Li & Fung 0494

Re: Li & Fung 0490

Postby winston » Mon Sep 08, 2008 8:35 am

Not vested.

Li & Fung share sale to Temasek unit raises $3.9b
Alfred Liu

Li & Fung (0494), a Hong Kong-based consumer goods exporter, said it will raise HK$3.9 billion to finance acquisitions by selling 168 million new shares at HK$23.09 each to a subsidiary of Temasek Holdings.

The subscription shares amounted to 4.62 percent of Li & Fung's enlarged share capital and 4.85 percent of its existing issued share capital as of yesterday.

The subscription price is at a 2.39 percent premium to last Friday's closing price of HK$22.55 per share, down 2.38 percent from the previous day.

Dunearn Investments, a wholly owned subsidiary of Singaporean state investment company Temasek, undertakes not to sell the shares for one year.

"We have no doubt that this strategic investment by Temasek will be of benefit to Li & Fung's activities in Asia and will further enable us to take advantage of any acquisition opportunities that may arise in this economic environment," said William Fung Kwok-lun, group managing director of Li & Fung.

Temasek and subsidiaries including Dunearn will hold 180.6 million shares, or 4.97 percent after the subscription.

Li & Fung last month reported worse-than-expected first-quarter net profit growth of 18 percent to HK$1.24 billion, and key brokerages cut the company's target price as a result.

Credit Suisse slashed its Li & Fung target price to HK$26.94, from HK$31.38, following a slowdown in US consumption. Morgan Stanley cut its target to HK$36 from HK$39, due to heightened market risks.

Li & Fung last month announced its takeover of New York-based handbag importer Van Zeeland for US$330 million (HK$2.58 billion).
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Re: Li & Fung 0494

Postby helios » Tue Sep 09, 2008 1:31 am

NB: Li & Fung has a value-chain logistics setup facility in singapore [Tuas] via IDS for pharmaceutical products.

*below article is a recap.


08-Sept: Temasek Holdings last night said it will invest HK$3.9 billion (S$717 million) in Hong Kong-based consumer goods exporter Li & Fung Limited.

The investment is done through the Singapore investment company's wholly owned subsidiary Dunearn Investments (Mauritius), which has entered into a subscription agreement with Li & Fung.

Listed on the Hong Kong stock exchange, Li & Fung is the export trading arm of the Li & Fung Group. The group has three distinct core businesses - exporting, distribution and retailing. It was founded in 1906 by Fung Pak-liu and Li To-ming.

The agreement will see the subscription of 168 million new Li & Fung shares - 4.85 per cent of the company's existing issued share capital - at a price of HK$23.09 per share.

The price represents the average closing price for the last five trading days, up to and including Sept 5. Li & Fung, whose share prices hit a high of HK$39.50 on Oct 30 last year, has a market capitalisation of about HK$78.12 billion.

The proceeds will mainly 'be used for funding acquisitions' by the company and its subsidiaries from time to time, Li & Fung said in a statement.

William K Fung, group managing director of Li & Fung, said: 'We are very pleased to have Temasek as one of our strategic shareholders in view of its long-term approach to this investment. This strategic investment will be of benefit to Li & Fung's activities in Asia and will further enable us to take advantage of any acquisition opportunities that may arise in this economic environment.'

Under the agreement, Temasek will not dispose of the shares for a period of 12 months from completion.

As part of its growth strategy, Li & Fung has set in place a three-year plan (2008-2010) to identify opportunities for growth. The strategy includes vertical and geographical diversification to tap new sourcing markets across the globe. (San's comment: 3 year plan is nothing new for marketing alignments)

Li & Fung has also increased its onshore business in the United States and Europe as well as branched out into new product segments such as health, beauty and cosmetics.

Li & Fung, which exports goods such as garments, toys and home furnishings, has more than 80 offices worldwide.

'With its robust business model and impressive leadership and management, we believe the company has excellent potential,' said David Heng, managing director of Investment for Temasek Holdings.

For the half year ended June 30, Li & Fung posted an 18 per cent increase year on year in net profit to HK$1.24 billion. Turnover grew 25 per cent to HK$47.39 billion, while earnings per share were 36 HK cents compared with 30.8 HK cents for 2007.

Source: Business Times
[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 0494

Postby winston » Fri Oct 03, 2008 11:28 am

Not vested. From UOB-Kay Hian:-

Li & Fung (494.HK): Fair: HK$18.10

− As almost 90% of its earnings come from the US and Europe, we see high earnings risk for 2009 given the worsening global economic outlook;

− It trades 20x our earnings estimate for 2008 and 15x for 2009. The premium multiples, which reflect its high historical growth, are set to contract further given the rising earnings risk;
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Re: Li & Fung 0494

Postby winston » Sun Nov 09, 2008 6:19 pm

Li & Fung cut costs

HONG KONG - HONG KONG sourcing giant Li & Fung has implemented a hiring freeze, cut travel expenses and could lay off some employees because of the slowing global economy, the company said.

The firm supplies global retailers, including US giant Wal-Mart, with goods ranging from clothes to gadgets, often made in southern China's factory belt.

