The highlight of the result is that Li & Fung’s core operating profit in the first half rose 12% year over year, excluding the Asia consumer and healthcare distribution divested in June 2016. The growth was on the back of productivity gains, such as simplification of business process and automation, and cost control in the supply chain solutions segment.
Our fair value Estimate is HKD 4.30, and we believe that LF's long-term business outlook remains stable. Our fair value estimate implies 12 times forward earnings per share, enterprise value/EBITDA of 9.6 times, and a free cash flow yield of 6.6%.
Analyst: Chelsey Tam
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