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I think it would be beneficial to conduct a simple benchmarking exercise between Richard Pieris Exports (REXP) & Hayleys Fibre (HEXP) since these days some people are saying REXP went to 240 from 40 so as HEXP will move to 80 from 40. And they further says HEXP has turned around and recording significant profits boosted by the decline of Sri Lanka rupee. Please read below.
Main Business
REXP - Exporting value added products in the form of hard rubber, latex based and minerals
HEXP - Exporting value added products made from coconut fibre
Last five year annual compounded revenue growth rate
REXP - 9.2%
HEXP - (4.2%)
PAT margin
REXP - Improved from a negative 4.2% in 2010/11 to 10.7% in 2014/15
HEXP - Improved from a negative 7.2% in 2010/11 to 0.5% in 2014/15
REXP is 4 times greater than HEXP in terms of revenue so incidentally their current share price also reflects the same ratio.
But how REXP grew their revenue 9.2% per year where as HEXP losing revenue at the rate of 4.2% per year. Key difference is the effectiveness of the management and the compelling appeal of the product portfolio to customers. Rubber based products appear more superior than to coconut fibre base product. If you get a rubber based mattress and coir based mattress what would be getting the first choice...
Also how REXP earns 10.7% where as HEXP only earns 0.5%. REXP have adopted stringent productivity improvement methods with clear focus on reducing costs which HEXP side looks more unproductive and unorganised.
So now really HEXP enjoy the benefits of rupee depreciation. Majority of the rupee depreciation happened in Q3 15 so logically these companies should show a growth in profits and margins. In Q3 REXP reports a NPAT margin of 10% while HEXP reports a margin of 4%. Compared to Q2, in Q3 HEXP NPAT increased by Rs2mn whereas NPAT margin gained by 2 pp.
Now with these performances I can explain the REXP share price movement from 30-40s in 2010/11 to 250-300 in 2015/16. But REXP moving 40/ in 2010/11 to 80-100 in 2015/16 is a big question for me . Also the so called change by some people on HEXP business fortunes is too a big question mark unless they change things radically like REXP did in 2011/12.
So movement of HEXP is highly unsupportive of its business performances but the other supports the share price have is some thing not known to the market.
Thanks
Main Business
REXP - Exporting value added products in the form of hard rubber, latex based and minerals
HEXP - Exporting value added products made from coconut fibre
Last five year annual compounded revenue growth rate
REXP - 9.2%
HEXP - (4.2%)
PAT margin
REXP - Improved from a negative 4.2% in 2010/11 to 10.7% in 2014/15
HEXP - Improved from a negative 7.2% in 2010/11 to 0.5% in 2014/15
REXP is 4 times greater than HEXP in terms of revenue so incidentally their current share price also reflects the same ratio.
But how REXP grew their revenue 9.2% per year where as HEXP losing revenue at the rate of 4.2% per year. Key difference is the effectiveness of the management and the compelling appeal of the product portfolio to customers. Rubber based products appear more superior than to coconut fibre base product. If you get a rubber based mattress and coir based mattress what would be getting the first choice...
Also how REXP earns 10.7% where as HEXP only earns 0.5%. REXP have adopted stringent productivity improvement methods with clear focus on reducing costs which HEXP side looks more unproductive and unorganised.
So now really HEXP enjoy the benefits of rupee depreciation. Majority of the rupee depreciation happened in Q3 15 so logically these companies should show a growth in profits and margins. In Q3 REXP reports a NPAT margin of 10% while HEXP reports a margin of 4%. Compared to Q2, in Q3 HEXP NPAT increased by Rs2mn whereas NPAT margin gained by 2 pp.
Now with these performances I can explain the REXP share price movement from 30-40s in 2010/11 to 250-300 in 2015/16. But REXP moving 40/ in 2010/11 to 80-100 in 2015/16 is a big question for me . Also the so called change by some people on HEXP business fortunes is too a big question mark unless they change things radically like REXP did in 2011/12.
So movement of HEXP is highly unsupportive of its business performances but the other supports the share price have is some thing not known to the market.
Thanks