'Due to worsening economic conditions which are impacting some of its customers, Li & Fung... announced that the company is undertaking a critical review of its cost structure,' it said in a statement issued late on Saturday.

'Initiatives include a hiring freeze in most locations, reduction of travel and other discretionary expenses and, as a last resort, employee downstaffing,' the statement added.

'At this stage, it is envisaged that a limited number of employees working with business units whose customers have suffered most severely will be made redundant.'

Demand for goods from southern China has dropped dramatically in the past few months, manufacturers say, as the global slowdown squeezes demand in Europe and the United States. Thousands of factories have gone out of business. -- AFP
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Re: Li & Fung 0494

Postby winston » Tue Nov 11, 2008 2:47 pm

Exporter Li & Fung dropped 1.5 hkd or 10 pct to 13.1, extending yesterday's slides as deteriorating trading conditions prompted several broker downgrades.

CLSA downgraded Li & Fung to "sell" from "outperform" and cut the target price to 11.01 hkd from 23.32 to reflect lowered earnings forecasts.

Li & Fung's revenue trends have deteriorated after a solid performance until the end of September, while the company's newly announced cost-cutting measures also point to worsening trading conditions, the brokerage said.

Goldman Sachs cut its target price for Li & Fung to 20.5 hkd from 32.7, but maintained a "buy" call.
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Re: Li & Fung 0494

Postby winston » Wed Jan 21, 2009 2:37 pm

DJ MARKET TALK:Goldman Tips Li & Fung As Top HK/China Retail Pick

1239 [Dow Jones] STOCK CALL: Goldman Sachs tips Li & Fung (0494.HK) as top 2009 pick in house's HK/China retail universe on view retail stocks with high exposure to U.S. market tend to be first to outperform. Notes management says FY09 topline growth may stay at double-digits despite poor holiday sales on market share gain, acquisitions.

Notes market expects 2009 profit to rise by HK$570 million vs Goldman's expectation of HK$1.15 billion-HK$1.35 billion on extra profits of HK$220 million from existing business, cost savings of HK$600 million to HK$800 million, contribution from Van Zeeland of HK$330 million. Keeps on Conviction Buy list, target HK$21.50. Stock up 6.2% to HK$14.4 vs HSI down 1.8%.
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Re: Li & Fung 0494

Postby winston » Thu Jan 22, 2009 4:43 pm

Li & Fung Rises on Obama Plan to Respond to Financial Crisis
By Frank Longid

Jan. 22 (Bloomberg) -- Li & Fung Ltd., the largest supplier of toys and clothing to Wal-Mart Inc. and Target Corp., jumped the most in a month in Hong Kong trading on U.S. President Barack Obama’s plan to respond to the economic and financial crises.

Li & Fung climbed 8.6 percent to HK$15.20 at 2:57 p.m. in Hong Kong, the biggest intraday rise since Dec. 10. It was the biggest gainer on the benchmark Hang Seng Index, which advanced 1.7 percent.

Treasury Secretary-designate Timothy Geithner told Congress yesterday that Obama plans to propose a “comprehensive plan” for responding to the economic and financial crises within the next few weeks. Li & Fung, which may report 2008 sales of HK$110 billion ($14 billion) according to 17 analyst estimates compiled by Bloomberg, earns most of its revenue in the U.S.

Investors probably “see a short recovery in the U.S. market,” Alex Wong, asset management director of Ample Capital Ltd. in Hong Kong, said in a phone interview today.

Li & Fung may also be surging because of a report yesterday from Goldman Sachs, which kept the trading company on its “conviction buy” list and made it the top pick among Hong Kong and China retail stocks.

Still, Wong said the gains in Li & Fung’s share price may be short-lived because “the U.S. retail market remains quite difficult and may even continue to deteriorate.”

Today’s gain trimmed Li & Fung’s loss in the past year to 35 percent, compared with a 41 percent drop for the benchmark Hang Seng Index.

Wal-Mart, the world’s biggest company by revenue according to data compiled by Bloomberg, fell 2.8 percent to $49.14 yesterday, while Target rose 4.9 percent to $34.14.

Obama’s plan will address the credit crunch and the collapse of the housing market, as well as global economic conditions that require a coordinated international response, Geithner told a Senate Finance Committee hearing in nomination hearings yesterday.

Geithner also urged Congress to pass a robust stimulus plan to revive the economy and pledged to reform the government’s $700 billion bailout program.
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Re: Li & Fung 0494

Postby winston » Sun Jan 25, 2009 7:42 pm

20090119 Macquarie Li & Fung (Neutral) - Order book showing double-digit growth
Stock: 494 HK
Name: Li & Fung
Price: HK$13.24
Market Cap (m): HK$48,116
Market Cap (m): US$6,202
Current valuation (DCF): HK$15.20
12mth price target: HK$13.80
Recommendation: Neutral

Event
Li & Fung's current order book is showing double-digit growth YoY.

