KGAL latest PE based analysis

xhora wrote:Because of the high interest over KGAL thought to do a little upto date PE analysis on this counter.

Profit after Tax
Last 3 quarters
31.12.2010 – 227.4 Mn
30.09.2010 – 214.9 Mn
30.06.2010 – 125.3 Mn

9 month Earnings - 567.6 Mn

Expected PAT for 31.03.2011
227.4 * 150% = 341.1 Mn

Basis :
KVAL has recorded a 48% increase from previous quarter. And considering favorable market conditions and being the largest rubber plantation. Taking 50% would be justifiable. As seen from KAVL and other plantation results heavy rains in the period didn't have any significant impact on production.

Expected Earnings
567.6 + 341.1 = 908.7 Mn

Making a 10% provision for audit changes
908.7 * 90% = 817.83 Mn (118 % growth from FY 2009/2010)
* In FY2009/2010 audited results had appreciated 2% over quarterly results.

Issued Shares : 25 Mn

Expected EPS
817.83 / 25 = 32.71

Current CSE plantation PER 17.5
so 32.71 X 17.5 = Rs. 572.43

Being more prudent taking 16-05-11 stock tracker report of NDB securities plantation sector PE 8.28
32.71 X 8.28 = Rs. 270.80

12 month trailing EPS
(237 + 567.6) / 25 = 32.81

Trailing PE (Price @20/05 Rs.230)
230 / 32.81 = 7.01

Technical Analysis
1 month Candlestick chart for KGAL.N0000

As seen from this chart KGAL is forming a nice up trend pattern with successive higher highs and lower lows. MACD also confirms the upward momentum. RSI is slightly crossing into the overbought region and this can slowdown the upward momentum a little bit. Forming of the "Doji" indicate Buying pressure and selling pressure getting equal. So this may come down a little before going up again.

So from this technical analysis we can see at least for short term KGAL is in bull run.

Conclusion
Purely mathematical fair value calculation with lots of assumptions.
Looking at these calculations I think Rs. 300 limit can be easily achievable.
Comments are welcome.

smallville wrote:Ah.. thats wat I call a valuation.. OMG ..150% growth assumed.. so optimistic
Good work BTW.. first + from me..

There'll be a lot of barriers in the run to 300 few being around previous highs..

xhora wrote:Because of the high interest over KGAL thought to do a little upto date PE analysis on this counter.

Profit after Tax
Last 3 quarters
31.12.2010 – 227.4 Mn
30.09.2010 – 214.9 Mn
30.06.2010 – 125.3 Mn

9 month Earnings - 567.6 Mn

Expected PAT for 31.03.2011 estimating a 50% growth from December quarter
227.4 * 150% = 341.1 Mn

Basis :
KVAL has recorded a 48% increase from previous quarter. And considering favorable market conditions and being the largest rubber plantation. Taking 50% would be justifiable. As seen from KAVL and other plantation results heavy rains in the period didn't have any significant impact on production.

Expected Earnings
567.6 + 341.1 = 908.7 Mn

Making a 10% provision for audit changes
908.7 * 90% = 817.83 Mn (118 % growth from FY 2009/2010)
* In FY2009/2010 audited results had appreciated 2% over quarterly results.

Issued Shares : 25 Mn

Expected EPS
817.83 / 25 = 32.71

Current CSE plantation PER 17.5
so 32.71 X 17.5 = Rs. 572.43

Being more prudent taking 16-05-11 stock tracker report of NDB securities plantation sector PE 8.28
32.71 X 8.28 = Rs. 270.80

12 month trailing EPS
(237 + 567.6) / 25 = 32.81

Trailing PE (Price @20/05 Rs.230)
230 / 32.81 = 7.01

Technical Analysis
1 month Candlestick chart for KGAL.N0000

As seen from this chart KGAL is forming a nice up trend pattern with successive higher highs and lower lows. MACD also confirms the upward momentum. RSI is slightly crossing into the overbought region and this can slowdown the upward momentum a little bit. Forming of the "Doji" indicate Buying pressure and selling pressure getting equal. So this may come down a little before going up again.

So from this technical analysis we can see at least for short term KGAL is in bull run.

Conclusion
Purely mathematical fair value calculation with lots of assumptions.
Looking at these calculations I think Rs. 300 limit can be easily achievable.
Comments are welcome.

SanjivFund wrote: Hi..just want to know what the charting software you use? and how u get the market updates for it? thanks

xhora wrote:Because of the high interest over KGAL thought to do a little upto date PE analysis on this counter.

