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Lion AsiaPac's Financial Woes: A Deep Dive Analysis · Investor Exchange

• 0:00
  Music.
• 0:10
  Into the financials for Lion Asia Pack Limited. That's good.
• 0:13
  We've got their unaudited condensed interim statements for the second quarter
• 0:17
  and half year ending December 31st, 2024.
• 0:20
  Let's see what we can find out about their business. Yeah, looking forward to
• 0:22
  it. This company, for anyone who needs a refresher, is based in Singapore,
• 0:26
  publicly traded on the SGXST.
• 0:28
  Right. And they're involved in a really interesting range of activities. Oh, yeah.
• 0:32
  Supplying roofing solutions, selling lime.
• 0:35
  Interesting. Trading steel and mining equipment. Okay. And acting as an investment holding company.
• 0:40
  Wow. That's quite the mix. It is. So our mission today is to figure out why
• 0:46
  their financials look the way they do, what it means for their future,
• 0:49
  and what you should be watching out for as you follow them. Okay. Sounds good.
• 0:53
  The first thing that jumps out to me is their revenue. Okay.
• 0:56
  It's down. Down? Compared to both last quarter and the same period last year. Hmm.
• 1:01
  Not great. Not a great sign. No. How much are we talking? It's not just a small
• 1:05
  dip either. It's a year over year drop for the half year.
• 1:08
  Oh, wow. From S16,160,000 to S17,625,000.
• 1:14
  Okay, so that's... Almost a 10% decrease. Yeah, that's pretty significant.
• 1:19
  It is, and it raises some immediate concerns, especially since they're so dependent
• 1:22
  on the steel trading market. Right.
• 1:24
  The report actually says that a lack of steel trading orders is a major factor.
• 1:28
  Okay, so how big of a deal is that for them? Well, that depends on how much
• 1:31
  they've been relying on steel trading.
• 1:33
  Yeah. And whether this is just temporary or a longer-term trend.
• 1:36
  If steel trading was a core part of their business. Right.
• 1:39
  And this downturn continues. That could be really bad. Yeah,
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  it could really impact their bottom line. For sure.
• 1:44
  And speaking of their bottom line, their profit has also taken a hit. Oh.
• 1:48
  They went from a profit of $511,000 in Q2 2023 to a mere $26,000 in Q2 2024. Wow.
• 1:57
  That's a 95% drop. Yeah, you don't see that every day. And for the half year,
• 2:02
  they've swung to a loss of $131,000.
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  Compared to a profit of $647,000 the year before.
• 2:09
  That is a dramatic shift. It is. It seems like there might be more going on
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  than just the steel trading slowdown.
• 2:15
  Yeah, I think so too. We need to look deeper to figure out if this is temporary,
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  but if this is temporary,
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  or a sign of bigger problems. Absolutely. Luckily, Lion Asia Pack breaks down
• 2:23
  their performance by segment.
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  Oh, okay. Which helps us get a more detailed view. Okay.
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  And that's where it gets really interesting. Their roofing solutions segment
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  is actually doing okay. Really? Even turning a profit. Interesting.
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  But their lime sales, trading, and their investment holding arm are all in the red.
• 2:41
  Hmm. So they're doing well in one area, but... But struggling in the others. Yeah.
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  Does that suggest a lack of focus, or is it just multiple markets being difficult
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  right now? That's a good question.
• 2:50
  Are these challenges coming from outside Lion Asia, or are they internal issues?
• 2:54
  Right. The report doesn't tell us everything. Sure.
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  But there are some clues. Okay. For example, they talk about increased competition
• 3:01
  in the lime market and the global economy affecting their investments.
• 3:06
  Right. So it's like a combination of... Internal and external pressures.
• 3:09
  Yeah, makes sense. To get a clearer picture, we need to look at their expenses.
• 3:13
  Okay. And how those have been affected by their acquisition of the Semigat Group.
• 3:17
  Right, back in September of 2023.
• 3:19
  Exactly. That was fairly recent. It was. Acquisitions can be tricky.
• 3:22
  They can lead to growth, but also a lot of costs as the companies try to.
