What’s The Deal on LBC Express?

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LBC Express Holdings, Inc. (LBC), formerly Federal Resources Investment Group, Inc. (FED), was formed on July 12, 1993 and used to engage in the manufacture of various adhesives and sealants and other chemicals for hardware, construction, do-it-yourself and industrial applications. In order to tap potential business opportunities, FED deemed it necessary to broaden the scope of the Company’s primary purpose by changing it to that of a holding company.

On July 22, 2015, a total of 59,101,000 shares of common stock of FED were issued out of its unissued capital stock in favor of LBC Development Corporation (LBCDC) following the completion of a mandatory tender offer by LBCDC to all shareholders of FED. As a result of said issuance, LBCDC became the owner of 59.1% of the issued and outstanding capital stock of FED. In October, FED conducted a concurrent issuance of 1,146,873,632 common shares to LBCDC and 178,991,839 common shares to three individual investors. The increase in LBCDC’s shares in FED resulted in a higher shareholding at 84.6%.

FED subsequently applied for the change in corporate name to the present one, which the SEC approved on October 12, 2015. The Company, however, maintained its primary purpose of being a holding company. FED executed on October 2, 2015 the deed of transfer whereby the Company acquired from LBCDC 1,041,180,493 issued and outstanding shares of stock of LBC Express, Inc. (LBEI).

LBC, through LBEI, provides logistics services via a network of 1,000 branches located nationwide. The LBC Group has also set up branches in various locations in North America, the Middle East, Asia Pacific, Europe and Oceania.

Recently, LBC has an unsettled issue with PDIC amounting to about PHP1.8B, just one of the many problems it is going through. Anyway, a business with no problems is not a business. If we have to keep on listening to the mainstream media the owners of this company should shut down this business and end their misery. But as you walk around the streets and observe keenly it’s business as usual with LBC.

Let’s have quick look of the fundamentals, yes the boring stuff, you know.

Annual

For the fiscal year ended : Dec 31, 2014
Currency(and units, if applicable) : PhP

Balance Sheet
Item Current Year Previous Year
Current Assets 2,799,659 5,200,716
Total Assets 2,799,659 17,693,975
Current Liabilities 1,924,000 1,428,643
Total Liabilities 1,924,000 1,428,643
Retained Earnings/(Deficit) -111,104,531 -95,714,858
Stockholders’ Equity 875,659 16,265,332
Stockholders’ Equity – Parent 0 0
Book Value 0.02 0.39
Income Statement
Item Current Year Previous Year
Gross Revenue 148,533 17
Gross Expense 15,535,236 4,237,071
Net Income/(Loss) Before Tax -15,386,703 -4,237,054
Net Income/(Loss) After Tax -15,389,673 -4,237,054
Net Income/(Loss) Attributable to Parent 0 0
Earnings/(Loss) Per Share (Basic) -0.37 -0.10
Earnings/(Loss) Per Share (Diluted) -0.37 -0.10

Quarterly

For the period ended : Sep 30, 2015
Currency(and units, if applicable) : PhP

Balance Sheet
Item Period Ended Fiscal Year Ended(Audited)
Current Assets 4,138,615,414 3,224,774,421
Total Assets 5,943,910,704 4,880,184,261
Current Liabilities 4,915,721,764 2,889,794,836
Total Liabilities 5,621,504,561 3,554,318,775
Retained Earnings/(Deficit) 414,129,041 133,861,985
Stockholders’ Equity 322,406,143 1,325,865,486
Stockholders’ Equity – Parent 357,946,979 1,339,790,549
Book Value 3.22 32.42
Income Statement
Item Current Year (3 Months) Previous Year (3 Months) Current Year-To-Date Previous Year-To-Date
Gross Revenue 1,980,474,146 1,742,502,716 5,764,018,829 5,242,315,377
Gross Expense 1,828,483,377 1,630,504,977 5,193,477,018 5,111,803,879
Net Income/(Loss) Before Tax 151,990,769 111,997,739 570,541,811 130,511,498
Net Income/(Loss) After Tax 101,193,688 62,523,888 389,338,545 85,795,429
Net Income/(Loss) Attributable to Parent 106,298,946 67,893,542 407,032,450 96,790,301
Earnings/(Loss) Per Share (Basic) 2.09 1.66 8.02 2.37
Earnings/(Loss) Per Share (Diluted) 2.09 1.66 8.02 2.37

As normal part of the routine, the stock data.

Status Open Market Capitalization 14,743,448,970.14
Issue Type Common Outstanding Shares 1,425,865,471
ISIN PHY5228G1023 Listed Shares 40,899,000
Listing Date Dec 21, 2001 Issued Shares 1,425,865,471
Board Lot 100 Free Float Level(%) 68.53%
Par Value 1.00 Foreign Ownership Limit(%) 40%
Last Traded Price 8.70 Open 10.50 Previous Close and Date 10.34 (Jan 11, 2016)
Change(% Change) down  1.64 ( 15.86%) High 10.50 P/E Ratio
Value 2,412,930.00 Low 7.50 Sector P/E Ratio
Volume 265,300 Average Price 9.10 Book Value
52-Week High 27.55 52-Week Low 10.34 P/BV Ratio

The closing price of 8.7 is less than the average price of 9.1 meaning there’s a good opportunity to trade this stock with only 265,300 shares or roughly 1% of the 28,027,007 shares circulating in the market has been traded as of this writing, in other words only few holders are interested to sell this stock, why? The others probably sensed a good opportunity to hold.

And the opportunity we are looking at is probably in the form of SMA(20) above EMA(13) or the SWAG that will eventually cross, the bearish Parabolic SAR that will not stay forever bearish, the Money Flow Index (Smart Money) at the below oversold level which will eventually move up.

LBC-01122016

 

Recommendation: BUY ON WEAKNESS

Holding Period: 90 trading days

Apply position sizing, risk management methodologies that you already know. As mandated by law, being a Certified Securities Representative, I CAN NOT GUARANTEE against loss.

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