Profit after Tax
Last 3 quarters
31.12.2010 – 227.4 Mn
30.09.2010 – 214.9 Mn
30.06.2010 – 125.3 Mn

9 month Earnings - 567.6 Mn

Expected PAT for 31.03.2011 estimating a 50% growth from December quarter
227.4 * 150% = 341.1 Mn

Basis :
KVAL has recorded a 48% increase from previous quarter. And considering favorable market conditions and being the largest rubber plantation. Taking 50% would be justifiable. As seen from KAVL and other plantation results heavy rains in the period didn't have any significant impact on production.

Expected Earnings
567.6 + 341.1 = 908.7 Mn

Making a 10% provision for audit changes
908.7 * 90% = 817.83 Mn (118 % growth from FY 2009/2010)
* In FY2009/2010 audited results had appreciated 2% over quarterly results.

Issued Shares : 25 Mn

Expected EPS
817.83 / 25 = 32.71

Current CSE plantation PER 17.5
so 32.71 X 17.5 = Rs. 572.43

Being more prudent taking 16-05-11 stock tracker report of NDB securities plantation sector PE 8.28
32.71 X 8.28 = Rs. 270.80

12 month trailing EPS
(237 + 567.6) / 25 = 32.81

Trailing PE (Price @20/05 Rs.230)
230 / 32.81 = 7.01

Technical Analysis
1 month Candlestick chart for KGAL.N0000

As seen from this chart KGAL is forming a nice up trend pattern with successive higher highs and lower lows. MACD also confirms the upward momentum. RSI is slightly crossing into the overbought region and this can slowdown the upward momentum a little bit. Forming of the "Doji" indicate Buying pressure and selling pressure getting equal. So this may come down a little before going up again.

So from this technical analysis we can see at least for short term KGAL is in bull run.

Conclusion
Purely mathematical fair value calculation with lots of assumptions.
Looking at these calculations I think Rs. 300 limit can be easily achievable.
Comments are welcome.

SanjivFund wrote:Hi xhora,thanks for the info..my broker is jksb do they have it? or can i download it?..
Btw great work with KGAL..

regards

salimts wrote:We should certainly encourage this type of analysis. .

Rajitha wrote:ITs funny how everyone here is praising the plantation stocks now!
4-5 months back when these companies were trading MUCH MUCH cheaper and when I was giving analysis and saying why they should be trading at these high values, most of the people here were objecting to those posts! And giving reasons why plantation companies suck and why they should trade at such low PE ratios!

Funny what time and personal stakes in shares make to People

smallville wrote:

Rajitha wrote:ITs funny how everyone here is praising the plantation stocks now!
4-5 months back when these companies were trading MUCH MUCH cheaper and when I was giving analysis and saying why they should be trading at these high values, most of the people here were objecting to those posts! And giving reasons why plantation companies suck and why they should trade at such low PE ratios!

Funny what time and personal stakes in shares make to People

I must admit that I had done the analysis of plantations KGAL & NAMU after Rajitha's posts on it.. So I never disagrees on the value of plantations except mostly Tea plantations like BALA.. But BALA even has shown good results this time and we see the effect of Rains have been pretty much less..

As a further note, I see more positive side for rubber plantations in future too.. On a mere attempt if KGAL flies to 270s next week again I'm not gonna be surprised But then again I expect huge sell orders passin ghtese previous highs as there are lot of ppl who bought this above 260 levels we cant just forget.. Therefore selling pressure may stop the upward movement temporary but same ppl will buy when they see this goin up next time too

kam2011 wrote:Dear friends, Many people say PE of Kegalle is around 7.00 and therefore it is very attractive to buy indirectly indicating that is the best PE shown in the plantation sector. While appriciating their good views I would like to invite your attention to PE of some major plantation companies which names are given below;

MAL price= 10.20
Annual EPS(2010) =1.90
PE= 5.37

HORANA price= 77.00
Annual EPS(2010)= 13.00
PE= 5.92

Thalawakele price= 44.00
Annual EPS(2010)= 6.21
EPS=7.08

Kotagala price= 175.00
Estimated Annual EPS= 24.00
EPS=7.29

Namunukula price=133.00
Estimated Annual EPS= 18.00
EPS=7.38

Kegalle price 230.00
Estimated Annual EPS= 32.00
EPS=7.18

I just highlight these numbers for information only. There are many other plantation Companies other than Kegalle which has a PE around 7.00. We must be very careful when we take a decision to invest our hard money in stocks. Anyway this is not to discourage anyone buying any particular stock. You should have your own studies before you take an investment decision pl.