Fujin Technology (they have an identity crisis lol)

Peter Robinson said...
"Great site Elizabeth - U R now in my bookmarks..!When you have some time, would you have a little look at Fujin (FJN) as it looked soooo promising once upon a time but has now left me sitting on a considerable loss..! Do I keep the shares hoping for another rise or shall I cut and run..? Certain sites reckon they are worth keeping as they seem to be moving into storage and are in a similar position to how they were in their 'offshore telecom' days.Thanks in advance,Peter "

OK Hi Peter

Thanks for the above and I've had a look at the company for you. Now I'm not suggesting you are lazy.....but hey you are lazy!!!! (I'm teasing) LOL. I didn't have to go further than their own company website for all of the following info. Don't take offence I'm the court jester sometimes, we all read into things differently, but here's my take on the situation.

I think the 'moving into storage' as a reason for holding them is a bit of a white elephant really as they are doing so many aquisitions and disposals that any section could be a reason.

I went to iii first actually to have a look at their 1 year, 3 year and 5 year charts. Initially it looked like a scarey decline that they've had after a meteoric rise, but following a visit to their own investors page and reading most (not all) of the investor announcements my opinion altered a bit.

They seem to have a penchant for changing their company name every 5 minutes. Like you said they were Offshore Telecom in 2004, and are currently Fujin Technology, but want to change it again next month to Xploite and have created a new website to go with that www.xploite.com . They intend keeping Fujin Tech for trading activities though. I'll sum up at the end.

Timeline

15.03.04 Offshore Telecom PLC renamed Matrix Communications

29.10.04 40:1 share consolidation effective 01.11.04 - It was just after this that the price started taking a battering.

27.01.05 5,525,000 shares placed with institutional investors. Of this 3750,000 were placed at £2.00 per share raising £7.5million before expenses. At that time there were 35,304,233 shares in issue. Directors provided 1,775,000 of the shares to the institutions to improve liquidity. After this the directors still held 33.7% of the share capital.

22.02.06 Herald Investments had 1,400,000 shares or 3.7% of share cap

24.02.06 Herald Investments increased holding to 1600,000 shares or 4.2% of share cap.

02.06.06 Canada Life following purchase, held 1,150,000 or 3.12% share cap

09.06.06 Result of EGM name change to Fujin Technology

20.06.06 Directors wife bought 42,500 shares representing 0.12% of share cap

12.09.06 Canada Life increase holding to 1,525,000 or 3.99% of share cap

19.10.06 3 Directors topped up their shareholdings

23.10.06 Result of EGM resolution passed to seek High Court to pass reduction of companies share premium account by £10.3 million. company to pay 27p per share back to investors.

30.10.06 Strathclyde Pension fund purchase 375,000 bringing their holding to 1,260,825 or 3.30% of share cap

12.12.06 Share disposal - recalculated due to issue of more shares - price per share returned 26.78p

21.12.06 Total share capital 38,505,617

02.07 Want to change name AGAIN to Xploite Plc to reflect its developing strategy.

12.02.07 Cash in hand £15million after disposals and cash return to shareholders, before tax due on disposal. board intend Buy & Build strategy. Aquisition of Posetiv for £3.6 million and issue of 520,000 shares. (This will bring shares in issue up to 39,025,617


OK - so thats a very rough sum up of whats been going on sharewise, however I have not put anything in about all the company purchases and disposals that they have been doing over the last 3 years.

On the whole I'd say from their figs, which I just glanced at the chairmans statement, they do seem to be a company that is progressing financially. They seem to have turned into a shell for aquisitions, mergers and disposals though in a way, which in itself is not necessarily a bad thing, but if thats not really the type of company you bought into then it could explain why it's not performing as you'd expect. I would always suggest that you know WHY you bought a stock, and rethink that holding IF the company changes direction.

I think your biggest problem currently for whatever you decide to do ie BUY MORE, HOLD or SELL is the lack of liquidity in this stock. There are only 39,025,617 (after the newest aquisition) shares in issue which normally would mean that ANY activity on the share would move the price one way or the other very easily, BUT, and heres the rub..........directors and institutions are holding over 50% of the shares issued and they 'are holding', which means very little activity on the share for you to get a rise out of.

Now the fact that they are holding AND topping up must say something about the company and what they think the results will be. The institutions bought at £2.00 and I haven't seen any notifications of any reductions in holdings, so must assume they are holding not selling, so they must think the price will go back up to at least £2.00.

What is hurting the share price in my opinion is all the aquisitions as they seem to issue new shares each time in part payment, this is diluting the price. Also aquisitons are costly. AND changing their name every 5 minutes must be costing them something of legal fees and re-doing all their stationary all the time...LOL. They have said that their strategy is to buy more as and when they see anything worth buying, so this could go on for a while, but at some point they will stop I guess.

On a positive note, they do seem to be returning capital to shareholders on disposals of companies, so you should be gettting money there if you haven't already. Do they pay a dividend - I didn't look deep enough to see, but if they do, then at least you are getting something there.

You are a bit disabled as a shareholder when it comes to EGMS though, cause between the Directors and the Institutions, they have enough voting rights to pass everything they dream up without you ever having opened the docs to read.

If you were asking what I would do if I were you - depending on what price I had bought in at and what my current loss was sitting at, I would be holding for a bit longer and possibly topping up to reduce my average cost per share (if I had the spare cash). Obvioulsy you may not feel you have time to sit and hold in which case you should take what you need and move onto the next 'big thing'...........which could be just as risky anyway.

I know that sounds like a cop out.......but I'm not advising :o)

Hope that all helps you Peter, but feel free to email me on uvegottalaugh@supawoman.com if you want to discuss this further offline.