LMA   

Singaporeregal - TA expertise for LMA

vested too for 2 mths ... hope it will rise. Seem to be an undervalued stock being overlook

 

Hikitty...

Since the big funds are the ones who really call the shots, it may not be that they 'overlooked' this great stock.
 

 

So short term,FA overtaking TA.

 

The sales of that 1m shares may have contributed to the dip to $0.54? Fortunately there is support at that level and now its back at the flat line of $0.57.

 

SGX announcment on 12 May: Major shareholder Wasatch Advisor, Inc trimmed 1m shares (from 8.03% to 7.85%) on May 8 (Tues) @ 55c.  http://info.sgx.com/webcorannc.nsf/ef3ba6cb188613ea482571b2003641d3/8d0551fea4951f56482572d8005e6183?OpenDocument

 

Extract from Businesstimes ! LMA International May 10 close: S$0.57 OCBC INVESTMENT RESEARCH, May 8 ONE-TIME charges hit bottomline: LMA posted a 15 per cent year-on-year increase in sales to US$23.6 million, boosted by the additional 50 per cent stake in LMA PacMed in Australia. However, net profit fell 24 per cent year-on-year due to non-recurring charges and new urology business start-up costs. Excluding the net effect of its new urology business costs and non-recurring charges, net profit declined marginally by 10.5 per cent year-on-year to US$4.2 million. The management has guided net positive effects from the LMA PacMed acquisition will be evident in 2H07 and that the urology business will be self-sustaining by end-FY07. Good earnings trends: Sales in the lucrative US market grew 10 per cent year-on-year to US$14 million, while international markets clocked 20 per cent year-on-year growth to US$9.2 million. A slowing down of ASP erosion and an increase in units sold achieved a net positive effect on sales. We expect topline to continue to grow at 16 per cent for FY07 as LMA PacMed synergises its operations with the group. We see the promising growth in the Ctrach and Urology segment being the key in driving revenue in FY08. First major M&A well-assimilated: LMA has shown its capability to quickly integrate acquisitions to boost sales. Maintain 'buy': We forecast LMA PacMed to raise topline to US$105 million (previously US$98.1 million), but we tweak our net profit to US$23 million (previously US$25.2 million) to account for the non-recurring costs associated with its PacMed acquisition and the Urology segment's start-up costs. We revise our fair value to S$0.77 (previously S$0.80), implying a possible 38 per cent upside. We still think the share price is under-appreciated despite our 12 times PE valuation at a substantial 68 per cent discount to LMA peers' PE. We have not factored in any M&As into our earnings model. Maintain 'buy'. BUY Disclaimer : I hope I am not infringe with any copyright Intellectual properties. Just for info sharing as sharing newspaper ! Thks.

 

The accounting adjustments could be ironed out without much problem  and I like the story and have since been doing some running arounds to get more. I think the reward will outweight the risk. Hey!  Don't forget the Coy is still making money, only less this time round due to some start-up costs and the PacMed's initial 'problems'. Cheers!

 

vested too..at 60 cents..

 

Hikitty

No problem to post LMA related news here. Anyway I am vested in this stock and has also ADD POSITION today. Personally, I think the positive outweighs the negative at this juncture and I see some upside from here.

 

Also good to see it at 57.5 at point of writing. 60c is a resistance.

 

Hi hotstock and all vested

Thanks hotstock for posting the report -  so kind of you to do that.  The illogical part of the share mkt is that this GEM has been overlooked by supposedly foreign funds.   

 

With many local n foreign call to buy or maintain its stance, LMA should find support around 55c.

The catalysts that will move the stock strongly upwards shall be:

- accretive M&A with good guidance

- strong Q2 results

- positive compensation from lawsuits

 

One more analyst released report on May 9, from S&P, the analyst recommend STRONG BUY with TP of 0.70

 

