Lityan Day 3

LOL!

Putting focus on low public shareholding spread?

Hmm.. low public shareholding equates to ______ ?

On Star Business: Investors continue buying into Lityan

• Thursday November 5, 2009
  Investors continue buying into Lityan
  By FINTAN NG
  
  PETALING JAYA: Investor interest in Lityan Holdings Bhd, which recently emerged from Practice Note 17 status as a listed subsidiary of Lembaga Tabung Haji (LTH), has been intense on speculation of the company’s earnings potential resulting from a tie-up with Huawei Technologies Co Ltd as well as other Middle East project tenders.
  
  Lityan group managing director and chief executive officer Nor Badli Mohd Alias said the share price volatility was likely due to the relatively lower public shareholding spread of the company with LTH having a 56% stake in the company.
  
  “There’s a lot of interest in the company but people are not selling. Coupled with the low public shareholding spread, there’s bound to be a rise in the share price,” he told StarBiz.
  
  On Tuesday, Lityan’s share price volatility earned the company an unusual market activity query from Bursa Malaysia.
  
  The stock tumbled 9.3% to RM2.45 on the same day before trading in its shares was halted less than 30 minutes before the market closed.
  
  Last Friday, the company’s shares surged 25.17% to close at RM1.74 from an opening price of RM1.39. From Oct 30 to Nov 4, the average trading volume was 13.68 million shares or 21.67% of the total share capital of 63.1 million shares.
  
  Nor Badli had said last Friday that the company was in a tie-up with Huawei for Telekom Malaysia Bhd’s (TM) high-speed broadband (HSBB) project as well as tendering for projects in the Middle East.
  
  Although TM group chief executive officer Datuk Zam Isa did not identify Huawei as one of the partners in the project in an earlier report, industry sources said the Shenzhen-based company was one of the technology partners in the RM11.3bil HSBB project.
  
  Nor Badli said the company was in a tie-up with Huawei to tender for three packages in the HSBB project but declined to reveal details except that the company’s share of the packages would be based on its scope of works.
  
  According to AmResearch Sdn Bhd, Lityan’s work in the project would involve fibre-to-the-home implementation and Internet protocol television infrastructure.
  
  So far, only the package involving the roll-out of fibre optics for the last-mile to targeted high-density areas of Kuala Lumpur and Selangor has been announced.
  
  “We don’t know when the results of the tender for the other packages will be announced. It’s been delayed six months,” Nor Badli said, adding that the tenders in the Middle East were done in conjunction with LTH.
  
  “This will involve projects with a minimum total value of US$1bil,” he said
  

Investors? Did he say 'investors'?

LOL!

And Star Business also carried the following article. Getting carried away once again?

• Thursday November 5, 2009
  Getting carried away once again?
  MAKING A POINT By JAGDEV SINGH SIDHU
  
  LITYAN Holdings Bhd’s stock is on a rally like it was in 1999, in particular, the end of the millennium when any stock related to the dotcom/Internet boom, even remotely, surged on the potential of tomorrow’s promise.
  
  The stock bolted off the blocks, after its shares were requoted on Bursa Malaysia on Oct 30 after its restructuring, by rising 79% in its first day of trading from its reference price of RM1 a share.
  
  In the first four days since it was requoted, the stock is now up a staggering 181% having closed at RM2.81 yesterday.
  
  In the process, the total volume of shares traded now stands at 88 million, which is about 40% more than the company’s entire shareholder base of 63 million shares.
  
  The churn of the shares of this newly-restructured company is even more surprising considering that Lembaga Tabung Haji, which owns 56% of the company’s stock, appears to not have sold a single share in Lityan.
  
  The exact reason for such high interest is yet to be determined but some of the reasons given have been the company’s newly-minted government-linked company (GLC) status or a slice of a lucrative contract.
  
  Being a GLC stock is not a right for a rise in any company’s share price and winning a contract is only as good as the amount of money the company will make out of it, which at this time, is still unknown.
  
  In the end, a company is gauged by a number of reasons, and it starts with its earnings.
  
  There has only been a sprinkling of coverage on Lityan and two brokers have pegged the stock’s fair-value range at between RM1.50 and RM3 a share.
  
  The range is wide but is derived from Lityan’s forecast that it will earn RM15.6mil, or 24.8 sen per share, in net profit for its financial year ending Dec 31, 2010.
  
  Based on the closing price, Lityan is trading at a prospective price earnings ratio of 11.3 times, not bad when compared with the broader market but when compared with some of its peers, it is a lot more expensive.
  
  HeiTech Padu Bhd, a company Lityan is compared with, does not attract much interest in terms of broker research but its revenue and profit track record over the past three financial years has been on an upward trend. It is also a company that is much larger than Lityan in terms of revenue but not so in terms of market cap.
  
  For the current year ending Dec 31 (FY09), HeiTech’s numbers are slightly off from its FY08 pace but it tends to book it a bulk of its profit in the final quarter. But, based on FY08’s numbers, HeiTech is trading at 3.77 times earnings, a snip of Lityan’s valuations.
  
  The other thing investors have to keep in mind is the volatile nature of projections and earnings by IT companies. They have a tendency to flatter and disappoint and, in Lityan’s case, it is still uncertain if the numbers can be achieved.
  
  Lityan’s forecast also projects that it to have a much higher profit margin than some of its listed peers.
  
  In light of the query by the stock exchange on Lityan’s share surge and the resumption in the upward charge of the stock yesterday, I wonder if investors are getting carried away once again.
  
  Maybe investors should decipher this piece of news: Lityan’s managing director and CEO sold all of his 1.25 million shares in Lityan at RM3.13 a share on Tuesday.
  
  ● Jagdev Singh Sidhu is deputy news editor at The Star. He wonders if investors have learnt their lesson from the years of chasing hot stocks

ROFLMAO!

Yeah the Managing Director and CEO SOLD ALL HIS 1.25 million shares at 3.13!!!!!!!!!!!!!

How?

Let's see what happens to Lityan today.

Here is Lityan's performance for the morning trading session.


(More charts to be posted later)