01 November 2012

AHB Holdings Berhad: Qualification of Opinion in External Auditors' Report

"Qualification of Opinion in External Auditors' Report on Audited Financial Statements for the Financial Year Ended XX XXX XXXX"

The above statement is one of the red flags for investors. If your invested company has received such 'warning' sign, you must be very conscious now, and take necessary action for the company - SELL or HOLD or BUY. If you have no idea why you have such company in your portfolio, then you probably should consider to clear them out immediately.

So, what we can learn from AHB Holdings Berhad case?

Firstly, open the latest quarter report of AHB via the following links:

Next, please take note on its "Revenues" from its income statement, that is, 3.5million per quarter and 17.4million per year.
Then, go to balance sheet, please take note on its "Trade receivables", that is, 17.3million in its current assets.

Generally, all the amount in current assets should be settled in one year. Now, please use a simple logical thinking to answer the following questions:
  1. First question: What happens if your receivable amount equals to your annual revenue amount?
  2. Second question: Do you want to own a business that sell products now, then collect money after one year?

I believe the answers for the questions are very obvious. My personal answers regarding the questions can been found in the footnote of this sharing.

Written by: Xaivier Chia

  1. Answer 1: No money has been collected for one year. @@ T_T
  2. Answer 2: No, of course. My company must collect back all deals as soon as possible.

(P/S: The above sharing is solely based on personal insight. Please do not take it seriously. However, your valuable feedbacks are very welcome.


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