Lonrho Share Discussion Threads

[valhamos] 30/3/2013 09:39

Quick lads, SELL! NK has revealed to us that LONR are using NET PRESENT VALUE!!!
Must mean major fraud - the sky is falling in, it will be the end of accounting as we know it!

Actually no. Net present value is used in lots of accounting standards where there is a long-term asset or liability not just for biological assets. In fact I'd be hard pressed to find a set of accounts where net present value wasn't used.

[crosswire] 30/3/2013 08:48

African Infrastructure – Lonrho (LONR).

Mar 30

by theboybulmer

7 of the top 10 fastest growing nations in the world are in Africa. War or famine plague the beautiful landscapes for the most part, a drastic truth which in future years will hopefully change as a result of Foreign Direct Investment (FDI). An increased tolerance to risk, and more stable governments (using the index for corruption as a guide) have lead investors to enter the various nations, as the unloved oil, gas & mineral deposits they hold become more accessible. As a result, FDI into Africa is currently $33 billion per year, and is set for $84 billion investment during 2014; a 255% increase.

With booming economies comes the need for infrastructure; a means of transport and mobility, not only amongst the local employees but also for operational requirements of the firms fuelling the growth & investment. It is reported 23% of the roads in all of Africa are 'paved' (asphalt). In Tanzania it is only 9%. An average of 6km of road per 100km squared of land (track, paved or otherwise) highlights the need for development, if the growth is to be sustained.

This lead me to think about companies specialising in infrastructure, more specifically those that might operate across the whole African continent. I came across Lonrho (LONR), a £106m MCap listed in London and Johannesburg. With operations across the continent including Tanzania, Gabon, DRC, Mozambique, Botswana and Zimbabwe, the portfolio is vast and covering logistics, flights, hotels and agriculture. Lonrho has fallen out of favour with institutional investors of late, with BlackRock and UBS selling part of their holdings in recent weeks, and a broker target of 7p set by Jefferies.


Democratic Republic of Congo – Lonrho owned hotel.
Alongside the peaches it sells to Tesco, Tuna it sells to Costco and John Deere tractors it distributes in Angola, Lonrho owns a 55% stake in FastJet (FJET), the London listed/African based low-cost airline. The business is certainly diversified sufficiently to avoid major consequences if a drop in commodity prices is seen, which might be a cause for concern to a gold miner for example. Lonrho also boasts it has recently won contracts to inspect oil & gas exported from Nigeria by its government, and provides giant Tullow Oil with a 250-man camp to support its exploration activities in Kenya.

Other examples of its operations include the ownership of the oil and gas logistics terminal in Equatorial Guinea (Africa's 3rd largest oil producer), which can now handle over 85% of support logistics requirements of offshore fields. Tennants include Ophir Energy, ExxonMobil and CNOOC.

Lonrho, the self-proclaimed 'demand-lead' organisation, believes it has now completed building its foundations in core African businesses, allowing it to deliver strong growth through 2013. This is evidenced in the reduction in Capital Expenditure from £43.4m in 2011 to £14.3m in 2012. The decision to focus on higher margin operations has helped revenues reach £206.5m for the 12 months to December 2012, up around 23% on 2011. Debt fell £1.2m to £87.2m, whilst gross profit was £59.6m, up from £51.2m in 2011, and net operating loss was recorded as £12.3m from a net profit of £8.5m the year prior. Total group equity was £328.5m, down from £331.7m.

Infrastructure and support services in Africa is an area I shall be researching further, as I see it as a major area of growth in the future years.

> If you wish to read further about Lonrho, the interim report can be viewed here:

> Q4 2012 results can be seen here:

I do not currently hold this stock, however it does look an interesting business model for the future. BUY at 6.6p.

[lucky_punter] 29/3/2013 10:52

Lonrho shares flying high after reporting strong revenue growth in 2012


Shares in Africa-focused food and logistics group Lonrho (LON:LONR) soared today after it reported strong revenue growth last year, including a 32% increase in turnover in its final quarter.

[twixy] 28/3/2013 20:43

DVI - nice;,well done.

Ndege Kidogo - if you are not already, you should be in journalism; the satire kills me ;-)

[elmfield] 28/3/2013 19:41

Dvi you called this one right, well done!

[deepvalueinvestor] 28/3/2013 19:19

I sold most of my million at just over 6p. A 30%+ profit in a week is not to be sniffed at. Good luck for those playing the long game. My problem is that I am bearish on markets and can't say no to such easy profit.

[valhamos] 28/3/2013 18:27

NK I see you still can't get to grips with accounting for biological assets. Pretty fundamental stuff for anyone commenting on an agri-business.

[crosswire] 28/3/2013 16:18

Thursday, March 28, 2013


Geoffrey White, Chief Executive of Lonrho (LON:LONR) tells Proactive Investors that, after the disappointing fourth quarter, highlighted in the trading update, 2013 has started as expected and the year is looking very strong for the company. The recent launch of easyHotels started with 100% occupancy and White says that there's a 'big demand' across the continent for the product.

[crosswire] 28/3/2013 14:10

Share price forecast

The 7 analysts offering 12 month price targets for Lonrho plc have a median target of 15.90, with a high estimate of 20.00 and a low estimate of 7.00. The median estimate represents a 218.00% increase from the last price of 5.00.

[diamond1] 28/3/2013 10:59

32% revenue growth in final quarter was what took my eye.

[bernieboy] 28/3/2013 09:03

Well done Ninja - I will take out a few but keep my major holding for the long term. Have been here for at least ten years already and top sliced all the way up to 21p. Still hold most of them....

[ninja 19] 28/3/2013 08:54

Ok Guys


I am out. Nice 3K profit.

Glad I posted the dead cat here and aye for some at 4.8P :)

[bernieboy] 28/3/2013 08:45

Deepvalue - I did the same as you - in for more at 4.6 and wished I had waited a day! Now very pleased.
Everyone expected a fundraising of some sort but I like this bit from the results - which looks like there isnt one in the near future. (Market tends to agree - at 6.2p now!).

Going concern
Although the current on-going economic conditions create uncertainty, the Group's forecast and projections, taking into account possible changes in trading performance, together with mitigating actions that are within managements control show that the Group is expected to be able to operate within the level of its debt facilities.
The Directors are carefully monitoring cash resources across the Group and have instigated a number of initiatives to ensure funding will be available for planned projects.
Following the careful review of on-going performance, and after making due enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the accounts

[davidlloyd] 28/3/2013 08:41

Happy days.

DL

[deepvalueinvestor] 28/3/2013 08:17

Ooh, good!

[valhamos] 28/3/2013 08:04

It opened at 5.1 - had a large spread 5.1 buy 5.7 sell for a few minutes. Now gone back into auction.

Edit: currently 10m on the book to buy, only 705k to sell. It's come out of auction at 5.61- 5.69

[deepvalueinvestor] 28/3/2013 08:00

Does anyone have live prices so I can see how it opens? They did reduce debt marginally....

[valhamos] 28/3/2013 07:56

Operating cash outflow is the key. Less than last year - improving trend is there but is it enough to get to cash generation before they need further dilution with a placing. Having said that I topped up yesterday because it got too cheap. With a Zambeef update as well quite an African feel this morning - cue Africa by Toto