Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Company Name: LION INDUSTRIES CORPORATION
| Research House: MIDF | Price Call: HOLD | Target Price: 0.46 |
Showing posts with label LIONIND. Show all posts
Showing posts with label LIONIND. Show all posts
March 2, 2015
November 28, 2012
A 'red' beginning to the year
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Company Name: LION INDUSTRIES CORPORATION
| Research House: MIDF | Price Call: HOLD | Target Price: 1.03 |
October 25, 2012
Buying landlord’s building
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Company Name: LION INDUSTRIES CORPORATION
| Research House: MIDF | Price Call: HOLD | Target Price: 1.18 |
July 20, 2012
Lion Industries raised to 'market perform'
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
RHB Research raised the call on steel manufacturer Lion Industries Corporation Berhad to "market perform" from "underperform" based on demand from the local Malaysian sector and an easing of cost pressure.
In a note to investors on Friday, RHB also raised the fair value of Lion Industries to RM1.28 from RM1.12, citing the chances for the company to exit a high-risk RM3.2 billion blast furnace project with the entrance of foreign investors.
News on local steel companies Perwaja Holdings Bhd and Hiap Teck Venture Bhd potentially securing iron ore mining concessions may also increase share prices within the sector, RHB said.
"We continue to hold the view that sustained share price performance of local steel players still hinges on a much more stable and improved global economic outlook," said the research house. -- Reuters
Company Name: LION INDUSTRIES CORPORATION
| Research House: RHB | Price Call: HOLD | Target Price: 1.28 |
RHB Research raised the call on steel manufacturer Lion Industries Corporation Berhad to "market perform" from "underperform" based on demand from the local Malaysian sector and an easing of cost pressure.
In a note to investors on Friday, RHB also raised the fair value of Lion Industries to RM1.28 from RM1.12, citing the chances for the company to exit a high-risk RM3.2 billion blast furnace project with the entrance of foreign investors.
News on local steel companies Perwaja Holdings Bhd and Hiap Teck Venture Bhd potentially securing iron ore mining concessions may also increase share prices within the sector, RHB said.
"We continue to hold the view that sustained share price performance of local steel players still hinges on a much more stable and improved global economic outlook," said the research house. -- Reuters
February 28, 2012
LIONIND (FV RM1.78 - TRADING BUY) 1HFY12 Results Review: Profit Down, But Still Richer
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Company Name: LION INDUSTRIES CORPORATION
| Research House: OSK | Price Call: BUY | Target Price: 1.78 |
Thanks to Parkson's contribution, Lion Industries managed tostay in the black in 2QFY12. However, its steel division suffered losses,largely due to the mismatch of high raw material costs and lower steel prices.The award of ETP projects may have gained pace but the actual works couldtake time. This, coupled with the delayedrecovery of steel prices, prompt us to cut our earnings estimates. However, we are keeping our Trading BUY call,with our FV cut to RM1.78, on anticipationof steel prices rebounding next monthmay spur interest in steel stocks. One excitement is the litigation settlement by 73%-owned LionForest,which may lead to a possible dividend as it will unlock up to RM250m incash.
Below expectations.After eliminating a few lumpy items, Lion Industries' 2QFY12 core net profitcame in at RM10.8m but its 1H earnings disappointed us and street estimates, representingonly 22.8% of our full-year numbers. Thefestive season that boosted Parkson's contribution, however, failed to mitigatethe huge loss in the steel division. We had earlier anticipated contributionsfrom its iron making business to cushion the losses from steelmaking in 2Q.However, the sharp plunge in both iron ore and scrap prices during that periodgave rise to a negative mismatch between lower selling prices and high rawmaterial costs (time lag impact), which eroded its iron making profit.
Improving 2H outlook?Although the implementation of 'mega' projects under the EconomicTransformation Programme (ETP) has been slow, the momentum of project awards has been picking up. Nonetheless, it may take a while foractual works to begin and eventually raise the demand for physical steel. Thisaside, steel prices have remained lacklustre and defied our earlier expectations of a possible recovery in February. We suspectthat prices may turn up in March, with China expected to bump up constructionactivities as it enters the spring season. With the maintenance of its Hot BriquettedIron (HBI) plant scheduled for next month, the group's 3Q numbers are not expectedto look pretty. Thus, we feel compelled to slash our FY12 and FY13 numbers by 40.4%and 34.8% respectively.
Maintain Trading BUY.Although let down by the long-standing delay in Lion Industries' steel assetdisposal, any sale would immediatelyunlock the value of its assets. The strong correlation between steeland share prices also suggests thatsteel price may escalate and spur interest in steel counters. We are also excited over thelitigation settlement by its subsidiary, which may unlock up to RM250m for 73%-owned Lion Forest, leading to a possibledividend being streamed up. As such, we keep our Trading BUY call on LionIndustries, with its FV trimmed to RM1.78 following our earnings cut. We valuethe stock at 0.4x FY12 P/BV, or the mean of its historical trading range.
Source: OSK188
Lion Industries Corporation Bhd - Below expectations
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Company Name: LION INDUSTRIES CORPORATION
| Research House: HLG | Price Call: SELL | Target Price: 1.01 |
Lion Industries Corporation Bhd
Below expectations
- 1HFY06/12 reported net profit came in below our expectation, accountingfor only 39.2% of our full-year forecast.
