Border Tax Adjustment Could Reduce Li & Fung’s FVE by 7%; Other Trump Policies a Mixed Bag
The potential Trump border tax adjustment could reduce Li & Fung’s trading revenue, in our view. In the first half of 2016, U.S. trading revenue accounted for 64% of Li & Fung’s trading network revenue and 61% of the group’s total revenue. This highlights the group’s large exposure to the border tax adjustment risk. If we assume a 10% decline in Li & Fung’s U.S. trading network revenue, and a 10-basis-point lower total margin beginning in 2018, our fair value estimate would decrease ...Li & Fung is an investment holding company. Through its subsidiaries, Co. is a consumer goods design, development, sourcing and logistics company for retailers and brands around the world. Co. is engaged in managing supply chains of high-volume, time-sensitive goods. Co. operates under two business networks, namely the Trading Network and the Logistics Network. The Trading Network focuses on provision of the global sourcing services via multiple channels, such as buying agent, trading-as-principal for private label merchandise and on-shore wholesale business. The Logistics Network focuses on provision of logistics solutions and freight forwarding services.
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