WATA - ATTRACTIVE PRICE

Then Plantation stocks

As per my news line, no major improvement in tea & rubber results.
Will see comming days.

RPPA wrote:2nd QTR PAT only Rs.32Mn dwn by 64% against same QTR last year.For some reason their cost of sales increased by whooping 46%.

So 6M EPS 1.11 Per share.

This is hard to believe with the attractive tea prices. So tomorrow share price may fall.

Anybody understand the reason why the cost of sales increased by 46% of WATA.

Tea
Tea sector reported a gross loss of LKR 5.5 Mn for 1HFY15 compared to gross loss of LKR 131 Mn recorded in the same period last year. Net Loss before Tax stood at LKR 154 Mn compared to Net Loss of LKR 234 Mn in 1HFY14.
Overall volumes saw an increase, recording 5.29 Mn kg during 1HFY15 vs.4.33 Mn Kg in 1HFY14.

Well done EPS you hit the Nail

i cant 100% agree with RPPAs statement.
There s is a decline of profits compare to last quarter.
thats true.
But if we rake overall 6 months , compare to last year
profits have gone up by 164 Mn ( 166% ).
compare to last year 6 month EPS 0.41 this year 6 month EPS is 1.11.
Compare to financial statements 2014/3/31,
Current and non current liabilities have gone down.
total equity gone up and asset column gone up and
Book value has gone up from 17.82 to 18.43.

look at the net cash flow from operating activities.
period ended in 2013 sep it was 25,692 but this year
595,707.

I dont see any valid reason to fall share price.
False Alarm !

After a bit of selling, this will move towards Rs 22-23 easily (within 2014)

Now we have to revise one year estimation of earnings on WATA. Accordingly we should set a target. That is a short term outlook. Still WATA has value. How about their mid and long term outlook? What about their mid and long term fundamentals? It is interesting to see how this stock is going to perform in this major uptrend in the coming third and fourth phase of major uptrend.

Will there be minor reaction today? Will they improve performance in the mid and long term?

Still value is there in this stock  when compare with broader  market. I heard during last tea auctions(In October) tea prices for western high grown tea and CTC Medium grown are higher than corresponding last year.

Just like Doctor I don't see any rapid fall in its share prices. Please note I don't have any shares and yesterday I am about to put buying order for this stock after seeing trend. When stock prices hit key areas first time after long perid they will go up further in a major uptrend.

Good luck!

RPPA wrote:

RPPA wrote:2nd QTR PAT only Rs.32Mn dwn by 64% against same QTR last year.For some reason their cost of sales increased by whooping 46%.

So 6M EPS 1.11 Per share.

This is hard to believe with the attractive tea prices. So tomorrow share price may fall.

Anybody understand the reason why the cost of sales increased by 46% of WATA.

Tea
Tea sector reported a gross loss of LKR 5.5 Mn for 1HFY15 compared to gross loss of LKR 131 Mn recorded in the same period last year. Net Loss before Tax stood at LKR 154 Mn compared to Net Loss of LKR 234 Mn in 1HFY14.
Overall volumes saw an increase, recording 5.29 Mn kg during 1HFY15 vs.4.33 Mn Kg in 1HFY14.

Valuepick. The increase in costs is the issue.Nothing else. But why 46%.

With this dividend it can touch Rs. 22/-, As the dividend XD dates are very close we can expect some buying pressure this week. Anyway I really expect this to touch Rs. 30 in long term.

AAABoy wrote:With this dividend it can touch Rs. 22/-, As the dividend XD dates are very close we can expect some buying pressure this week. Anyway I really expect this to touch Rs. 30 in long term.

30 is possible long term.

RPPA wrote:

RPPA wrote:

RPPA wrote:2nd QTR PAT only Rs.32Mn dwn by 64% against same QTR last year.For some reason their cost of sales increased by whooping 46%.

So 6M EPS 1.11 Per share.

This is hard to believe with the attractive tea prices. So tomorrow share price may fall.

Anybody understand the reason why the cost of sales increased by 46% of WATA.

Tea
Tea sector reported a gross loss of LKR 5.5 Mn for 1HFY15 compared to gross loss of LKR 131 Mn recorded in the same period last year. Net Loss before Tax stood at LKR 154 Mn compared to Net Loss of LKR 234 Mn in 1HFY14.
Overall volumes saw an increase, recording 5.29 Mn kg during 1HFY15 vs.4.33 Mn Kg in 1HFY14.

