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I'm doing my part to educate everyone that they have a chance against the mighty Goliath company. I'm not against Nokia phones, though I used them twice only in my whole handphone career. To me, it was pretty stable (back then, without colours and funny stuff, every other phone is stable) and had pretty long battery life (again, without funny applications, every phone had to have a long battery life). I heard from a lot of users that Nokia phones are getting from bad to worse (out of maybe 50 students, only less than 10% uses Nokia). Guess which is their favourite? Sony Ericsson :)

I can say that Motorola services is okay, not exceptionally good nor exceptionally bad. I wouldn't want to test their service centre too.

This is a classic example of bad services and bullying. It's a shame that a strong company like Nokia is rotting to such a level. It's no wonder that they market share have been eroded by other companies.

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From lousyexperience,

I finally won the battle against Nokia Pte Ltd.

I bought a Nokia phone in Aug 2007 through Starhub with 24months contract at $388.

The phone was not functioned properly in the very first week. I tried to ask for a one to one exchange and was replied, "Nokia has no such policy". I got no choice but to send to Nokia Care Centre for repair.

Between Aug 2007 and Nov 2007, countless of visitation and many phone call were made to Nokia. So much time was wasted but the phone was getting from bad to worst.

I gave warning to Nokia that I was considering to file a claim against them through Small Claim Tribunal. I finally took action as there was no proper follow up from Nokia after one month.

Nokia authorized a young girl to come for the first consultation and then in default of attending before the Tribunal for the rest.

I finally won the case and was awarded $778 by Small Claim Tribunal in 18 Dec 2007.

Nokia was given 15 days to make the settlement, but they did not respond to me.

I called to check about it on 22 Jan 2008, and Nokia said that they did not receive such notice.

I went to their HQ the next day, after presenting the Order of Tribunal to the Manager, he finally agree to pay. However, Nokia would pay me if only I agreed to sign a conditional letter. They wanted to keep my mouth shut and I was not allowed to disclose this claim to any third party. I refused as they had no right to impose any condition because this was not an out of court settlement.

I then applied for WSS (Writ of Seizure and Sale) the next day. An appointment date was scheduled on 11 Feb 2008.

I accompany the bailiff officer to Nokia HQ. Nokia was then given two options by the bailiff officer. One was to make settlement and the other one was let the bailiff officer to sticker their movable assets.

They finally woke up and agree to make payment. By then, they got to pay $1,018.43 instead of $778.

By sharing this experience, I hope that many have a better idea of what to do if encounter similar situation in the future.

Many of us wouldn’t want to take the trouble to make such claim. Some may have no time, and some may think that Nokia is such a big company and no point goes against them.

The Relations Manager of Nokia, Ms Serene Teo, told me that I won’t be able to win the case and the most I could only get back $388. This was what she believed, but she was wrong.

One metric that I really find it helpful to analysis in detail is actually the ROE - returns on equities. The definition of ROE:

ROE = Net earnings/total assets

Problem with metrics such as these is that the definition can be tweaked accordingly to one's needs. For instance, one can change the total assets to shareholder's equities. Net earnings can be trailing (past 12 months) or forward looking. As such, it's important to make sure that the components that make up ROE is defined clearly, otherwise we might not be comparing apples to apples.

One system which helps me to understand the interaction of ratios is actually the Dupont system. Dupont system of analysing ROE splits it up into 3 parts, all multiplied together to derive the ROE.

ROE = Financial leverage x Assets turnover x Net margin

Financial leverage = Assets / equity
- financial leverage measures the total assets that a company have (like bond issues, bank loans, accounts payable etc) to the equities. Basically the higher this ratio is, the more debts that the company has.

Assets turnover = Revenues/Assets
- Asset turnover measures how much revenue is generated for each dollar of assets. Some business need a certain amount of assets before revenue can be generated (e.g. utilities) while others need less amount of assets input (e.g. software). Basically, the higher this ratio, the more productive the firm will be in terms of generating revenue from their assets. You can see this ratio as how fast the assets are churning out revenue too.

Net margin = Profits/Revenues
- Revenue is the dollar amount received from selling goods or services. But not all will go into the coffers, some of them will need to pay for the expenditures. Hence, this ratio will tell us how many dollars is made upon a dollar of revenue earned. The higher this ratio is, the more profitable the revenue stream is.

The more interesting part of Dupont analysis is that, if you do a little algebra, the components of adjacent ratios will cancel each other out, giving us the ROE exactly.

ROE = (Assets /equity) x (Revenues/Assets) x (Profits/Revenues)

Thus by breaking up ROE into 3 components, we can see what really drives the ROE of a company. Is it the high leverage of the company that creates higher ROE, or high margins, or high asset turnover?


