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LFECORP (7170)  / PN17 - LFECorp - The Turning Point

Little known LFECorp had recently came to a little bit of limelight after seeing the PN17 beleaguered counter had finally saw a tunnel of light from a savior - Shapadu Corp Sdn Bhd.

Back then, LFECorp had been a well doing company which had joint venture with well known IJM Corp Berhad, Sunway Berhad and Zelan Berhad in the RM 1.32 billion Al Reem job in Abu Dhabi back in 2006. However, things took a sour turn during the 2008 financial crisis, and a former director, Alan Rajendram went further to add salt into the wounds of LFECorp by falsifying financial statement in the company.

While the management work through the trying times in order to keep the company standing, things had got hard when some of the work done
However, LFECorp might be seeing a total turning point when White Knight - Shapadu Corp Sdn Bhd had decided to give the company a breather.

How would the whole deal between LFECorp and Shapadu Corp Sdn Bhd pan out?



Looking at the price chart of LFECorp, the stock hit a relatively high note back then in September 2013 after the release of the quarterly result which had shown a huge positive gain for the quarter. However, the share price continued to be depressed pending the submission of the regularization plan to Bursa Malaysia in order to turn the company around.

As of lately, LFE had saw some active trading with the announcement of the subscription of private placement by Shapadu Corp Sdn Bhd. With the growing interest in the company, LFE could be looking to trade towards it's par value of RM 0.30 as volume continue to pick up in the coming days.


The White Knight - Shapadu Corp Sdn Bhd

Shapadu Corp Sdn Bhd is founded by the late Datuk Shahrani Abdullah. Currently, Shapadu's business had expanded into Oil & Gas division, Property & Construction, Civil Engineering,  Transportation & Logistic, Infrastructure Development, Security and Training services as well.

Shapadu had been looking to hit into the KLSE back then in 2013, with plans to list it's subsidiary Shapadu Energy & Engineering Sdn Bhd (SEEN) in order to raise fund for working capital in it's expansion plan. Previously, the group had listed is container haulage outfit Shapadu Kontena Berhad, which was later sold to Logistik Berhad in 2005.

Currently, Shapadu Corp through it's subsidiary, Shapadu Boulevard Sdn Bhd, had given LFECorp a turning point with the project award amounting to RM 350 million for the engineering, procurement and construction of Shapadu City Village at Putrajaya, Precinct 2, which commenced on 16th December 2014.

Shapadu had gone deeper into the whole picture when they plan to take up the private placement of 66.667 million shares for RM 20 million at 30 cents a share. However, the placement will subject to the approval of Bursa Malaysia in it's regularization plan which had been awaiting for the regulatory body reply since it's submission at 25th July 2014.

LFE had been displaying a better set of results with the latest 3 out of 4 quarters in the positive zone. With the ongoing project in hand, LFE will be able to put another positive quarter forward, which will sees a 3 consecutive positive quarter for LFE as well.

According to familiar sources, LFE should be seeing a green light from the regulatory body for the regularization plan after putting up the latest quarterly result with 3 out of 4 positive, identified cornerstone investor for the private placement and a foreseeable on going concern for the company.

Shapadu Corp, under Datuk Rosthman Ibrahim, intends to finalize and complete the private placement with LFE in the month of May 2015. According to Datuk Rosthman, Shapadu will plan to dish out more project to LFE after the completion of the private placement in May.

Shapadu is a strong and well connected government linked company. With it's top management significance in the ruling party, Shapadu is expected to bag in more deals from the Putrajaya.


In Conclusion, LFE will be an interesting company in the coming days given
- RM 20 million Private Placement subscription at RM 0.30 a share by Shapadu Corp Sdn Bhd to be completed in May 2015.
- Favorable result with 3 out of 4 recent quarter in the black, putting a good outlook for approval chances for regularization plan from Bursa Malaysia.
- Shapadu to dish out more project to LFE prior to completion of share placement.
- LFECorp is a possible RTO target by Shapadu in the long term outlook with possible asset injection, given the motive of Shapadu to be seen listed in the KLSE market.


Turn along with Shapadu? You decide.

Bone's short term TP: RM 0.30

Cheers and have a nice day

Regards,
Bone

http://investors188.blogspot.com
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