Pinestone Capital (HKSE:00804) Beneish M-Score : -2.01 (As of May. 21, 2024)

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What is Pinestone Capital Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.01 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Pinestone Capital's Beneish M-Score or its related term are showing as below:

HKSE:00804' s Beneish M-Score Range Over the Past 10 Years
Min: -7.56 Med: -2.64 Max: -1.3
Current: -2.01

During the past 10 years, the highest Beneish M-Score of Pinestone Capital was -1.30. The lowest was -7.56. And the median was -2.64.

Pinestone Capital Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Pinestone Capital for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1

0.528 * 1

0.404 * 1.0059

0.892 * 1.0026

0.115 * 0.6453

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1

4.679 * 0.064222

0.327 * 0.3785

-2.01

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Dec23) TTM:

Last Year (Dec22) TTM:

Total Receivables was HK$0.00 Mil.
Revenue was HK$19.52 Mil.
Gross Profit was HK$19.52 Mil.
Total Current Assets was HK$0.00 Mil.
Total Assets was HK$176.01 Mil.
Property, Plant and Equipment(Net PPE) was HK$0.63 Mil.
Depreciation, Depletion and Amortization(DDA) was HK$0.97 Mil.
Selling, General, & Admin. Expense(SGA) was HK$0.00 Mil.
Total Current Liabilities was HK$0.00 Mil.
Long-Term Debt & Capital Lease Obligation was HK$0.62 Mil.
Net Income was HK$-24.39 Mil.
Gross Profit was HK$0.00 Mil.
Cash Flow from Operations was HK$-35.69 Mil.

Total Receivables was HK$0.00 Mil.
Revenue was HK$19.47 Mil.
Gross Profit was HK$19.47 Mil.
Total Current Assets was HK$0.00 Mil.
Total Assets was HK$169.94 Mil.
Property, Plant and Equipment(Net PPE) was HK$1.61 Mil.
Depreciation, Depletion and Amortization(DDA) was HK$1.03 Mil.
Selling, General, & Admin. Expense(SGA) was HK$0.00 Mil.
Total Current Liabilities was HK$0.00 Mil.
Long-Term Debt & Capital Lease Obligation was HK$1.59 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total Receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI	=	(Receivables_t / Revenue_t)	/	(Receivables_t-1 / Revenue_t-1)
	=	(0 / 19.521)	/	(0 / 19.47)
	=	0	/	0
	=	1

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI	=	GrossMargin_t-1	/	GrossMargin_t
	=	(GrossProfit_t-1 / Revenue_t-1)	/	(GrossProfit_t / Revenue_t)
	=	(19.47 / 19.47)	/	(19.521 / 19.521)
	=	1	/	1
	=	1

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (0 + 0.631) / 176.014)	/	(1 - (0 + 1.605) / 169.942)
	=	0.996415	/	0.990556
	=	1.0059

4. SGI = Sales Growth Index

Ratio of Revenue in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI	=	Sales_t	/	Sales_t-1
	=	Revenue_t	/	Revenue_t-1
	=	19.521	/	19.47
	=	1.0026

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI	=	(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))	/	(Depreciation_t / (Depreciaton_t + PPE_t))
	=	(1.033 / (1.033 + 1.605))	/	(0.974 / (0.974 + 0.631))
	=	0.391585	/	0.606854
	=	0.6453

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI	=	(SGA_t / Sales_t)	/	(SGA_t-1 /Sales_t-1)
	=	(0 / 19.521)	/	(0 / 19.47)
	=	0	/	0
	=	1

7. LVGI = Leverage Index

The ratio of total debt to Total Assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((0.622 + 0) / 176.014)	/	((1.587 + 0) / 169.942)
	=	0.003534	/	0.009338
	=	0.3785

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA	=	(IncomefromContinuingOperations_t	-	CashFlowsfromOperations_t)	/	TotalAssets_t
	=	(NetIncome_t - NonOperatingIncome_t	-	CashFlowsfromOperations_t)	/	TotalAssets_t
	=	(-24.388 - 0	-	-35.692)	/	176.014
	=	0.064222

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Pinestone Capital has a M-score of -2.01 suggests that the company is unlikely to be a manipulator.

Pinestone Capital Beneish M-Score Related Terms

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Pinestone Capital (HKSE:00804) Business Description

Industry

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Comparable Companies

Traded in Other Exchanges

N/A

Address

26 Harbour Road, Room 1807, 18th Floor, China Resources Building, Wan Chai, Hong Kong, HKG

Website

http://www.pinestone.com.hk

Pinestone Capital Ltd is an investment holding company registered in the Cayman Islands. It is principally engaged in providing bespoke services including security brokerage, securities-backed lending for individual and corporate purpose and placing and underwriting businesses. The company offers money lending services through its subsidiary Pinestone Capital Group Limited. It operates is business activities in Hong Kong and all of the revenue of the company is generated from Hong Kong itself. The company's revenue comprises of interest income from securities backed lending services, income from placing and underwriting services and commission income from securities brokerage services.