Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Neutral recommendation on Lion Industires and believes the revocation of Lion Group's investment licence in Vietnam last month as the group did not fulfill its commitments has a positive bias for the group.
It said on Tuesday, March 8 that it remain cautious on the investment risks associated with Lion Industries and its subsidiary, Lion Forest (LFIB)'s involvement in the just proposed JV in a Blast Furnace (BF) project.
OSK Research said it was not surprised with the news of Lion Group's investment licence being revoked as rumors have surfaced a few times before this official revocation. Also, the group has not made much progress since it first announced the proposal in September 2008.
The licence was initially issued to the JV company to be formed by Lion Group and Vietnam's Vinashin to undertake the proposed steel mill project. Management also has not decided which company under the Lion Group will undertake the project since obtaining the licence.
OSK Research said considering that the group has not started CONSTRUCTION [] on the project, the only cost involved is on the preliminary research on the investment and other administrative expenses, which in its opinion is marginal.
'We also have not incorporated any earnings contribution from this project and have had very low expectations even at the initial stages. Looking deeper into this development, we think revoking of the licence may even help to ease concerns over the high borrowings of certain companies under the group.
'Therefore, we are keeping our NEUTRAL recommendation on Lion Industries, with our fair value maintained at RM1.57 pending approval of this project by minority shareholders at an upcoming EGM. The fair value is derived from a 5x PER multiple and P/NTA to 0.43x, which is the mean of its historical trading band on CY11 numbers,' it said.
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Neutral recommendation on Lion Industires and believes the revocation of Lion Group's investment licence in Vietnam last month as the group did not fulfill its commitments has a positive bias for the group.
It said on Tuesday, March 8 that it remain cautious on the investment risks associated with Lion Industries and its subsidiary, Lion Forest (LFIB)'s involvement in the just proposed JV in a Blast Furnace (BF) project.
OSK Research said it was not surprised with the news of Lion Group's investment licence being revoked as rumors have surfaced a few times before this official revocation. Also, the group has not made much progress since it first announced the proposal in September 2008.
The licence was initially issued to the JV company to be formed by Lion Group and Vietnam's Vinashin to undertake the proposed steel mill project. Management also has not decided which company under the Lion Group will undertake the project since obtaining the licence.
OSK Research said considering that the group has not started CONSTRUCTION [] on the project, the only cost involved is on the preliminary research on the investment and other administrative expenses, which in its opinion is marginal.
'We also have not incorporated any earnings contribution from this project and have had very low expectations even at the initial stages. Looking deeper into this development, we think revoking of the licence may even help to ease concerns over the high borrowings of certain companies under the group.
'Therefore, we are keeping our NEUTRAL recommendation on Lion Industries, with our fair value maintained at RM1.57 pending approval of this project by minority shareholders at an upcoming EGM. The fair value is derived from a 5x PER multiple and P/NTA to 0.43x, which is the mean of its historical trading band on CY11 numbers,' it said.
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