UDPL Results

Valuepick, whatr is your expectation on quartely results ?

Bolinger wrote:Valuepick, whatr is your expectation on quartely results ?

We have to wait and see. For example in the past in one quarter I expected good profit from one Plantation Company instead they declared marginal loss or marginal profit. During that period their output was down compare to previous quarter. On the other hand other companies made profits. There are lot of things to learn. We have to analyse future earnings, growth, commercially viable land and earnings of other source such as spices, power projects, timber, etc to get some estimation and decisions on plantation stocks. Some companies have better marketing arm in global tea market. Look at the debt level of UDPL. How good they are in debt management? Have you done some study on their value added products?

They produce some of the best high quality tea in the world. Currently there is a demand for their medium grown high quality CTC tea and prices are higher than corresponding last year. If I am correct after tea their next income is other sources not rubber. They have coconut plantations too.

Now lot of concessions have given to the plantation sector. During next three to six quarters we may be able to get next direction of global tea market. Unlike those days tea is fast becoming one of the popular hot beverages in the world. In addition to health reasons population growth also should create demand for tea in the coming years. Even now there is a great demand for high quality tea. As long as they maintain quality there will be great demand. If tea prices fetch above the cost of production in the coming years as expected tea industry will have bright future. Three is a global trend for healthy tea now.

In addition as currently there is a major uptrend stocks should stay strong and can appreciate further. Plantations stocks also are adjusting to the current market uptrend now as they have more value than other sectors. As long as major uptrend is intact many stocks will go up further.

Good luck

Annual Report 2013

• As an environmentally conscious corporate we pioneered the \Rainforest Alliance certification in Sri Lanka and have since extended the coverage to all the estates.

• Our continuous investments to increase the factory capacities in the mid country continued with the second line of CTC machinery installed at Duckwari, which enabled us to process over 2.5 million kg of green leaf from the smallholders and the State Plantation Corporation estates in the vicinity.

• The highlight of the year was the performance of the estates in the Nuwara Eliya group, which exceeded the previous year’s crop by 14% despite the erratic weather conditions. The group achieved attractive prices especially for our Courtlodge estate teas recording Rs. 467/- per kg. This was Rs. 90/- above the district average and Rs. 23/- above the national average, in addition to recording 96 top prices at the weekly auctions during the year under review. The increase in the crop intakes and prices in the Nuwara Eliya group of estates helped the Company to surpass last year’s harvest of estate crop by 5 % and the total production inclusive of outgrowers leaf by 6%.

• We have planted 5.0 hectares during the year  which has added on to our timber/fuelwood base.

• Coconut: we are optimistic of achieving a better harvest in the ensuing year.

• Courtlodge Estate installed the first micro-climate weather station in Sri Lanka, which makes use of nanotechnology, enabling forecasting of micro-agro climatic conditions with better accuracy and speed.

According to 2012 annual report

• The company was  diversifying into Rubber and Commercial forestry, in poor yielding Tea areas

• They have bought leaf processing operation.

• Company continued with the development plan and invested Rs. 20 Mn. for field development and Rs.64 Mn. for factory and other infrastructure development. Total capital expenditure for the year was Rs. 84 Mn. which is an increase of Rs. 48 Mn. compared to the previous year. This represents 6 % of  the turnover and 195% of the cash generated by operations.

According to 2011 annual report

• The principal goal of the Board has been to ensure that the Group’s strategies create value for the long-term investor.

• We have also \continued our mechanization programme with shear harvesting where 25% of the pluckers are on shears and this has gained popularity amongst the younger generation which augurs well for the future

• Crop Diversity: During the year under review we have planted only 7.00 hectares of fuelwood as UPL does not have much bare land for planting. We have however embarked on planting minor crops such as Cinnamon, Pepper and Cocoa in small extents so that we will have a wider mix of crops to sustain our business going forward. The unproductive land on our estates is being planted with these  crops whereby we will fortify our strengths to the maximum.

• In the meantime we have also generated much needed revenue by disposing of the mature timber trees where we generated a sum of Rs. 11 Mn. during the year.

According to annual report 2009

• Our investments in the re-forestation programme and the timber re-plantings as well as new plantings continue and are very much aligned to our plans of self sufficiency in fuel wood. We realise that this strategy will place us on a better footing to cope with ever increasing energy prices.

•Notwithstanding tea and timber being our main crops, there are considerable extents of land unsuitable for the cultivation of any of these. In order to attain maximum utilization of land therefore, it is imperative that we identify other minor crops to exploit this land area. We are hence exploring the viability of a diverse variety of minor crops including cardamoms, cinnamon and cocoa to implement this strategy.

• We must therefore use this opportunity to realise that the increase in productivity and achieving a better cost structure are two facets that are of vital importance for survival – for employees, the company and the industry.

Annual report 2010

• The Company’s efforts to undertake tea replanting on large tracts of land,especially in the Nuwara Eliya Group of estates, demonstrates our commitment to improve land productivity at a considerable cost to the Company

• Our new factory in Matale has\now been fully operational for two years,bringing an expanded capacity, which has led to success in enhancing the intake of out-grower leaf by 34% during\the year.

