Lonrho Share Discussion Threads

[deepvalueinvestor] 25/3/2013 07:51

Tommy, if there is a rights issues rather than a placing then only open to existing investors so the strategy would be to quadruple exposure from 1m to a more meaniningful exposure of 4m or so. If not then I have dipped a toe and can add on the way up when we get signs of a return to profit and debt reduction. I always assume the worst in these situations but I want to get cash into overseas markets such as Africa so happy to take a punt ahead of the results.

[tommyjnewton] 25/3/2013 00:10

DVI: I am investing with the expectation of a rights issue but if they don't need one then, great, the share price will be much higher

Why are you 'investing' if you think there will be a dilution? It doesn't seem very bright.

[hvs] 23/3/2013 16:08

David Lenigas

Laughed all the way to the bank

[twixy] 23/3/2013 12:35

The Independent article above epitomises everything I have read about Lonrho.

The South Africa economy is struggling badly as well, with worse to come.

In the West when things go wrong we point to the macro environment and select our excuse from that menu; there the collective excuse is 'this is Africa'.

More and more people are saying Africa is where the future growth action is but I don't see it. Lonrho is still run largely by the same individuals, in the same inept way.

[deepvalueinvestor] 23/3/2013 11:44

The analyst I spoke to at length (one of the 3 above) was quite confused about the loss as revenues came in as he thought so he assumed costs must have risen but he couldn't see where. The results will either calm the situation or investors will start to worry about a loss making investment that has debt. I am investing with the expectation of a rights issue but if they don't need one then, great, the share price will be much higher.

[twixy] 23/3/2013 09:47

Ndege Kidogo - you seem very well informed on Lonrho and I take it from your posts you are not a current investor. What would you need to see to become a shareholder in this company?

[kibu] 23/3/2013 00:12

Daniel Stewart - October 2012 - Lonrho target price 20p
Jeffries (Lonrho's broker and financial advisor appointed in June 2012) - October 2012 - Lonrho target 15p
Renaissance Capital - June 2012 - "sum of parts £299m" target price 18p

I posted this mini-summary on 5 Feb 2013. What gives? Are the graphs as upside down as my understanding of fundamentals?



kibu

[kibu] 22/3/2013 22:42

Where is cestnous? I used to love his messages. His final word was always "filtered." I think he filtered kibu when Lonrho was about 12p or it could have been when kibu was posting "sell" at 43p.

Just 'between us," cestnous, during this week I have posted several "weak buys" at 5.91p on down. As Lonrho is now 4.55p what would you recommend?



kibu

[deepvalueinvestor] 22/3/2013 22:19

Kibu, I missed it! I invested in pme African infrastructure instead and that proved to be an error although investors have received lots of income over the years.

[kibu] 22/3/2013 22:06

"easyHotel's African expansion stutters"
22 March 2013

News that Africa's first easyhotel is far smaller and in a different location than leased last summer is not the first dramatic U-turn in this increasingly complex and costly story.

In September 2011, David Lenigas, on Bloomberg, said that Lonrho/EasyGroup franchise planned "budget hotels in Ivory Coast, Nigeria, Tunisia, Morocco, Egypt and South Africa."

On 4 October 2011, Lonrho announced their first development - in Mozambique. It reached agreement with LonZim to pay $5.1m for an 80% stake in ATdM. This 'company' owned property that included two derelict hotels. Lonrho "plan to refurbish an existing property on the site to establish an easyHotel by Lonrho and provide quality office space for key companies seeking to establish offices in Beira" ran the news release. The former Hotel Dom Carlos would become a 90-bed hotel. The agreement included liabilities of $2.7m.

This was the same property that LonZim, managed by the Lonrho BoD, had bought in March 2008. Having done nothing with it, despite announcing grandiose plans, they sold it to Lonrho, and managed to book a profit on the deal for LonZim.

After 2011's inspired accounting, the site decayed further. In autumn 2012, Lonrho Hotel's CEO, Ewan Cameron, said that work (was) to begin shortly and that the budget hotel will include 80 beds. In early 2013, the hotel still housed "hundreds of poor families" according to local press. Effectively, this has been a 'dead' investment made by Lonrho's management. Five years this month with no return. Enormous investment will be required to turn the hotel into a place that people would pay to rent a pillow (see "Dom Carlos Beira" Google images).

