Li & Fung 0494

Re: Li & Fung 0494

Postby winston » Fri Feb 20, 2009 10:51 am

DJ MARKET TALK: Merrill Ups Li & Fung To Buy; Target HK$20.44

0911 [Dow Jones] STOCK CALL: Merrill Lynch upgrades Li & Fung (0494.HK) to Buy from Underperform as it's "banking on cost-saving for growth"; also hikes price target by 48% to HK$20.44, noting "we have raised earnings estimates for 2009-10 by 10/20% to factor in larger-than-expected cost savings."

Says company responding to tougher macro environment by actively using natural attrition to reposition its cost base in lower-cost countries; notes around 150 people laid off as a result of customer bankruptcies, but Li & Fung's high staff churn rate of 20% offers flexibility.

"We expect cost-cutting to be 2H-loaded in 2009, with 2010 reflecting the full benefit. Based on our analysis, the Street has not factored in any meaningful SG&A savings." Stock ends down 1.2% at HK$15.90
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Re: Li & Fung 0494

Postby winston » Fri Feb 20, 2009 6:09 pm

DJ MARKET TALK: Li & Fung +4.0%; Cost-Cutting Potential Eyed - GS

1128 [Dow Jones] Li & Fung (0494.HK) +4.0% at HK$16.54, sole gainer among 42 HSI constituents, supported by Merrill Lynch's upgrade of stock to Buy from Underperform with target lifted 48% to HK$20.44 as house factors in better-than-expected cost savings. Separately, Goldman Sachs keeps stock at Conviction Buy, saying L&F remains top pick for 2009 in HK/China retail space due to attractive valuation and more upside in 2009, 2010 consensus earnings; says market has underestimated cost-cutting potential while organic growth remains. Keeps target at HK$21.50 based on 2002-2003 trough P/E of 18X
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Re: Li & Fung 0494

Postby winston » Mon Feb 23, 2009 2:27 pm

DJ MARKET TALK:Li & Fung +5.3%;CS Tips HK$10-HK$11 Re-Entry Level

1230 [Dow Jones] Li & Fung (0494.HK) best-performing blue chip, +5.3% at HK$16.96, adding to Friday's outperformance after Merrill Lynch upgraded stock to Buy from Underperform with HK$20.44 target.

Credit Suisse keeps cautious view, expect L&F revenue to remain hostage to U.S. macro environment even though it continues to take on new outsourcing contracts and acquire; keeps Underperform call, HK$11.77 target, which based on 14X FY09 P/E. Adds if 2010 "sees the punchy 49% profit growth" house assumes for now, and L&F regains 20x recovery P/E by 2010, HK$25 fair value may be justified in two years.

Still, believes there are opportunities elsewhere in bear market, with share upside at much more attractive 200%-plus; "even on a two-year horizon, HK$10 to HK$11 would be a more tenable re-entry level."
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Re: Li & Fung 0494

Postby winston » Tue Feb 24, 2009 11:01 am

DJ MARKET TALK: Li & Fung Off 6.6% At Pre-Open; UOB Keeps Sell

0946 [Dow Jones] At pre-open, Li & Fung (0494.HK) down 6.6% at HK$16.34, as profit-taking likely to set in after 10.1% rise in past 2 sessions. Expected broad market weakness following losses on Wall Street also likely to weigh.

Stock ignoring US$83 million buy of U.S. fashion retailer Liz Claiborne's (LIZ) sourcing operations; UOB KayHian doesn't think buy will substantially boost earnings, estimates profit contribution of HK$15-16 million, less than 0.5% of L&F's 2009 forecast net profit. Keeps Sell call, HK$8.80 fair price as acquisition "will be overwhelmed by negative organic growth."
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Re: Li & Fung 0494

Postby winston » Wed Feb 25, 2009 2:45 pm

DJ MARKET TALK: ML Ups Li & Fung Target To HK$21.45; Keeps Buy

1127 [Dow Jones] STOCK CALL: Merrill Lynch raises Li & Fung (0494.HK) target to HK$21.45 from HK$20.44 after raising earnings estimates for 2009/2010 by 3.2%/2.5% following announcement of long-term, exclusive Buying Agency Agreement with Liz Claiborne (LIZ). Li & Fung will pay LIZ US$83 million and act as primary global apparel and accessories sourcing agent for all brands in LIZ portfolio with exception of jewelry; management expects deal to bring US$1 billion in annualized 2009 revenues, not including US$200 million-250 million for Mexx.

