Update On LCL

Posted last Friday: Warning Sign On LCL As It Misses Deadline To Submit Audited Reports!

Yesterday on the Financial Edge: TA cuts LCL to sell, values IFO outfit at 35 sen

• TA Securities views LCL Corp Bhd’s failure to submit its audited financial statements ended Dec 31, 2008 before April 30, 2009 which violated listing requirements as a negative surprise.
  
  The research house, which downgraded LCL to a sell at 57 sen from a buy, now values LCL at 35 sen from 82 sen previously, based on the revised three times CY09 earnings per share. .
  
  The interior fit-out (IFO) company now has less than three months to submit the audited financial statements before Bursa Malaysia suspends the trading of LCL shares. Also, LCL will be delisted if it fails to submit the audited financial statements within six months from now.
  
  TA Securities said LCL’s management attributed this negative surprise to a stock verification issue in Dubai, which has prolonged the audit process.
  
  “We understand that there is no payment issue or any conflicts in the method used to recognise VO (variation order) claims. In 4Q08, LCL reported an increase in inventories of 19% quarter-on-quarter and 38% year-on-year respectively to RM34 million.
  
  “This was nothing unusual given the increased amount of works in Dubai. Hence, we do not expect LCL to take too long to publish its audited financial statement unless a much more complicated issue arises,” TA said in a research report yesterday.
  
  Nevertheless, TA reckoned that LCL would be fined for failure to furnish audited financial statements on time. In the past, Bursa Malaysia has fined various companies from RM2,000 to RM72,000 for late submission of audited accounts.
  
  TA maintained its FY2009-2010 earnings projections given that the fine is expected to be immaterial.
  
  “However, until the audited FY2008 financial statements are being audited, we raise the discount attached to the construction sector (10 times) now from 30% to 70% to factor in the risk of misrepresentation of FY2008 financial performance,” said the research firm.
  
  LCL fell three sen to close at 54.5 sen yesterday.
  
  This article appeared in The Edge Financial Daily, May 5, 2009.

Nothing is mentioned about the property plunge in Dubai. :D

I just received a copy of CIMB research report on LCL just now.

This is what they wrote.

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