A few days before Sia’s MerryMart IPO debuted in the stock market on June 15, the Double Dragon founder announced that 2019 profits surged 43 percent to P10.6 billion from P7.417 billion.
Sia also wanted to reinforce DD’s claim as a “recurring revenue focused company” when he announced that recurring revenues grew 30 percent to P3.95 billion from P3.03 billion.
But Abacus Securities saw through Sia’s spin and smashed it to smithereens.
Abacus noted that based on DD’s report (it has yet to release its 2019 financial statements), its revenues soared to P20.204 billion last year with P13.274 billion or 65 percent coming in the fourth quarter alone. This is almost equivalent to what DD earned for the whole of 2018 at P14.348 billion.
“This figure may include significant non-recurring gains from increased fair values of investment property. If we strip out remeasured gains from property investment and minority interests, the company would have incured a huge loss,” said Abacus.
DD has been posting “paper” gains to make its bottomline look better on paper.
In 2018, DD booked unrealized gain (increase in the valuation of DD’s assets but have not yet been sold) of P9.627 billion or 134 percent of its net income of P74.17 billion in the same year.
In the first nine months of 2019, DD booked P2.979 billion in unrealized gains or 95 percent of its P3.123 billion profit for the same period.
Bilyonaryo reported previously how Tan Cancaktiong made it appear that Jollibee Foods Corp realized P3.15 billion in paper profits from his purchase of Coffee Bean & Tea Leaf (which has been on the market for two years before Jollibee snapped it up in July 2019).