Thursday, July 1, 2010

Lion Asia Pac (LAP SP) SGX - part 2

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.

  • 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

  • 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

  • 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



Feed the lion.

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