Q: this company reported good results .sold some assets to majority share holder . yet drops a lot . plese explain
5i Research Answer:
LCFS's sister company TWM also dropped a lot and we have comments posted on it yesterday. On LCFS, low-carbon fuel standard credit sales are declining, and this is resulting in concern over the company's future potential. The company also announced a large asset sale to TWM and this will reduce future revenue and cash flow. LCFS was unable to get a contract from BC for credit sales for the Q3 and this reduces a stream of income that makes up a significant portion of LCFS's overall corporate revenue and cash flow. Debt is also quite high here, and with TWM's own issues investors may be concerned that TWM will sell its holdings in LCFS (69%) creating more pressure on the stock.