Recommendation & Investment Risks
? We maintain our Strong Buy recommendation on LMA despite
disappointing 1Q07 results. We believe the share price already
reflects LMA?s disappointing performance in recent quarters and the
challenges faced by the group ? stronger-than-expected competition
and accounting issues. We believe that the current share price is
supported by single-digit PE multiples on our reduced estimates, and
possible share buyback (mandate passed during EGM in Mar 2007).
? Our unchanged 12-month target price of S$0.70 is based on
discounted cash flow valuation method. Intrinsic value has been
calculated based on WACC of 9.6%-10.4%; 10-year free cash flow
CAGR of 3.0% and terminal growth rate of 2.0%.
? Risks to our recommendation and target price include further price
undercutting by competitors and inability to penetrate emerging
markets such as China and India. We also note that LMA buys almost
all of its products from related companies (controlled by its parent
Venner Capital), and this could raise questions of conflict of interest,
in our opinion.
Results Review & Earnings Outlook
? LMA?s 1Q07 net profit of US$3.5 mln (down 20% YoY) was below our
expectations, accounting for only 15% of our full year estimate. The
variance was due to the non-cash, one-off accounting issues arising
from the consolidation of LMA PacMed. Following the purchase of 50%
of Australian distributor LMA PacMed in 1Q07, LMA had to revalue up
LMA PacMed?s inventory under US GAAP, which effectively wiped out
gross profits accrued from LMA PacMed sales, and squeezed margins
at the group level. In addition, 1Q06 had included profits from sales to
LMA PacMed when it was a 30% associate, but 1Q07 did not, as it is
now a 80% subsidiary. 2Q07 gross margin will be similarly affected.
? Group revenue grew 15% YoY to US$23.6 mln, boosted by the
consolidation of LMA PacMed, increased sales of single-use laryngeal
masks and contributions from new products launched last year (i.e. LMA
CTrach, LMA Stonebreaker and McGrath Video Laryngoscope). If LMA
was still an associate, LMA sales would have increased by 9% YoY.
Pricing trends improved, as single-use ASP decline slowed to 3% and
reusable units ASP rose 11%. Gross margin shrank by 6%-pts YoY to
66.3% due mainly to the effects of the LMA PacMed consolidation.
? We maintain our earnings estimates despite the disappointing 1Q07
results. Response to recently-launched new products has been good,
particularly for the LMA Supreme (launched in 1Q07), and we expect
positive contributions in 2H07, which should offset the negative effects of
the LMA PacMed consolidation. 

 

any comments from anyone on this counter? 

 

Waiting patiently everyday..when is this counter going to wake up?..

 

sorry guys....cant seem to post the reports..

paiseh..

 

oops sorry..repost..

 

Results Review & Earnings Outlook ?

 LMA?s 1Q07 net profit of US$3.5 mln (down 20% YoY) was below our expectations, accounting for only 15% of our full year estimate. The variance was due to the non-cash, one-off accounting issues arising from the consolidation of LMA PacMed. Following the purchase of 50% of Australian distributor LMA PacMed in 1Q07, LMA had to revalue up LMA PacMed?s inventory under US GAAP, which effectively wiped out gross profits accrued from LMA PacMed sales, and squeezed margins at the group level. In addition, 1Q06 had included profits from sales to LMA PacMed when it was a 30% associate, but 1Q07 did not, as it is now a 80% subsidiary. 2Q07 gross margin will be similarly affected. ? Group revenue grew 15% YoY to US$23.6 mln, boosted by the consolidation of LMA PacMed, increased sales of single-use laryngeal masks and contributions from new products launched last year (i.e. LMA CTrach, LMA Stonebreaker and McGrath Video Laryngoscope). If LMA was still an associate, LMA sales would have increased by 9% YoY. Pricing trends improved, as single-use ASP decline slowed to 3% and reusable units ASP rose 11%. Gross margin shrank by 6%-pts YoY to 66.3% due mainly to the effects of the LMA PacMed consolidation. ? We maintain our earnings estimates despite the disappointing 1Q07 results. Response to recently-launched new products has been good, particularly for the LMA Supreme (launched in 1Q07), and we expect positive contributions in 2H07, which should offset the negative effects of the LMA PacMed consolidation.

