EAH: Just another fishy deal

Just when will Bursa put a stop to this - minority shareholders are going to have no say in this. Any acquisitions that are cash in nature does not need shareholders approval and management as well as the controlling shareholders continue to take advantage of this.

Another deal which took opportunity of this another smallish company. Fresh from its rights issue, raising RM42.5 million it took the opportunity to have a spending spree, buying a less than 1 year old company. See for yourself - a company that was incorporated on 11 Sep 2013. The rights issue was created it seems partly to acquire this company. Otherwise, how can the deal be done in such a short timeframe? - a month after the rights.

Why is it fishy?

1. The announcement claims that it makes RM2.01 million profit - it has a track record for less than 1 year. How are we suppose to evaluate a less than a year old company? The fact that it achieves such a high net margin especially in short period of time causes some concerns already;
2. Another part of the announcement mentioned that it still has unbilleable contract worth RM4.94 million. One of the contract started before the company was even formed. How is it so? Contracts are transferred i.e. assigned?
3. Beyond the mention of its PAT, comparison against currently traded PEs of similar companies not much was revealed. How about showing the audited report of the acquired company?

For those whom have come out with money to subscribe for the rights earlier, good luck!