The home appliance makers including Khind and Pensonic are facing difficulties in their collections. This is reflected in their rising trade receivables which are past due for more than 120 days.
Normally, money due from customers for over 120 days is recorded as impairment loss, which will have an impact on the bottom line.
For instance, Pensonic’s trade receivables which are past due for over 120 days but not impaired rose to RM4.57 mil as of May 31, 2015 from RM626,559 in the previous year. The impaired portion of its trade receivables increased to RM956,339 in FY15 from RM889,661 in the previous year. The company says this is due to customers in financial difficulties but the money is expected to be recovered through the debt recovery process.
Similarly, Khind’s trade receivables past due for over 120 days were higher at RM8.13 mil as of Dec 31, 2015 versus RM6.76mil the year before. It recorded a higher allowance for impairment losses of trade receivables of RM4.33 mil compared with RM2.35 mil.
Naturally, investors are concerned about the rising receivables that are past due for more than 120 days. This basically warns of the high probability of more provision of bad debts to come.
