Li & Fung 0494

[winston]

Li & Fung starts spree by forking out up to $3.1b for US clothing firm

Global consumer goods exporter Li & Fung (0494) announced yesterday it will pay up to US$401.8 million (HK$3.134 billion) to buy US clothing business Wear Me Apparel.

President Bruce Rockowitz told Dow Jones that the deal is one of the company's best to date, as the Hong Kong-based sourcing firm and exporter had offered to pay four to five times more three years ago.

( Huh ? Are they smarter now or were they stupid 3 years ago ? )

"We will continue to pursue our acquisition strategy, and this deal is only one of the many opportunities that we are currently looking at," he said.

New York-based Wear Me Apparel holds licenses for top brands such as Calvin Klein, Timberland, US Polo, Disney, Marvel and Warner Brothers. The company had sales of US$700 million last year.

Under the deal, Li & Fung will use internal cash reserves to pay Wear Me Apparel a fixed amount of US$101.8 million, plus performance-based payments over the next five years of up to US$300 million.

Rockowitz said more acquisitions in the clothing, health and beauty industries - mainly in the United States and Europe - are expected over the next several months. The exporter said in March it aimed to spend US$1 billion on acquisitions this year.

Source: DEREK YIU, The Standard HK

[winston]

The unstoppable Fung brothers

Li & Fung has become one of the world's largest producers of consumer goods, and the company only keeps growing.

By Suzanne Kapner, writer

NEW YORK (Fortune) -- On the morning of Sept. 11, 2001, William Fung, the CEO of Li & Fung Limited, a large Hong Kong-based sourcing company founded by his grandfather, awoke in his Boston hotel room with an inexplicable urge to meet his sister, who lives in San Francisco, for lunch at their favorite sushi restaurant there.

Fung was booked on United Airlines Flight 175, which was scheduled to leave Logan International Airport at 8:00 a.m. that morning for Los Angeles. At the last minute, he changed planes and boarded one bound for San Francisco instead. The sushi craving saved his life. Terrorists hijacked the United flight and flew it into the World Trade Center.

William chalks up his good fortune to fate and the benevolent deeds of his ancestors. "The Chinese believe that if you do good, you'll be rewarded," he says.

Fate also saved his father's life. At the end of World War II, a Japanese soldier stumbled into Fung Hon-chu's Hong Kong office waiving a pistol. Before he could do much harm, the soldier, who was drunk, quickly staggered out.

http://money.cnn.com/2009/12/07/news/in ... g.fortune/

[winston]

Not vested.

DJ MARKET TALK: Li & Fung +1.0%; HBT Deal A Big Win -Goldman

1117 [Dow Jones] Li & Fung (0494.HK) +1.0% at HK$34.05 vs HSI down 0.7% after inking another outsourcing deal, becoming exclusive sourcing agent for major brands of Hudson's Bay Trading.

Goldman Sachs says deal "a significant win," as HBT sourcing business previously handled by local competitor Linmark (0915.HK); assuming typical retail gross margin, private label at about 20% of total sales, estimates deal could be another US$1 billion account for L&F.

"To us, L&F's ability to win this contract is a strong testament of the competitive advantages that it now offers to retailers compared to smaller players," GS says; keeps stock on Conviction Buy list, target price unchanged at HK$39.50. Linmark off 5.1% at 47 HK cents.

Source: Dow Jones newswire

[winston]

Not vested.

DJ MARKET TALK: Buy Li & Fung; US Trade Positive -GS

1109 [Dow Jones] STOCK CALL: Goldman Sachs picks Li & Fung (0494.HK) among HK-listed exporters, with U.S. textile import data showing November is rebounding faster than expected.

"We had thought 4Q09 would see trade decline continue to narrow, leading to positive gains by 1H10. However, it appears trade is turning positive earlier than we expected and in a significant way."

Notes, analysis of last three upturns in trade cycles indicates Li & Fung share price doesn't typically peak until 8-11 months after trade peaks; also, all three share price peaks at significantly higher 12-month P/E multiples (28x-40x) than what stock is trading currently. Keeps stock at Buy, on conviction list, target at HK$39.50, based on 24x 2010 P/E.

Source: Dow Jones Newswire

[winston]

Li & Fung inks Wal-Mart deal

Consumer goods exporter Li & Fung (0494) said it has entered into a sourcing agreement to supply Wal-Mart with goods valued at US$2 billion (HK$15.6 billion) in the first year, and expected to grow after that.

"It is expected that the group will benefit from the sourcing arrangement described through an enhancement of profitability," Li & Fung said yesterday.

Li & Fung said the sourcing arrangement was non-exclusive and did not contain any sourcing volume commitments by Wal-Mart, the world's largest retailer.

"This is a long-term strategy deal that will grow strongly over the next four to five years," said president Bruce Rockowitz.

Li & Fung said it was aiming to post annual turnover of US$20 billion and a core operating profit of US$1 billion under its current three-year plan for 2008 to 2010.

Li & Fung posted turnover in the first half of 2009 of about US$6 billion. It has not reported its full-year results for 2009.

Wal-Mart was already among Li & Fung's clients, which include other major retailers such as US store operator Target.