• 3:27
  You know, integrate. Definitely. And looking at their financials,
• 3:30
  several expense categories have gone up.
• 3:32
  That makes sense. So now the question is, are the returns justifying the investment?
• 3:37
  Right. Are they actually getting value from this growth strategy?
• 3:41
  Exactly. We need to look at things like synergy realization.
• 3:43
  Yeah. Are they actually achieving those cost savings and revenue boosts they planned for?
• 3:49
  Right. And we also need to think about the long-term impact of this acquisition
• 3:53
  on their overall financial structure. For sure.
• 3:56
  Are they taking on too much debt To pay for this growth? It's definitely something to consider.
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  So let's look at their cash flow. Okay. For more insight. Yeah.
• 4:03
  Their operating cash flow is positive. Okay.
• 4:05
  Which is good. That's a good sign, yeah. It is, but it seems like they're relying
• 4:09
  a lot on borrowing for investing and financing activities.
• 4:13
  Hmm. That's something to keep an eye on, for sure. Yeah, borrowing can be good.
• 4:16
  Sure, if it's for strategic investments that'll pay off later.
• 4:20
  Exactly. But if they're just using debt to stay afloat. Or chasing risky ventures.
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  A whole different story.
• 4:25
  Yeah, could be trouble. It's also worth noting, they took a big impairment charge in 2024. Oh, how big?
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  $1,437,000.
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  Okay. Because some of their subsidiaries were in a weak financial position.
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  Makes sense. But this year they had a reversal of $479,000.
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  Interesting.
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  Due to improved performance. So up and down. Yeah, a real roller coaster.
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  It makes you wonder about those subsidiaries.
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  It does. Are these reversals signs of good turnaround strategies?
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  Or just, you know, temporary changes in a volatile market.
• 4:55
  Right. We need to look closer at each subsidiary to get a sense of their long-term health. For sure.
• 5:01
  And lastly, we can't ignore the elephant in the room. Which is?
• 5:04
  Lionasia PAC is facing arbitration proceedings related to a disputed share purchase agreement.
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  Okay. Legal battles can be expensive. They can. And distracting.
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  And who knows how they'll turn out.
• 5:15
  Exactly. This situation could really impact their financials.
• 5:18
  Absolutely. Depending on the outcome. Yeah.
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  Before we wrap up, though, let's take a closer look at their segmental performance.
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  Okay. And really break down what's happening in each area of the business.
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  It'll give us a much clearer understanding of their overall financial health.
• 5:31
  Right. And where the real challenges and opportunities lie. Yeah,
• 5:34
  that makes sense. What stands out to you as we get started with this beeper dive?
• 5:38
  Well, the contrast in performance is really interesting to me. Yeah.
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  The roofing solutions segment seems to be doing okay. Right.
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  But the other segments are really struggling.
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  That's true. So I think that's a good place to start. See if we can figure out
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  what's causing that difference.
• 5:51
  I agree. Let's start with roofing solutions and see what lessons we can learn
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  from their success. Okay.
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  And then we'll dive into the struggling segments. Yeah. And try to pinpoint
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  what's dragging them down. All right. Let's do it. Let's get started.
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  Okay. So let's look closer at Lion Asia Packs roofing solutions segment. Right.
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  Remember, this is the one area that seems to be doing well. Right.
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  If we look at their unaudited condensed interim statements. Mm-hmm.
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  For the half year that ended December 31st, 2024, this segment made S $8,583,000 in revenue.
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  Not bad. Especially compared to their Lime sales. Yeah.
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  Which brought in S $7,147,000.
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  Okay.
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  And their trading revenue. Yeah. Which was only S $865,000.
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  Wow. That's a pretty big difference. Yeah, it is. Their total revenue is down year over year. Right.
• 6:40
  But this segment seems to be holding up okay. So what's helping them stay afloat?
• 6:45
  That's the million dollar question, isn't it? Yeah. Ha ha.
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  The report doesn't give us all the details. Sure. But we can make some guesses
• 6:51
  based on what we know about their business. Okay.
• 6:54
  And what's happening in the market overall. Right. For one thing. Yeah.
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  Their roofing solutions segment mostly operates in Malaysia.
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  So the economy there and how much construction is going on. Yeah.