- Key variance again our forecast was the lower-than-expected sales volumeat the steel manufacturing division.
- Earnings forecasts and SOP-derived TP of RM1.01 maintained for now,pending further update with management.
Source: HLIB Research 28 Feb 2012
Lion Industries - Earnings at inflexion point
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Company Name: LION INDUSTRIES CORPORATION
| Research House: AMMB | Price Call: BUY | Target Price: 1.90 |
We are maintaining our BUYrecommendation on Lion Industries Corp (LICB) with our fair value lowered to RM1.90/share, based on a 10% discount to ourrevised sum-of-parts value of RM2.06/share.
LICB reported 1HFY12 earnings of RM35mil (-72% YoY) aftergenerating only RM7mil (-75% QoQ) in 2QFY12. This was despite recording ahealthy YoY turnover growth of 36%.
This came below our and street estimates, covering only 18%and 29% of the respective full-year forecasts. The figures show that whilesteel demand was decent, earnings were affected by high feedstock costs andalso subdued selling prices of steel products.
We have therefore slashed our earnings forecast for FY12F by63% to RM69mil as its earnings will be impacted by the sustained high inputcosts and weak selling prices for its products ' underpinned by supplydisruption and economic turmoil in Europe, coupled with weaker demand inChina.
However, we are expecting a strong surge in earnings ' RM190miland RM294mil for FY13F and FY14F, respectively, to be underpinned by demandrecovery and stronger pricing trends. We have assumed the average selling priceto be between RM2,300/tonne and RM2,400/tonne. Its 17%-associate ParksonHoldings will be a key contributor to income as well ' accounting for 40% of70% of pre-tax profit in FY13F and FY14F. LICB should be a direct beneficiaryof the acceleration of key infrastructure projects in Malaysia, particularlythe Klang Valley MRT. Our strong conviction is supported by the group's largestmarket share in the supply of local steel bar (32%) and about 40% in the wirerod segment.
Our checks revealed that some 500,000 tonnes of steel productswill be required for the SBK line alone. This accounts for about 9% of theannual rolling capacity of the five major steel millers in Malaysia.
There is further upside as there are other key infrastructureprojects such as the West Coast Expressway, KLIFD, RRIM re-development, andGemas-JB double tracking that will provide a massive boost to steel demand inthe mid-term.
Another plus point is that LICB is currently trading at an attractiveCY13F PE of 5x.
Source: AmeSecurities
December 22, 2011
OSK Research maintains Neutral on Lion Industries, FV RM1.50
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Larger Smaller Reset KUALA LUMPUR (Dec 22): OSK Investment Research has maintained its Neutral call on Lion Industries Corp Bhd with a fair value of RM1.50 and said it welcomed that the group was ''actively seeking mining assets, although the details were scarce.
The research house however added that the steel market was still fraught with challenges considering the slow execution of domestic projects and the impending consolidation of China's steel industry, which may hurt global sentiment.
'Talks with potential investors on the sale of its steel units are still ongoing but we see an indefinite delay in the outcome.
'Thus, we keep our NEUTRAL call with a Fair Value of RM1.50 in the absence of immediate catalysts,' it said on Thursday.
Company Name: LION INDUSTRIES CORPORATION
| Research House: OSK | Price Call: HOLD | Target Price: 1.50 |
Larger Smaller Reset KUALA LUMPUR (Dec 22): OSK Investment Research has maintained its Neutral call on Lion Industries Corp Bhd with a fair value of RM1.50 and said it welcomed that the group was ''actively seeking mining assets, although the details were scarce.
The research house however added that the steel market was still fraught with challenges considering the slow execution of domestic projects and the impending consolidation of China's steel industry, which may hurt global sentiment.
'Talks with potential investors on the sale of its steel units are still ongoing but we see an indefinite delay in the outcome.
'Thus, we keep our NEUTRAL call with a Fair Value of RM1.50 in the absence of immediate catalysts,' it said on Thursday.
December 7, 2011
ECM Libra: KLCI to trade in a range of 1,520 and 1,300 in 1H2012
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
KUALA LUMPUR (Dec 7): ECM Libra Investment Research expects the FBMKLCI to trade in a range of 1,520 and 1,300 points in 1H2012 before moving up towards 1,600 in 2H2012.
It said on Wednesday that Malaysia had outperformed in 2011 and was not cheap relative to other markets.
The research house said that with the outlook for domestic interest rates flattish with downward bias, it made sense to hold high dividend yield stocks while waiting for better buying opportunities.
It also advised investors to avoid stocks with high exposure to Europe as it expects a sharp depreciation in the Euro.
'Stocks which have underperformed the FBM KLCI over the past year, and which are closer to their bottom due to negative news or developments, offer more potential upside if there is a turnaround in their situation.'
'We have identified two such stocks, Tenaga Nasional ( Strong Buy, TP: RM5.95-7.96) and Lion Industries (, Strong Buy, TP: RM2.16),' it said.
