Piramal Glass Ceylon PLC (GLAS.N) - 1Q2013/14 Interim ...€¦ · Ltd, Rockland Distilleries Ltd,...
Transcript of Piramal Glass Ceylon PLC (GLAS.N) - 1Q2013/14 Interim ...€¦ · Ltd, Rockland Distilleries Ltd,...
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Equity Research Division
19th July 2013 Piramal Glass Ceylon PLC – 1Q2013/14 Interim Update
Asha Phillip Securities Ltd
“High electricity cost & stagnant liquor market hampered the top line margins”
Revenue dropped by 5% in 1Q2013/14 y-o-y
Revenue witnessed a drop of 5% 1Q2013/14 mainly owing to the escalated
demand in the Liquor & Aerated water segment coupled with the sharp
decline in export sales.
Export sales weakened at a faster rate
GLAS’s export market is mainly centralized with India which accounts more
than half of its export revenue. With the devaluation of Indian rupee,
exports to India have become quite competitive while experiencing a drop
in sales volume. This resulted to record a drop of 15% in export sales from
LKR 360 Mn to LKR 307 Mn during 1Q2013/14.
Domestic sales too dropped marginally
Domestic sales which approximately account 75% of total revenue also
witnessed a marginal drop of 2% from LKR 932Mn to LKR 916Mn due to the
low demand from the liquor segment. The local liquor sector which registers
more than 50% of the total domestic sales of the company seems stagnant
with the imposed taxes, affecting negatively towards the demand for glass
bottles from GLAS’s top customers such as Distilleries Lanka PLC, ID Lanka
Ltd, Rockland Distilleries Ltd, Lion Brewery PLC etc. The developing trend
for canned-bear will also affect adversely towards the demand for glass
bottles from beer market.
Piramal Glass Ceylon PLC (GLAS.N) - 1Q2013/14 Interim Results Update
Sector: Manufacturing
Market Price(LKR) 6.00
Issued Quantity 950,086,080
Market Capitalization(LKR) 5,700,516,480
52 Week
High (LKR) 7.00
Low (LKR) 4.90
Public Holding 43.54%
Foreign Holding 28.05%
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14,000.00
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140.00
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19-Jul-12 19-Sep-12 19-Nov-12 19-Jan-13 19-Mar-13 19-May-13
Vol ('000) GLAS MFG ASPI
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Equity Research Division
19th July 2013 Piramal Glass Ceylon PLC – 1Q2013/14 Interim Update
Asha Phillip Securities Ltd
Electricity cost hike pressured the cost structure
The electricity cost hike executed from last April has resulted an adverse
impact on the company’s cost structure which escalated by 3% y-o-y despite
the dip in sales volume. Energy cost including Furnance Oil, Electricity & LP
Gas collectively account approximately LKR 150Mn per month, representing
around 40% of the total cost structure of the company.
GP margins narrowed further
GP margins recorded a drastic dip from 28% to 21% y-o-y. We expect the
margins for FY2013/14E would be further pressured due to the slowing sales
growth together with the escalated energy cost. Further, Overall GP
margins witnessed a drop from 30% in FY2011/12 to 28% in FY2012/13.
Selling proceeds of the non-operating land to retire borrowings
GLAS concluded a sale of 10 acres of its 21 acre land in Rathmalana during
June 2013 for a consideration of LKR 355 Mn , realizing a profit of LKR 297Mn
for the 1Q2013/14. The selling price per perch was recorded as LKR 222Mn
whilst its cost recorded as LKR 37k. Moreover, the company announced its
plan on disposing the balance 11 acres to Ideal Motors at a consideration of
LKR 415 Mn during the 3Q2013/14. The expected profit from this transaction
is accounted to LKR 351Mn whilst the entire proceeds will utilize to retire the
part of the debt.
Acres Sales Value Profit Buyer
1st Part Sold in June 10 355,000,000 297,000,000 Prime Land
2nd Part Expect to sell in November 11 415,000,000 351,200,000 Ideal Motors Limited
Top 5 Shareholders No. of Shares % Holding
Piramal Glass Limited 536,331,880 56.45%
Employees Provident Fund 90,317,140 9.51%
Mr. M M Udeshi 41,238,021 4.34%
CITI Bank NY S/A forward International
Dividend Fund 20,000,000 2.11%
Mr. G. Dangampola & Mrs. N.P. Dangampola 10,280,007 1.08%
LKR Mn 1Q2012/13 1Q2013/14
Revenue 1,293 1,223
Growth % -5%
Cost of Sales (935) (961)
Gross Profit 358 262
GP Margins 28% 21%
Profit on Disposal of Investment Property - 297
Operating Profit 207 424
Finance Cost (59) (54)
After Tax Profit 144 358
Growth % 149%
Quarterly Performance
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Equity Research Division
19th July 2013 Piramal Glass Ceylon PLC – 1Q2013/14 Interim Update
Asha Phillip Securities Ltd
Outlook – FY2013/14
Finance cost to save by approximately 27%
Company utilized the property sales proceeds of LKR 355 Mn to repay part
of its debt during 1Q2013/14. Further, we expect the debt burden will further
relax, owing to retiring debt using expected property sales proceeds of LKR
415Mn in November 2013.
