by Travis Johnson, Stock Gumshoe | February 4, 2013 9:58 am
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Source URL: https://www.stockgumshoe.com/2013/02/a-truly-lousy-quarter/
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Tough break. I have been looking at this one for a long time maybe it is time to bite.
I noticed that LONR.L is down 20+% but LNAFF is only down about 13% Do you know why they are not tracking each other more closely?
They often don’t track perfectly because of low liquidity (not many shares traded on the pink sheets — though actually, there aren’t that many typically traded in London either), and you can’t count on being able to buy or sell at the last quoted pink sheets price. The percentage changes also don’t track, since the last pink sheets trade the day before may have been at a premium to the London price and the first trade today at a discount, or vice versa. The close in London was at about 7p, so that’s roughly 11 cents at the current exchange rate.
Thank you for your quick response and thorough analysis!
Any updates??
It’s going to be close to two months before they release the “real” numbers, but the basics are that revenue grew rapidly (40% year on year) but still came in almost 20% below analyst estimates, and that roughly half of that shortfall is from specific problems that they identified in the release (delays in the ports for their John Deere imports in Mozambique, smaller catch at Oceanfresh, delayed hotel openings). Most of that shortfall will be made up for on the books early this year as the hotels did or will open, the catch improved, etc., and given the company’s commentary about focusing on margins and the limited evidence that they’re doing that (they cut one business line because it didn’t have good enough margins, for example), I’m still sticking with them, mindful of the fact that they still have tremendous revenue growth and huge potential if you look to the several-years-out horizon. It does not look, however, like I made a good call in pegging them as a great 2013 performer. I based that call on the fact that I thought they were hitting sustainable profitability last quarter, and clearly they didn’t. I’ll continue to think on Lonrho and will let you know if my opinion changes.
Thanks for your insights Travis! I continue to look at lonrho as a long term investment. One bad quarter does not make or break a company. It might take a bit longer than we hoped, but I feel there is great potential for growth here.
I actually bought a few more shares at 6.99 pence. If I did not have a decent position yet I probably would start to build up one soon.
Thanks Herbert. There is certainly risk to go with that growth, as I think most folks understand — and some real concern from investors who were told six months ago that they had turned the corner to profitability. Here are a couple articles on the announcement, FYI:
http://www.telegraph.co.uk/finance/newsbysector/transport/9848434/Lonrho-shares-dive-on-full-year-loss-warning.html
http://www.proactiveinvestors.com/companies/news/40242/lonrho-remains-positive-on-strategy-expects-to-post-net-operating-loss-for-fy-2012-40242.html
http://www.ft.com/intl/cms/s/0/b874f43e-6ec5-11e2-9ded-00144feab49a.html#axzz2K3FSJdRj
Re: pink sheet liquidity….after 2 months my limit order filled yesterday during the selloff. A first micro nibble long term speculaton. I’ll probably put a low ball micro limit order on the pink sheets again soon and see what happens
Impressive patience! I hope it works out well for you in the end.
Has anyone tried LOHOY? (1 ADS : 100 Ordinary)
http://www.otcmarkets.com/stock/LOHOY/quote