Recommendation & Investment Risks

?

disappointing 1Q07 results. We believe the share price already

reflects LMA?s disappointing performance in recent quarters and the

challenges faced by the group ? stronger-than-expected competition

and accounting issues. We believe that the current share price is

supported by single-digit PE multiples on our reduced estimates, and

possible share buyback (mandate passed during EGM in Mar 2007).We maintain our Strong Buy recommendation on LMA despite

?

discounted cash flow valuation method. Intrinsic value has been

calculated based on WACC of 9.6%-10.4%; 10-year free cash flow

CAGR of 3.0% and terminal growth rate of 2.0%.Our unchanged 12-month target price of S$0.70 is based on

?

undercutting by competitors and inability to penetrate emerging

markets such as China and India. We also note that LMA buys almost

all of its products from related companies (controlled by its parent

Venner Capital), and this could raise questions of conflict of interest,

in our opinion.Risks to our recommendation and target price include further price

 

 

Standard & Poor?s Equity Research Services U.S. includes Standard & Poor?s

Investment Advisory Services LLC; Standard & Poor?s Equity Research Services

Europe includes Standard & Poor?s LLC- London and Standard & Poor?s AB

(Sweden); Standard & Poor?s Equity Research Services Asia includes Standard &

Poor?s LLC?s offices in Hong Kong, Singapore and Tokyo, Standard & Poor?s

Malaysia Sdn Bhd and Standard & Poor?s Information Services (Australia) Pty Ltd.

Recommendation & Investment Risks

?

disappointing 1Q07 results. We believe the share price already

reflects LMA?s disappointing performance in recent quarters and the

challenges faced by the group ? stronger-than-expected competition

and accounting issues. We believe that the current share price is

supported by single-digit PE multiples on our reduced estimates, and

possible share buyback (mandate passed during EGM in Mar 2007).We maintain our Strong Buy recommendation on LMA despite

?

discounted cash flow valuation method. Intrinsic value has been

calculated based on WACC of 9.6%-10.4%; 10-year free cash flow

CAGR of 3.0% and terminal growth rate of 2.0%.Our unchanged 12-month target price of S$0.70 is based on

?

undercutting by competitors and inability to penetrate emerging

markets such as China and India. We also note that LMA buys almost

all of its products from related companies (controlled by its parent

Venner Capital), and this could raise questions of conflict of interest,

in our opinion.Risks to our recommendation and target price include further price

Results Review & Earnings Outlook

?

expectations, accounting for only 15% of our full year estimate. The

variance was due to the non-cash, one-off accounting issues arising

from the consolidation of LMA PacMed. Following the purchase of 50%

of Australian distributor LMA PacMed in 1Q07, LMA had to revalue up

LMA PacMed?s inventory under US GAAP, which effectively wiped out

gross profits accrued from LMA PacMed sales, and squeezed margins

at the group level. In addition, 1Q06 had included profits from sales to

LMA PacMed when it was a 30% associate, but 1Q07 did not, as it is

now a 80% subsidiary. 2Q07 gross margin will be similarly affected.LMA?s 1Q07 net profit of US$3.5 mln (down 20% YoY) was below our

?

consolidation of LMA PacMed, increased sales of single-use laryngeal

masks and contributions from new products launched last year (i.e. LMA

CTrach, LMA Stonebreaker and McGrath Video Laryngoscope). If LMA

was still an associate, LMA sales would have increased by 9% YoY.

Pricing trends improved, as single-use ASP decline slowed to 3% and

reusable units ASP rose 11%. Gross margin shrank by 6%-pts YoY to

66.3% due mainly to the effects of the LMA PacMed consolidation.Group revenue grew 15% YoY to US$23.6 mln, boosted by the

?

results. Response to recently-launched new products has been good,

particularly for the LMA Supreme (launched in 1Q07), and we expect

positive contributions in 2H07, which should offset the negative effects of

the LMA PacMed consolidation.We maintain our earnings estimates despite the disappointing 1Q07

Standard & Poor?s Equity Research Services

 

LMA International (LMA SP)

Guides for stronger second half

S$0.55

BUY

Price Target : S$ 0.91

Reporting

Period

Performance Mkt Cap FY EPS (S cts) EPS Revision PE (x) PBV (x) Net Divdend Yield

(%)(Prev S$ 1.05)

1Q 2007

Below S$320m

US$211m

2007

2008

6.1

6.6

-12.8%

-9.7%

9.1

8.3

2.2

1.7

0.0

0.0

Comment on Results Outlook Recommendation

LMA reported 1Q07 results that were

slightly below our expectations. Earnings

fell by 19.5% y-o-y to US$3.5m despite

revenue growth of 15% y-o-y to US$23.6m.