Newly captured Australia & New Zealand market will reap benefits towards
the year end.
We expect the export sales to recover towards the end of FY2013/14E with
strong penetration in Australia & New Zealand. Hence, the overall sales for
FY2013/14E are expected to be grown at a marginal 3% y-o-y. Further, the GP
margins are expected to be narrowed further to 26% in FY2013/14E amidst
the pressure on energy cost.
Post-Tax Profit to grow at 82% whilst recurring earnings to drop by 8%
Net earnings to grow at 82% to LKR 1.3Bn with the sizable LKR 648Mn
property disposal profit. However, the normalized earnings will witness a
drop of 8% y-o-y to LKR 672 Mn mainly owing to the slower topline growth
coupled with the upward pressure on energy cost which will result a
depressed GP margin y-o-y.
Dividend payout to maintain at a similar level
Company maintained an average 28% payout ratio for FY2012/13, declaring a
divided of LKR 0.38/- . Going forward, we expect the company will maintain
the similar payout level in FY2013/14E in the absence of any major CAPEX
plans.
LKR Mn FY2012/13 FY2013/14E
Total Borrowings 2,244 1,492
Finance Cost 257 187
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Equity Research Division
19th July 2013 Piramal Glass Ceylon PLC – 1Q2013/14 Interim Update
Asha Phillip Securities Ltd
Historical Financials & Outlook
LKR Mn FY2009/10 FY2010/11 FY2011/12 FY2012/13 FY2013/14E
Revenue 3,519 4,163 5,197 5,501 5,598
YoY Growth % 18.3% 24.8% 5.8% 2%
Cost of Sales (2,619) (2,898) (3,660) (3,952) (4,127)
Gross Profit 899 1,265 1,537 1,549 1,471
GP Margins 25.6% 30.4% 29.6% 28.2% 26.3%
Profit on Disposal of Investment Property - - - - 648
Operating Profit 520 898 914 1,026 1,581
Finance Cost (581) (306) (221) (257) (187)
After Tax Profit (61) 579 685 725 1,320
Recurring After Tax profit 672
No of Shares 950
Recurring EPS (0.06) 0.61 0.72 0.76 0.71
Market Price (17th July 2013) 6.00
PER 8.5
Target PER 11.0
PE based Target Price 7.79
Total Equity 2,215 2,509 3,246 3,629 4,580
NAV per share 2.33 2.64 3.42 3.82 4.82
Taraget PBV 1.70
PBV based Target Price 8.20
Dividends payout ratio 28%
Dividends per share - - 0.30 0.38 0.39
Dividend Yeild 6.5%
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Equity Research Division
19th July 2013 Piramal Glass Ceylon PLC – 1Q2013/14 Interim Update
Asha Phillip Securities Ltd
DISCLAIMER: This research is not in compliance with the regulations as per; Rule 2.2.5 of section 2 of the Colombo Stock Exchange - Stock Broker Rules since this is not a
comprehensive document. This document has been prepared and issued by Asha Phillip Securities Ltd, on the basis of publicly available information, internally developed data and
other sources believed to be reliable. While every effort has been made to ensure that the data quoted and used for the research behind this document is reliable, there is no guarantee
that it is correct. Asha Phillip Securities Ltd, nor any Director, Officer or employee accept no liability whatsoever in respect of any errors or omissions. This document is a piece of
economic/Financial research and is not intended toconstitute investment advice, nor to solicit dealing in securities or investments. Asha Phillip Securities Ltd may act as a Broker in
the investments which are the subject of this document or related investments and may have acted upon or used the information contained in this document, or the research or
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Research Division
Thakshila Hulangamuwa Pasindu Perera Lasantha Senanayake
Vice President- Business Development Manager – Research Research Analyst
[email protected] [email protected] [email protected]
0094 113070494 0094 112429109
Nishantha Warnakulasuriya – Trainee Research Analyst