Little wonder that, almost two years into the "MFA" and with no results, the easyHotel venture switched again. This time to South Africa. They signed a 30-year lease with Afhco on part of Stuttafords, an iconic building in Johannesburg. It appears they failed to find out the full extent of refurbishment required. Afhco now has a problem too although one employee today denied that Afhco was involved anymore. Their website, nonetheless, continues to offer retail and office space at Stuttafords.

None of this should surprise those who have followed Lonrho's Byzantine business dealings over the years. What may surprise is that easyHotel is such an "ideal" bed-partner.

In July 2008, easyHotel upgraded their website. An article 'easyHotel Upgrades Web Site Without Losing Its Cool' references "a plan to introduce 200 hotels in 10 years." Today, easyHotel's website claims a mere "15 hotels" (although there are nineteen - twenty from Tuesday). Their website today still showed the Stuttaford picture.

Stelios and Lenigas live close to each other in Monaco. Wealth and distance do not align their interests with shareholders. While Monaco is at 13C for the weekend, the UK chill may help investors look more critically at the Lonrho Board's achievements since late 2005.





kibu

[kibu] 22/3/2013 22:06

deepvalueinvestor,

Don't get you. Why didn't you invest when the price was 1.9p? Your story doesn't make sense.


kibu

[deepvalueinvestor] 22/3/2013 19:41

A day of consolidation. Lets see what the results bring next week - any idea which day?

[deepvalueinvestor] 22/3/2013 08:14

Thanks. I have my little exposure to Lonrho and happy with them. Someone mentioned ZAM but like Lonrho for the mix of businesses.

[valhamos] 22/3/2013 08:06

DVI if you're looking for exposure to Africa, where a number of countries are showing good growth rates, and agri business in particular, have you had a look at Zambeef ZAM?

[deepvalueinvestor] 22/3/2013 08:00

There is no secrecy. Close period of not, if they were close to breaching bank covenants then they would notify the market. The obvious just stated in response to some heavy selling but if you feel the conversation was inappropriate then I guess I have brought it into the public domain with this post. As to why I suddenly invest, well waiting 10 years and then investing at a distressed price seems patient to me. I am taking a risk by trying to catch a falling knife but much happier at 4.5p with some blood on the carpet, than at 9p. The purchase reflects a nibble before investing more significantly after the results, if I feel that they can manage the debt without a rights issue.

I am very defensively positioned but at the same time have some small cap exposure with a focus on certain emerging market, particularly India, with lots of SPL. I am looking to gain exposure to Turkey when an opportunity presents itself and also A toe in Africa as represented by this small Lonrho purchase. I am also attracted to the agri business as I have been diversifying into grains etfs recently too. I also want to get cash out of Sterling.

[ndege kidogo] 22/3/2013 06:46

DVI, it seems to me that management should not be discussing price sensitive information ( eg 'well within banking covenants) with an individual shareholder in a close period. Very strange. Also very odd that you don't invest for 10 years, make a call to the company and a few analysts and bingo whack in £ 45k.
Deep throat comes to mind. And even if Linda's well past caring, the regulator might not be.

[twixy] 21/3/2013 21:48

DVI - I am curious to know what made you decide to invest, other than what appears to be a cheap price? I don't post on the SHA thread but do read it, as there are many smart posters on there and I can see the success you have had on other stocks with your real time trades.

[deepvalueinvestor] 21/3/2013 21:46

Elmfield, that's why I have waited for a decade to invest. The risk reward now looks attractive when compared to an over bloated equity market. If the ftse 100 falls a thousand points, it doesn't mean that Lonrho's share price will keep falling after the recent carnage we have seen.

[elmfield] 21/3/2013 21:43

Deep value,
Remember this is Africa we are talking about, the rewards are great the risks huge and corruption is rife!

[deepvalueinvestor] 21/3/2013 21:28

I don't know you either but ask on the SHA board if you want a reference. 1m shares is actually not that much and very much a nibble ahead of results where I may add again. Alternatively, I may indeed be a bit early and would add again if they go close to 4p. When there is panic selling involved, we simply don't know which way they will go next. Crucially, management confirmed that they are well within banking covenants so I expect a relief rally to, say 6p, on results but we will have to see.

[ndege kidogo] 21/3/2013 17:55

So deepvalueinvestor, only 1,612,103,988 shares left for you to buy, or will you stop your rot sooner. Something tells me you're not for real.

[deepvalueinvestor] 21/3/2013 15:00

Investec had a seller but I bought 1m shares at 4.5p so hopefully stopped the rot.

[tommyjnewton] 21/3/2013 13:27

If price stays down here, there will be a whole lot of dilution come the next passing around of the hat.