Valuepick. The increase in costs is the issue.Nothing else. But why 46%.

Good question. We should have practical knowledge about plantation sector to answer for this question.

One reason for higher cost of production may be due to the intensity of the rains in September in their tea plantations.

The inter-monsoonal evening thunder storms usually commences in early October. This year, in September came in strong. Their tea prices were good in July 2014. These are short term trend. Long term trend is different. Those who can identify long term trends can become some of the top winners in the market.

There are lot of things to learn in this industry. However as I said before we should be able to get better idea about global tea trend during next four to eight quarters. Accordingly we can get some wise decisions.

Even if earnings are flat for this sector in this quarter due to short term issue still they have great value when compare with broader market. Imagine that North African countries including Kenya develop another drought like situations in 2015 what will happens to tea prices? Despite Middle East crisis especially Iran crisis in the past surprisingly still there was a demand for Sri-Lankan tea prices. Low grown tea had some record prices.

I think we should not underestimate plantations sector. After privatization there were lot of improvements. Didn’t short term/mid and long term investors and traders make capital gain and dividends time to time? Those who bought some of the plantation stocks for the long run have benefited lot in capital gain wise and dividend wise.

I found some of the following information from WATA quarterly report.

They have made some profit from export of the value added tea and herbs.

Exports

This sector recorded a profit before tax of LKR 15 Mn against LKR 11 Mn recorded in the same period last year. The profit was mainly derived from
export of the value added tea and herbs.

Outlook

With the recent favourable changes in the weather condition, improved tea prices together with our resilient agro practices, we are reasonably confident
that we will achieve better results in the 2HFY1

We will wait and see not only few quarter but also coming years to get bigger picture of tea market. Good luck!

VALUEPICK wrote:

RPPA wrote:

RPPA wrote:

RPPA wrote:2nd QTR PAT only Rs.32Mn dwn by 64% against same QTR last year.For some reason their cost of sales increased by whooping 46%.

So 6M EPS 1.11 Per share.

This is hard to believe with the attractive tea prices. So tomorrow share price may fall.

Anybody understand the reason why the cost of sales increased by 46% of WATA.

Tea
Tea sector reported a gross loss of LKR 5.5 Mn for 1HFY15 compared to gross loss of LKR 131 Mn recorded in the same period last year. Net Loss before Tax stood at LKR 154 Mn compared to Net Loss of LKR 234 Mn in 1HFY14.
Overall volumes saw an increase, recording 5.29 Mn kg during 1HFY15 vs.4.33 Mn Kg in 1HFY14.

Valuepick. The increase in costs is the issue.Nothing else. But why 46%.

Good question. We should have practical knowledge about plantation sector to answer for this question.

One reason for higher cost of production may be due to the intensity of the rains in September in their tea plantations.

The inter-monsoonal evening thunder storms usually commences in early October. This year, in September came in strong. Their tea prices were good in July 2014. These are short term trend. Long term trend is different.  Those who can identify long term trends can become some of the top winners in the market.

There are lot of things to learn in this industry. However as I said before we should be able to get better idea about global tea trend during next four to eight quarters. Accordingly we can get some wise decisions.

Even if earnings are flat for this sector in this quarter due to short term issue still they have great value when compare with broader market. Imagine that North African countries including Kenya develop another drought like situations in 2015 what will happens to tea prices? Despite Middle East crisis especially Iran crisis in the past surprisingly still there was a demand for Sri-Lankan tea prices. Low grown tea had some record prices.

I think we should not underestimate plantations sector. After privatization there were lot of improvements. Didn’t short term/mid and long term investors and traders make capital gain and dividends time to time? Those who bought some of the plantation stocks for the long run have benefited lot in capital gain wise and dividend wise.

I found some of the following information from WATA quarterly report.

They have made some profit from export of the value added tea and herbs.

Exports

This sector recorded a profit before tax of LKR 15 Mn against LKR 11 Mn recorded in the same period last year. The profit was mainly derived from
export of the value added tea and herbs.

Outlook

With the recent favourable changes in the weather condition, improved tea prices together with our resilient agro practices, we are reasonably confident
that we will achieve better results in the 2HFY1

We will wait and see not only few quarter but also coming years to get bigger picture of tea market. Good luck!

Thanks VALUEPICK

Finally I got a feedback on the cost side.