Company Name: TENAGA NASIONAL BHD
| Research House: ECMLIBRA | Price Call: BUY | Target Price: 7.96 |
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
| Research House: ECMLIBRA | Price Call: BUY | Target Price: 2.16 |
KUALA LUMPUR (Dec 7): ECM Libra Investment Research expects the FBMKLCI to trade in a range of 1,520 and 1,300 points in 1H2012 before moving up towards 1,600 in 2H2012.
It said on Wednesday that Malaysia had outperformed in 2011 and was not cheap relative to other markets.
The research house said that with the outlook for domestic interest rates flattish with downward bias, it made sense to hold high dividend yield stocks while waiting for better buying opportunities.
It also advised investors to avoid stocks with high exposure to Europe as it expects a sharp depreciation in the Euro.
'Stocks which have underperformed the FBM KLCI over the past year, and which are closer to their bottom due to negative news or developments, offer more potential upside if there is a turnaround in their situation.'
'We have identified two such stocks, Tenaga Nasional ( Strong Buy, TP: RM5.95-7.96) and Lion Industries (, Strong Buy, TP: RM2.16),' it said.
December 5, 2011
Proposed Capital Reconstruction And Settlement Scheme By LionCorp
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Company Name: LION INDUSTRIES CORPORATION
| Research House: RHB | Price Call: SELL | Target Price: 1.19 |
November 30, 2011
HLIB Research 30 Nov 2011 (MAHB; TdC; RHB Cap; LICB; TRC; Vitrox; KSL; Traders Brief) (Part 3/3)
Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Stock Name: TRC
Company Name: TRC SYNERGY BHD
Stock Name: VITROX
Company Name: VITROX CORPORATION BHD
Stock Name: KSL
Company Name: KSL HOLDINGS BHD
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
| Research House: HLG | Price Call: BUY | Target Price: 6.80 |
Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD
| Research House: HLG | Price Call: HOLD | Target Price: 7.00 |
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
| Research House: HLG | Price Call: SELL | Target Price: 1.01 |
Stock Name: TRC
Company Name: TRC SYNERGY BHD
| Research House: HLG | Price Call: BUY | Target Price: 0.69 |
Stock Name: VITROX
Company Name: VITROX CORPORATION BHD
| Research House: HLG | Price Call: HOLD | Target Price: 0.95 |
Stock Name: KSL
Company Name: KSL HOLDINGS BHD
| Research House: HLG | Price Call: BUY | Target Price: 2.16 |
MAHB (BUY)
Look for Longer Term Prospect
'''' MAHB revealed KLIA2 final detailed layout costing RM3.6-3.9bn, more than the initial provisions of RM2bn. There are several major upgrades, capacity of 45m passenger p.a. By bringing forward capex will save MAHB RM766m.
'''' MAHB expects to recoup ~RM175m savings from building materials sales tax for KLIA2 development, which will effectively reduce its overall development cost of RM3.9bn.
'''' MAHB also expects to develop more JVs or commercial lots. MAHB had projected additional revenue of RM2.5-3.0bn and the project IRR improved to ~11% from previous 8% over the concessionaire term.
'''' The final commencement date of KLIA2 is targeted by April 2013 and MAHB expects the KLIA2 to be profitable within first year of operation, where passenger numbers is projected to hit 20m.
'''' Target price reduced to RM6.80 (RM7.00) as dilution impact more than offset the cost savings and additional revenue.
''
TdC (BUY)
3Q11 Analyst Briefing
'''' We felt positive after TdC shared key takeaways and post-acquisition outlook during the briefing.
'''' TdC put strong emphasis in profitability over revenue growth and committed to deliver shareholders' return more than the dilution resulted from the acquisition. As a result, TdC has walked away from DiGi-Celcom's node fiberisation bid which demanded extremely low price. Currently, DiGi and Celcom are laying their own fibre.
'''' Wholesale data segment is expected to undergo strong growth momentum which more than sufficient to neutralize the decline in voice revenue. TdC is expecting the growth will outpace and offset price erosion of 15%-30% annually.
'''' Current EBITDA margin of 32% is expected to be sustainable thanks to economy of scale.
'''' All corporate exercise proposals (including financing) are on track and expected to complete by February 2012. TdC is looking at about 20% growth post-merger.
'''' Comments: DiGi-Celcom self-fiberisation requires long lead time and not cost effective, especially to support LTE deployments. Thus, we see opportunity for TdC to benefit in near future.
'''' Reiterate our Buy call with unchanged SOP target price of RM0.85 imputed with our DiGi target price (instead of market price, which would add 4 sen).
''
RHB Capital (HOLD)
Likely Miss ROE KPI But Already Factored In
'''' 3QFY11 results in line with HLIB and consensus.
'''' Despite strong loans growth (ahead of industry), 3Q weaker qoq due to derivative MTM loss, impairment loss and erosion in NIM but partly offset by low provisions.
'''' Management indicated that FY11 results are likely to miss its ROE KPI.'' However, this is in line with our expectations.''
'''' Derivative MTM loss (would reverse upon maturity) to remain unchanged unless changes to interest rate and yield curve.
'''' 4Q results likely to mirror 3Q - absence of derivatives MTM and impairment losses as well as NIM near bottom to offset expected higher credit charge on strong loans growth.
'''' Asset quality improved and capital ratios robust.
'''' Internal stress test indicated that it can meet Basel III requirements at the group level, subject to BNM guideline.
