The group’s investment in the retailing industry is through its chain of 68 Parkson departmental stores, with 29 in Malaysia, 38 in China and 1 in Vietnam. Its nett income for the 1st Qtr 2007 was RM77 million compared to RM21 million a year ago. That is huge jump of over 270%. This indicates how robust is the retailing industry under LIONDIV. Excluding all exceptional gains, LIONDIV previous quarter still came up 80% compared to the 4th Qtr 2006. Looking at the figures and the China factor, I would say LIONDIV is definitely a growth story pending to be written. 
People in China are spending more, restaurant and food industries are booming, many are eating out and last but not least, their shopping malls are always packed. I have already noted my optimism towards LIONDIV in my previous post after my recent trip to Chongqing, China. The tabulation above shows the calculation of LIONDIV value which is solely based on its 55.5% stake in Parkson Group that is listed in HKEX together with the cash in its piggy bank. Not to forget LIONDIV other business unit are also profitable, its property development unit in Bandar Mahkota, Cheras and its computer business segment under the banner, LIKOM. So do you think LIONDIV is undervalued? Its definitely a YES for me. . .Regarding the previous announcement on the LIONDIV - ACB deal whereby a sale of Parkson Group to ACB was valued at a measly RM4 billion but based on the latest transacted price for Parkson Group over at HKEX, it should easily be valued at RM6 billion based on its 55.5% stake. Well, this cannot be blamed as the announcement was first mooted somewhere in September 2006 when Parkson Group was trading at HK$29 and the price tag of RM4 billion do sound reasonable at that time. Since now the price of Parkson Group has surged to HK$48.05 (Target price by Goldman Sachs : HK$56.10), should any ammendments be made to the previous proposal? Should we be getting 2 ACB shares for every 1 LIONDIV share instead? Of course many can say that after the proposal, the precious assets of Parkson Group still stays within the LIONDIV's stable, but at the end of the day would it be fair to its minorities for selling the assets worth RM6 billion at a huge discount?
1 comment:
Banks are falling over themselves to lend money, at ultra-low interest rates and with no strings attached. And the private equity firms do not even need to have a good credit rating. They secure the debt they borrow on the assets of the companies they buy. With pre-determined debt interest costs, any increase in profits from reducing staff numbers, for example, goes straight to the Orange County business investors.
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