Source: REUTERS

[winston]

Not vested. Up 10% today. The sourcing arrangement is non-exclusive and did not contain any sourcing volume commitments by Wal-Mart, already an existing customer of Li & Fung. So why are u so excited ? Are the traders pumping the price up to get out ? Or worst, to a placement ?

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DJ MARKET TALK: GS Raises Li & Fung Target To HK$43.30

1102 [Dow Jones] STOCK CALL: Goldman Sachs raises Li & Fung (0494.HK) target to HK$43.30 from HK$39.50 after news it's signed non-exclusive sourcing deal with Wal-Mart Stores (WMT) with expectations U.S. retailer could buy US$2 billion worth of goods through HK firm in deal's first year.

Houses raises FY10-FY11 EPS forecasts by 1.2%-4.8% to factor in near-term earnings impact from this partnership. "We think this partnership offers the strongest proof to date that even at L&F's current scale, growth does not need to slow down," says Goldman.

Says this account alone can eventually reach or surpass company's current size (FY09 sales of US$14 billion). Says even with low net margin of 1%-2%, partnership's longer-term boost to company's earnings can be substantial. Keeps stock at Buy. Shares last +10.4% at HK$35.65.

Source: Dow Jones Newswire

[winston]

Not vested.

DJ MARKET TALK: Wal-Mart, Li & Fung Deal A "Good Match" -JPM

1210 [Dow Jones] STOCK CALL: JPMorgan says it's hard to quantify how large Li & Fung (0494.HK), Wal-Mart (WMT) deal could eventually become. "While Wal-Mart's sourcing needs for Private Label are huge (about US$100 billion) that number likely includes categories where Li & Fung may not currently have a presence (such as Food and Groceries).

Further, (L&F) management indicated that they expect to make lower-than-normal margins from this deal, which is typical of what they make from deals that give them large volumes." Says deal could create US$3 billion in value in five years time for Li & Fung based on "a very optimistic set of assumptions."

Adds, Li & Fung will have separate headcount, infrastructure commitments to run this business, which implies some margin pressure on company in initial years. Generally, says partnership looks like "good match," could also open up new verticals, such as food, for Li & Fung in long run. House is reviewing forecasts; currently rates stock Underweight, target at HK$22.00. Shares jump 10.4% to HK$35.65.

Source: Dow Jones Newswire

[winston]

Li & Fung taps rebound by Mandy Lo

Li & Fung (0494) - which is aiming to make 2010 its best year ever as exports continue to recover - said net earnings last year climbed 39 percent to HK$3.37 billion on massive cost controls.

The suppliers for retailers including US chain store Wal-Mart bases its confidence on robust orders for the first nine months, managing director William Fung Kwok-lun said yesterday.

"If you look at all the outsourcing and some of our acquisitions, everything is coming together. This will be our best year ever," said president Bruce Rockowitz.

A six-year outsourcing contract the company signed with Wal-Mart in January is expected to generate US$2 billion (HK$15.6 billion) in revenue in the first full year. Li & Fung bought British supplier Visage in February and Rockowitz said other deals are in the pipeline.

As of December 31, the Hong Kong-listed firm had HK$4.16 billion in cash.

The company's aim to achieve a turnover target of US$20 billion this year remains a challenge "depending mainly on the valuation of the yuan as China is a key sourcing country," Fung said.

But Li & Fung outsourced more manufacturing to lower-cost countries like Vietnam and Bangladesh, helping to boost its core operating margin to 3.82 percent from 2.79 percent. Rockowitz projected the core operating margin to surpass 4 percent in the coming year, as demand rises and production costs fall.

Turnover slid 6 percent to HK$110.7 billion last year as the financial downturn hit consumer sentiment.

The firm said 64 percent of turnover came from the United States and 27 percent from Europe - two key markets battered by economic turmoil.

A final dividend of 49 HK cents per share was declared. Shares of Li & Fung closed 0.71 percent lower at HK$41.75 ahead of the annual results.


http://www.thestandard.com.hk/news_deta ... 00325&fc=7

[winston]

Dopped 10%. Vested

DJ MARKET TALK:CIMB Raises Li & Fung Target 13.9% To HK$42.50

1548 [Dow Jones] STOCK CALL: CIMB raises Li & Fung (0494.HK) target price to HK$42.50 from HK$37.30 after increasing target multiple to 25X FY11 P/E from 22X, in line with 2003-09 valuation average as stock re-rated on post-SARS earnings recovery.

"We think that a recovery multiple is justified in view of more indicative signs of recovery in 2010." Notes FY09 net profit at HK$3.37 billion, coming in 0.5% below house's forecast, but 10% below consensus; revenue hit by weak environment, but margins helped by offshore business; adds, cost rationalization paid off, with operating expenses down 2.4%.

Says 2010 starting to look up on lower base, orders starting to strengthen, average selling prices trending up, while retailers placing more orders due to low inventory levels, improving consumer sentiment. Keeps FY10-11 earnings forecasts unchanged; keeps at Neutral after stock's recent rally. Shares down 10.5% at HK$37.35.

Source: Dow Jones Newswire

[helios]

Oh. Winston just entered into the position ... ...