Textured Jersey

raider · 1 Textured Jersey Fri Jul 17, 2015 10:02 am

raider

Manager - Equity Analytics

Posts : 265
Equity Stars : 3710
Reputation : 8
Join date : 2015-02-24

Some food for thought. Great analysis.

Although I'd still buy at current prices. What do you guys think?

http://lankanmarkets.blogspot.com/2015/07/textured-journey.html

slequityanalyst · 2 Re: Textured Jersey Fri Jul 17, 2015 11:01 am

slequityanalyst

Manager - Equity Analytics

Posts : 136
Equity Stars : 3401
Reputation : 3
Join date : 2015-06-09

raider wrote:Some food for thought. Great analysis.

Although I'd still buy at current prices. What do you guys think?

http://lankanmarkets.blogspot.com/2015/07/textured-journey.html

Hi raider, I shared this in some other discussion. It was worth the read.

However, I'm not buying at these current prices as owners have exited at LKR26.50 and due to the fact that they valued the share at LKR28.50 for the share swap purposes. If you enter now, what is the upside you are looking at? Besides, we don't really know what these acquisitions look like. So, it's not a bet I'd take. But never know, momentum might push it to unexpected highs!! Good luck to you.

raider · 3 Re: Textured Jersey Sat Jul 18, 2015 10:53 am

raider

Manager - Equity Analytics

Posts : 265
Equity Stars : 3710
Reputation : 8
Join date : 2015-02-24

slequityanalyst wrote:

raider wrote:Some food for thought. Great analysis.

Although I'd still buy at current prices. What do you guys think?

http://lankanmarkets.blogspot.com/2015/07/textured-journey.html

Hi raider, I shared this in some other discussion. It was worth the read.

However, I'm not buying at these current prices as owners have exited at LKR26.50 and due to the fact that they valued the share at LKR28.50 for the share swap purposes. If you enter now, what is the upside you are looking at? Besides, we don't really know what these acquisitions look like. So, it's not a bet I'd take. But never know, momentum might push it to unexpected highs!! Good luck to you.

I do know the numbers just don't add up for TJL whatever way I try to value it other than basic P/E. This is probably why the owners could not get the institutional investors to buy at anything higher than Rs. 26.80.

If you look at it's current price - 29.50 and take out the dividend, it's 28.70. Last quarter EPS is 0.78 and if you simply annualise it, it's 3.12 which places the stock's P/E at 9.2x. The usual P/E multiple of this counter is 13x, which arrives at the ultimate valuation of Rs. 40.50.

However, if you discount the EPS by 15% (annualised 2.65) to account for the dilution of EPS following the share exchange and a potential downside and calculate current P/E you arrive at 10.8x. At a valuation of 13x you will be looking at an upside of Rs. 34.50 which is still a considerable gain.

I do agree that there is not much information available to us with regard to acquisitions and the impact of them on the financial performance and the position of the company. So at this point it is a little risky if you are looking at it on a fundamental viewpoint. However, I have a feeling that stock will keep moving up given the positive investor sentiment building up in the market, the increased liquidity etc. etc.

Please note that this counter has shown tremendous volatility since its IPO nevertheless posted very attractive gains for traders as well as long term shareholders - which supports me to take the bet. Furthermore, chances are you won't make long term losses on this counter as it keeps paying out a good dividend and will show constant growth given that they are working towards improved capacity utilisation, regional expansion etc.

Any thing you people have to add to this?

slequityanalyst · 4 Re: Textured Jersey Sat Jul 18, 2015 9:51 pm

slequityanalyst

Manager - Equity Analytics

Posts : 136
Equity Stars : 3401
Reputation : 3
Join date : 2015-06-09

raider, respect your pricing thoughts. Yes, in Sri Lankan markets (or may be true for any markets!) sometimes relative thinking works better. In terms of market timing I'm really bad and hence why I try not to jump in to the momentum game. I'd rather take a contrarian view on certain fundamentally sound stocks where valuations (rather than pricing) support is there. It is a difficult task but different strategies work for different players :-)

Besides, you are looking at annualized forward EPS on TJL as it is now. With the acquisitions the consolidated EPS will be probably higher and so you are taking a safe bet. (I believe that Pacific Textured would not agree to buy loss making entities which will not be value accretive for them being an investment holding company).

Good luck again.

raider · 5 Re: Textured Jersey Sun Jul 19, 2015 12:04 am

raider

Manager - Equity Analytics

Posts : 265
Equity Stars : 3710
Reputation : 8
Join date : 2015-02-24

In terms of timing, I am bad too. I missed so many opportunities with TJL itself. I think I learnt a lot about the volatile nature of this stock from those instances.

So now I'm gonna take it on and play the game.

Good luck to all!

slequityanalyst · 6 Re: Textured Jersey Sun Jul 19, 2015 2:24 pm

slequityanalyst

Manager - Equity Analytics

Posts : 136
Equity Stars : 3401
Reputation : 3
Join date : 2015-06-09

:-)

raider · 7 Re: Textured Jersey Tue Jul 21, 2015 4:20 pm

raider

Manager - Equity Analytics

Posts : 265
Equity Stars : 3710
Reputation : 8
Join date : 2015-02-24

So after a little more thought, I decided against buying TJL. I have a feeling this price won't sustain after results.

slequityanalyst · 8 Re: Textured Jersey Tue Jul 21, 2015 4:33 pm

slequityanalyst

Manager - Equity Analytics

Posts : 136
Equity Stars : 3401
Reputation : 3
Join date : 2015-06-09

raider wrote:So after a little more thought, I decided against buying TJL. I have a feeling this price won't sustain after results.

Did you? I have a feeling that you smell something about the going to be results!!! ;-)

Let's wait and see.

raider · 9 Re: Textured Jersey Wed Jul 22, 2015 12:21 am

raider

Manager - Equity Analytics

Posts : 265
Equity Stars : 3710
Reputation : 8
Join date : 2015-02-24

Well, not a clear cut idea. I have a feeling after XD and results it will face a small drop. Most of top of the line investment advisors also feel this way.

So I am just holding on to my existing quantity for the moment.

slequityanalyst · 10 Re: Textured Jersey Wed Jul 22, 2015 8:53 am

slequityanalyst

Manager - Equity Analytics

Posts : 136
Equity Stars : 3401
Reputation : 3
Join date : 2015-06-09

raider wrote:Well, not a clear cut idea. I have a feeling after XD and results it will face a small drop. Most of top of the line investment advisors also feel this way.

So I am just holding on to my existing quantity for the moment.

Good piece of info. I rarely have advisor feels!!