• Furthermore, we have achieved abreakthrough in harvesting techniques by having 35% of our tea pluckers usingshears for harvesting within a short span of time.

•We have been rolling out our development plan in phases with a newly built factory and further expansion and development of our existing tea factories, in order to allow greater capacity to accommodate out-grower leaf.

• In a bid to reduce our carbon footprint, the Company has been exploring alternate sources of fuel, and has replaced fossil fuels with paddy husk and briquettes for firing ourteas, which are non-pollutants and reduce the release of harmful gases into the environment.

• Meanwhile, we continue to incorporate best practices from our sister companies in UK and Kenya by harnessing unique worker welfare and modern cultivation measures.

VALUEPICK wrote:

Bolinger wrote:Valuepick, whatr is your expectation on quartely results ?

We have to wait and see. For example in the past in one quarter I expected good profit from one Plantation Company instead they declared marginal loss or marginal profit. During that period their output was down compare to previous quarter. On the other hand other companies made profits. There are lot of things to learn. We have to analyse future earnings, growth, commercially viable land and earnings of other source such as spices, power projects, timber, etc to get some estimation and decisions on plantation stocks. Some companies have better marketing arm in global tea market. Look at the debt level of UDPL. How good they are in debt management?  Have you done some study on their value added products?

They produce some of the best high quality tea in the world. Currently there is a demand for their medium grown high quality CTC tea and prices are higher than corresponding last year. If I am correct after tea their next income is other sources not rubber. They have coconut plantations too.  

Now lot of concessions have given to the plantation sector. During next three to six quarters we may be able to get next direction of global tea market. Unlike those days tea is fast becoming one of the popular hot beverages in the world. In addition to health reasons population growth also should create demand for tea in the coming years. Even now there is a great demand for high quality tea. As long as they maintain quality there will be great demand. If tea prices fetch above the cost of production in the coming years as expected tea industry will have bright future. Three is a global trend for healthy tea now.

In addition as currently there is a major uptrend stocks should stay strong and can appreciate further. Plantations stocks also are adjusting to the current market uptrend now as they have more value than other sectors. As long as major uptrend is intact many stocks will go up further.

Good luck

In addition UDPL is managed by FINALYS,So quality & standard id guaranteed.

Finlays was founded in 1750. As a wholly owned subsidiary of the Swire Group, the company has extensive tea and horticultural interests in Kenya, South Africa and Sri Lanka, complemented by global trading, packaging and extraction activities. It’s primary markets are in the UK, USA, Asia and increasingly continental Europe.

Finlays is a well respected global brand, with a 250+ year old heritage. It has operations in many countries and in diversified markets and is well known across the tea and horticulture industries. Over the years Finlays has played important roles in the development of the tea industry in India, has pioneered instant tea research, development and production. Recent expansion into flowers, fresh produce and rubber is in keeping with its 250 years old tradition to continually expand by seeking opportunities which will benefit shareholders, employees and stakeholders.

Agree with you 2 ValuePick and RPPA.
I am impressed with their product mix and business strategy.

Their Courtlodge estate continues to produce the best quality tea in weekly tea auction.

1 kg of this high quality tea was selling at Rs 467 with Rs 90 above the district avg price and specially Rs 23 above the national level.

This trend continues week after week in weekly tea auction.

Also I am expecting positive impact on price appreciation due to minimum float rule which companies are suppose to comply by DEC 31st.

Finlay owns More than 90% of UDPL.
With minimum float rule they suppose to sell good percentage ( at least another 5%) to public.

I am sure they will get the price up and sell this quantity.

UDPL is a illliquid share with almost no selling in order book.

Lets wait and see the outcome.

Adding to same note, Valuepick and RPPA, we know that plantations are heavily depend on weather conditions.

I was trying to understand the weather impact on Tea counters during 2nd quarter. If we could understand this impact we could have predict the possible price movement before they publish the quartely results.

I have noticed impressive growth in tea plantstions belongs to Watawla with monday published results. Their profit was down due to other busines areas , not due to Tea.

In WATA results they ackoledge favourable weather conditions for tea in 2nd quarter.

so I expect same weather positive impact on UDPL tea.

UDPL results
I guess 30th September (Q3) 2014 results will be nothing much.
BUT don't be panic because Q4 will be massive.

if the result is good or Bad this will pass Rs.60 soon

on e Run enough from present level

Friends , heard TPL - Talawakele plantation results were out today and they have done well.

TPL is strong tea based plantation like UDPL.
Anyone has the results of TPL ?

PL share.

http://www.cse.lk/cmt/upload_report_file/726_1414753121963.pdf

If give good result Rs.70/- with this bull 

Thks for the TPL results info.
The tea segment of TPL has done well with good profit & revenue growth.

Their problem was rubber and new mini hydro power plant.

TPL is UDPL like high grown tea plantation.

earlier this week Watawala has recorded good tea sector growth.
Now wit TPL recording good gain in tea sector, we can expect good favourable weather condition prevaild for high grown tea in last quarter.

Lets keep finger crossed for UDPL results.

With strong tea background UDPL should report good results with favourable weather conditions.)