'''' It is hopeful of completing the Mestika and OSK M&As within six-month times.'' It is targeting for a win-win deal with OSK by end 2011 with completion another 3-4 months later.
'''' Maintain HOLD and target price of RM7.00.
''
Lion Industries (SEL)
1QFY06/12: Below expectations
'''' 1QFY06/12 net profit of RM27.6m (qoq: -38.6%) came in below expectations, at 20.4% and 18.8% of our and consensus full-year forecasts respectively.
'''' Key deviations were: (1) Lower-than-expected sales volume at the steel manufacturing division; and (2) Higher-than-expected effective tax rate of 58.0% vs. 25.0% we assumed, mainly due to certain expenses not deductible for tax purposes.
'''' FY06/12-14 net profit forecasts cut by 18.6-34.7% to RM88.4m, RM110.7m and RM129.0m respectively, largely to account for lower sales volume, lower average selling price assumption, as well as higher effective tax rate assumption in FY06/12.''
'''' SOP-derived TP lowered by 26.8% from RM1.38 to RM1.01 (unchanged 20% discount) to reflect: (1) The downward adjustment in our net profit forecasts; and (2) The latest share prices of its listed subsidiaries and associate.
''
TRC Synergy (BUY)
3Q still being weighed down by LRT delays
'''' 9MFY11 PATAMI dipped by -14% to RM11m (2.36 sen/share), making up only 55% and 47% of HLIB and consensus expectations respectively.
'''' Earnings missed expectations due to slower than an expected progress for the LRT project while existing construction orders are either at the tail end or still at the initial stages to have meaningful contribution. We believe that it is a timing issue in profit recognition as earnings will pick up once the new orders fully takeoff.
'''' Overall, total outstanding order book remains sizable at ~RM1.43bn, translating to ~3.8x FY10's revenue and ~5.1x order book-to-market cap ratio.
'''' We maintain a BUY call on TRC but with a reduced TP of RM0.69 due to lower earnings forecast to reflect delays in construction activities.
''
ViTrox Corp (HOLD)
Evident Slowdown in 3Q11
'''' 3Q11: ViTrox registered a revenue of RM18.1m (-28.0% yoy, -33.3% qoq), EBITDA of RM4.1m (-57.5% yoy, -50.3 qoq), PAT of RM6.36m (-30.7% yoy, -26.8% qoq).
'''' Lower revenue mainly due to reduction in sales from MVS and ECS in line with the global slowdown in semiconductor industry. However, there is increase in sales from ABI due to high demand for advanced X-ray inspection system from new customers in the US market.
'''' 9M11: ViTrox reported a revenue of RM66.9m (+4.2% yoy), EBITDA of RM19.2m (-22.1% yoy), PAT of RM21.5m (-8.4% yoy). Marginally higher sales driven by stronger demand from ABI thanks to continuous acceptance of AOI and AXI from customer worldwide. Lower EBITDA due to higher sales from lower margin products (ABI) and lower sales from higher margin products (MVS and ECS).
'''' ViTrox is expecting to secure first service contract soon from a Chinese customer which will positively contribute to the top line as recurring revenue.
'''' Comments: Continuous investment in R&D during current difficult outlook is crucial for ViTrox to sustain competitive edge, understanding that talent is scarce.
'''' Successful product diversification and not solely dependent on MVS only.
'''' Our target price is cut to RM0.95 (from RM1.17 previously) based on DCF with a WACC of 13.8% and TG of 0%. This gives ViTrox an implied PER of 7.6x for FY11.
''
KSL (BUY)
KSL City in full swing; time to look ahead
'''' 3Q net profit rose 3.3% qoq and 92.8% yoy to RM30.0m.''
'''' 9M net profit was RM72.0m, in-line with HLIB and street estimates.
'''' Phase 1 of their flagship RM2.5bn project Klang has launched in Q4; this project is expected to be KSL's main earnings driver from 2012 onwards.
'''' We maintain our positive outlook on KSL; no change to our earnings forecast and price target of RM2.16 (based on 30% discount to RNAV), implying 56% upside.'' Maintain BUY.
''
KLCI: Choppy trend ahead
'''' We doubt this downtrend could reverse any time soon as KLCI struggles to crack above the immediate resistance zones at mid Bollinger band (now at 1464) and 100-d SMA (1476) levels. If the last week's low 1424 (Nov 23) is taken out, we expect the next down leg towards the 1400 psychological level and probably retesting the 76.4% FR support at 1378 pts.
OSK: Momentum building up
'''' Technically, short term outlook has turned better after holding well above the mid Bollinger band (now at RM1.74), 10-d SMA (RM1.76) and 50% FR (RM1.72) supports, underpinned by improving technical readings of its daily and monthly charts. Upside targets are situated at RM1.96 (monthly upper Bollinger band) and around RM2.10 (downtrend line since 1999). Immediate supports are RM1.72, RM1.68 (38.2% FR) and RM1.65 (50-d SMA). Cut loss below RM1.65.
June 23, 2011
RHB Research ups Lion Industries to trading buy, FV RM2.54
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
KUALA LUMPUR: RHB Research Institute has upgraded Lion Industries' indicative fair value to RM2.54 and upgraded it to a Trading Buy.
