Buy @ $0.34. An impulsive buy based on Ken’s recommendation. Their cash/share (47ct – $190Mil @ 405.5Mil shares) is higher than share price after they’d sold their China business (Anhui Jianghuai Automobile Co @ $53.2Mil profit). NAV is even higher @ 53.39ct. It was also reported in BT on Sat. that shareholders were unhappy that LionApac didn’t pay out a special dividend from this big cash position.
LionApac is apparently looking for new biz as their remaining biz doesn’t seem very profitable (Most likely we’ll see a net loss fm next Q). Extracts fm Q2 (Dec09) financials,
Improvement in market demand has resulted in the quicklime business registering a 35% rise in turnover from S$3.7 million to S$5.0 million during the second quarter, with a growth in earnings from S$0.3 million to S$1.1 million. Accordingly, turnover increased by 10% from S$9.2 million to S$10.1 million during the half year, and earnings went up by 69% from S$1.3 million to S$2.2 million.
The scrap metal trading business did not carry out any trade due to the absence of demand in this second quarter as well as the last corresponding quarter. Hence, it recorded a turnover of S$13.6 million during this half year, compared with S$3.5 million in the last corresponding half year. Earnings amounted to S$0.3 million, up from the last corresponding half year’s S$0.1 million.
The electronics business, comprising only contract manufacturing, still suffered from the electronics industry downturn, saw its turnover shrank by 87% from S$7.9 million to S$1.0 million. A loss of S$0.6 million was incurred during the quarter after taking into account foreign exchange loss and write-off of an investment, compared with earnings of S$0.3 million in the last corresponding quarter. During the half year, turnover dropped by 93% from S$24.8 million to S$1.7 million, leading to a net loss of S$0.8 million, rather than earnings of S$0.6 million in the last corresponding half year.
The risk for me is that the longer the mgmt takes to explore new biz, the higher the likelihood the share price will drop back to the sub-30ct level. But, the 27.5% discount to cash/share looks very attractive! I better spend more time to dig into this co. in case there are many hidden problems!
Note : A search on CNA Market Forum and www.NextInsight.net shows discussions and write-ups on LionApac cash position, so, don’t anyhow treat this as an undiscovered hidden gem ie. there’s risk here. 😀
4:47pm
Buy @ $0.335. Looks set to go lower!