Exciting time ahead for Lion Industries

*As per Lion Industries Annual Report 2005.

A) Lion Forest Industries Bhd:
Share price @ 1/9/06 : RM2.50
Market Cap : 525 mil
*Owned 80%= 420 mil

B) Lion Diversified
Share price @1/9/06 : RM4.70
Market Cap : 3,255 mil
*Owned 36% = 1,172 mil

Total Market Cap Owned (A+B) = RM1,592 mil

Lion Industries
Total paid up capital is 697 mil ordinary shares @ RM1.00.
It's NTA as at 30/6/06 is RM2.85
It's shares price as at 1/9/06 is 0.82,
Market cap is 697 mil x RM0.82 = 572 mil

There are a few reasons for us to believe Lion Industries is attrative :

1. The current price of 0.82 is only 28% of it's NTA of 2.85
2. The Market Cap of 572 mil is only 35% of the market cap owned on Lion Forest & Lion Diversified.(1,592 mil)
3. Lion Diversified is still undervalue at price of 4.70 ( she just disposed off 10% of Parkson Hong Kong with price above RM650 mil. Lion Diversified owened 65% shares of Parkson Hong Kong equalvalent to 650 x 6.5 = 4,225 mil, 30% higher than existing market cap of 3,255 mil ) Lion Industries will benefit from the upside potential on Lion Diversified through 36% shareholding.
4. If you notice that Lion Industries has substantial short & long term borrowing of 2,282 mil, however the borrowing will be reduced by capital reduction from Lion Forest.
5. Lion Industries shares price reached RM1.40 in May 2006, now down to 0.82, going down almost 40%, couple with reasons stated in 1 & 2 above, the down side risk is limited.
   
6. And the most important one,
   The current corporate exercise by Lion Diversified to sell 10% of Parkson Hong Kong shares will made this cash rich company flush with cash of above RM1,600 mil, we can expect more corporate exercise undertaken by Lion Diversified to “UNLOCK THE VALUE” in Lion Diversified, and within the companies under the Lion Group.