Friday, October 19, 2007

Market research: HCL:WSE

Outstanding shares : 25,856,126
Net Tangible Asset: L$-0.254
EPS: L$0.035
P/E Ratio: 21.18
Monthly Revenue: L$2029407.55
Monthly Expenses: L$1113892.59
Monthly Earnings (Net Profit): L$915514.97
Liabilities : ca L$ 12000000

To start with my analysis I have to admit that I own myself roughly 4% of all outstanding HCL shares and a derivative with call character on HCL is listed on WSE (LHH). Can I be objective then…? Well, I let you decide, some also may think that it is good sometimes to put the goat in the garden…

Let’s start with some provocations and negative aspects in relation to last report of HCL:

NTA: negative! In other words and if we believe the published financials there are 3 millions $L from IPO and 8 millions from revenues which resulted in liabilities of 12 millions. What happened here? If Luke hadn’t a reputation as straight guy we effectively should be more than worried.

HCB: 6.7 millions $L! Quite a bit of six packs you can buy for - and not even a symbolic dividend couldn’t be afforded. No, we learn that the money is used for the future development of WSE and that we should be happy about…ok, but where is the master plan also an average shareholder may understand, where the budget where the previsions – I don’t speak of the figures which were thrown at us and where we don’t know the source. You can read in between the lines of the last financial report of course to catch an idea or you are extremely imaginative ... I’m not sure whether we all are imaginative…

Ginko: They own 34.03% of all outstanding shares in WSE! I hope they don’t work with alter egos? You see the point. This is a huge burden for the whole WSE as we don’t know how Ginko will develop. As a big portion of their income is supposed to come over dividends from HCL and HCB I really wonder what will happen at the end of this month as dividends will be zero. Will they be able to pay one or simply disappear and increase the fan club of WTF? And why wasn’t the fact to get >20’000 users of Ginko bank used to gain them for the WSE with adapted marketing methods…?

Reporting: SL has short life cycles as it is such an innovative environment and hopefully our history related laws from RL will not invade this world and that the virtual world get a chance to create their own or get a kind of offshore status…ok, this is a daydream of Casper this time. It’s not sufficient if reporting is done only in a three months row. HCL is the main share on WSE and is setting the standards. If WSE want to gain confidence it should better take more care of the information need of the average shareholder…

Management: Some markets here pretend so much to be democratic, truthworthy, serious and professional that they become almost comic in a cyber world which is wild west. This is not true for WSE. However, unfortunately we are here on the other edge of the scale - a kind of dictatorship where shareholders are sheep and from time to time learn that the vet want them to go through the chemical dip. Well, I think as SL is a new environment we all have to be clever- sometimes it helps to find a middle way and consider others thoughts. A determined sheep herd is more powerful than a bunch of lions on a ego trip…lol…ok, I overdo here.

And come to the positive aspects:

Management: Luke is surely a skilled and straight guy who showed character during all these turmoil. We have to honor him for the work he put into WSE, the consistency and finally for the creation of the WTF also we don’t know yet about the details. And there is the problem. In a world like SL with all these crazy players like me there are so many different characters, ages, mentalities, professions and sexes linked to each other that communication problem (sorry for my Lindenspeak…lol) become a question of survival. There is some potential I think. The best possible world may fail on details. Learn to motivate your team and success will follow. I agree this is not easy to realize…but we all have to learn

System: Surely one of the best. And the link to RL also opens doors to a new world nobody can imagine, even if rumors speak about legal problems this may produce if the investors from RL are dealing on WSE without using the SL platform. You US avatars, give the rest of the world a chance…;-)…But rumors are rumors and still need to be proven. Till then SL will have reached already a next development level. As will WSE 4.0, hopefully.

New markets: The magic word is 3D-Web? I put a lot of value in this dream. I think that WSE is the only stock exchange at the moment which has the basis to explore this virtual white map with full strength. Just some adjustments are needed. The potential is huge, but also the risks. If a common consensus between WSE owner and investors can be found a straight forward development will be more probable and in the favor of WSE.

Customer services: Luke and his team is normally answering any serious request and asap and the often present concierge smitty the bunny may be sometimes a bit unserious but always good to turn any serious problem into a laugh. For me it is a good sign if people still can laugh better as if they hide between attorney made paragraphs and don’t stop to assure that it wasn’t their fault or responsibility…

A lot of text, probably too much so let’s come to the essentials.

Positive aspects:

1. Strong leadership also a bit zack-zack
2. Good and secured system which works
3. Business model which open doors to new markets in RL with huge potential
4. Most advanced and stable stock exchange market with more than 60 listed companies
5. Good customer relationship
6. 25’000 users can be motivated at any time with the right strategy to gain confidence into WSE
7. Good architecture which permits to add new elements easily

Negative aspects

1. Positive aspects can also be negative
2. Communication towards shareholders
3. Not democratic enough
4. To many open questions which leave space to rumors which spread in SL faster than in RL

Conclusion: I’m in dilemma as I cannot promote HCL without risking to see LHH to shoot into the sky which would worry me a bit…. So I put them on hold for the moment…believe the goat or not…lol…you anyway see if I would add some shares…

Average share prices we see at 1.2 $L/share in a three month time if WSE 4.0 will be fully operational.

Casper Trebuchet
Analyst, WSE

LEM, CEO
House of derivatives (LFB, LWI, LHH and LEM Knock-In WSEIndex as IPO)

http://lemurinvest.blogspot.com

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