ACCESS ENGINEERING PLC (AEL.N0000)

Bullrunner7 wrote:Someone advise me please ?

anges wrote:if your patient in the coming days you can buy it for 21-22 levels

anges wrote:if your patient in the coming days you can buy it for 21-22 levels

Hawk Eye wrote:Access Engineering is diversifying into real estate, building high-rises for rent income to bring a steady revenue stream and also to increase the group's net asset base. Following projects are underway adding to its diversification strategy.
 
The projects that going to support the top line of business through the new strategy are
 
 
·         Capital Heights comprising 242 luxury apartments will be completed in 2020 with 40 percent of the apartments already sold. Access Engineering holds a 50 percent stake in the project.
·         Marina Square is a mixed development project comprising 1,068 condominium apartment units and around 150,000 square feet of commercial space, has recorded presales of 25 percent.
·         Marina Square is owned by Harbour Village Private Limited a joint venture between Access Engineering, China Harbour Engineering and Musthafa's Singapore and will overlook the Colombo Port.Access Engineering holds over 60 percent of Harbour Village.
·         Access also owns 21 acres of land though subsidiaries within the IT zone in  Malabe which is proposing to build a private university Horizon Knowledge City offering tech, science, law, engineering and paramedical degrees.
·         Access Engineering is building 608 housing units for government employees at Borella for the Urban Development Authority costing 4.9 billion rupees.The company completed 941 low-cost housing units comprising two bed rooms, living area and kitchen, toilet and balcony for 3.3 billion rupees, which also for the UDA.
 
Additionally, the Colombo Port City also could give lot of business opportunities for AEL
 
·         The construction of the Colombo Port City Phase I will shortly begin where the development potential is estimated to be USD 15 Bn. There are also long-term road development projects that will be initiated like the Ruwanpura Expressway, the Elevated Highways, and others. There are also plans underway to construct a new passenger terminal at the BIA. These national construction projects and the private-sector infrastructure projects will be a huge boost to the national economy as well as the construction industry
 
https://economynext.com/Sri_Lanka_Access_Engineering_says_real_estate_strategy_seeing_results-3-11695-4.html
 
 
The Diversification strategy is getting another dimension with Overseas business expansion
 
·         Access Engineering PLC is en route to secure its largest construction contract outside Sri Lanka worth of 14 million euros to design and construct substructures for a Spanish-funded steel overpass for vehicles in Nairobi, Kenya, as the firm eyes business expansion in East Africa. 
 
http://www.dailymirror.lk/article/Access-Engineering-set-to-secure-largest-overseas-project-162297.html
 
 
 
Quarterly Financial Report Dec 2018
 
Revenue for quarter  increased to 7.9bn from 6.9Bn previous quarter which is a 15% increase in Revenue. The cost of sale increased by 11% to achieve this 15% increment in Revenue which resulted in GP increasing by 38%. The 9 months cumulative results shows a similar trend. Therefore I believe that the average GP will be improved Q2Q which will show a tremendous net figure with a fairly good EPS value, thus increasing the value of share.
 
Therefore the AEL strategy to increase the revenue base and better GP margins by adopting a new strategy showing signs that things are going to be better by 2020 and onwards.
 
It is also to be noted that what impact would the VAT 15% on apartment sale going to have on AEL results.
 
 
Other Income comprises mainly Dividends, rental income and a major portion through fair value change in investment property. The new strategy will increase the Rental Income portion thus the Other Income should increase Q2Q in coming Quarters. 2017 March quarter bottom line was significantly increased through the fair value change in Investment properties
 
 
Share of results of equity-accounted investees, Current Quarter results recovered the cumulative losses up to last quarter. I am not sure whether this gives us the implication that the JVs and Partnerships have started turning in to profits. If the positive result going to continue in this area we can see improvements in Net profit and a leverage in value of share.
 
The whole strategy change is going to be reflected through above areas.
 
An interesting area to note is Its Automobile Business which  contributed 29.6% of Revenue but deriving only  3% in Profit. Out of the Total Rs.21.6 Bn Revenue Rs.6.4bn came from Automobile Segments, which is 29.6% of Revenue. Balance 15.2 Bn Came from segments:, Construction Rs.12.5Bn, Construction Related Material Rs.2.2Bn and Property Segment Rs0.5Bn. All these segments contributed on average 10% in PAT.  What I like to highlight here is when the Business and Economic condition for automobile segment looks favourable AEL profit and share value going to increase further.
 
 
Finance Cost
All these mega JV and partnership projects have to be financed in some way. Equity, Debt or mix of it. The net Finance cost is moving up as a percentage of Operating Profit. In 2017 9months Net Finance cost was Rs263Mn, which is 15% of Operating Income where after the strategy change initiation has put the cost to jump to Rs.516Mn, which is 19% of the operating income. For the December quarter the net finance cost is 24% . When the projects start generating Income the Net Finance cost % should drop Q2Q to atleast to 15% previous levels. That would give us a clear sign that AEL is on right track.
 
 
If we look at the Balance sheet the Trade Receivables stands around 12.8Bn. It is the outcome of undertaking government contracts I guess. But it also has a close amount of Trade Payables 11.90 Bn, which reveals they are financing these through squeezing the creditors for long credit period.
 
On the other hand if we compare KAPI, KAPI has a trade receivable amounting 18Bn, but theses are mainly financed through a Bank Borrowings amounting 22Bn. So obviously the Finance cost should eat up the Profit. KAPIs Administrative Expenses for the QTR is 197.9Mn , but the Finance Cost is 883.4Mn. Clear sign of Doom.
 
 
 
Earnings Per Share
At the current context AEL can report an EPS around Rs.1.2-1.4. But I have a strong feeling that in coming quarters with the new strategy they can gradually touch the 1.8-2.4 range. Automobile profits can give additional weight to EPS. While all others in the segment performing very badly and with negative figures AEL shines. So there is a greater chance for AEL share value to appreciate. ( Technical Charts should give a better projection)
 

Therefore, I believe AEL has a good prospect in Medium to Long-term, and would like to have your views as inputs
 
 
HE

wisdom79 wrote:Really it is true. The best investment. Buy and hold. It will take time but you will get a triple profit.

arun.cse wrote:AEL will not move under the remaining government.

nuwanmja wrote:Until Ranil and the clan in top levels neither CSE nor country develop

Yahapalanaya wrote:AEL is good at current price level.It made profit in difficult period and out performed other construction companies.

 x                     Net profit         Asset/share

2015/16              2,465M             17.46

2016/17              2,708M             18.84

2017/18              3,071M             20.78

2018/19              2,436M             21.39

Current share price 12.5   

I don't think Mangala target any particular company.Budget also asked foreign companies  partner with local company.Construction company got concession for importing construction material etc..Lot of infrastructure projects about to start with the funding of IMF etc..

I hope AEL is the best construction company in the CSE that would give good return in future whether UNP or SLPP or SLFP form government.