Lam Soon woes appear a matter of management

Lam Soon Food Industries has an unenviable record of disappointment. For five years investors have been waiting for this flour and edible oils company to realise its potential.

Since listing in 1991, the shares, according to Bloomberg, have fallen 71.5 per cent, against a rise in the Hang Seng Index of 173 per cent. Profit attributable, excluding gains from non-core sales, has fallen from $85.7 million in 1991, to $7.17 million in 1995.

Profit attributable was $472.47 million in 1994 after booking a $420.35 million sale of a subsidiary. For the record, in 1995 there was a $41.39 million exceptional loss booked on operations in Beijing. Operating profit before exceptionals in 1995 was $49.2 million, up about $7 million.

Despite years of capital investment in new plant in China and attempts at building sales in Guangdong province, the management at Lam Soon Food has failed to inspire investors with its performance.

Maybe it is time to let someone else have a go and see if they can add better value to the group assets, business and share value.

In the 1995 accounts, the management suggests things in 1996 will get better.

Chairman Whang Tar Choung told shareholders: 'Your company now stands on a firm infrastructural foundation to be a prime contender in China's vast continental economy.' Very few of the shareholders, it appears, believed him. Since issuing the 1995 results, the stock has fallen 24.73 per cent, against a rise in the Hang Seng Index of 2 per cent.