The price of LionD surged to 3.10 from 1.58 ex-price on 9th Oct after it split from Parkson.
The price went down thereafter for 6 consecutive days and closed 1.65 today.
It is scary to watch the selling pressure keep pushing down the price.
However, this is the right time to look at the value of LIONDIV.
LionD now is pure Steel counter, the main Biz is DRI plant next to Megasteel. As per TTB of Icap, the fair value for DRI alone worth RM3.00 (ie 10 x EPS of 0.30 per share)
LionD owned RM500 mil redeemable convertable loan stock of Parkson from the split exercise. This alone worth 1,000 mil (if convert to 125 mil parkson shares at Mkt price of RM8.00), equivalent to RM1.35 per shares.
LionD also owned certain % shares of Megasteel, LionInd.
AND it is CASH RICH after disposing certain % of Parkson China before the split exercise.
AND it is most likely to undertake an M&A exercise to restructuring again the Lion Group of company.(ie LionD, LionCor & LionInd)
At today closing of 1.65, it is undervalue & unbelievably CHEAP!
3 comments:
what is the target price of Liondiv ?
Hi SS,
I am also a subscriber of Icap from Penang. I wish to know why you said that liondiv is cash rich after disposing Parkson (exclude the RM500mil RCLS). I thought all the sales proceeds (in term of parkson shares) of diposing Parkson is distributed to the liondiv shareholders already?
If the RCLS is converted, would this be diluting the EPS for the parkson?
I hold Parkson for quite a few years. Post-split, should I be holding on to both liondiv and parkson, or should I switch from liondiv to Parkson, or vice versa? Personally, I thought Parkson retail business (China and potentially Vietnam) would be more attractive than the steel business.
Appreciate if you can shed some lights. I can be reached via utmseng@hotmail.com
Hi! Let the profit run is my answer to the TP of LionDiv.
As for which one is more attractive will depend on the investor's preference.
Steel or Retail or both !
For me, I will keep Parkson as long as the China biz continue to enjoy high growth & high profit margin.
I still see Liondiv attractive due to the M&A play, it's a rock solid company after split, cheap valuation & will be the major Steel manufacturer in M'sia.
The coming qtr results of LionDiv & Parkson will tell whether the cash is in Parkson or LionDiv. But I do believe the cash will be kept by LionDiv, because this is exactly what the Lion Group needed.
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