The Board of Directors (the &ldquo Board&rdquo ) of ISDN Holdings Limited (the &ldquo Company&rdquo , and together with its subsidiaries, the &ldquo Group&rdquo ) refers to the Company&rsquo s announcement dated 27 September 2023 and 8 August 2023 in relation to the Company&rsquo s unaudited financial statements for the financial period ended 30 June 2023 (&ldquo 1H2023 Results Announcement&rdquo ). Unless otherwise defined or the context otherwise requires, all capitalized terms shall bear the same meaning as ascribed to them in the 1H2023 Results Announcement.
Q1. Revenue Please explain the reasons why the Company recorded positive profits of S$9.0m while it has also recorded negative cashflows from operations of S$1.1m.
Company&rsquo s Response: The Company recorded negative cash flows from operations mainly due to (i) advances made to the trade suppliers of S$6.1 million, which predominately result from advances made to the engineering, procurement and construction (&ldquo EPC&rdquo ) contractor for the construction of mini-hydropower plant, Lau Biang 2 and (ii) lower contract liabilities of S$3.5 million was mainly due to decrease in advances received from customers for sales of goods largely from our PRC subsidiaries. Contract liabilities are recognised as revenue when the performance obligation of transferring the goods is satisfied at a point in time.
Q2. Cash and bank balances:-
(i) Please explain why interest income amounted to only S$125k, when the Company has significant cash and bank balance amounting to S$51.5m.
(ii) Please provide a breakdown of cash and bank balances that are restricted / unrestricted.
(iii) Please explain the reason why the Company is holding S$51.5m of cash, and the Company' s plans for the utilisation of such cash.
Company&rsquo s Response:
(i) The Group maintained a cautious approach to its cash management, preferring flexibility over interest income. Consequently, the Group maintained the majority of its cash in low yielding interest and non-interest bearing bank accounts where it was readily available, although this resulted in lower overall interest income.
(ii) A breakdown of the Group&rsquo s cash and bank balances that are restricted / unrestricted follows:
As at 30 June 2023 S$&rsquo 000 Cash and bank balances 48,060 Fixed deposits 3,497 Cash and bank balances 51,557 Less: bank deposits pledged (restricted) (1,985) Total cash and cash equivalents (unrestricted) 49,572
(iii) Company' s plans for the utilisation of S$51.5 million of cash
The Group plans to utilise the cash for the expansion of our industrial park in PRC for the extension of our business services, the construction pipeline of our renewable energy projects, working capital for operations as well as the repayment of short-term liabilities obligations.
Q3. Trade and other receivables:-
(i) Please provide an explanation why ' advances paid to suppliers' increased from S$6.3m as at 31 December 2022 to S$12.4m as at 30 June 2023, while revenue decreased to S$169.1m as at 30 June 2023 from the previous corresponding period.
(ii) Noted that the aging of trade receivables has been disclosed on page 21. In this regard, please disclose the amount of trade receivables that are past due, and the Board' s reasoning and assessment of their collectability.
Company&rsquo s Response:
(i) The increase in advances paid to suppliers from S$6.3 million as at 31 December 2022 to S$12.4 million as at 30 June 2023 was mainly due to advances made to the EPC contractor for the construction of mini-hydropower plant, Lau Biang 2 which is in line with our expected project timeline.
(ii) The past-due amount of trade receivables was S$23.4 million as of 30 June 2023 (31 December 2022: S$30.8 million) of which approximately S$3.4 million or 14.6% was collected subsequently as at 31 July 2023. The management reviews the trade receivables aging monthly and follows up with the respective general managers and/or customers on collection matters. If overdue debts remain unpaid, the Group may stop processing new orders from the customers until the overdue debts are settled. The management may also take legal actions to recover debts, if necessary. The management regularly assesses the recoverability of the trade receivables. The Board has considered the approach undertaken by the management and is comfortable with the approach taken. In addition, the Board also review of the receivables as at 30 June 2023 and is satisfied with the recoverability.