Bloomberg reported that Baosteel Group Corp, China's second largest steelmaker, is in talks with Lion Group to buy a stake in Amsteel Mills Bhd.
'We suspect that the offer will not be just for a stake in Amsteel Mills, but may include stakes in other steelmaking units within the Lion Group as well. It is also quite likely that Baosteel could be roped in as a strategic investor for the RM3.2 billion blast furnace project, given its expertise in the flat steel product segment,' RHB Research said.
RHB Research said it lowered its holding company discount to 20% to reflect improved trading sentiment on the back of the potential entrance of Baosteel and the likelihood that Lion Industries may not be roped in to invest in Lion Diversified's high-risk RM3.2 billion blast furnace project.
Company Name: LION INDUSTRIES CORPORATION
| Research House: RHB | Price Call: BUY | Target Price: 2.54 |
KUALA LUMPUR: RHB Research Institute has upgraded Lion Industries' indicative fair value to RM2.54 and upgraded it to a Trading Buy.
Bloomberg reported that Baosteel Group Corp, China's second largest steelmaker, is in talks with Lion Group to buy a stake in Amsteel Mills Bhd.
'We suspect that the offer will not be just for a stake in Amsteel Mills, but may include stakes in other steelmaking units within the Lion Group as well. It is also quite likely that Baosteel could be roped in as a strategic investor for the RM3.2 billion blast furnace project, given its expertise in the flat steel product segment,' RHB Research said.
RHB Research said it lowered its holding company discount to 20% to reflect improved trading sentiment on the back of the potential entrance of Baosteel and the likelihood that Lion Industries may not be roped in to invest in Lion Diversified's high-risk RM3.2 billion blast furnace project.
Lion Ind upgraded to 'trading buy'
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Lion Industries Corp was upgraded to "trading buy" from "neutral" at OSK Research Sdn Bhd as a potential sale of a stake in Amsteel Mills Sdn. will allow it to ‘unlock'' the value of its steel business.
Lion Industries rose to a four-month high, climbing 4.8 per cent to RM1.96 at 9:03 a.m. local time, set for its highest close since Feb. 23.
Bloomberg reported yesterday that China's Baosteel Group Corp is in talks to buy a stake in Amsteel Mills for about US$1 billion, according to two people with knowledge of the matter. -- Bloomberg
Company Name: LION INDUSTRIES CORPORATION
| Research House: OSK | Price Call: TRADING BUY | Target Price: 2.73 |
Lion Industries Corp was upgraded to "trading buy" from "neutral" at OSK Research Sdn Bhd as a potential sale of a stake in Amsteel Mills Sdn. will allow it to ‘unlock'' the value of its steel business.
Lion Industries rose to a four-month high, climbing 4.8 per cent to RM1.96 at 9:03 a.m. local time, set for its highest close since Feb. 23.
Bloomberg reported yesterday that China's Baosteel Group Corp is in talks to buy a stake in Amsteel Mills for about US$1 billion, according to two people with knowledge of the matter. -- Bloomberg
May 25, 2011
LIONIND - OSK keeps 'neutral' call on Lion Industries
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
OSK Research has reiterated its "neutral" stance on Lion Industries Corporation with a cautious view on the group's medium term outlook.
"After adjustments to various exceptional items, mainly in the past quarters, Lion Industries' core net profit for the third quarter came in at RM62.1 million while the nine-month core number stood at RM80.5 million," OSK Research said in a statement today. - Bernama
"After adjustments to various exceptional items, mainly in the past quarters, Lion Industries' core net profit for the third quarter came in at RM62.1 million while the nine-month core number stood at RM80.5 million," OSK Research said in a statement today. - Bernama
April 13, 2011
LIONIND - Lion Industries Corp hives off China tyre business
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
Lion Industries Corporation Bhd
(April 13, RM1.74)
Maintain neutral at RM1.76 with target price RM1.57: Lion Industries' 73%-owned subsidiary Lion Forest Industries (LFI) announced to Bursa Malaysia that its wholly owned subsidiary Lion Rubber Industries Sdn BHd (LRI) has entered into a conditional share and receivable transfer agreement with Toyo Tire & Rubber Co Ltd for the proposed disposal of 75% equity interest in Shandong Silverstone LuHe Rubber & Tyre Co Ltd (Shandong Silverstone) for a cash consideration of US$21.6 million (RM65.9 million), subject to adjustments and a settlement of intercompany debts of US$24.4 million to LRI.
Simultaneously, LRI has entered into a joint-venture agreement as well as a put and call option agreement with Toyo Tire on the remaining 25% stake in Shandong Silverstone.
We are not surprised by management's decision to dispose of Shandong Silverstone, especially after its earlier decision to dispose of the profit-making tyre business in Malaysia, Silverstone Bhd, in October 2010. LRI's cost of investment in the 75% equity interest in Shandong Silverstone in December 2004 was US$30 million plus a cost of US$6.6 million to acquire the remaining 25% stake in this unit in January 2011.
Shandong Silverstone has been loss-making since its inception owing to the fierce competition in China's commercial tyre business. Therefore, we believe the initial disposal consideration, arrived at on the basis that the consolidated net asset value (NAV) of Shandong Silverstone of 142.67 million yuan (RM66.06 million), is fair.
