Tuesday, 12 November 2013

Asian Bamboo report Q3 2013

Q3 2013, report, Asian Bamboo

The nicer and thicker the report the worse the news or? When I was going through the report I did however realise that they are reusing pictures from previous reports. Good! They have realised they need to tighten the belt and remove all useless expenses. The stock market responded on the report with -4.4% at the deepest dip and then went back up to -2.3%. How about the content then?

The report which was published last Friday can be found here and all the information and pictures were taken from it.

What we see is that the tough time has continued for Asian Bamboo. They have now during the running nine months had a revenue of 25 million € compared to 61 million € in 2012 during the nine months AND 2012 was a bad year for Asian Bamboo. The only benefit they have is that they have few permanent employees in comparison to the total workforce used during normal harvesting conditions so decreased revenue is directly giving decreased salary expenses.

They have still the same issues as before. Low demand for Bamboo, problems finding work force and the reorganisation is still not working as it should. They also sold off a plant that they owned to 40% because they were unhappy with the revenue from it and the fibre business is still not running either. That fibre business should have been running for the last one and a half to two years now and in the last report it was even stated that the founder and CEO would more directly control the activities there... which did not seem to help because they have even less revenue from the fibre business.

They continue to prepare the road for the future by decreasing the value of the bamboo forest further so now it has gone from a valuation of over 100 million € at their activity peak to around 80 million €. My guess is that they will use that to push up "revenue" once business turns... if it ever will...

This season there were also no sprouts to be picked which they have no problems to directly sell for food (at least they claim that themselves) IF it gets picked. We shall see if they will manage to get that back on their feet in Q4 with the winter sprouts because that would at least indicate that the work force situation has improved.

Conclusion: Asian Bamboo is doing bad. It is not a healthy company and they have both internal as well as external issues on their shoulders. When I bought Asian Bamboo back in 2012 I looked upon it as a strong growth company and today they are fighting for their survival. Luckily (they got a good loan before things went this bad) for them they have cash to survive for a couple of years due to their flexible labour force that keeps control of the costs. I will keep my shares and I am not allowed to buy any more shares until Asian Bamboo starts to show some positive results.

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