Q4. Trade and other payables:-
(i) Please explain the nature of the S$27.4m ' Other payables' .
(ii) Apart from the trade payables, please confirm whether the rest of the payables are interest bearing.
(iii) Please confirm if any of the Trade and other payables are past due and if the Company has received any letters of demand from its creditors.
Company&rsquo s Response:
(i) Breakdown and nature of other payables of S$27.4m: S$ million Nature Amounts due to contractors 23.6 It relates to the construction cost of our mini-hydropower plants projects, namely Lau Biang 1, Sisira and Angocci and the amount is not due yet as of the date of reports Other taxes payables 1.8 It refers to goods and services tax and withholding tax Sundry payables 1.6 Dividend to non-controlling interest of subsidiary 0.4 27.4
(ii) The amount due to contractor of $19.3 million for Lau Biang 1 project is interest bearing at 6.5% per annum. The remaining amounts due to contractors for Sisira and Angocci of S$4.3 million are non-interest bearing.
(iii) Trade and other payables are usually settled within the credit terms. There are past due trade and other payables which majority have been settled subsequently with no letters of demand received by the Group.
tccroy ( Date: 10-Oct-2023 16:25) Posted:
BB pressed down and buy back. All the 33 sellers bought by them
godizion ( Date: 10-Oct-2023 16:11) Posted:
| i think some funds have been pressing down .. u see little by little lots sell down ... |
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we' ve reached the end of an era for the Chinese economy.
For the past three decades, China has been on the upswing of a supercycle that saw an almost uninterrupted expansion of the country' s capacity to manufacture, appetite to consume, and ability to project power across the world economy. The Chinese Communist Party relentlessly pursued economic development over all else, even when that single-mindedness pushed the party to make debilitating policy mistakes &mdash creating a massive bubble in the property market, saddling provinces with loads of debt, and failing to transition away from an overreliance on investment. There was no time to stop for corrections while China' s mind was on money alone.
This era of expansion was not only a boon for Beijing, it also helped fuel global demand. Countries relied on China' s hunger for speedy modernization and industrial might to supercharge their own development. Even American companies saw China as the next great global market &mdash and made bets accordingly.
They lost those bets.
President Xi Jinping has shifted the CCP' s raison d' ê tre to national security over the economy. Getting rich isn' t China' s big project anymore the project is power. As a result, both the government' s priorities and behavior have changed. In the past, whenever it seemed like a recession was on the horizon, the CCP came to rescue. There' s no hefty stimulus coming this time. Nor will the explosive growth that experts once expected from China return. Beijing' s relationship with the outside world is no longer guided by the principles of economic rationality, but rather its yearning for political power.
" This isn' t about the economy anymore, it' s all about advanced technology and weaponry," Lee Miller, the founder of the Chinese economic surveyor China Beige Book, told me.
In response, American businesses need to consider how else Beijing' s decision-making may now be flipped on its axis. For everyone from American farmers to pharmaceutical companies, this means shrinking demand and unstable supply chains. For policymakers, it means a China that is harder to mollify when conflicts arise. For the rest of us, it' s a more precarious world.
A spent economic system
The Chinese economy has been bending under the weight of its structural problems for almost a decade now, but since the end of Xi' s COVID-lockdown policy, it' s become clear that its growth model is well and truly broken. Beijing' s story so far has been to claim that, like other economies on the mend from the pandemic, China will in time resume its normal growth pattern. Instead, it looks like the economy is falling behind.
Let' s start with the country' s real-estate market, the importance of which cannot be overstated. Not only is it the biggest source of wealth for Chinese households, real estate is also the mechanism through which local governments are financed. Instead of property taxes, municipalities sell large swaths of land to property developers and then use the revenue for basic social services like fixing roads and paying out pensions. Cities like Shanghai and Beijing get a lot of attention, but they make up just a fraction of the property market. Property firms did the most building in third-tier cities where people aren' t as wealthy. This is where you' ll find China' s infamous
ghost cities.
