Li & Fung 0494

Li & Fung 0494

Postby winston » Thu May 22, 2008 8:02 am

Li & Fung eyes Europe, Russia for acquisitions
Karen Wong
Thursday, May 22, 2008

Li & Fung (0490) sees opportunities for mergers and acquisitions in the face of the economic downturn. It also reports growth in its orders from the United States and European markets.

"The company is interested in both small and large-size acquisition opportunities," said group managing director William Fung Kwok-lun. "The company annually sets aside US$100 million (HK$780 million) to be used for small-size acquisitions."

Fung said the company will look into possible small acquisitions mainly in Europe as it is seen to have a better outlook. "We are looking into Western Europe but also Russia as well for possible small-size acquisitions." No specific large-size acquisitions were targeted.

Fung said Li & Fung has not been affected by the US slowdown. "The recession stops US consumers from purchasing expensive goods. However, our products continue to be in demand for they are not high-end. Our products consist of toys, daily products and clothing.

"There is a positive growth in orders from Europe and the United States. The orders from the first quarter have increased from the same period last year."

Fung said the Sichuan earthquake has had only a limited impact on the company's business. "Our company is actively participating in the fundraising activity," he said.
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Re: Li & Fung 0490

Postby helios » Thu May 22, 2008 8:38 am

Li & Fung reports robust growth in 2007, largest turnover growth since 2000
New Three-Year Plan sets US$1 billion profit target for 2010

Hong Kong, 27 March 2008 – Hong Kong-based global consumer goods exporter Li &
Fung Limited (“Li & Fung” or “the Group”, SEHK: 494) today announced strong annual
results for 2007, well-exceeding the 2005-2007 Three-Year Plan target. At the same
time, the Company announced its new 2008-2010 Three-Year Plan target of achieving a
turnover of US$20 billion and a core operating profit of US$1 billion by 2010.

Three-Year Plan 2008-2010
The new Three-Year Plan’s targets are to reach US$20 billion in turnover, of which
US$16 billion will come from the core sourcing business and US$4 billion from the
onshore businesses in the US, Europe, and China
. The Group is also targeting to
achieve US$1 billion in core operating profit and has set a target to achieve operating
leverage of doubling income percentage growth over turnover percentage growth (i.e. 2x)
by the end of this new Three-Year Plan.

Mr. Fung commented, “This year marks the first year of the Group’s Three-Year Plan
2008-2010. While the new Three-Year Plan is commencing against the backdrop of a
soft consumer market in the U.S., it has made a good start with a strong flow of orders
to-date. Because of our asset-light model and extremely flexible sourcing network, the
management is confident that they can navigate around the current uncertainties
surrounding the global market. In addition, we expect the momentum of companies
outsourcing their buying activities to Li & Fung will accelerate in the current weak market
conditions. We will also continue to pursue acquisitions in this Plan period to
complement our organic business growth
.”

Mr. Bruce Rockowitz, President of Li & Fung (Trading) Limited, said, “We are very
excited about the growth opportunities within our core business as well as the
opportunities presented by our onshore business model. The new Three-Year Plan
contains more growth drivers than ever before. We will be expanding our footwear, and
health, beauty and cosmetics businesses.
We also plan to duplicate our successful US
onshore business model in Europe and China as part of this Three-Year Plan. With our
strong sourcing and design capabilities, we are well-positioned to take the Group to new
heights.”
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Re: Li & Fung 0490

Postby helios » Thu May 22, 2008 5:15 pm

IDS Group Announces Two Acquisitions - Hong Kong Pharmaceutical Universal Company & US WTI Logistics Company

Hong Kong, 16 May 2008 – Integrated Distribution Services Group Limited (or “the Group”, or “IDS”; SEHK: 2387), an Asian multinational provider of integrated-distribution services, today announced it has reached separate agreements to acquire a pharmaceutical company in Hong Kong and a third-party logistics company in the US.

The total consideration for the two acquisitions is approximately US$24 million and will be financed by the Group’s internal cash reserves and bank borrowings.

“I am pleased to report on two successful acquisitions, one being our maiden acquisition in our home base, Hong Kong, and the other being a logistics company that will strengthen our US operations,” said Mr. Ben Chang, Group Managing Director of IDS.

