Continuation from part 1, firm sold its Chinese automobile business and a $0.15 per share dividend or (S$ 60.8mn) was given on April 2010. After a period of inactivity, firm proposes another $0.10 per share or (S$40.5mn) ex 13, payable 29 July 2010.
Financials
- Cash pre both dividend is S$188.416mn or S$0.46 per share
- Borrowings are at S$0.371mn
- Share number is at 405.522704 mn x price of S$0.26 (close) = S$105.43 mn
- Price rallied to S$0.330 today alone
- After giving the latest dividend, firm will still have S$87.04mn or S$0.21
- A fair price range to exit will be S$0.28-S$0.31and lower for buy in ranges
Expectations
- Current price is way over the distribution and overall value of the firm
- Decided to not take action on this due to low margin of safety
- Was unwilling to lock up capital at S$0.26/sh and wait out for the S$0.05/sh increase
- The wait out I deemed unlikely since it has given a prior S$0.15/sh dividend and management should use the remaining cash to strengthen their very weak operations
- Turns out I was wrong and underestimated the forces of "activist" shareholders and the ownership of LAP stock by the manager himself
Risks
- Amid the flurry buying the counter, one has to note their operating business is getting poorer QoQ
- Top line has been reduced substantially even though they attempted to increase capex for their quick lime business
Lion Asia Pac, Lion Asia Pacific, Lion Asiapac, LAP SP, SGX, Lion Asia
1 comments:
Feed the lion.
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