Wednesday, 13 January 2016
Hevea Under Attack
Recently Hevea has been under relentless attacks by a few people in i3investor.
I'm alert to this as I'm also a small shareholder of Hevea.
Last week I wanted to write about my opinion on this issue but finally I did not do so. I thought that I should not let my decision affecting other readers since the reliability of those information are in doubt.
A few people made the allegation, and some people tried to counter it by posting feedback from Hevea's management. All these information might not be true.
Yesterday, the first reliable source of information finally came out. CIMB organised a conference call with Hevea management and its institutional investors, and published the note today.
Last week, the first allegation was that Hevea's directors & major shareholders had some physical conflict and are involved in a few civil suits.
The major issue the author wished to bring out was that Hevea tried to hide these law suits from the shareholders/investors by not disclosing them to Bursa when they are obliged to do so.
Both parties consist of HeveaWood controlled by HeveaBoard's MD Yoong's family, and Dato Loo who is a non-executive director & founding member of HeveaBoard.
Those who know Hevea well should know that HeveaWood is not a subsidiary of HeveaBoard but is a major shareholder of HeveaBoard.
This is just some personal conflict among HeveaWood shareholders who also happen to be HeveaBoard shareholders.
So I think Hevea has no obligation to reveal these law suits under material litigation in their financial report as they do not involve Hevea directly.
After CIMB's report, we know that the law suits are because of non-payment of dividends at HeveaWood and the court has actually decided in favour of Yoong's family.
Of course these conflict among directors is not good for Hevea. However, it should not affect Hevea's operation as Dato Loo is not an executive director and this case were already closed even though an appeal seems to be on-going.
Yoong Hau Choon & Dato Loo Swee Chew
The second allegation was about 700 containers stuck in Korea port and Hevea could potentially face hefty fines and was alleged to sell hazardous products!
I opined that this could not be true. The number of 700 is too huge and how can Hevea passes Japan test but fails in Korea?
Finally it turned out that it was 700m3 containers and the Korean custom actually used the wrong testing method. This issue has also been resolved.
From the 2 allegation above, we can know that the attacker has close relationship with Hevea as he can gain access to those information.
However, why did he only tell half of the story? Didn't he know that the Korea issue is just a misunderstanding and has been resolved without "hefty fines"?
He either knows only a bit and inevitably gave inaccurate information, or knows the issues well but chose to mislead the public deliberately by posting and exaggerating only on the negatives.
If he is really a neutral person who is trying to help the investing public as he claimed to be, he should quickly write another article to support his earlier claims or apologize for his mistakes, especially the 700 containers story.
However, he didn't.
So to me, there is a well-organised plot to attack Hevea & its current executive directors for whatever reason I'm not sure but it seems to me that it is related to earlier law suits.
As for the accounting fraud part, though I'm not good at accounting, I wonder why the "amount due to/by related parties of HeveaWood & HeveaBoard must be the same. Can't there be other parties involve other than these two?
Now CIMB has reported that there are other parties involved so this allegation is a joke.
Similarly, the attackers should counter CIMB report or Hevea MD's clarification by giving concrete evidence. If they fail to do so, this just exposes their desperate plot to down Hevea with purpose.
There might be more allegation coming out but the credibility of those attacking authors are surely waning.
I just write my view on one of my company I'm investing in and I might also be wrong.
Hevea's MD might cheat those institutional investors and gave empty promise if he is really that bad & "no big no small" as described by the attackers.
The attackers will surely continue to find faults in Hevea and we can't rule out that they might find something real in the future, as I don't think a big organisation can do things 100% right.
We as outsiders can only use our own brain to think and make a decision on who is right or wrong.
Please be reminded that this is not a buy or sell recommendation on Hevea.