop. Spoke too soon. Still 5MM of $0.17 options left to go. Looks like there’s still a lot of fruit up top yet
Note 19 is all one needs to read on this thing.
This feels like a squatter-aspiring-to-be-taken-out…..shifted to……business-accelerator-ATM-for-mgmt. The businesses they’ve invested in could use a lot of accelerating btw, they’ve picked ones that are like cars rusting in a field. The blockchain outfit has shed half its value since listing, and the late stage applicant’s business(es) appear to be suspended in amber. They’re also connected to some clinical trials, a retail facing outfit, among several others. All paper, all the time. If there’s a business in here outside of a cashlessly fuelled pitch deck (written on lots of paper), I can’t see it. Perhaps something will happen someday. Nothing has in the last 365 of them. Excepting SBC of course. It's been busy there. QCC - Quadron Cannatech Corp Price Then: $0.38 - Price Now: $0.12
Cash and inventory and liabilities and S/E relatively flat.
A/R shows sales throughput
30% margins. G&A lean. SBC exemplary for industry.
SBC might also be low because share price has tanked.
Sales needed. Slower industry ramp has slowed industry need for equipment. Should be stronger year if the underlying operational capacity begins to expand, and demand for units cranks.
Very clean financials. Not much else to say or see.
This one is dead simple in the financial statements. Love love love. Whether they’ll start extracting revenue, is solely a function of their sales channel. As I’ve learned over the past year - everybody (and I mean everybody) - is in the extraction space. Operating in this industry sub-sector is like being in a sardine can without any oil (pun intended). Crowded space indeed. Cashflow is the core of business, and, if QCC can compete and succeed within what is a very competitive landscape - all power to them (and Canadian manufacturing as well). Calling this a ‘challenging environment’ is an understatement. Sales need to begin growing. Another year in the same general state will test market patience, which, is looking like its' already becoming impatient. Disclaimer - I've met Rosy several times now, and have come to respect her very much. I believe she’s a class act: both professionally, and personally. FWIW, full disclosure. I’m gonna go have some egg nog with the elves and compliment them on their behavior. They don't start drinking until after 1PM most days now. That they get out of bed around noon, it's not really saying much. Still, a big improvement over last year.
How I lost $1.7 million last year trading the Forex market. But my gains where however much higher!
I am not responsible for any trading losses that may be experienced by following my wayward lead, in fact I recommend you don't follow my lead. :) Have fun and happy trading. :) Have fun and happy ... Currency trades will be taxed at the normal tax rates whether they are short-term or long-term trades. Prepare to pay as much as 15 percent taxes on currency trading deals with information from a ... **This video is not intended to be tax advice. Seek your own tax professional about your personal tax situation. ** Grab a copy of the Home Business Success ... Forex gain or loss in Tally The unadjusted Forex gain or loss balance will arise due to the exchange rate fluctuations. ... Create a ledger as Forex gain or ... Reminder: Get 80% off all my EAs. I am just back from a visit my Tax accountant. We determined that my losses in the Forex market amounted to a whopping $1.7 Million – not as high as last year ...