I like Li and Fung [Introduction]

16 Aug

Note – tomorrow I’ll present a more detailed look at the company itself and last week’s 2Q09 results

I like Li and Fung (HKG:0494). These guys are growing and cutting costs in a global recession. But to top it all off, they are sitting on a cool US$1bn in cash.

The President of the firm (Rockowitz) summed it all up when he said last week: “We’re sitting with about $1 billion of firepower. I see this as a huge window of opportunities, like a kid in a candy store and you want to eat everything.”

CEO William Fung said that the firm is looking for potential acquisitions in the US and Europe in the beauty, health and cosmetics markets.

Although stocks have appreciated in the last half-a-year, with so much firepower Li & Fung must still have leverage to find bargains out there.

Google finance description of the comapny:
Li & Fung Limited is an investment holding company. The Company, along with its subsidiaries, is engaged in the trading of consumer products. It operates in two segments: softgoods and hardgoods. During the year ended December 31, 2008, softgoods and hardgoods accounted for 66% and 34% of turnover respectively. The Company manages the supply chain for retailers and brands worldwide. It services its customers globally through a sourcing network of over 80 offices in more than 40 economies.

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5 Responses to “I like Li and Fung [Introduction]”

  1. Yoav August 16, 2009 at 7:32 pm #

    Interesting article. I understand that te company manages the supply chain for global brands and retaillers. What do you see as the fundamental risks posed to their growth from the challenges faced in many supply chains at the moment?

    • theravenandthedragon August 17, 2009 at 12:07 am #

      I’m not an expert on supply chains – but you mention growth. I consider growing the top line to be the biggest challenge in the present environment. Though the firm does have ambitious plans to cut costs by 10%, and have already commenced travel reductions and moving non-production employees to production sites.

      Let me know if you have any thoughts yourself on supply chain related issues.

  2. Boaz August 17, 2009 at 2:51 pm #

    Seems like a great time for them to look at acquisitions. They have a lot of cash and acquisition costs should be down now.

  3. theravenandthedragon August 17, 2009 at 4:35 pm #

    My point exactly Boaz. These guys are taking a larger slice of a shrinking pie. BoA/ML just upped the target price to HK$29. It closed at HK$26.75 yesterday.

  4. Boaz August 18, 2009 at 6:14 pm #

    Thanks. I saw they have done well the past few days. You mentioned that you are going to give a more detailed look soon? Am holding onto my shares so am interested to hear what you have to say.

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