Brooke Asia (formerly Latitude Tree International Group)

[Stockerman]

Including fixed deposit and cash, company has about $17.7mil on hand. Compared to debt of $28mil, is this reasonable?

The Group’s gearing ratio was 0.51 times as at 31 December 2011 as compared to 0.56 times as at 30 June 2011.

They also have $29m of debt as compared to $50m of equity and their FCF is not very nice either

[shanrui_91]

http://www.freeenterpriseland.com/BOOK/BLUMKIN.html

http://en.wikipedia.org/wiki/Nebraska_Furniture_Mart

Simple furniture business but they made it very big....


In 1983, Warren Buffet- Omaha resident and the second richest man in the United States bought an 80% interest in Nebraska Furniture Mart on a handshake from the Blumkin family for $55 million. He said that he would want to be involved in any business Rose Blumkin was a part of even if it was a popcorn stand. Buffet had often thought of buying the store, and on his birthday just walked in and asked how much they would sell it for and wrote them a check.

About the transaction he said, I would rather have her word than that of all the Big 8 auditors. It's like dealing with the bank of England." The deal has been called the "historic Omaha handshake".

Latitude is involved in the upstream and mid stream while nebraska is involved in the downstream. Not everyone can sell furniture on a big scale like nebraska since you need space and shop to compete for retail buyer. But for latitude, they have to compete internationally with almost anyone to sell to retailer. Trust and price are what that counts.

And if the business is so profitable, why is there significant debt in the balance sheet and why did the parent company choose to list part of it in Singapore since this SIngapore business is more profitable than the Malaysia one

If you look at their parent company, result is much lousier in terms of ROA, ROE and net profit margin. The parent company also has significant debt as compared to equity. These are obviously not signs of a company with significant competitive advantage and high return.

Including fixed deposit and cash, company has about $17.7mil on hand. Compared to debt of $28mil, is this reasonable?

The Group’s gearing ratio was 0.51 times as at 31 December 2011 as compared to 0.56 times as at 30 June 2011.

Those money are not internally generated, these are IPO money. If you look at latitude berhad in 2007, it has 160m of debt, 160m of equity and 20m of cash. Reason for spin off is quite obvious

[Curiousparty]

Has the group already lost its position as the largest exporter of wooden furniture in vietnam?

With over ten (10) years of experience in the wooden furniture industry, the Group had attained its status as the
Largest Exporter of Wooden Furniture in Vietnam (2006 to 2009).

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So the real reason should be to spin off some of the debt from its parent company into the Spore subsidary?



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1) Why did Latitude Tree decide to list on SGX Catalist in October 2007?

The listing provided Latitude Tree International Group (“LTIG”) cheaper access to capital and enabled us to tap into a wide pool of stock market investors for future growth.

[shanrui_91]

Has the group already lost its position as the largest exporter of wooden furniture in vietnam?

With over ten (10) years of experience in the wooden furniture industry, the Group had attained its status as the
Largest Exporter of Wooden Furniture in Vietnam (2006 to 2009).

---

So the real reason should be to spin off some of the debt from its parent company into the Spore subsidary?



*******

1) Why did Latitude Tree decide to list on SGX Catalist in October 2007?

The listing provided Latitude Tree International Group (“LTIG”) cheaper access to capital and enabled us to tap into a wide pool of stock market investors for future growth.

Largest exporter in vietnam does not mean anything. When you are talking about outsourcing, you are competing with China, India and other countires. They account for 3% of total USA furniture import, which you can probably figure out how many competitors are they fighting against.

While debt is not neccessarily bad if it is well-used to generate good return, something is wrong when the company is taking on substantial debt. In 2007, their 160m of debt is a 1.0 debt to equity ratio whereas their net profit is only 9m. Obviously they need a spinoff to clear off the debt, else I wonder how they are going to pay off the debt.

Usually, I will treat all statements regarding spinoff, rights or share placement as B***Sh** when the obvious reason is that they are in dire need of capital.

Their FCF/Net Profit is not that wonderful either, so why are they able to give such a high dividend yield? Simple reason being they have very low PE. At a PE of 3.6, they only need a dividend payout ratio of 30% to generate a 9.0% dividend yield.

As for why the stock is trading at such a low PE, I have no idea why.

The only positive thing about this company is that total operating expense is less than 10% of the total revenue, which makes it less likely to go into red during a recession. However, a rise in raw material is still going to hit it hard

[Curiousparty]

It seems that the Vietnam assets are still generating good profits . Not too sure if the Malaysian assets have turned the corner and started to generate profit ....

Can I confirm that only the Vietnam assets are spinned Off in the Singapore subsidiary ?

Even if the parent company in Malaysia is not doing well, it should not impact the company listed in spore ?

[VestedInterest]

I wonder if the wife, who is the new CEO, can do a good job as the late husband. There is a report in the Malaysian business press (can't remember which one) that stated that the wife was very involved in the business, especially the Malaysian one. Hence, there won't be much change in the strategic direction of the company. Let's watch.

[Curiousparty]

Does anyone have any idea on the major distributors which LTIG is using ?

They seem to be contending more with downstream issues ?

Comments pls. Thank you

*************
7) What challenges do you expect as you expand upstream and downstream in the longer term? How do you plan to overcome these challenges?

We should not face any major challenges for the upstream expansion as we are very experienced in upstream operations and have the expertise to overcome anticipated challenges.

As for the downstream expansion, the challenges will be finding the right property, location, local logistic partners and retail management team. To overcome such challenges, we plan to work together with our existing agents or distributors who are experienced in setting up retail outlets and managing such operations.

[Stockerman]

On 18 April 2012 , stock spiked up to 25 cents before dropping back to 20 cents ... What was the trigger ?

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Does anyone know where to get a copy of the annual report ? Cannot seem to find the IR page for the company . Tks

[lanoitar]

Parent LTHB has offered to acquire all the subsidiaries of LTIGL. Let's take a look:

Before deal (Company level, as of 31Dec12):
Equity without subsidiaries = $40.253m - $30.102m = $10.151m.
Num shares = 239.636m

After deal:
Equity = $10.151m + $0.5118 = $10.6628m
Num shares = 239.636m - 186m = 53.636m
Per share = 19.88c

Effectively, parent is offering to take out all the lucrative businesses from minorities by paying just a cash amount of $511.8k & cancelling their shares (186m). Minorities are left with a cash shell that's worth less than the current market price (20.5c).

Another Eastern Holding.

Source: http://info.sgx.com/webcoranncatth.nsf/V...9003E0E74/$file/Latitude_ProposedAcquisition_LTHB_05022013.pdf?openelement

[VestedInterest]

In the Shanghai Asia case, they got cash. In this case, a bigger portion of a shell company with no EPS. Still trying to figure out what's in it for the minority shareholders.