It' s been clear for years that the Chinese real-estate market has been in trouble. China has a population of 1.4 billion, but it has
built housing for a population of 3 billion, according to expert estimates. Many of the mega-developments became empty monuments to Beijing' s insatiable desire for growth. In Shenyang,
farmers have taken over a development of empty mansions for cattle grazing.
Worried that the sector would implode, Beijing attempted on multiple occasions to limit the credit that was fueling the bubble. But because real estate played such a vital role as a government-funding mechanism, China had to keep building, despite these troubles. Authorities didn' t want to change the way local governments funded themselves or allow Chinese household finances to crumble, so they could not let prices fall. That credit addiction remains.
But this system, supported by speculation and easy money, is starting to break down. Country Garden, China' s largest real-estate developer, is on the brink of collapse. In a sign that Beijing has grown tired of this game, Xu Jiayin, the chairman of Evergrande, another embattled real-estate behemoth, has been
detained by authorities. Money-starved provinces are being forced to
ask for bailouts &mdash which the federal government doesn' t want to give &mdash and
sell assets that the local governments claim are illiquid. The country' s massive, opaque shadow-banking sector, which served as the backbone for the real-estate boom, is also
under pressure. At least one $87 billion money manager, Zhongrong Trust, skipped payments to investors this summer,
sparking protests.
" We' ve not been in a situation where so many developers are defaulting and consumers are questioning whether or not they should prepay for an apartment," Charlene Chu, the managing director and senior analyst at Autonomous Research, told me. " Before they were thinking, ' Prices are rising so fast, I need to get in.' Now prices are declining and the urgency to buy has vanished, so they' re waiting."
Official data has shown relatively modest price declines so far, but like a lot of official
economic data coming from Biejing these days, it' s hard to take those numbers seriously. Private data shows prices falling by 15% in metropolises like Shenzhen and Shanghai. In tier-two and tier-three cities, prices have fallen by as much as 50%,
according to Bloomberg. " Eighty percent of all sales by area are in tier-three and below cities," Chu said, adding that many of these places are facing long-term structural problems. " If their market doesn' t come back, the entire market doesn' t come back."
Little fires everywhere all at once
The real-estate sector is the most visible sign of China' s fading star, but other key parts of the economy are showing strain as well. While the rest of the world is battling inflation, China is still in deflationary mode. August CPI came in at 0.1%, up from minus-0.3% the month before, showing an overall lack of domestic demand. Exports &mdash which make up
40% of the country' s GDP growth &mdash hit their lowest level in three years in July, falling
14% from the same time a year before. August export figures showed some improvement but still came in down 8.8% from the year before.
Overall, Autonomous expects China' s exports to slow 8% compared to last year. Chu &mdash who has been called the "
rock star" of Chinese debt analysis &mdash told me that this weakness is not just a result of a cyclical downturn it' s a part of a more permanent shifting of supply chains caused by trade tensions with Europe and the US. These are powerful forces that are not easily reversed. Once multinational corporations no longer see China as a source of steady growth, they could begin changing their plans to invest. At the same time, domestic anxiety about shrinking employment may change the basic consumer behavior that powered China' s rise. This can create a vicious, self-reinforcing cycle that keeps investment out and spending low.
Chu started the year with one of the weakest growth outlooks for China on Wall Street, and the second half is looking worse. Autonomous' proprietary growth index for China, the Real Autono Economic Activity Composite, projects the country' s economy to grow by 3.8% for all of 2023, down from its original 4.2% projection in January &mdash and worse than Autonomous projected during the depths of China' s COVID lockdown. Beijing is projecting 5% growth &mdash and given how tightly the CCP likes to manage expectations, officials will stick to that number come hell or high water. It' s a far cry from the double-digit growth policymakers used to demand and a signal to the Chinese people that Beijing is not going to direct its banks to spew credit to get the economy moving faster again.
