LYS’s Shares Tumbled On ASX Post Update On Review Of Lynas Malaysia Sdn Bhd’s Operations

  • Oct 15, 2018 AEDT
  • Team Kalkine
LYS’s Shares Tumbled On ASX Post Update On Review Of Lynas Malaysia Sdn Bhd’s Operations

On 2 October 2018, The Lynas Corporation (ASX: LYC) had released an open letter to the Government of Malaysia and proposed a review of Lynas Malaysia Sdn Bhd’s operations. As per the letter, the CEO of Lynas wants to be fair, objective and transparent review of Lynas Malaysia Sdn Bhd’s operation. For the past 6 years, Lynas Malaysia has been producing high-quality rare earth material keeping in minds the company’s zero harm philosophy to the people, communities, and environment. The company has been successfully producing rare earth material for which it has gained an international profile as a center of excellence in producing rare earth material. Despite the company’s excellent records, a Lynas review committee had been formed and was decided that it will be headed by the member who openly admits being anti-Lynas. The CEO made an appeal to the government of Malaysia to conduct a review and the company will co-operate with full confidence in term of its performance. Also, an appeal was made where the CEO anticipates the government to apply high standards of fairness and openness in all aspects of public life which was seen in other recent initiatives of the new government.

However, as per the recent update of Malaysian media, the anti-Lynas MP has been withdrawn from the Lynas review committee who previously announced that she would be chair the committee. However, Lynas along with the Government of Malaysia will engage themselves in order to seek details of the reported review committee. 

The company has shown a negative performance of -51.43% since the inception. For the 6 months, the company has shown a performance of -30.93%. The 1 year, 5 years and 10 years performance are -21.11%, -51.37% and -43.19% respectively. For the year ended 30 June 2018, the company has made a profit of A$53.119 million. The total comprehensive income for the year attributable to the equity shareholders is A$100.041 million. The company has a strong balance sheet with total assets being A$764.631 million and total liabilities of A$330.153 million showing the company’s strong ability to clear its long-term obligations. The total current asset of the company is A$108.673 million and total current liabilities is A$38.015 million. This shows the company’s ability to clear is short-term obligations. The total equity attributable to the equity shareholders is worth A$434.478 million. The company has generated A$118.480 million from the cash through operating activities. The company has made payments for property, plant, and equipment worth A$24.22 million and deposited A$29.139 million as collateral for AELB. These two were the major cash outflow used in investing activities. Thus, the net cash used in investing activities was A$54.667 million. The company has made repayment of long-term borrowings (JARE loan facility) worth A$65.542 million and made payment in regard to the interest and financing cost worth A$27.714 million which was the major source of cash outflow through financing activities. Thus, overall at the end of the period ended 30 June 2018 the net cash and cash equivalent with the company was A$42.292 million.

LYC’s share traded at A$1.75 with a market capitalization of circa A$ 1.18 billion and PE ratio of 20.08x. The price movement of the shares depicts that the moving average convergence and divergence line is moving above the signal line indicating the price movement to be bullish in nature.

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