Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
It said the neutral stand and downgrade was in view of
LICB's weaker-than-expected first half financial year 2011 results.
"We see limited downside from here despite our caution on the investment risk posed by the proposed blast furnace project," OSK said in a research note today.
LICB entered into a conditional share subscription agreement with Lion Diversified Holdings Bhd and Lion Forest Industries Bhd for a proposed joint venture to invest 29 per cent, 51 per cent and 20 per cent stakes, respectively, in Lion Blast Furnace SB.
The estimated total cost of the blast furnace project is RM3.23 billion, in which the joint venture partners will subscribe for the agreed capital of RM970 million according to their respective stakes in the venture.
"The share price may potentially spring back in the event this proposed investment is shot down by shareholders at the upcoming EGM as this will help to substantially ease our concern," OSK added. -- Bernama