Konsortium Logistik Bhd. 6157

Konsortium Logistik Berhad (Konsort) is now principally an asset light logistics service provider.

Initially, Konsortium Logistik Berhad gross profit margin do impress me with around 28% to 33%. However its administrative expenses eat out almost all the profit margin around 15% to 17%. Both figures are the highest among all the Logistic players in this region. But at the end, it only manage to register net profit around 8% to 9%.

From its annual report 2009, there are several statement attract my interest and I really cannot figure what is happening on this company.

Firstly, Management execute a share buy back exercise, this should be a good news but however they resold back some shares after they bought in. What is the reason of doing this? Buy low sell high?? NO!! They are buy high sell low. This I cannot accept.

Secondly, As stated in the annual report, trade receivables and trade payables duration is 30days, so thats mean there are at least 12 times turnover can make it during one financial year. BUT!! The revenue show us some weird number with only around 2  to 3 times turnover. Where is the other revenue go?

Thirdly, Konsort has a high debt on its financial statement, which around RM 100 million, but they do not use the cash to settle the debt yet still use the cash to exercute share buy back?? Every year, the debt interest took out 2% to 3% of the profit margin.

The fourth, Allowance of doubtful debts is around 10% of the trade receivable. Do they understand their client well?? How come the allowance is so high?? I think there are something I do not know there.

Lastly, Management buy in some quoted shares, BUT the quoted shares register a loss of RM 158.9 million from a cost of RM 717.9 million, which losses around 22%. It is normal to make some paper loss in the investment but why management still buy in the quoted shares every year and do not fully ultilise the money to expand the business or settle the debt?? For your information, revenue of the company stay constant 5 years already.

There are too many things I cannot understand from konsort.