Revisiting AHB holdings and Shell

Looking at Shell's loss, especially after talking positively on the stock, I have to go back and take a look at what went wrong. I read that Shell Refining does most of its business in Malaysia. It has a massive industrial cracker which refines the oil. It has no stake in the retail ops, though I suspect that the Shell retail operations get most of their supply from Shell Refining.

Herein lies the issue. Prices are controlled at the pump and Pemandu pays out the petrol subsidies there. Shell Refining I don't think will get as much revenue upside as say the retail ops which will see an immediate upside in revenues as subsidies get lifted. Gasoline demand is ineleastic so a small price increase won't decrease consumption much.

So perhaps Shell isn't a great play on the subsidy lifting scheme but they are generally a well run company. They still pay dividends and make steady money. At any rate, subsidy lifting is a non event for the company.

ABH. Now this is stock for you risk takers out there! After a second look at the company, they do have a large number of receivables and land which probably could be securitized in the event of a liquidity crunch. If businesses are spending, which they are judging by the growth of business loans, this company should reap a massive windfall.

Current ratio is over 1.37 from the latest report. The directors costs are ridiculously high though, taking up half a million. Their employee wages run at 2.3 million.

The company has options in the receivables. It has not securitized those items. Inventories are higher year over year which means if revenue picks up, the company has the ammo to capitalize on increased business demand.

But the premise for buying ABH remains the same. If you are a company looking to spend some money on capital expenditure, and you don't want to fork over half a million for state of the art equipment. You would spend a much smaller sum on office furniture that would make your workers more efficient, or fit more workers in a smaller space, therefore making your office space more efficient.