BUZZ-Li & Fung: The struggle continues

Tue Aug 13, 2013 12:04am EDT

Li & Fung shares are hovering near their 4-year lows and there is little to suggest that its earnings report will enthuse investors back.

** Li & Fung is the HSI's fourth-worst performing stock this year behind the coal stocks and Belle International.

** Company has struggled to generate revenue from its aggressive acquisitions resulting in the lowest return on assets since at least 2000.

** Relationship between ROA & share price particularly strong since February 2011.

** Shares staged a recovery of sorts from April-end through to mid-July on hopes that a better U.S. economy would help reverse Li & Fung's fortunes.

** EPS estimates are being cut. 2013 EPS estimate is down 3.4% in the past month according to StarMine.

** The company's U.S. unit, LF USA, continues to struggle with margin improvement still missing. Goldman Sachs says "it is more about the micro than macro for L&F"

** Short-selling remains strong. According to Markit it is the second-most heavily borrowed stock in the Hang Seng in terms of percentage of shares out on loan vs total outstanding shares.

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A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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