“These acquisitions are in line with our strategy of identifying strategic merger and acquisition (M&A) targets to enhance the scale of our existing operations and supplement organic growth.”

The Hong Kong acquisition involves the purchase of 91% (with put and call options exercisable one year after completion to acquire additional 5%) of the issued capital of Universal Pharmaceutical Laboratories Limited (Universal) for a consideration of HK$109.2 million (approximately US$14 million), subject to adjustments based on the audited adjusted net profit for the year ended 31 December 2007, the net asset value of Universal as at 31 December 2007 and net cash of Universal at completion. The consideration is equivalent to approximately 8.25 times of the estimated 2007 net profit after tax of Universal based on its management accounts.

The Acquisition Agreement was signed on 15 May 2008 and it is expected to be completed by 26 May 2008.

Universal is a leading Hong Kong-based manufacturer and distributor of pharmaceutical and healthcare products covering the categories of pharmaceuticals, health & beauty and animal health. It runs a GMP-certified manufacturing facility in Hong Kong for the production of generic drugs and is a dominant supplier of certain restricted chemicals in Hong Kong.

“The acquisition of Universal further strengthens our healthcare distribution operations in
Hong Kong and will enhance our healthcare entry into China
. It also enables us to expand our scope of manufacturing expertise to cover pharmaceutical products, thus enhancing our service offering to our customers,” said Mr. Joseph Phi, President of IDS.

“This acquisition is very timely as we have recently constructed a state-of-the-art healthcare distribution center in Hong Kong, designed to accommodate our expected growth in this business.”

The acquisition in the US involves a third-party logistics company, Warehouse Technology Inc. (WTI), based in the Los Angeles Metropolitan area. IDS has completed the acquisition of all the shares of WTI on 8 May 2008 with a total consideration of US$10 million. WTI reported revenue of US$23m for the year ended 30 September 2007.

WTI provides storage and transportation services to a portfolio of illustrious customers in the footwear, handbags and accessories sectors, including the Rosetti handbag division of Li & Fung (Trading) Limited ("Li & Fung"). WTI currently operates five logistics facilities in California covering a floor area of over 1.3 million square feet. This is the second acquisition IDS has made in the US after the Group entered the US logistics market in 2006.

“The addition of WTI will substantially strengthen the scale of our US operations and will allow us to tap the enormous potential of the non-apparel segment of footwear, handbags and accessories,” said Mr. Chang. “We also expect substantial synergies as a result of consolidating our current logistics facilities on the West Coast with those of WTI. More importantly, WTI currently has a strong business partnership with Li & Fung in the US. This acquisition more than doubles our business on the US West Coast. It will facilitate and strengthen our position to connect Asia and the US with source to destination end-to-end global logistics services.”

“We will continue to be active in M&A activities. Well-managed companies that augment our existing operations or allow us to enter new geographies or service segments will be our primary targets,” concluded Mr. Chang.
[Finance disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought regarding investing of any stocks/ funds and/or whatsoever. The author has no vested interest in the mentioned stock at the time of writing.
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Re: Li & Fung 0490

Postby helios » Tue May 27, 2008 3:41 pm

RE: Benedict CHANG Yew Teck, aged 50, IDS Group Managing Director of the Company. has a Bachelor of Science degree in Marine Engineering. From 1984 to 1996, Mr. Chang held various senior executive positions with the HAVI Group LP. He was Group Managing Director of the HAVI Group LP’s Asia Pacific operations, providing logistics, supply chain management, manufacturing and purchasing services to McDonald’s in Asia Pacific. He was also Senior Vice-President and Partner of the HAVI Group LP and sat on the Executive Team of the HAVI Group LP. Mr. Chang spent his early career as Ship Repair Manager with Keppel Corporation Limited. From 1980 to 1984, Mr. Chang was the Project Director of the Allied Food Group and then the Director of Manufacturing at Allied Cocoa Industries, a subsidiary of the Cocoa Division of W.R. Grace. He's currently the Chairman and owner of Dommal Food Services Sdn. Bhd., a company with the country development rights to operate and franchise Domino’s Pizza stores in Malaysia. He is also a director of Delifrance Asia Pte Limited and Li & Fung (Gemini) Limited.

