FerroChina trigger cashflow concern – Part 3: MIDAS, Hongwei

MIDAS
In the last half year result.

Asset:
Cash and equivalent 64mil
Trade and receivable 44mil

Amount repayable in a year 18mil (secured)

Cash before working capital 11mil
Cash after working capital and others 10mil
Net increase in cash for half year 6mil

The company has little debt and sufficient cashflow. No cause for concern.

Hongwei

This is another harshly battered down fiber stock. In the past half year.

Cash and deposit 66mil
Trade receivable 97mil

Amount repayable in a year 48mil

Cash before working capital change 36mil
Cash after working capital and others -17mil (cash outflow, because increase of trade receivable by 38mil)

Just by using the cash on hand, it is more than enough to pay off the debt. The negative cashflow is because of the increase of trade receivable as a result of sales increase. Looking at current environment, there might be impact on collection. We have to see the impact on next quarter announcement. The significant drop in oil price is a good news to fiber stock, but if the customer sales is geared towards export, there would be impact on the sales order.