Most of the information is courtesy Shares Investment and from DBS vickers online Clarity service. I didn't double check the information, so if you're wondering why dairy farm have a ROE of over 1000%, well, me too! Please double check the information, I'm not responsible for any wrong information provided :)

It's interesting to look at Swiber and china milk, very similar ROE. We can see that both Swiber and Chinamilk have similar financial leverage. Asset turnover for Swiber is the thing that causes the ROE to be high, which shows that Swiber did pretty good use of its assets in generating revenue. China milk, on the other hand, banks on its high net margins to drive ROE. This means that China milk is sitting on a very profitable business, with 86 cts of net profit coming from every $1 in revenue.

Dupont analysis thus allows us to analyse what drives the ROE. Is it financial leverage, high turnover or high margins that push ROE high? For more details, of course, there is no escaping poring through the financial statements. But I think this forms a pretty good start.

Hi Stupidbear,

This is in response to your posting on Aztech. I've previously did some research on Aztec before for fun. So I added 2007's result into my spreadsheet to analyse a little more closely. These are the few points I noticed:

1. Turnover increases steadily, yes, but the net margins is rather low actually.

2003--2.4%
2004--4.2%
2005--5.7%
2006--8.4%
2007--6.8%

2006 is an exceptional year for aztech, so discounting the fact, the margin did grow at an admirable rate. But to me, the net margin this low suggests to me that the industry is quite competitive. Can you think of why customers would want to buy aztec's product? There are so many similar ones out there. What's so good about their product? Hard to have product differentiation, and their industry quite easy to penetrate in too.

Take note that their turnover is mainly coming from North/south america. It wasn't like that all the time. In 2004 and 2005, their main revenue comes from europe (40% turnover). In 2006, main revenue comes from Asia pacific (46%). But in 2007, 40% comes from north/south america. Considering the slowdown of demand from america, I wonder what kind of results aztech will get in 2008. Such a big shift yearly... does that mean their contract duration is rather short? How come one year is europe, the other from asia pac, the other from america?

2. Cost of goods sold (COGS) increases by a lot in 2007 because of higher labor costs over in China, and of rising yuan in their plant at Dong guan. This causes their 2007's gross profit and corresponding net profit to drop. Management also cited new labour law in china that might adversely affect their COGS. This is one thing I would look out in the coming reports.

3. Did you know aztech had negative accumulated earnings? It had been steadily decreasing though, meaning that it is turning round. It's still negative though. Does it matter to you that they have accumulated losses and never had a year of positive accumulated profit since 2003? I didn't check their annual report backdated from 1999. The gap is closing in though, so they might actually break even in this respect in the coming financial year.

in '000
2003--(58,173)
2004--(52,332)
2005--(42,611)
2006--(26,621)
2007--(15,699)

4. Cash generated from operations is quite strong in aztech. Didn't calculate its free cash flow though. Ever wondered why aztech is giving dividends out? Could it be that they couldn't find better returns for their business? They paid increasing dividends through out the years though

2004--0.0025 per share
2005--0.0050
2006--0.0150
2007--0.0175

I think based on current price 0.265, their yield for 2007 is 6.60%. Quite good, but I'm worried about future dividend growth prospects though. Can they afford to keep on paying increasingly more dividend? Dividend CAGR of nearly 90%!!

5. I'm not comfortable with them going into construction materials business. This is afterall something out of their core business. I doubted their expertise in this area, and they surprised me with a contract award of a substantial amount. Their first award of 23 million is 8.6% of their 2007's total turnover. It remains to be seen what kind of margins they can earn from this new revenue stream. We can see it in 6 mths time actually, and whether aztech will continue to get their 2nd and 3rd contract continuation.

6. Based on net profits of $18, 177,000 and shares outstanding of 419,118,000 shares, current share price of $0.265,

EPS = 0.0434
P/E = 6.1 (range from 5.2 to 10 thereabouts)
ROE = 20.3% (from 2003's 5.8%, 11.7%, 15.7% to 2006's 24.8%)

Attractive enuff for you?

7. Current ratio from 2003 to 2007 range from 1.4 minimum to 1.8 maximum. Presently 1.7. Acid test range from 0.9 to 1.2, currently 1.2. I think they have no problems with inventory turnover, in fact it's getting better over the years in this respect. They are also getting less inventory as a ratio to their current assets. From 2003 figure of 43% to present of 30%. This is reflected much in their cash flow too...less money in inventory, more in other places (in aztech's case - in cash).

I really have no vested interest in Aztech, just wanted to share with you my findings. I'm neither for or against Aztech. Give me your comments too :)