Furthermore, Toyo Tire will settle intercompany debts due to LFI amounting to US$24.4 million, which will help to recoup this long outstanding amount.
As for the remaining 25% stake in Shandong Silverstone, LRI will be granted a put option by Toyo Tire to require Toyo to acquire the 25% balance over a duration of one year after a holding period of three years. However, Toyo Tire will also have the option to call on LRI to dispose of the 25% equity interest in Shandong Silverstone.
The settlement pricing will be based on the actual NAV on completion, plus 5% simple interest per year for the entire duration of the option period.
We welcome the latest development as: (i) the group has finally managed to hive off the loss-making unit; and (ii) the disposal also returns huge cash proceeds amounting to RM140.3 million. We are not overly excited, however, as we do not expect any cash to flow to the holding company or minority shareholders, taking the cue from the disappointing cash repayment of only approximately 13% from the net proceeds of Silverstone Bhd's disposal last year.
The proposals are also expected to result in a loss of about RM2 million. Furthermore, we remain cautious of the recent announcement of direct investments of 29% and 20% JV stakes in Lion Blast Furnace Sdn Bhd (LBF) by Lion Industries and its subsidiary LFI respectively, as this large-scale investment poses a high investment risk to the JV partners and Lion Group as a whole.
Therefore, we maintain our 'neutral' recommendation, with a fair value of RM1.57, derived from five times price-earnings ratio and 0.43 times price-to-net tangible assets ratio on CY11 figures. ' OSK Research, April 13
This article appeared in The Edge Financial Daily, April 14, 2011.
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
Lion Industries Corporation Bhd
(April 13, RM1.74)
Maintain neutral at RM1.76 with target price RM1.57: Lion Industries' 73%-owned subsidiary Lion Forest Industries (LFI) announced to Bursa Malaysia that its wholly owned subsidiary Lion Rubber Industries Sdn BHd (LRI) has entered into a conditional share and receivable transfer agreement with Toyo Tire & Rubber Co Ltd for the proposed disposal of 75% equity interest in Shandong Silverstone LuHe Rubber & Tyre Co Ltd (Shandong Silverstone) for a cash consideration of US$21.6 million (RM65.9 million), subject to adjustments and a settlement of intercompany debts of US$24.4 million to LRI.
Simultaneously, LRI has entered into a joint-venture agreement as well as a put and call option agreement with Toyo Tire on the remaining 25% stake in Shandong Silverstone.
We are not surprised by management's decision to dispose of Shandong Silverstone, especially after its earlier decision to dispose of the profit-making tyre business in Malaysia, Silverstone Bhd, in October 2010. LRI's cost of investment in the 75% equity interest in Shandong Silverstone in December 2004 was US$30 million plus a cost of US$6.6 million to acquire the remaining 25% stake in this unit in January 2011.
Shandong Silverstone has been loss-making since its inception owing to the fierce competition in China's commercial tyre business. Therefore, we believe the initial disposal consideration, arrived at on the basis that the consolidated net asset value (NAV) of Shandong Silverstone of 142.67 million yuan (RM66.06 million), is fair.
Furthermore, Toyo Tire will settle intercompany debts due to LFI amounting to US$24.4 million, which will help to recoup this long outstanding amount.
As for the remaining 25% stake in Shandong Silverstone, LRI will be granted a put option by Toyo Tire to require Toyo to acquire the 25% balance over a duration of one year after a holding period of three years. However, Toyo Tire will also have the option to call on LRI to dispose of the 25% equity interest in Shandong Silverstone.
The settlement pricing will be based on the actual NAV on completion, plus 5% simple interest per year for the entire duration of the option period.
We welcome the latest development as: (i) the group has finally managed to hive off the loss-making unit; and (ii) the disposal also returns huge cash proceeds amounting to RM140.3 million. We are not overly excited, however, as we do not expect any cash to flow to the holding company or minority shareholders, taking the cue from the disappointing cash repayment of only approximately 13% from the net proceeds of Silverstone Bhd's disposal last year.
The proposals are also expected to result in a loss of about RM2 million. Furthermore, we remain cautious of the recent announcement of direct investments of 29% and 20% JV stakes in Lion Blast Furnace Sdn Bhd (LBF) by Lion Industries and its subsidiary LFI respectively, as this large-scale investment poses a high investment risk to the JV partners and Lion Group as a whole.
Therefore, we maintain our 'neutral' recommendation, with a fair value of RM1.57, derived from five times price-earnings ratio and 0.43 times price-to-net tangible assets ratio on CY11 figures. ' OSK Research, April 13
This article appeared in The Edge Financial Daily, April 14, 2011.
March 22, 2011
LIONIND - LICB discloses details of blast furnace project
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Research House: HLG
Lion Industries Corp Bhd (LICB)
(March 22, 2011, RM1.68)
Maintain 'sell' at RM1.64 with target prices of RM1.61: LICB management has revealed details of its proposed RM3.2 billion blast furnace project, including the rationale for the proposed joint investment, projected internal rate of return (IRR) and expected payback period of the project.
