Postings in our lounge.

Postings in our lounge.

While the SET is boring, Thanulux (TNL, 48) has had a niece run on continued impressive earnings reports this year. Here is what was said in our cyber-lounge in 1998, when TNL stock was trading at 1/4 the priece it is now well bid for.

Exact Posting By K. on October 05, 1998 at 23:18:36:"On Notes from TNL's financial statements:In April 27, 1998 shareholder's meeting, Company was authorized to:

1. Loan up to 500 million baht to related parties. As of June 30, 1998, total loans to related companies were 157.85 million baht. This included 30.95 million baht required by a related company to stay in business.

2. Company was also authorized to provide guarantees to banks and other financial institutions for related company liabilities at the amount of less than 1/2 of the Company's total assets. As at June 30, 1998, Company has a total of 183.92 million baht contingent liabilities from various guarantees to 15 related companies. These guarantees do not appear on the Company's balance sheet.

From the annual report for TNL, December 31, 1997 financial statements -- At that time, the company had loaned a sum of 196.57 million baht to related companies at interest rates of 7.5% to 9% per annum, and an additional 0.54 million baht at 12% per annum. What this means -- The Saha Pat Group is using TNL as a source of funds for companies that are not in as good of financial condition as TNL. The loans apppear to be at below market interest rates. In a worst-case scenario, if TNL actually makes loans of 500 million baht and guarantees of 50% of assets, and they go bad, then TNL's equity would be wiped out.

This company is interesting because it's so cheap. I agree with Paul's historical prognosis (up until very recently) for this company, that it's interesting, but not a core holding. While I may nibble at this one, I'm not going to make it one of my core positions".

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Posted By Paul A. Renaud on October 01, 1998 at 01:41:32:

"Two short comments on stocks I like.

While TNL is not currently in my top 7 recomendations, it probably should be. I quote from today's BKK Post: "The elimination of import duties starting today on raw materials used by the leather and garment industries is expected to improve the competitiveness of the two key export sectors. All companies that manufacture leather goods and garments for export will receive the duty waiver, even if they are not promoted by the Board of Investment. The taxes had ranged from 5% to 40%."

This is excellent news fo TNL. The stock is at rock bottom levels and deserves to be bought for long term.

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