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Thank u. Lets see how it perform on the next quater then we will be able to conclude. Time will tell
Yes time should tell if a company is worth its salt. And if you interested in this stock based truly on an investing perspective, then you should realise the next quarter alone is not sufficient. One really needs to see an earnings track record of at least 5 years before one is able to decide if the company is truly a wonderful business.
And incredibly, after all these years LionD restructuring story finally concluded. A correction of the past mistakes the company has made. And one of they past mistake was simply over borrowing. Hence, debt issue is so rather important in this company. It failed because of over leverage. Hence, there's always a strong chance the same mistake could be made in the near future.
And then comparisons with other steel stocks is so important. Our stock market is way too small. One probably should not overload in any one sector. Hence when we choose stocks, we want to choose only the better stocks in any given one sector.
So is LionD it? The best steel stock listed?
Compare profit margins. Who has the best?
Compare cash balances? Which has the best?
Compare track recod? Which is the the best?
Last but not least... there is so much danger in using cheapness as your main criteria in stock picking. Cheap stocks are cheap for one reason or another. And there is no guarantee card that says all cheap stocks will become expensive. It just does not work this way. And I am sure you have seen some cheap stocks remaining relatively cheap for a long time. Bull rallies could come and go and yet the stock could remain relatively cheap.
Thanks for your useful guidance on the stock selections on the steel sector.
I try to ask opinion from the samgangs.... but they have diffrent opinion on this stock . Allow me to cut and paste here. Hope you can comments a word or two on their statement.
By Benjamin
Allow me to comment on Liondiv.
Included in the term loan there was a USD132.11mil of 2.5% exchangeable bond which was issued by a way of conversion RM160mil RCLS of 40mil Parkson Shares.
The issuance of bond was at RM11.0361 while RCLS was only RM4. In another word, Liondiv "crystalised" a profit of RM281.444mil in this deal. Beside, the interest was only 2.5% where to get such a low interest rate loan?
Technically speaking, Liondiv is not in net cash position @31/12/2007.
However, Liondiv still holding 500mil RCLS which was valued at RM625.33mil @31/12/2007 and it worth RM781.25mil today based on the closing price of RM6.25 of Parkson. Thus, there is a profit of RM155.92mil to be booked in on Liondiv FS @31/3/3008. On top of this, LionD benefited from the depreciation of USD by a translation gain of RM10.819mil (assume forex rate @3.19)arose from exchangeable bond of USD132.11mil.
The above statement was made from the accounting perspective. Hope can solve the queries.
By TL
TL to Ben
At end of 5 years tenure, LION Div have the right to ' redeem ' ( convert ) RCSL to Parkson shares and pass to Bond holder at maturity date.
Please do not mix up. Redeemable ( conversion ) and exchangable. ( exchangeble by BONDS holder to Parkson shares at end of 5th years )
Hope what I trying to explain here able to help.
Reference is made to the announcements by the Company dated 31 October 2007 and 6 November 2007. The Board of Directors of LDHB wishes to announce that the issuance by Excel Step Investments Limited (“Issuer”), a wholly-owned subsidiary of LDHB, of USD132,110,000 nominal value 5-year 2.5% exchangeable bonds which are exchangeable into approximately 40 million new ordinary shares of RM1.00 each of Parkson Holdings Berhad (“Parkson”) to be issued by way of conversion of RM160 million nominal value redeemable convertible secured loan stocks of Parkson held by the Issuer, at an initial exchange price of RM11.0361 per Parkson share (“Proposed Exchangeable Bonds Issue”) has been issued and completed today.
It's a forum etiquette not to try to discuss other opinions posted elsewhere.
You know why.
Say if I made a comment against what TL has said.. then... how is TL gonna defend his opinions? And where? And even if they do reply to what I said here... then how? Where am i to read there comments and where should I comment?
It's rather endless.
I believe u can understand what I am trying to say. So I would very much appreciate it if you do not paste other's views here for discussion and vice-versa (do not re-quote what's said here) since it would ultimately be pointless and serves no purpose.