The management believes the project would allow both Amsteel Mills and Megasteel to substitute a portion of their raw materials with hot metal produced from the proposed blast furnace, which would in turn result in better production efficiency and better product quality. The project would also allow Lion Blast Furnace (LBF) to market slabs to both domestic and Asean steel producers. According to LICB's announcement on March 3, LBF aims to convert about 75% of the liquid hot metal from the blast furnace into slabs and sell them in the open market domestically and overseas.
We understand that slabs production is currently under-invested in Asean; the region imported roughly 3.5 million tonnes of slabs, which are equivalent to almost half of the region's total slabs consumption in 2009.
Bright demand prospects aside, LBF would also be able to take advantage of the preferential tariffs within the Asean region such as the zero import duty for steel products with a minimum 40% local content.
The management also revealed that the completion of the blast furnace would allow the group to compete head on with the regional large-scale integrated steel players by selling the by-products such as slags, crude tar, ammonia, benzene, sulphur and carbon credit.
Based on management's estimates, the sale of by-products as well as electricity cost savings arising from the generation of power from blast furnace and coke oven gas would result in a total cost savings of RM295 million a year,'' assuming the blast furnace is operating at full utilisation rate.
Management expects the blast furnace to contribute positively to the group in its first year of operation, produce an IRR of 17% and have a payback period of six years, assuming the current market condition will be sustained with 100% utilisation rate.
While we have no doubt on the longer-term feasibility of the project, which can eventually yield positive results to the group, we are keeping our negative view on the proposed investment project for now.
This is due to the volatile iron ore and coking coal prices, which will affect the economic viability of the blast furnace project.
On top of that, the potential corporate governance issue given that this is a related-party transaction and the huge investment outlay involved in the project may affect LICB's near-term working capital, in particular, its steel operations are factors for concern. ' Hong Leong Investment Bank Research, March 22
This article appeared in The Edge Financial Daily, March 23, 2011.
Company Name: LION INDUSTRIES CORPORATION
Research House: HLG
Lion Industries Corp Bhd (LICB)
(March 22, 2011, RM1.68)
Maintain 'sell' at RM1.64 with target prices of RM1.61: LICB management has revealed details of its proposed RM3.2 billion blast furnace project, including the rationale for the proposed joint investment, projected internal rate of return (IRR) and expected payback period of the project.
The management believes the project would allow both Amsteel Mills and Megasteel to substitute a portion of their raw materials with hot metal produced from the proposed blast furnace, which would in turn result in better production efficiency and better product quality. The project would also allow Lion Blast Furnace (LBF) to market slabs to both domestic and Asean steel producers. According to LICB's announcement on March 3, LBF aims to convert about 75% of the liquid hot metal from the blast furnace into slabs and sell them in the open market domestically and overseas.
We understand that slabs production is currently under-invested in Asean; the region imported roughly 3.5 million tonnes of slabs, which are equivalent to almost half of the region's total slabs consumption in 2009.
Bright demand prospects aside, LBF would also be able to take advantage of the preferential tariffs within the Asean region such as the zero import duty for steel products with a minimum 40% local content.
The management also revealed that the completion of the blast furnace would allow the group to compete head on with the regional large-scale integrated steel players by selling the by-products such as slags, crude tar, ammonia, benzene, sulphur and carbon credit.
Based on management's estimates, the sale of by-products as well as electricity cost savings arising from the generation of power from blast furnace and coke oven gas would result in a total cost savings of RM295 million a year,'' assuming the blast furnace is operating at full utilisation rate.
Management expects the blast furnace to contribute positively to the group in its first year of operation, produce an IRR of 17% and have a payback period of six years, assuming the current market condition will be sustained with 100% utilisation rate.
While we have no doubt on the longer-term feasibility of the project, which can eventually yield positive results to the group, we are keeping our negative view on the proposed investment project for now.
This is due to the volatile iron ore and coking coal prices, which will affect the economic viability of the blast furnace project.
On top of that, the potential corporate governance issue given that this is a related-party transaction and the huge investment outlay involved in the project may affect LICB's near-term working capital, in particular, its steel operations are factors for concern. ' Hong Leong Investment Bank Research, March 22
This article appeared in The Edge Financial Daily, March 23, 2011.
March 15, 2011
LIONIND - RHB Research has market perform on Lion Industries, FV RM1.80
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Research House: RHB
''KUALA LUMPUR: RHB Research Institute has a Market Perform recommendation on LION INDUSTRIES CORPORATION [] Bhd (LICB) with an indicative fair value is RM1.80 based on 'sum-of-parts' basis
It said on Wednesday, March 15 that Lion Industries Corporation Bhd (LICB) is the largest integrated long steel producer in Malaysia, with total annual billet production capacity of 3.05m tonnes.
RHB Research said the basis of its investment case for LICB are: 1) Largest long steel producer with dominant market share in Malaysia; 2) A value play as stakes in listed entities are worth more than its market capitalisation; and 3) Stronger balance sheet compare to peers.
'However, its recently proposed blast furnace project increases potential investment risk. The project is still pending approval from minority shareholders. If the project gets rejected, this would serve as a re-rating catalyst for LICB's share price,' it said.
