I would normally not be too impressed with this earnings report....

I would normally not be too impressed with this earnings report.

Net (Loss)/Profit for the half year 2017, 5,354 2016, 7,557

Profit is down $2 million. However,

Profit before income tax 2017, 8,467 2016, 8,668

Profit before tax is similar. The difference is due solely to an additional $2 million in tax. This concerns me far less than if the profit shrank due to decreasing sales or margins.

Furthermore, there is a $3 million loan deduction in the profit before income tax numbers.

Impairment of loan 5 (3,011)

If this amount is added back, then

Profit before income tax 2017, 11,478 2016, 8,668

This is a very healthy 32% growth in profit before tax. This is the silver lining of the report. I don't care if profits are permanently reduced because of increased taxes. However, I would be highly concerned if the company was in fact not growing profits and revenue.

Revenue from Sale of Goods 2017, 42,209 2016, 29,488

Revenue is up 43%. Good.

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However, I would love for somebody to shed some light on this loan business. I agree that it hardly makes sense to recall capital at a loss when they are already sitting on a pile of cash. I own a basket of these Chinese shares and one of my big complaints is that they are all sitting on a huge pile of cash, that is often making almost no interest, and seem to be in no hurry to do anything with it. I realise they need a larger cash reserve due to the unavailability of loans in China. However, this starts bordering on ridiculous... WMC could easily double profits simply by buying a related company that would be additive or making a business investment that yielded a 10% return on $45m in cash.

Which leads me back to the issue of calling back the loan. I have this memory of them having a stake in ownership in something internet provision project and they would get a portion of the advertising revenue. Managements judgement to pull out, np. But why take a hit to get the cash back. It's not a deal breaker for me... I just don't like things I don't understand.