[extracted from nov2004, ipo prospectus - - IDS group belongs to Li and Fung parent company].

updated on 29-May'08, e chart is as below:

Image
[Finance disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought regarding investing of any stocks/ funds and/or whatsoever. The author has no vested interest in the mentioned stock at the time of writing.
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Re: Li & Fung 0490

Postby winston » Thu Jun 26, 2008 3:52 pm

Not vested. Hong Kong's Li & Fung tumbles on worries U.S. sales may fall

HONG KONG (Thomson Financial) - Shares of Li & Fung, which supplies consumer goods to U.S. retailers, tumbled in afternoon trade in Hong Kong on Thursday on worries sales may decline after a survey showed growing pessimism among American consumers on economic outlook.

The Conference Board this week reported that U.S. consumer confidence plunged in June to its lowest in 16 years, heralding a further decline in spending among Americans.

Merrill Lynch cut its rating on Li & Fung to "underperform" from "neutral" on bleak earnings outlook arising from the plummeting consumer confidence in the United States. It also lowered its price target on the stock to HK$24.73 from HK$32.45.

"We are lowering our estimates on Li & Fung ... on expectations that margin improvements will be delayed by a worsening U.S. consumer environment," Morgan Stanley analysts Denise Chai and Kenny So wrote in a report released Wednesday.

"The collapse in consumer expectations suggests that the operating environment could become much more difficult," they said.

Shares of Li & Fung slumped almost 6 percent to HK$25.20, underperforming the Hang Seng Index which was last down 0.5 percent.

Other retailers which rely mainly on overseas sales also declined.

Hong Kong-based fashion retailer Esprit Holdings, which has outlets in the U.S. and Europe, lost 3.5 percent to HK$83.00.

Yue Yuen Industrial (Holdings), supplier of sports shoes to brands like Nike and Adidas, declined 1.2 percent to HK$19.66.
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Re: Li & Fung 0490

Postby winston » Tue Jul 15, 2008 12:15 pm

Not vested.

STOCK ALERT - Hong Kong's Li & Fung lower after Goldman cuts target price

HONG KONG (XFN-ASIA) - Li & Fung Ltd, which supplies consumer goods to US retailers, fell sharply in late morning trade after Goldman Sachs cut its target price to 33.3 hkd from 38.8, reflecting lower earnings forecasts.

At 11.45 am, the stock was trading down 1.0 hkd or 4.32 pct at 22.15.

Goldman said it had trimmed the 2008 and 2009 earnings per share forecast for Li & Fung by 9 pct and 11 pct, respectively, to 1.04 hkd and 1.34 hkd, reflecting a slower margin expansion outlook due to macro concerns in the US.

However, Goldman maintained its "buy" rating on Li &Fung, citing relatively low valuation compared with historical levels, and confidence that the firm can reach its plan of achieving 1 bln usd in operating profit by 2010.
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Re: Li & Fung 0490

Postby winston » Thu Jul 31, 2008 9:26 pm

Not vested.

Li & Fung advanced almost 2.1 percent to HK$26.65 on hopes U.S. consumers may spend more after receiving tax rebates from the government.

UBS Investment said the supplier of consumer goods to U.S. retailers such as Wal-Mart may not disappoint investors when the company reports its first-half results on August 13. The exporter may also announce planned acquisitions next month, UBS said in a note to clients.

'We note that the deteriorating global economic conditions will provide Li & Fung with more acquisition opportunities,' it said.

Last year, Li & Fung announced nine acquisitions, including four Liz Claiborne brands
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Re: Li & Fung 0490

Postby winston » Wed Aug 13, 2008 8:38 pm

Not vested.

Li & Fung pays $330 mln for U.S. handbag importer

HONG KONG, Aug 13 (Reuters) - U.S.-focused consumer goods exporter Li & Fung (0494.HK: Quote, Profile, Research, Stock Buzz) said on Wednesday it will pay $330 million to buy U.S. handbag importer Van Zeeland to become a leading handbag supplier in the United states.

