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Sri Lanka Equity Forum » Stock Market Talk » Ceylon Leather Products PLC-Opportunity??????

Ceylon Leather Products PLC-Opportunity??????

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1Ceylon Leather Products PLC-Opportunity?????? Empty Ceylon Leather Products PLC-Opportunity?????? on Wed Apr 27, 2011 9:01 pm

lion


Senior Equity Analytic
Senior Equity Analytic
Financial Review:
Profitability Ratios

Gross Profit Ratio: 248,753/754,827=33%
Net profit margin: 107,255/754,827=14%
Forecasted minimum EPS for the year 2010/2011=Rs. 5.76
Note.

The above forecasted EPS is based on the quarterly accounts published by the CLPL for the December quarter, which includes only the results of the core activities of the company (sale of leather products. In June 2010 the company acquired the controlling interest in South Asia Textile Industries Limited (SATL). This investment was shown under other investment in December accounts. I believe the consolidated accounts will be published in the year end.

South Asia Textiles Industries Lanka (Pvt) Ltd. (SATL), a leading fabric manufacturer in Sri Lanka and has generated positive results from the inception. Inclusion of the results of SATL in the 31st March accounts should further enhance the quality of the earnings of the CLPL group, I believe the consolidated EPS for the March accounts should at least be Rs. 7.00. (Resulting a PE of just 12.5 at current prices)
More on SATL: http://www.yarnsandfibers.com/news/index_fullstory.php3?id=22797#

Liquidity review:
Further to the 2010 warrant conversion the company has one of the strongest balance sheet in the ERIL group.
Current Ratio: 768,772/230,269=3.34 times
Loan coverage: 144,054/(144,557+37,493)=80% (80% of loan can be repaid with an annual profit)
Price to Book Value =88/75.78=1.1 times

Other considerations
CLPL warrant is due to be converted in August this year with a right a price of Rs.102. presently the warrant is trading in the range of Rs.20 resulting a total cost of 130/=. All the investors in CSE know the aggressive nature of ERIL (even last year before the warrant conversion the share went to 230 levels) so I believe within a short period they will hike the price of CLPL in order to make the warrant attractive.
CLPL is strong fundamentally as well as its one of the important hot stocks in CSE.

Friends open for comments and suggestions.

Regards



Last edited by lion on Wed Apr 27, 2011 9:40 pm; edited 1 time in total

2Ceylon Leather Products PLC-Opportunity?????? Empty good analysis ! on Wed Apr 27, 2011 9:10 pm

shaankh

shaankh
Manager - Equity Analytics
Manager - Equity Analytics
Yes it seems to be a profit making company after ERIL involvement.

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@lion wrote:Financial Review:
Profitability Ratios

Gross Profit Ratio: 248,753/754,827=33%
Net profit margin: 107,255/754,827=14%
Forecasted minimum EPS for the year 2010/2011=Rs. 5.76
Note.

The above forecasted EPS is based on the quarterly accounts published by the CLPL for the December quarter, which includes only the results of the core activities of the company (sale of leather products. In June 2010 the company acquired the controlling interest in South Asia Textile Industries Limited (SATL). This investment was shown under other investment in December accounts. I believe the consolidated accounts will be published in the year end.

South Asia Textiles Industries Lanka (Pvt) Ltd. (SATL), a leading fabric manufacturer in Sri Lanka and has generated positive results from the inception. Inclusion of the results of SATL in the 31st March accounts should further enhance the quality of the earnings of the CLPL group, I believe the consolidated EPS for the March accounts should at least be Rs. 7.00. (Resulting a PE of just 12.5 at current prices)
More on SATL: http://www.yarnsandfibers.com/news/index_fullstory.php3?id=22797#

Liquidity review:
Further to the 2010 warrant conversion the company has one of the strongest balance sheet in the ERIL group.
Current Ratio: 768,772/230,269=3.34 times
Loan coverage: 144,054/(144,557+37,493)=80% (80% of loan can be repaid with an annual profit)
Price to Book Value =88/75.78=1.1 times

Other considerations
CLPL warrant is due to be converted in August this year with a right a price of Rs.102. presently the warrant is trading in the range of Rs.20 resulting a total cost of 130/=. All the investors in CSE know the aggressive nature of ERIL (even last year before the warrant conversion the share went to 230 levels) so I believe within a short period they will hike the price of CLPL in order to make the warrant attractive.
CLPL is strong fundamentally as well as its one of the important hot stocks in CSE.

Friends open for comments and suggestions.

Regards

This chapter was discussed before in this forum. Yes u have point, to have successful warrant conversion, CLPL.N has to be traded above Rs.130.. otherwise warrant conversion will be unsuccessful..

I guess based on this reason, it had a run in January and went up Rs.125, and then came down.. I am little concern about this personality, When u carefully watch, When GREG started to make run, CLPL and DPL will also run.. and When GREG comes down, these also will come down... This is the investors/ these stocks sentiments in the mkt..

However, as u correctly pointed out. In the ERI group, CLPL is comparably good performing share ( comparing with DPL and PHAR) and trading current PE about 15...

We have about 3 months for the warrant conversion, will see How the share will perform...

Happy Trading

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