Dec 14, 2009

LCL Corporation recent

Abras are the traditional mode of transport be...



Stock Code No 7177


Latest (delayed) price and chart at LCL Yahoo Finance 

LCL Default in payment

LCL Corp Bhd’s subsidiary has defaulted RM72m of bank  loans  following  the collapse of property prices  in Dubai,making  it  the  first casualty on  the  local stock exchange  in  the aftermath of  the Dubai debacle. LCL said yesterday  it received notice of demand from Affin Bank Bhd for RM22.76m owed in general lines and RM46.66m owed in blanket contract financing.

Its subsidiary LCL Furniture Sdn Bhd has also defaulted RM2.63m of murabahah working capital financing provided
by Bank Islam Malaysia Bhd. “LCL has been severely impacted by the recent financial turnmoil in Dubai, where property prices
have plunged resulting in delay and non payment of its receivables. Hence, LCL and its subsidiaries have been unable to meet its  repayment  obligations,”  the  company  said.  LCL  added  that  prior  to  the  notices  of  demand,  it  has  been  in  regular negotiations with the banks to reschedule its loan payment. However, the defaulted bank borrowings will have a consequence on  the on-going bank borrowings of  the LCL, which will also be declared default by 12 other banks under  the cross default  clause. (Malaysian Reserve dec 11)


CIMB Equities Research is maintaining its underperform recommendation on LCL

CIMB Equities Research is maintaining its underperform recommendation on LCL Corp Bhd after the latter's unit defaulted in payment of RM72 million to two banks.

"Our target price remains 25 sen as we continue to tag to the stock an unchanged 75% discount to our 1.8 times target price/book value for the CONSTRUCTION [ ] sector. We reiterate our Underperform recommendation," it said in a research note on Friday, Dec 11.

CIMB Research said the latest news was a major de-rating catalyst, along with worsening newsflow and continuing collection problems in Dubai.

The research house said it expected more loan default announcements by LCL in the coming months unless Dubai's financial position turns around for the better soon.

"We believe this is a less likely scenario. Over the next few months, newsflow for LCL is expected to get worse before it gets better," it said.

The research house said it was unfortunate that LCL had reached this stage. The company offered so much potential two to three years back but its operations and balance sheet were hit hard after working conditions in Dubai deteriorated rapidly in the aftermath of the 4Q08 property crash.

It added the challenges were not just hitting LCL but also hitting hard the main contractors in Dubai, including the Korean and Japanese contractors.  (source: theedge dec 11)