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These three cable manufacturing companies operate in Manufacturing sector in CSE. Since no comparison between these companies has done previously this might be of some usefulness when taking a decision about investing in these companies. According to latest results the sector PE and PBV stands at
Sector PE 20.1
Fair value Sector PE 15.22 (NDBS Reports)
Sector PBV 2.9
ACL
ACL is the largest of three companies and owns a dominating proportion of local cable market with a strong Brand name.
Price : Rs. 87.50
Shares 59.89 Mil
52w High : Rs.107
52w Low : Rs.80
PE calculation :
87.5/3.56 = 24.58
Dividend :
ACL haven’t paid a dividend since FY 2007/2008. With their return to profitability we can expect a one this year.
According to both Market PE and sector PE at current price of 87.5 ACL can be assumed overvalued.But looking at the QoQ growth shown in this year and the general increase in profitability of the manufacturing sector of the country. Paying premium value for ACL may give high return in the long run.
KCAB
ACL owns 79.3% of KCAB and they has a subdivision of 2:1 on 31st march 2010. EPS has been adjusted for the FY 2009/2010 to reflect the effects of this subdivision.
Price: Rs. 98.5
Shares 21.8 mil
52w High : Rs.139
52w Low : Rs.90.1
PE calculation :
98.5/5.91 = 16.67
Dividend :
KCAB has paid Rs.2.75 dividend for FY2009/2010. After the sub division we can expect at least Rs.1 this year. But huge negative cash balance is a big concern and a lower than expected dividend payout is highly probable.
At the current price of 98.5 KCAB is fairly value with a PE of around 16. Looking at their progress in the last two quarters we can expect with the booming construction industry KCAB to post higher profits in the coming quarters. It's worth noting that even though profits has increased over 80% cash balance has come down drastically. This counter is nearing it's 52 week low.
SIRA
58.11% owned subsidiary of Sierra Holdings (Private) Limited and the smallest of these three companies both in turnover and the market share. Browns Investment owns 5.55% stake of SIRA.
Price : Rs. 5.10
52w High : Rs.6.40
52w Low : Rs.2.50
Shares 532.51 mil
PE calculation:
5.1/0.1 = 51
Dividend :
Has paid Rs. 0.2 for FY2009/2010 which is remarkable considering that their EPS is also 0.2
SIRA is highly overvalued at the current price because the company has failed to produce the expected profits in the last quarter and it has dropped 50% from the last quarter and annual profits also dropped 50% from last year. At current EPS this is only worth about Rs. 2/=
Investor Ratios
Comparison of key investor ratios of these three companies. Figures may not be 100% accurate since audited financial reports are still unavailable.
Comparing all three cable manufacturing companies we can easily see that KCAB stand out in almost all the aspects. It has the lowest PE comparable to sector fair value PE and has high ROCE and net profit margin. It is the lowest geared company among these three. KCAB is an illiquid counter with only 32 trades YTD compared to ACL's 139 trades and SIRA's 1562 trades.
Copper Prices
As the raw material for this industry all these companies depend on copper prices. We can see that through out the last year is has gone up and reached a high about $10/1KG and after that has gradually declined. So the next quarter will be good for all cable manufacturing companies with reduce cost of sales.
Even though Copper prices has come down Aluminum prices still remains at a higher price.
References
NDB Stock broker reports
Capital Trust Key Performance Indicators (10th June)
ACL,KCAB,SIRA Interim and Annual Reports
DirectFN
http://www.metalprices.net
Sector PE 20.1
Fair value Sector PE 15.22 (NDBS Reports)
Sector PBV 2.9
ACL
ACL is the largest of three companies and owns a dominating proportion of local cable market with a strong Brand name.
Price : Rs. 87.50
Shares 59.89 Mil
52w High : Rs.107
52w Low : Rs.80
PE calculation :
87.5/3.56 = 24.58
Dividend :
ACL haven’t paid a dividend since FY 2007/2008. With their return to profitability we can expect a one this year.
According to both Market PE and sector PE at current price of 87.5 ACL can be assumed overvalued.But looking at the QoQ growth shown in this year and the general increase in profitability of the manufacturing sector of the country. Paying premium value for ACL may give high return in the long run.
KCAB
ACL owns 79.3% of KCAB and they has a subdivision of 2:1 on 31st march 2010. EPS has been adjusted for the FY 2009/2010 to reflect the effects of this subdivision.
Price: Rs. 98.5
Shares 21.8 mil
52w High : Rs.139
52w Low : Rs.90.1
PE calculation :
98.5/5.91 = 16.67
Dividend :
KCAB has paid Rs.2.75 dividend for FY2009/2010. After the sub division we can expect at least Rs.1 this year. But huge negative cash balance is a big concern and a lower than expected dividend payout is highly probable.
At the current price of 98.5 KCAB is fairly value with a PE of around 16. Looking at their progress in the last two quarters we can expect with the booming construction industry KCAB to post higher profits in the coming quarters. It's worth noting that even though profits has increased over 80% cash balance has come down drastically. This counter is nearing it's 52 week low.
SIRA
58.11% owned subsidiary of Sierra Holdings (Private) Limited and the smallest of these three companies both in turnover and the market share. Browns Investment owns 5.55% stake of SIRA.
Price : Rs. 5.10
52w High : Rs.6.40
52w Low : Rs.2.50
Shares 532.51 mil
PE calculation:
5.1/0.1 = 51
Dividend :
Has paid Rs. 0.2 for FY2009/2010 which is remarkable considering that their EPS is also 0.2
SIRA is highly overvalued at the current price because the company has failed to produce the expected profits in the last quarter and it has dropped 50% from the last quarter and annual profits also dropped 50% from last year. At current EPS this is only worth about Rs. 2/=
Investor Ratios
Comparison of key investor ratios of these three companies. Figures may not be 100% accurate since audited financial reports are still unavailable.
Comparing all three cable manufacturing companies we can easily see that KCAB stand out in almost all the aspects. It has the lowest PE comparable to sector fair value PE and has high ROCE and net profit margin. It is the lowest geared company among these three. KCAB is an illiquid counter with only 32 trades YTD compared to ACL's 139 trades and SIRA's 1562 trades.
Copper Prices
As the raw material for this industry all these companies depend on copper prices. We can see that through out the last year is has gone up and reached a high about $10/1KG and after that has gradually declined. So the next quarter will be good for all cable manufacturing companies with reduce cost of sales.
Even though Copper prices has come down Aluminum prices still remains at a higher price.
References
NDB Stock broker reports
Capital Trust Key Performance Indicators (10th June)
ACL,KCAB,SIRA Interim and Annual Reports
DirectFN
http://www.metalprices.net
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