Full Name LCL CORPORATION BHD
Stock Code No 7177
Sector TRADSERV
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)
