View Full Version : LMC - Lemarne Corp
08-03-2004, 11:37 AM
This is an interesting, undervalued (imo) cash rich company. LMC (basically a holding company) has 3 main subsideries: Pacific composites, Lemtronics and C10. Lemarne finished acquiring the rest of Lemvest early this year. (Richardson Pacific was sold earlier)
LMC currently has cash of $25m which they are actively using to purchase shares. There is 17,808,333 issued shares (inc Lemvest) By my calculations LMC trades at low valuations:
PE = 10
ROE = 16.5%
PS = .39
Cash per share of $1.44
The story continues;
LMC now wants to buyback 35% of the issued shares (approx 6.25million shares) at $2.34 (current market price). This is basically a capital repayment. This would reduce issued shares to about 11.5m.
Now maybe Iíve missed something....but this is what I donít understand - shouldnít the shareprice appreciate?
08-03-2004, 11:49 AM
LMC currently is not trending, (as shown by the flat adx) and appears to be forming an ascending triangle. A false breakout occured in Oct'03. LMC probably consolidating before next move, and often when adx is below both + and - the next move could be interesting. Price is above LT MA.
08-03-2004, 07:37 PM
Thanks for the lead.
I haven't had time to have a thorough look into LMC just yet, but a few things to think about are....
(1) The buy-back is optional @ $2.34. If the market-price is higher than $2.34, why not sell your stock on market?? The buy-back arrangement, by necessity, prevents short-term upside, because any short-term upside will frustrate the buyback!
(2) LMC's earnings include interest on this cash. They appear to have an assortment of rather average operations. Earnings of $1m for the first half were very meager.
As I have only had a quick glance, I may well have overlooked a few things, but so far I haven't found that interests me at LMC.
Please feel free to try to change my mind!
16-08-2004, 08:29 AM
LMC appears to have closed up slightly. This could be due to the buyback being completed or the buy-in from ppt. I wouldn't be suprised to see lmc start to be rerated. I am unsure of how this affects lmc's actual position fundamentally....can anyone help[?]
24-11-2004, 09:32 AM
LMC hit a 4 year high yesterday. It will be interesting to see if the bulls can hold this thinly traded stock.[^]
19-08-2007, 04:48 PM
This share is very illiquid and tends to make matters worse by regularly selling off businesses and then using part of the proceeds to buy back stock. This makes it incredibly cheap - but difficult to know if it can ever be anything different.
Just reported eps of 52.7cps and share price is $2.85, so P/E of 5.4. Yet they also have net cash on hand of $1.46 per share. That's CHEAP!!!
Dividends total 18.5cps for the year (yield of 7.4%), but that is probably lower than might otherwise have been due to cash returned in November 2006 buyback. NTA is $3.15 per share.
It is just a pity that directors hold control of this company and seem to suffer from no imperative to recognise any value from it other than the cash they take out during each buyback.
Actually, reminds me of Richina Pacific on the NZX. Both hold an odd mix of businesses and tend to rotate between them in terms of performance. Both are controlled by directors with little chance of change.
I have held Lemarne shares on two occasions in the past 4 years and made good money from them. But have since regretfully decided that they are too difficult to hold, are never likely to get the register opened up sufficiently and are unlikely to pursue a strategy which would enable value to be realised in the share price with any speed.
29-10-2008, 05:29 PM
Posted 15 October 2008 on the stocks under cash/near NTA thread:
LMC - pretty close...
Market cap at $3.30 = $32.3m
Net working capital (as per Graham definition, i.e. net of all liabilities, both current and non-current) = $32.3m
No option dilution.
No major investment commitments/requirements
Since paid div of $2.1m, but has approx operating net cashflow/EBITA from continuing operations of $8m last year, so this has probably since offset dividend post year-end.
(Though I think Ben Graham tried to buy a portfolio of these type of stocks at around 2/3rds of the net working capital? Can't quite recall exactly)
AGM today - announced payment of a 15cps special div in Nov/Dec (just paid 12.5cps) and said operating profit is well ahead of same time last year, although given global situation, expect softer second half.
At current s.p. of $3.30, market cap is $32.2m with NTA of $37m and cash coming in at around $3m per quarter. Yield with special div of 12.1% plus franking.
25-08-2011, 10:59 AM
LMC back near prices of 2008, although has paid some big divs in the interim, at the expense of cash holdings (now about $2.30 in cash per share).
Only one business unit at present (Lemtronics - Malaysian electronics firm). However, they have been hinting at strategies and have not mentioned divs this result, saying they will discuss at the AGM. This says to me either they plan to add business units or to divest Lemtronics and liquidate - a strategy that would be unthinkable for most companies, but might be in line with directors past comments.
Flies well under the radar due to low liquidity, market cap etc, but counting divs returned to shareholders, they have been a solid performer over the years I've watched them. After a couple of good trades on them, coming and going with the weather forecasts, I eventually decided they could be trusted and put a bit of the long-term savings in there, which seems to have worked out okay, despite recent pullback.
At $3.35, P/E 7.8, EV/EBIT 2.0, Pr/NTA 0.92, P/S 0.53, yield - hard to say until they announce future plans..
07-10-2011, 08:39 PM
Announced today that they intend to sell Lemtronics for $US20m and return proceeds to shareholders. After that, they intend to "actively explore several future opportunities for the company".
That suggests they'll distribute between $1.90 - $2.30 per share. Given the sale is on a "no cash, no debt" basis, I think they will still have somewhere between a further $14m - $20m of existing cash after distribution. I still lean towards a view that management and directors may be wanting to retire, so perhaps this will be a back-door listing situation to take advantage of the LMC, cashed-up shell.
Price jumped to $4.05 today (market cap $34m), having crept back to around $3.70 since last post. Potentially a few more cents in it (though probably not dollars).
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