Li & Fung, which counts U.S. retail behemoths Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research, Stock Buzz) and Target (TGT.N: Quote, Profile, Research, Stock Buzz) among its clients, is ramping up acquisitions as it grows its proprietary brands businesses, and seeks to hit a turnover target of $20 billion by 2010, up from roughly $12 billion now.

New York-based Van Zeeland is a leading importer of mid-tier and department store handbag brands including its flagship labels Kathy Van Zeeland Handbags, B. Makowsky and Tignanello which are sold at Macy's (M.N: Quote, Profile, Research, Stock Buzz) and JC Penny (JCP.N: Quote, Profile, Research, Stock Buzz), among other locations.

Li & Fung -- which sources everything from toys to clothes to beauty products-- said the deal will significantly strengthen its presence in the fashion accessories market.

"They are a less expensive Coach (COH.N: Quote, Profile, Research, Stock Buzz), that's the way I'd position these brands," Group Managing Director William Fung told reporters, referring to the famous New York-based 'affordable' luxury handbag maker.

On Wednesday Li & Fung posted a 18 percent rise in first-half net profit to HK$1.24 billion, on the back of a 25 percent surge in turnover to roughly $6.1 billion due to market share gains.

However that result lagged an average forecast of $1.32 billion according to 15 analysts polled by Reuters, as U.S. consumers cut spending and retailers tightened inventories amid a looming global slowdown.

Li & Fung also announced it has inked deals to acquire the buying offices of toy retailer Toys R Us, and apparel brand Timberland (TBL.N: Quote, Profile, Research, Stock Buzz), as increasing numbers of firms look to outsource their sourcing arms to cut costs. It did not disclose the financial terms of the deals.

In September apparel company Liz Claiborne Inc (LIZ.N: Quote, Profile, Research, Stock Buzz) agreed to sell four of its moderately priced brands to the U.S. arm of Li & Fung which the sourcing firm plans to reposition as proprietary brands.

Last November, Li & Fung bought U.S. private label sleepwear firm, American Marketing Enterprises, for US$128 million as it ramped up its U.S. onshore business.

Shares in Li & Fung closed down about 3 percent on Wednesday, underperforming the Hang Seng Index's .HSI 1.6 percent drop.
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Re: Li & Fung 0490

Postby winston » Tue Aug 26, 2008 1:17 pm

Not vested. From UOB-Kay Hian:-

Vulnerable to the US slow down

As a major sourcing service provider for large retailers with 60% revenue deriving from the US market, Li & Fung is vulnerable to the slowdown in the US consumer market. Given limited organic growth, the company will rely more on M&As to drive its earnings growth. However, this strategy would be limited by its current high gearing ratio.

Li & Fung maintains its target to achieve a total revenue of US$20b by 2011 (up 69% from 2007 sales of US$11.85b or 19% CAGR from 2008 to 2011) and 38% CAGR of operating profit (two
times the annual growth for revenue). To achieve this aggressive target amid unfavourable macro environment, Li & Fung will continue launch acquisitions, large or small.

The Group has completed six more acquisitions ytd, including four small ones with proceeds of less than HK$50m each (for fashion business and health, beauty and cosmetics businesses) and a large one with a price of US$330m (Van Zeeland, a New Yorkbased importer of mid-tier and
department store brands).

With a net debt position of HK$5.70b (59% of equity) in 1H08, the Group would need to raise funds either via share placements or bond issues to finance further acquisitions. This represents further EPS dilution or increase in debt burden, going forward.

Though the Group’s core operating profit could grow at around 30% CAGR from 2008 to 2010, driven by acquisition and organic growth, we expect its EPS to grow at only 22% CAGR given the higher finance costs. The stock is trading at 25x 2008 PE, which is not cheap given the mounting macroeconomic risk and fund raising pressure. Maintain SELL with fair price of HK$19.30 based on 15x 2009 PE.
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Re: Li & Fung 0490

Postby helios » Wed Aug 27, 2008 8:33 am

Image

- Weekly Chart reviewed on 26-Aug'08.
[Finance disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought regarding investing of any stocks/ funds and/or whatsoever. The author has no vested interest in the mentioned stock at the time of writing.
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