Company Name: LION INDUSTRIES CORPORATION
Research House: RHB
''KUALA LUMPUR: RHB Research Institute has a Market Perform recommendation on LION INDUSTRIES CORPORATION [] Bhd (LICB) with an indicative fair value is RM1.80 based on 'sum-of-parts' basis
It said on Wednesday, March 15 that Lion Industries Corporation Bhd (LICB) is the largest integrated long steel producer in Malaysia, with total annual billet production capacity of 3.05m tonnes.
RHB Research said the basis of its investment case for LICB are: 1) Largest long steel producer with dominant market share in Malaysia; 2) A value play as stakes in listed entities are worth more than its market capitalisation; and 3) Stronger balance sheet compare to peers.
'However, its recently proposed blast furnace project increases potential investment risk. The project is still pending approval from minority shareholders. If the project gets rejected, this would serve as a re-rating catalyst for LICB's share price,' it said.
March 8, 2011
LIONIND - OSK Research maintains Neutral on Lion Industries, FV RM1.57
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.
March 4, 2011
LIONIND - OSK keeps 'neutral' call on Lion Industries
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK
OSK Research is maintaining a "Neutral" call on Lion Industries Corporation Bhd (LICB) but has downgraded its target price to RM1.57 per share from RM2.07 per share, previously.
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
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
LIONIND - HLIB Research reduces earnings outlook for Lion Industries, cuts TP to RM1.61
Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Research House: HLG
KUALA LUMPUR: Hong Leong Investment Bank (HLIB) Research is reducing its FY12-13 core net profit forecasts for Lion Industries Corp Bhd (LICB) by 8.5%-9.2% to RM212 million and RM230.3 million respectively.
It said on Friday, March 4 that it reduced the target price (based on sum-of-parts) by 15.7% from RM1.91 to RM1.61.
HLIB Research said the reduction in the TP was to reflect its lower earnings assumption at the steel division (arising from higher borrowing cost to finance the blast furnace project); and'' changes to the latest market prices of LICB's stakes in the listed entities. Downgrade from Hold to Sell.
LCIB had on Thursday entered into a joint venture agreement with Lion Diversified (LDHB, the holding company), Lion Forest (a 73% subsidiary) and Lion Blast Furnace (LBF) to jointly undertake the CONSTRUCTION [] of a blast furnace project, which has a rated capacity of 2.1 million tonnes/annum. Under the agreement, LICB, LDHB and LFIB will invest 29%, 51% and 20% respectively in LBF.
LICB, LFIB, and LDHB would invest RM281.3 million, RM194 million and RM494.7 million respectively into the blast furnace project. LICB will also provide corporate guarantee to the project's loan facility.
HLIB Research said the proposed equity investment by LICB and LFIB turns LICB's net cash position into a net debt and net gearing of RM384.5 million and 0.12x respectively.
'Assuming a financing cost of 6% p.a. (before 25% corporate tax), the additional borrowing costs arising from the blast furnace project investment would bring down LICB's FY12-13 net profit forecasts by 8.5-9.2%.
'We believe the venture could likely take a while before it could yield positive results to the group, given: 1) The volatile iron ore and coal prices, which in turn affect the economic viability of the proposed blast furnace project; and 2)
'The huge investment outlay involved (despite 70% of the project cost will be funded by borrowings) that may affect LICB's near term working capital, in particularly, at the steel manufacturing division,' it said.
Company Name: LION INDUSTRIES CORPORATION
Research House: HLG
KUALA LUMPUR: Hong Leong Investment Bank (HLIB) Research is reducing its FY12-13 core net profit forecasts for Lion Industries Corp Bhd (LICB) by 8.5%-9.2% to RM212 million and RM230.3 million respectively.
It said on Friday, March 4 that it reduced the target price (based on sum-of-parts) by 15.7% from RM1.91 to RM1.61.
HLIB Research said the reduction in the TP was to reflect its lower earnings assumption at the steel division (arising from higher borrowing cost to finance the blast furnace project); and'' changes to the latest market prices of LICB's stakes in the listed entities. Downgrade from Hold to Sell.
LCIB had on Thursday entered into a joint venture agreement with Lion Diversified (LDHB, the holding company), Lion Forest (a 73% subsidiary) and Lion Blast Furnace (LBF) to jointly undertake the CONSTRUCTION [] of a blast furnace project, which has a rated capacity of 2.1 million tonnes/annum. Under the agreement, LICB, LDHB and LFIB will invest 29%, 51% and 20% respectively in LBF.
LICB, LFIB, and LDHB would invest RM281.3 million, RM194 million and RM494.7 million respectively into the blast furnace project. LICB will also provide corporate guarantee to the project's loan facility.
HLIB Research said the proposed equity investment by LICB and LFIB turns LICB's net cash position into a net debt and net gearing of RM384.5 million and 0.12x respectively.
'Assuming a financing cost of 6% p.a. (before 25% corporate tax), the additional borrowing costs arising from the blast furnace project investment would bring down LICB's FY12-13 net profit forecasts by 8.5-9.2%.
'We believe the venture could likely take a while before it could yield positive results to the group, given: 1) The volatile iron ore and coal prices, which in turn affect the economic viability of the proposed blast furnace project; and 2)
'The huge investment outlay involved (despite 70% of the project cost will be funded by borrowings) that may affect LICB's near term working capital, in particularly, at the steel manufacturing division,' it said.
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