5 Comments

Hello!

Thanks for giving your thoughts on UMDK.

"The only thing missing now is news of the CEO fleeing to Venezuela to make this a perfect bowl of diarrhea." :-D

Actually yesterday I put a warning in front of my article: https://simonbrenncke.substack.com/p/united-mobility-technology-when-you

[WARNING: Trouble may be brewing in paradise. The first of June 2023, Alexander Hupe was appointed to the Management Board in the role of CFO. Just one month later it was announced that he resigned from the position. What did he do in the meantime? "Mr. Hupe has been actively involved in the preparation of the annual financial statements." Didn't he like what he saw? I have no idea. However that may be, one day after making the resignation public, on the fifth of July 2023, UMT announced they were writing down the value of their assets Buchberger and Mobile Payment UMS. As to Buchberger, it was to be expected ("due to the stagnation in the construction industry"), but Management adds in the announcement: "...and the legal case." From a former announcement, I thought the legal case all but resolved; however, even unresolved I believe it's not consequential. Consequential, however, is their perception of UMS, their biggest asset, the rationale of the reduction in value being: "the successes from the payment business have not yet been seen". Two short announcements with little information that apparently scared investors a lot, driving down the stock price - this and the prospect of a capital increase "to secure liquidity" and for further acquisitions, when according to the H1 2022 financial statements no liquidity would need to be secured, as the company was flush in cash and cash equivalents on paper. It fits with the unlucky communication style I flagged below in the article. Add to this inconsistent communication; Management promised the numbers for full year 2022 until the 30th of June (cf. Financial Calendar on their website) and did not deliver on that promise. Perhaps I'll write another update article when full year results 2022 come out, still expected for July 2023.]

As you can see, I still do not think that fraud is involved. But I'm a dangerously naive person, so that's that.

"It seems all their profits are paper profits that went into “other assets”. Not in the investing section of their cash flow statement, but through a change in other operating assets above the cash from operations line, which is a bit fishy."

Could you elaborate further on that? I would appreciate a lot if you could break it down granually, so I can follow better.

Expand full comment

that's what I was thinking too, but I'm guessing it's not the case with the reporting standard they're using. I suspect ToffCap is German, and thus he knows what he's talking about. Anyway, there is just so much stuff about UMDK that is weird and opaque that I moved on rather than trying to definitively answer this question.

Expand full comment

Why is that so? One would expect that if price of their main commodity increases, the margins would shrink...

Usually when cotton prices spike up, their margins greatly expand, but as they crash, margins collapse.

Expand full comment

A while back, ToffCap told me that cash went into money market funds, which apparently are included in those "other assets." But I passed on UMDK - just too many red flags.

Expand full comment
author

Wouldn't that show up in the investing section of the CF statement?

Or is that only with GAAP.

Expand full comment