"While we remain bearish on the U.S. consumer, Li & Fung is using natural attrition to actively restructure and reposition its cost base. We think this will generate higher margins and returns, which will justify a higher valuation." Keeps Buy. Stock +4.4% at HK$17.98
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Re: Li & Fung 0494

Postby winston » Wed Feb 25, 2009 2:53 pm

DJ MARKET TALK: Li & Fung +5.2%: Macquarie Ups Rating, Target

1056 [Dow Jones] Li & Fung (0494.HK) +5.2% at HK$18.12, continuing recent outperformance as US$83 million buy of Liz Claiborne's (LIZ) sourcing operations taken as positive by most investors. Macquarie says deal size significant, adds US$1.0-US$1.1 billion sourcing volume in 2009; estimates L&F paying less than 5X EBIT for LIZ operations, if assuming 3.5% operating margin, estimates profitability would be enhanced by 5%-plus on annualized basis.

House upgrades Li & Fung to Outperform from Neutral, target price to HK$19.80 vs HK$13.80; "Li & Fung is one of the few companies in the consumer universe that is providing positive earnings visibility."
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Re: Li & Fung 0494

Postby winston » Wed Mar 25, 2009 5:12 pm

HK's Li & Fung H2 profit falls 41 pct

HONG KONG, March 25 (Reuters) - Li & Fung (0494.HK), a leading global exporter and distributor, said on Wednesday its net profit for the second half of 2008 fell 41 percent, lagging analyst forecasts, as U.S. consumers cut spending and retailers tightened inventories amid the global slowdown.

The Hong Kong-based consumer goods exporter, which supplies U.S. retailers such as Wal-Mart (WMT.N) and Target (TGT.N), posted a profit of HK$1.18 billion ($159 million) for July-December, compared with HK$2.01 billion in the year-ago period.

The consensus forecast for the second half was for profit of HK$1.82 billion, according to 13 analysts polled by Reuters Estimates.

The company posted a full-year profit of HK$2.42 billion for 2008, against HK$3.06 billion in 2007.

Shares of Li & Fung have risen almost 50 percent this year, after plunging 43 percent in the second half of 2008 and underperforming a 35 percent fall in the benchmark index
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Re: Li & Fung 0494

Postby winston » Thu Mar 26, 2009 7:31 am

Li & Fung net slides as orders fall by Mandy Lo

Consumer goods exporter Li & Fung (0494) expects no growth in orders this year after reporting a 21 percent drop in last year's net profit to HK$2.42 billion.

"Orders received [for the] first half from our existing customers were flat or even fell slightly compared with last year," managing director William Fung Kwok-lun said yesterday. He projected sales growth this year to come from outsourcing deals.

Li & Fung lost orders for the first quarter as clients deferred shipment by three months from the fourth quarter last year to adjust inventory levels. Earnings per share last year fell 23 percent to 69.3 HK cents. The firm slashed its final dividend by 34 percent to 33 HK cents.

"Net income was eroded by some one-off expenses totaling HK$639 million, including restructuring costs and an increase in claims and bad debts from customers who filed for bankruptcy," Fung said. Underlying profit excluding the one-time expenses jumped 15 percent. Turnover rose 20 percent to HK$110.7 billion, with the US accounting for 62 percent, down from 65 percent. Europe made up 29 percent. The firm shed 20 percent of its US staff to 800.

Fung said the exporter will allocate US$100 million (HK$780 million) on small-scale acquisitions. It had HK$2.28 billion in cash as of December 31. Li & Fung shares rose 1.6 percent to close at HK$19.50.
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Re: Li & Fung 0494

Postby LenaHuat » Thu Mar 26, 2009 3:20 pm

Another +indicator that the US economy is turning around :
For the first time since late 2007, Li & Fung is seeing early signs of very strong re-orders in its books in the last 2 weeks, notes its president Bruce Rockowitz
.

Read his interview on CNBC if U are interested.
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Re: Li & Fung 0494

Postby winston » Thu Mar 26, 2009 3:38 pm

DJ MARKET TALK: Li & Fung Off 7.2%; Daiwa Tips Margin Risks

1025 [Dow Jones] Li & Fung (0494.HK) down 7.2% at HK$18.10 after reporting weaker-than-expected results. Daiwa says discrepancies mainly due restructuring costs related to downsizing in U.S. and Europe, bad debt provisioning (relating to KB Toys) and higher effective tax rate due to higher contribution from U.S. onshore business.

"We are concerned about the risk of margin dilution given Li & Fung's increasing business from low-margin discount chain operators," says Daiwa. Keeps at Hold, raises target to HK$19.28 vs HK$15.85; raises FY09-10 EPS forecasts by 7%, 8%, in light of better-than-expected order flow from U.S. customers year-to-date. Early low of HK$17.44 as immediate support
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