PETALING JAYA: Lion Diversified Bhd has proposed to set up blast furnace facilities in Banting, Selangor, involving capital expenditure of about US$500 million (RM1.62 billion) and with a production capacity of 2.5 million tonnes per annum.
Announcing this yesterday, it said the facilities would comprise of a blast furnace, raw material yard, coke oven plant and sintering plant, and was expected to be completed in 18 months.
Lion Diversified said its unit Apex Gem Sdn Bhd signed an agreement yesterday with China’s Wisdri Engineering & Research Incorporated Ltd for the engineering and commissioning of the 2,580-cubic metre furnace for a contract fee of RM532.95 million.
“The estimated capex (capital expenditure) will be funded by Lion Diversified group’s internally generated funds and/or borrowings. The gearing of the group is expected to increase with the borrowings and the effect of the gearings is subject to the funding size, which has yet to be determined,” it said.
As u can see... it's a rather massive project... which involves massive borrowing yet again!
PETALING JAYA: Lion Diversified Holdings Bhd has bought four pieces of land measuring 20 hectares in Changshu City, China, for RM151.68 million cash as part of its venture into the world’s largest population property market.
In a statement yesterday, the department store operator said the purchase provided a good chance for it to tap the residential and commercial market in Changshu City, which is now getting strong foreign direct investment (FDI).
“The venture in the property development in Changshu will further generate strong revenue for the group,” it said, adding that the acquisition would be sourced from internally generated fund.
I mean... wow!
Almost 10 years ago... Lion Group got into so much trouble due to it's over-expansion and over borrowing.
Look at i now... 150 million into property venture... and another 1.5 BILLION into a blast furnance...
That's massive spending...
and u look at most recent earnings... where's the profits? where's the cash balances?
Sorry .I am too new with this forum. Will do as you said, not to re-qoute anything to anywhere. Well, actually, i am only an average student who make mistake and pay for it often. Hence, I often seek for guidance from experience investor like you all.Not meant to offend you and all the sahamas member.
I never know about its history 10 years ago. Hey,you had pointed out the most important part which mayb can save me for paying for my investment school fees agan. Borrowing vs cash. It remind me about the risk which occured.Thanks for your guidance
Sorry .I am too new with this forum. Will do as you said, not to re-qoute anything to anywhere. Well, actually, i am only an average student who make mistake and pay for it often. Hence, I often seek for guidance from experience investor like you all.Not meant to offend you and all the sahamas member.
I never know about its history 10 years ago. Hey,you had pointed out the most important part which mayb can save me for paying for my investment school fees agan. Borrowing vs cash. It remind me about the risk which occured.Thanks for your guidance
Hello Goodluck,
This is not a problem at all.
Just do remember LionD was a restructured stock and that it had gotten into trouble before due to its aggressive expansion which incurred massive borrowing.
For me, expansion it's always a good sign and sometimes borrowing isn't always that bad BUT one must draw a line between manageable expansion and reckless expansion.
Anyway you had mentioned "but they have different opinion on this stock ."
That's rather strange if you asked me.
If you read from the start of the postings, on posting #1, you would note that LionD only reported earnings of 42 mil and if you compared to its previous year earnings, earnings wasn't that hip. (of course - u would need to filter out the exceptional items)
That was in Dec.
Posting #5, sleeppy mentioned it was cash free. Which was strange. Cos when i decided to have a peep, i saw otherwise in the quarterly earnings reported in Dec 07.
Last month LionD only reported an earnings of 5 mil. From 42 to 5 mil. That's a worry yes?
Which is all about pointing out the exact facts.
So I am left wondering... what different opinion?
Anyway... since this section is the investing forum, all my 3-comments are based solely from an investing perspective. ie investing in LionD for a longer period (say 5 years).
Now in the short run... stocks can always do some funky stuff. On a hot market, most stocks will rise, and that includes lousier quality stocks.
And on a short term, I have no idea what this stock will or will not do.