This was largely due to one-off accounting

adjustments made on consolidation of an

associate company (PacMed) as well as

start-up costs for LMA Urology. Higher

investment in human resources and

litigation costs also resulted in more SG&A

expenses. Revenue growth was led by

consolidation of PacMed?s sales,

contribution from StoneBreaker as well as

organic growth of existing products.

LMA expects a similar trend for 2Q07,

where numbers will continue to be

affected by the accounting adjustments

needed for the consolidation of PacMed.

Despite this, management remains

confident that its new initiatives and the

acquisition of PacMed will help deliver

positive earnings growth for the full year,

implying a much stronger second half for

LMA. To be on the prudent side, we have

lowered our estimates for FY07 and FY08

by 12.8% and 9.7% respectively to reflect a

higher cost structure.

Maintain BUY, with our target price revised

to S$0.91, from S$1.05 previously. This is to

reflect our lower earnings estimates as well

as a weaker USD. For the stock to re-rate,

the company must start to execute and

deliver on its results. Our target price of

S$0.91 is based on 15x FY08 earnings.

ANALYST: Singapore Research Team +65 6533 9688 research@dbsvickers.com

DBS Group Research . Equity 9 May 2007

Singapore

Result Analyser

 

Hi hotstock

Many thanks for the excellent posting.  LMA should move north soon, like most other shares, with OCBC's call. What's your take?
 

 

LMA, jpm remains OVERWEIGHT
- 1Q07 results below JPM and consensus. LMA International reported its 1Q07 EPS of 0.6 S cts, below our estimate of 0.8 S cts and consensus EPS of 0.85 S cts by 30%. Sales revenues was inline with expectations, recording a growth of 15% to US$23.6MM in the 1Q07 due to the consolidation of 80% owned subsidiary LMA PacMed. If LMA PacMed had remained an associate, sales would have increased by only 9%. We are not changing our rating.
- Gross margin decline due to (1) product mix shift to single-use devices from reusable devices (we have estimated that single use gross margins c.61% while reusable unit gross margins c.82%); and (2) accounting treatment of inventory purchased as part of LMA PacMed acquisition ?value acquired inventory at estimated selling prices less cost of selling. Management believes that approximately US$500k of inventory was adjusted higher, thus reducing gross margin by 5ppt and expects 2Q07 gross margin to be similarly affected.
- Seeks strategic investments and new initiatives. The company is looking to acquire product rights or existing businesses for new, innovative or revolutionary products and look out for investments opportunities to acquire strong performing distributors. Management remains upbeat about the new product pipeline to drive sales and profit growth for FY07.


LMA, ocbc remains a BUY with target price $0.77
- One time charges hit bottomline. LMA posted a 15% YoY increase in sales to US$23.6m, boosted by the additional 50% stake in LMA PacMed in Australia. However, net profit fell 24% YoY due to non-recurring charges and new urology business start-up costs. Excluding the net effect of its new urology business costs and non-recurring charges, net profit declined marginally by 10.5% YoY to US$4.2m. Management has guided that net positive effects from the LMA PacMed acquisition will be evident in 2H07 and that the urology business will be self sustaining by end of FY07.
- Good earnings trends. Sales in the lucrative US market grew 10% YoY to US$14m, while International markets clocked 20% YoY growth to US$9.2m. A slowing down of ASP erosion and an increase in units sold achieved a net positive effect on sales. We expect topline to continue to grow at 16% for FY07 as LMA PacMed synergises its operations with the group. We see the promising growth in the Ctrach and Urology segment being the key in driving revenue in FY08.
- First major M&A well assimilated. LMA has shown its capability to quickly integrate acquisitions to boost sales. LMA PacMed (now LMA's subsidiary) contributed an additional 6% YoY growth to the topline in a span of 3 months versus being an associate previously. With management guiding that they are in discussions with several parties, we are more confident that integration issues will be minimised.
- Maintain BUY. We forecast LMA PacMed to raise topline to US$105m (previously US$98.1m), but we tweak our net profit to US$23m (previously US$25.2m) to account for the non-recurring costs associated with its PacMed's acquisition and the Urology segment's start up costs. We revise our fair value to S$0.77 (previously S$0.80) implying a possible 38% upside. We still think the share price is under appreciated despite our 12x PER valuation at a substantial 68% discount to LMA peers' PER. We have not factored in any M&As into our earnings model. Maintain BUY.