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Cheng-from the RM212 mil PP in 2021, by right these money should be use for Plant 3. Now, management diverted RM86mil to upgrade existing machines (OMG, new machines in 2021 almost lost the capability to produce high quality products and need to upgrade/convert to other product package). Worst thing, balance RM127mil use for repayment borrowing. Really bad in situation.
indeed its not good, green. Mgmt should have used the money to pay royalties to Nichia so that D&O can keep using their design. Unfortunately, its too late now. Nichia and Osram have signed a deal to cross-license their patents.
they cannot sell the affected products listed in the patents infringement case anymore in markets where Nichia has patents to safeguard its design. Cannot sell and cannot produce since not paying royalties.
Depending on percentage of revenue contributed by the affected products, green. These products will no longer be available in Japan, China, Taiwan, Korea, India, US, UK, France, Italy, Netherlands and Germany
RM250 mil written off old stock, then using RM83 mil to upgrade old machines and RM127 mil to pay short term borrowing. It means, company won’t be able to growth in near future. UNLESS, issue another PP, then dilute the market share.
Already bad news with the surprise huge stocks written off in the recent QR. Now, with such significant variations to their intended PP proceeds, it doesn’t augurs well going forward.
Makes sense for EPF to manage their positions and avoid unnecessary risk. It's mind boggling that mgmt is keeping quiet on the patents infringement case when Nichia has published the verdict by the court. Inventory written off, capex funds redirected and the next natural course will be lower revenue as D&O cannot produce the affected products using Nichia's patented technology.