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  Will directly affect how this segment performs.
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  Makes sense. It would be interesting to compare how much the Malaysian construction market has grown.
• 7:14
  Okay. to how much their roofing solutions revenue has grown.
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  If those trends match up, it would support our theory.
• 7:21
  Definitely. Looking at external market data can be really helpful when you're
• 7:26
  analyzing a company. Absolutely.
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  Another thing to think about is competition.
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  Maybe they're not facing as much competition in roofing. Compared to their other
• 7:34
  segments. Right, exactly.
• 7:35
  Good point. It's also possible they've been better at managing costs in this segment. That's true.
• 7:40
  Which would help protect their margins. Yeah. Even if revenue growth slows down.
• 7:44
  Makes sense. Or maybe they've been innovative.
• 7:47
  Okay. Like offering new products or services or finding new customers.
• 7:51
  Yeah. It's definitely possible, but without more information from the company,
• 7:55
  it's hard to say for sure what's driving their success.
• 7:58
  Right. But it's clear they're doing something, right? They are.
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  Which leads to another question. Which is? What lessons can they learn from
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  rooping solutions? Right.
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  And use those in their other business areas? That's a really important question.
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  It is. If they can figure out what's working here. Yeah. And apply those strategies
• 8:14
  elsewhere. It could really help turn things around.
• 8:17
  Exactly. Okay, now let's look at their Lime Sales segment. Right.
• 8:20
  Which has seen a pretty big drop in profitability.
• 8:22
  Oh. They went from a profit of S$346,000. Okay. In the half year ended December 31st, 2023.
• 8:30
  Right. To a loss of $287,000.
• 8:33
  Wow. For the same period in 2024. So what happened?
• 8:37
  Well, the report mentions increased competition. Okay.
• 8:40
  So are they losing market share or having to lower prices to stay competitive? Yeah. Good question.
• 8:46
  It could be both. It could. And happening at the same time. Yeah.
• 8:49
  More competition often leads to price wars. Right. Which can really hurt profit margins. Definitely.
• 8:55
  We also need to consider the cost of production. Agree. Lime production uses
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  energy and raw materials.
• 9:00
  So changes in those prices could really impact their bottom line.
• 9:04
  For sure. And what about the Semangat Group acquisition?
• 9:07
  Oh, right. Did they buy any lime-related businesses as part of that deal?
• 9:11
  Hmm, that's a good question. If they did, they need to figure out if those businesses
• 9:15
  are doing well and if the integration went smoothly.
• 9:18
  Yeah, problems with immigration could lead to extra costs. They can.
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  And disruptions that eat into profits. Absolutely.
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  Okay, let's move on to their trading segment. All right. This one's had the
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  biggest drop in revenue.
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  They went from S$70,108,000 in the half year ended December 31st, 2023 to only S$865,000.
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  Wow.
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  That's a huge drop. Yeah, it is. And remember, the company specifically mentioned
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  the lack of steel trading orders as a major reason for this.
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  So it sounds like- Steel trading is a big part of their trading segment.
• 9:51
  Yeah. But why the sudden drop in orders?
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  Yeah. What's going on with steel? Well, the global economy is definitely a factor. Okay.
• 9:58
  If manufacturing and construction slow down, demand for steel goes down too. Makes sense.
• 10:03
  We also have to consider things like supply chain problems, geopolitical issues
• 10:08
  in steel-producing regions, and changes in commodity prices. Yeah, all those things.
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  Can affect how much steel is traded. Definitely. And what about competition?
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  Right. Are they losing out to competitors who are more efficient?
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  Or maybe they made some bad calls with their trading strategy.
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  Like misjudging the market or not getting good contracts.
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  Yeah, it's possible. Whatever the reason, this drop in trading revenue is a big problem.
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  It is. They need to figure out what's going wrong. And fast.
• 10:33
  Yeah, and fix it quickly. If they want to save this part of their business.
• 10:36
  Absolutely. It really shows how important diversification is. True.
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  If you rely too much on one market or product, it can make you really vulnerable
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  to problems. Like when things change unexpectedly.
