On 8th Oct 2014, Latitude Tree has entered into Sales & Purchase Agreement with subsidiaries of another listed company KPS Consortium, to acquire a 4.4-acre freehold industrial land, together with its office, factory and machinery for total cash of RM22mil.
The factory in Klang, which is near to Latitude's HQ in Kapar, was used for manufacturing of printed laminated wood by KPS Consortium. KPS has moved its manufacturing activity to a new place.
Latitude does not buy the company or its business. It has to start from scratch and hire management personnel and workers to run the manufacturing process.
It is clear that Latitude wants to grow into upstream activity of furniture manufacturing by enhancing its furniture products using the decorative wood panels manufactured from this newly acquired factory.
I don't think Latitude will sell the products to others in the early stage so it will not contribute much to the revenue. It will not be a surprise to see operational loss in this operation next year.
Though expenses will increase, overall this should be positive for Latitude in the long run as it can design and manufacture its own laminated wood panel, compared to outsource from other suppliers.
For me, the management is working to grow the company and enhance the value for shareholders.
agree, the deal is rational n business minded.
ReplyDeleteI'm happy as its small shareholder :)
DeleteYou own Latitude also?
Need to monitor the progress and performance.
ReplyDeleteMany companies in different industries always try to expand to upstream or downstream business to save cost and to achieve 1+1 =3. It's a good move but not many able to achieve success. Need to keep monitor.
Btw, latitude price stayed strong in these few days of red sea. :)
This one I think not too heavy an investment, but still need to monitor.
DeleteYes, I bought it recently, avg price is rm3.8. So far, the free cash flow is still decent with a capex of 22mil.
ReplyDeleteAs a outdoor man (门外汉) of furniture industry, we really dunno how good or how bad is the deal, we can only believe in the good track record of the management in generating return for shareholders.
I bought this share bcoz there r four protectors (四大护法) supporting it, one is u dummy bro, the others r Kcchong, Cold Eyes n now the name is already busuk de Koon Yew Yin.
Btw, KYY wrote an letter to management to issue right issue n bonus shares to raise fund n increace the liquidity of Laittude.
http://www.klse.my/article/guessPost/koon-yew-yin-letter-to-the-latitudes-bod---why-and-how-to-improve-your-share-price.jsp
Wow, I just knew about this letter by KYY. Bonus issue will be nice. Anyway, I'm not in the same level with those other 3 investors u mention. Hope we'll be like them one day.
Delete