Slashing Li & Fung’s FVE by 28% to HKD 4.30 Per Share on Weaker-Than-Expected Trading Business
We have slashed our fair value estimate to HKD 4.3 per share from HKD 6.00 per share, while maintaining our no-moat rating. The shares are now fairly valued, and we recommend a better entry point to compensate for the high uncertainty. The earnings presentation painted a much dimmer multiyear trend than we previously expected in the trading business. We now forecast revenue to decline by 1.1% per year for the next five years, versus a 0.8% increase previously. Our five-year average operating mar...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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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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