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Chevron a subsidiary of Chevron Texaco Corporation is the market leader for lubricants in the Sri Lankan context which is 69% approximately. Chevron operates with two brands namely ‘Caltex’ and ‘Lanka’ currently . LIOC follows with 15% in a market which now has 15 operators.
Chevron Lubricants Lanka PLC engages in blending, manufacturing, importing, distributing, and marketing lubricant oils, greases, break fluids, and specialty products in Sri Lanka.
The company offers its products for industrial, commercial, and consumer applications.
Chevron Lubricants Lanka PLC markets its products under Chevron, Caltex, and Texaco brands.
The company was incorporated in 1992 and is based in Colombo, Sri Lanka.
Factors to consider;
1. Expected increase in vehicle registrations in 2010E and 2011E could benefit the lubricant industry,New vehicle registrations over the first four months of 2010 amounted 95,929.
2. Chevron has expanded its operations overseas to Bangladesh and the Maldives in a small scale where exports amount to 10% of the company revenue.
3. Sectors such as tourism, agriculture and fisheries are poised to benefit the most in post war Sri Lanka. Also with power projects and road development projects taking place a positive impact could be expected on the lubricants market.
4. Gross profit margins could come under pressure as base oil prices are on the rise.
5. Historically LLUB has demonstrated a clear dividend policy of paying high dividends.
Current Assets: 3,083,79
Current Liabilities : 1,028,59
EPS for the year ended 31st December 2010 : 12.51
ordinary Shares : 120 Mn
Public Holding : 49%
Sector PE : 23.40
Fair Sector PE at a 30% discount : 16.38
Hence fair valuation of share = 16.38 * 12.51 = Rs. 204.9/-
Current PE:162/12.51 = 12.95
Current PE is abt half of the sector PE, therefore; its safe to assume this is undervalued..
Most importantly LLUB is one of the very few counters that gives u 4 interim dividends a year.. The first one is pending in April..
Note:- Some facts have been taken from 2010 research reports of JKSB & BMS.
Chevron Lubricants Lanka PLC engages in blending, manufacturing, importing, distributing, and marketing lubricant oils, greases, break fluids, and specialty products in Sri Lanka.
The company offers its products for industrial, commercial, and consumer applications.
Chevron Lubricants Lanka PLC markets its products under Chevron, Caltex, and Texaco brands.
The company was incorporated in 1992 and is based in Colombo, Sri Lanka.
Factors to consider;
1. Expected increase in vehicle registrations in 2010E and 2011E could benefit the lubricant industry,New vehicle registrations over the first four months of 2010 amounted 95,929.
2. Chevron has expanded its operations overseas to Bangladesh and the Maldives in a small scale where exports amount to 10% of the company revenue.
3. Sectors such as tourism, agriculture and fisheries are poised to benefit the most in post war Sri Lanka. Also with power projects and road development projects taking place a positive impact could be expected on the lubricants market.
4. Gross profit margins could come under pressure as base oil prices are on the rise.
5. Historically LLUB has demonstrated a clear dividend policy of paying high dividends.
Current Assets: 3,083,79
Current Liabilities : 1,028,59
EPS for the year ended 31st December 2010 : 12.51
ordinary Shares : 120 Mn
Public Holding : 49%
Sector PE : 23.40
Fair Sector PE at a 30% discount : 16.38
Hence fair valuation of share = 16.38 * 12.51 = Rs. 204.9/-
Current PE:162/12.51 = 12.95
Current PE is abt half of the sector PE, therefore; its safe to assume this is undervalued..
Most importantly LLUB is one of the very few counters that gives u 4 interim dividends a year.. The first one is pending in April..
Note:- Some facts have been taken from 2010 research reports of JKSB & BMS.
