I think i was a little naive as far as my last investment goes. Since, i've sold all Educomp and happy to get out of it. The great earning potential of Educomp has been built on a very shaky foundation and i have reason to believe that the stock will go even lower. Much lower that most people believe.
I've been reading a book - Financial Shenanigans by Schilit. Basically the company has been very aggressive in revenue recognition. I have reason to believe that the primary segment of the company - Smart Class, is not doing that well. So they have started selling receivables through a complicated structure involving a SPV. Without going into the details, let me just say that this is one of the most apparent signs of declining revenues. At the same time, IMO the company has been foraying into a host of other things to make up for the declining revenues from Smart Class. They havent been very successful in this endevour as still more than 95% of the revenues come from Smart Class. Randomly diversifying into every sector in education just shows how desperate the company has become.
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