Victor Shih, an associate professor and the director of the 21st Century China Center at the University of California San Diego, told me that when people ask him if there will be a financial crisis in China, he tells them that China " is constantly in a financial crisis." It' s like the authorities are playing a game of whack-a-mole, trying to contain any shocks to the financial system because they fear social instability. That means there can be no correction, but if there' s no correction, there' s no deleveraging, and if there' s no deleveraging, the moles will only multiply.
Zombies in the Middle Kingdom
The economy has put Beijing in a bind. There' s too much for the Chinese Communist Party to do, and not enough money or time to do it. Allowing a property-market correction, bailing out local governments, creating a new funding mechanism for them, developing a social safety net for the people through all this instability &mdash all of it costs money. And even if the capital were there, policymakers fear what this disruption could do to their grip on power. Falling property prices and shrinking exports would weigh on the Chinese people' s wealth, and the government is concerned that a meaningful correction would cause unrest.
" Every time there are severe property-price declines, Beijing views it as a risk to social stability," Chu said.
Plus, Beijing may need to conserve its firepower for other concerns coming down the pipeline. In the long-term, the CCP has to worry about China' s demographics. Thanks to government mandates like the one-child policy, the country' s population is rapidly aging &mdash and even started to decline in 2022. The workforce will soon begin shrinking: Right now there are three working-age adults for every retired person in China, according to data compiled by J Capital Research, and by 2050, that ratio will hit one to one. Without booming property prices or continued growth, the growing pool of retirees will put a heavy burden on China' s threadbare social safety net. GDP per capita is currently about $12,800. When Japan started struggling in 1991 with a similar dynamic &mdash aging population, sky-high debt, and slowing growth &mdash its GDP per capita was more than triple that amount, at $41,266 in today' s dollars. China will get old before it gets rich, placing the task of growing the economy on fewer and fewer people as time goes on.
Getting rich isn' t China' s big project anymore the project is power.
" What' s really a shame is that China never seized the opportunity on the way up to build a comprehensive social safety net where people feel they don' t have to save a lot of money for a rainy day &mdash for healthcare, education, what have you," Chu told me. " Most Chinese people do not feel they are covered for everything they need &hellip This is what' s going to make moving to the domestic, demand-driven model difficult."
Unless dramatic action is taken, the future of China' s economy is looking less like a young dynamo and more like an
old, slow-moving blob. Last week, Bloomberg reported that policymakers are considering a modest
$137 billion stimulus &mdash just enough to meet its already comparatively low annual growth target, and nothing in the way of reform.
" There are healthy parts of the economy, it' s just the zombie parts that have to be dealt with," Shih said. " It doesn' t look like they are doing that now, but it will be a bigger and bigger drag on growth. I think the slow growth will cause such a serious employment and capital-flight problem, there could be political instability."
But again, that' s could, not
will. And because its priority is now power &mdash where gains are much more idiosyncratic &mdash it' s a risk that Beijing has shown it is willing to take.
A new, more dangerous era
The idea that Chinese policymakers connect political stability and economic growth is dogma in the West, but what we' re witnessing now suggests that' s not the case &mdash at least not in practice. Beijing has not spent money on &mdash or talked about raising money for &mdash social programs for its aging population, nor has it made any attempts to tackle the cost of living for young families. If economic modernization was the most important thing, these would have been on the docket years ago. But they' re not. Policymakers don' t want an implosion, but they' re not pushing for warp-speed development anymore either.
" All the policies are now determined by Xi Jinping himself, and his priorities are spending money to engage in a technology and national-security race with the US," Shih explained.
tccroy ( Date: 10-Oct-2023 16:25) Posted:
BB pressed down and buy back. All the 33 sellers bought by them
godizion ( Date: 10-Oct-2023 16:11) Posted:
| i think some funds have been pressing down .. u see little by little lots sell down ... |
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guys stop fighting. we are here to earn money. not here to talk about ah pek story or stalking story
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