It is happy to see TPL was able to make some profit this quarter despite some short term issue. Still it has great value when compare with broader market. Say if they make one year EPS around 5 to 7 still this stock should go above Rs.50/- in the short run. Besides this is a major uptrend. So their stocks should adjust according to the market. When market P/E reaches over 27 this should reach at least P/E ratio of 18. At this stage of market it is better to add more value stocks.

It is better to analyse mid and long term trend in tea market to get wise decisions on tea stocks as there is a new global trend for tea now. Trend is our friend.

In short term anything is possible. Normally in some period weather has affected for tea output. For example during quarter ending September 2013 tea output was down due to excessive rain in some areas. If Kenya and other African countries report drought in the coming months there will be severe shortage in some black tea. There is another report about those countries that they will have severe drought from 2015 to 2017. We will wait and see. What will happen to tea prices then? My gut feeling is there could be drought in Africa in 2015. The recent the most severe drought reported in Kenya was in 2010/11. As a result of this Sri-Lankan tea stocks broke some all time highs. Then they had another drought in 2008/2009 and it affected their tea output too. They are doing research to find out drought resistant crops.

This year, for the first time, temperatures reporting over 40 degrees Celsius during the day in Northern Kenya have made farming, schooling, and other daily activities a struggle. Even they have started night school instead of day school due to this heat.

During last three years Kenya over produced some tea and as a result of this they couldn’t maintain quality. Low quality tea will fetch prices below the cost of production. So their prices have gone down and some farmers want to abandon their tea crop now. Their main tea export markets are Egypt and Pakistan.  As Egypt had political problems it affected badly for their tea export. Some farmers are struggling now and some are trying to produce purple tea now. Globally many producers find difficult to recruit workers to their factories now. Bangladesh will become one of the tea importing countries sooner than later. They hardly export any tea. Sofar North Indian tea output has come down.  So there could be shortage in some varieties of back tea toward end of this year.

There is a weather pattern for Kenya. These all are sort term factors.

As Sri-Lanka had good rain during last couple of weeks tea output should improve in the coming months. Coming season is Western quality season. If they produce quality tea they will have premium prices this time. Companies such as TPL, MASK, UDPL and BOPL produce some high quality higher grown tea. After July 2014 prices were higher for high quality western high grown tea and medium grown CTC tea in October 2014 when compare with corresponding last year. Low grown tea prices are down when compare with corresponding last year. I heard in the third week of October UVA tea prices also has fetched higher than corresponding last year. During latest auction tea prices have come down little bit due to quality issue. As long as they maintain quality there will be great demand for those teas and accordingly tea prices will appreciate. Now gap between low grown and high grown tea prices are narrowing.

Finally if tea prices fall below the cost of production for more than two years, globally many plantations will close down their operations. Those who can stay in good and bad time will be winners as there is a demand for tea in the coming decade. Innovative mangers will have great strategy including marketing strategy.  In Sri-Lanka some companies are expanding their value added base. This is a good strategy. I think UPDL is a hidden gem in the plantations sector. They produce some of the best high grown tea including high quality Medium grown CTC tea. It has top bullish pattern in the plantation sector. We need to do more study on this company now. If we  pick companies we should pay attention to strong management.

Good luck!

Valuepick, i agree with your point on "UDPL has the top bullish pattern in the plantation sector"

Its MACD indicates 5.03 against signal line 4.69.

Also RSI indicates 81.5 with Momentum on OVERBOUGHT.

with the above technical parameters Trend indicates BULLISH signal very clearly.

This will be a hidden gem for short term and long term.

Bolinger wrote:Valuepick, i agree with your point on "UDPL has the top bullish pattern in the plantation sector"

Its MACD indicates 5.03 against signal line 4.69.

Also RSI  indicates 81.5 with Momentum on OVERBOUGHT.

with the above technical parameters Trend indicates BULLISH signal very clearly.

This will be a hidden gem for short term and long term.

Careful Parent may dump 5% or more in the open market to comply with the regulatory requirement of 10% free float.

Or they may delist the company. If so share price may appreciate more.

Yes RPPA, Deadline for free float is nearing, think its DEC end.

Definately Finlay has to sell min 5 % of thier stake.

other than expected good Tea results + Tech positive signals....free float factor will take the price up !!!!

Company will release some shares to some strong investor

Bolinger wrote:Valuepick, i agree with your point on "UDPL has the top bullish pattern in the plantation sector"

Its MACD indicates 5.03 against signal line 4.69.

Also RSI  indicates 81.5 with Momentum on OVERBOUGHT.

with the above technical parameters Trend indicates BULLISH signal very clearly.

This will be a hidden gem for short term and long term.

Over bought don’t always work out as they’re supposed to.

Eg: At over-bought markets, such as the US stock market today, frequently continue to go up, rather than drop with the exception of the Great Collapse of 2008.

Being over-bought in a bear market is a different matter. In bull market after over-bought stocks prices go up. Avoiding the stock market (Colombo stock market, today) -- because it is over-bought may not be a great decision.

Lesson to learn:

As long as the big trend remains bullish, plan on adding to that position on market sell offs, pullback and market pause.

Good luck!