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  Exactly. That's a good lesson for any investor. Don't put all your eggs in one
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  basket, right? Exactly. Finally, let's talk about their investment holding segment. Okay.
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  Which also had a loss for the half-year ended December 31st, 2024. All right.
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  Now, investments can go up and down. They can. So a loss isn't always a reason to panic.
• 11:05
  Right. But it does raise some questions. About? Their investment strategy. Okay.
• 11:09
  And how healthy their portfolio is overall. Makes sense. We know from their
• 11:13
  statements that their portfolio includes shares of Mendax Limited.
• 11:17
  Oh, the Australian mining company. Yeah, the one listed on the ASX.
• 11:21
  Right. So their investment performance
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  is probably tied to how well the Australian mining sector is doing.
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  And the stock market in general. And we know that commodity prices have been
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  all over the place. We have. And the global economy is uncertain.
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  It is that volatility could be why their investments are down. It could.
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  They also have a lot of money they've lent to their subsidiaries.
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  Okay. Which are classified as investments in their statements.
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  So how well the subsidiaries are doing directly affects their investment holding segment.
• 11:48
  Exactly. Which brings us back to the importance of understanding the stability
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  of those subsidiaries. Right. If they're struggling.
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  It can cause problems for Lionasia PAC as a whole. It's like everything's connected.
• 11:58
  It is. When one part of the system is off balance. It can throw the whole thing off. Yeah.
• 12:03
  That's a great way to put it. It shows why you have to look at the whole picture.
• 12:07
  When analyzing a company. You can't just focus on the individual parts.
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  Right. You have to see how they all work together.
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  And how outside factors affect them. Exactly. Okay. So we've looked closely
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  at Lion Asia Packs segment. We have. And found both strengths and weaknesses.
• 12:20
  Yeah. Roofing Solutions is doing well. Seems like it. But their lime sales,
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  trading, and investments are all struggling.
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  Right. We've talked about some possible reasons for these trends.
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  We have. But without more information from the company, it's hard to be certain. True.
• 12:33
  But this analysis has given us some good insights. It has. And we've identified
• 12:37
  key areas to watch for in their future reports. Definitely.
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  This deep dive has given you, the listener, the tools to analyze their next
• 12:45
  report with a critical eye.
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  You'll be able to see if they're making progress. Or if their problems are getting
• 12:50
  worse. And use that information to make better decisions.
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  So where do we go from here? What does the future hold for Lion Asia Pack?
• 12:58
  Yeah, that's the big question, isn't it? I mean, based on their financials,
• 13:01
  things aren't looking great.
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  No, not exactly. Declining revenue, the swing to a loss, questions about that
• 13:09
  Simengat Group acquisition.
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  They're relying a lot on borrowing. And then there's that lawsuit hanging over
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  their heads. It's definitely a challenging situation. It is,
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  but it's not all bad news.
• 13:19
  Their operating cash flow is still positive. Which is a good sign.
• 13:23
  It means they're making money from their core business.
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  Right. And their roofing solution segment is doing okay. Yeah.
• 13:28
  Seems to be holding up. Plus, this is just one point in time. True.
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  Companies go through ups and downs, just like people. So the real question is,
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  can they fix their problems?
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  Can they capitalize on their strengths? And get through those legal issues?
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  Right. Their next financial report will be really important.
• 13:42
  It will. We'll see if they're making progress or not.
• 13:45
  Okay. So before we go, one last thing to think about. Okay.
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  Given all of Lion Asia PAP's different businesses. And the problems they're
• 13:51
  facing. Would they be better off just focusing on what they do best?
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  And maybe selling off the parts that aren't working?
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  It's a tough choice a lot of companies have to make. Sometimes simplifying things
• 14:01
  can be the best way to become more profitable. And more stable.
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  It's something to consider as you follow LineAsiaPack's story.
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  Will they bounce back or keep struggling? Only time will tell.
• 14:10
  We'll have to wait and see.
• 14:11
  That brings us to the end of our deep dive into LineAsiaPack Limited.
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  Hope you found it useful. We hope you learned something new.
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  Knowledge is power, especially when it comes to money.
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  So keep learning, keep asking questions. And keep diving deep. Until next time.
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  Music.