Impact
Order visibility satisfactory. We expect that order book visibility would extend into the spring season but visibility for the back-to-school season would still be low. Given our expectation that three of its customers (Mervyn's, Goodys and KB Toys) will detract from top-line growth this year, the double-digit growth in the order book is satisfactory, especially also given that a number of retail customers (eg, Abercrombie & Fitch and American Eagle) has been showing double-digit declines in same-store sales growth in recent months. Therefore, in light of what's happening with the current customer base, we expect that this double-digit order growth would include new outsourcing deals announced over last year.

Note that the Van Zeeland deal was completed. However, despite the delay in completion, the key terms relating to the price remained the same. The only key change was the term relating to the put/call option on the wholesale distribution business in Europe, which was deleted.

Expect deflationary pressure. The extent of the deflationary pressure is difficult to say, however. This is coming from two fronts - trading down by customers as well as input prices coming down. Total commission income is negatively affected in a deflationary environment.

Sourcing countries remain the same. Despite the fluctuations in currencies in the recent past, product sourcing for customers has not seen any significant changes with China remaining the key country for sourcing of product.

Pipeline for new outsourcing deals. Management has indicated that the pipeline remains good. And we would expect that retailers in this environment would outsource more to convert more costs into variable costs.

Action and recommendation
The stock is trading near our target price of HK$13.80 and we maintain our Neutral stance on the company.
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Re: Li & Fung 0494

Postby winston » Tue Feb 10, 2009 1:37 pm

Li & Fung Benefits as Wealthy ‘Hit Hard’ by Recession By Stephanie Wong

Feb. 10 (Bloomberg) -- Li & Fung Ltd., the biggest supplier to Wal-Mart Stores Inc. and Target Corp., is benefiting as the recession boosts sales of low-priced toys and clothing, company President Bruce Rockowitz said.

“We are gaining tremendous market share because we’re creating products at the prices that people want,” he said in a Bloomberg Television interview in Hong Kong today. “Everybody is trading down.”

U.S. consumers hurt by job losses and tighter credit are spending more at discount retailers such as Wal-Mart, which last week posted sales ahead of forecast, and Family Dollar Stores Inc. Hong Kong-based Li & Fung, which makes two-thirds of its sales in the U.S., has surged 20 percent this year in Hong Kong trading, compared a 3 percent drop in the benchmark Hang Seng Index.

While the luxury-goods industry “did really well” in previous recessions, “this time the rich are getting hit pretty hard,” Rockowitz said. “All the high-end retailers are generally pretty bad right now.”

The economic stimulus package sought by U.S. President Barack Obama “is a good step toward the right direction,” Rockowitz said. Plunging home values and the worst unemployment in almost 16 years have hurt consumers and companies in the U.S.

Shares Surge

Li & Fung shares jumped 8 percent to HK$16 at 11:08 a.m. in Hong Kong trading today, the biggest intraday gain since Jan. 29. The Hang Seng Index gained 1 percent.

While Wal-Mart, the world’s biggest retailer, reported January sales that exceeded its projection, it said it will stop giving a monthly forecast because of the difficulty in predicting consumer behavior.

U.S. unemployment may rise to about 10 percent, Rockowitz said in a separate interview today. “It’s by far the worst economic environment that we’ve had to deal with. It’s really the first time there has been a major change in the spending patterns of people.”

While some of the Hong Kong trader’s clients have gone bankrupt, they constitute a small percentage of the total, Rockowitz said. “If you add up all the bankruptcies together, we have seven to eight bankruptcies last year out of 1,200 customers. We got impacted by a very small amount financially -- about $10 million altogether including the $5 million from KB Toys.”

Li & Fung client KB Toys Inc., an 86-year-old retailer, filed for bankruptcy in December.

The company will “be very cautious” about making acquisitions this year “because the market is still very volatile,” Rockowitz said. “We still see huge opportunity but we are taking our time.”
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Re: Li & Fung 0494

Postby winston » Fri Feb 13, 2009 2:23 pm

DJ MARKET TALK: Recent Li & Fung Rally Offers Chance To Sell -UOB

1129 [Dow Jones] STOCK CALL: Li & Fung's (0494.HK) recent rally offers better potential to sell as market overexcited by strong earnings-momentum euphoria, unrealistic expectation of 2H09 recovery in U.S. consumption growth, UOB KayHian says.

Notes management has guided "double-digit" 2009 revenue growth on 2008 M&A, market-share gains, but analyst Ken Lee says target questionable given low order-growth visibility, sluggish market. Notes also, many major customers' sales declining, tips credit risk from possible customer bankruptcies.

Expects L&F to face significant downward pressure on commission fees on U.S./European retailers' huge discounts, competition from direct trade. Keeps 2008-10 net profit forecasts unchanged, tips 2009-10 net profit +2%, +9%; notes house's 2009-10 earnings estimates 14%, 23% below consensus.

Says shares trading at 19.1X 2009 P/E, but tips should be trading at 10X-12X forward P/E trough multiple from Asian financial crisis. Keeps at Sell, fair price at HK$8.80 based on 10X 2009 P/E. Shares down 4.9% at HK$16.00.
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