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Sri Lanka Equity Forum » Stock Market Talk » TOKYO CEMENT COMPANY (LANKA) PLC (TKYO.X0000)

TOKYO CEMENT COMPANY (LANKA) PLC (TKYO.X0000)

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Cliff777


Stock Analytic
Stock Analytic
Can you please elaborate? Smile

Cliff777


Stock Analytic
Stock Analytic
This should ward off the concerns about lack of Chinese workers in the construction sector in Sri Lanka due to spread of coronavirus. 


[size=40]China posts sharp drop in new coronavirus cases after criteria change[/size]
 

https://www.reuters.com/article/us-china-health-toll/china-posts-sharp-drop-in-new-coronavirus-cases-after-criteria-change-idUSKBN20E088?il=0

Cliff777


Stock Analytic
Stock Analytic

Teller


Moderator
Moderator
SLIC/EPF factor to consider 🎉
EPF strongly should not touch tokyo

Cliff777


Stock Analytic
Stock Analytic
Can you please elaborate, I don't get what your are implying? Thank you very much!!

Cliff777


Stock Analytic
Stock Analytic
EPF already owns 4.2% of TKYO.X. Currently EPF share of investments in the CSE is 3% of its portfolio. They are planning to raise it to 6% in 2020 as it was in the news. So it is highly likely that EPF will increase its stake in TOKY.X during the year. Further, this also means that circa LKR 66 billion additional funds will be invested in the CSE by the EPF this year if they raise their stake to 6% of its portfolio which they clearly announced.



Last edited by Cliff777 on Fri Feb 21, 2020 12:15 pm; edited 1 time in total

Ekanayake90

Ekanayake90
Senior Equity Analytic
Senior Equity Analytic
@Teller wrote:SLIC/EPF factor to consider 🎉
EPF strongly should not touch tokyo

They have very limited options available since they cannot increse the holdings of banking and finance sector anymore.
The next best option would be Other Bulechips trading at a discount at the moment.(Spence, Tokyo , Ael , Llub ,Melsta , JKH..ECT).



EPF not actively investing in Sri Lanka bank shares: officials
Friday January 31, 2020 12:29:08

ECONOMYNEXT- Sri Lanka’s Employees’ Provident Fund (EPF) of private sector workers savings managed by the state, is currently not “actively investing” in banking shares, officials said, where concerns have been raised about conflicts of interest and state interference.
“The EPF is not actively investing in banking shares now,” Senior Deputy Governor NandalalWeerasinghe said, responding to a question raised by EconomyNext.
The 2.2 trillion rupee EPF, managed by the central bank, is now one of the largest owners of private banks.
Since banks are some of the top performers there have been calls for the EPF to be managed independently.
Deputy Governor H A Karunaratne said the exposure of the EPF to banking stocks is too high, but did not say a specific prohibition had been placed on bank investments but said the decision to buy banking stocks once more will be up to the EPF Investment Committee.
“There is no hard and fast rule,” he said. “We are careful about moving into that area because the exposure is high.”
EPF has been subscribing to rights issues of banks.Many banks are opting for rights issues as their capital buffers are coming under pressure amid rising bad loans.
Distancing EPF from Bank Supervision
Criticism has risen on the conflict of interest over EPF controlling banks because the central bank is the industry regulator and is privy to information that is not public.
Concerns have been raised earlier on the EPF appointing bank directors with or without the support of other state funds. Other state managed funds, including Sri Lanka Insurance, also own bank stocks.

With the recent decision taken not to actively buy bank stock, and a limit of new purchases to below 10 percent will reduce some of the conflicts, Weerasinghe said.
“As long as you are not actively engaging in trading or investing other than passive investment, I see no conflict there,” he said, adding that officials such Assistant Governors are now not in charge of both duties.
Previously, the bank supervision duties were handled by the same assistant and deputy governors who were in charge of the EPF.
Last June, when EconomyNext questioned then Governor Indrajit Coomaraswamy on whether the roles could be split, he said the central bank would consider distancing the two roles.
Officials on Thursday confirmed that new governance measures have been brought in.
Karunaratne and Assistant Governor Yvette Fernando, who were previously in charge of the two roles, were not fully aware of EPF trades which were and were not conducted during the December quarter.
“This clearly shows there is a separation between the EPF and the Deputy Governor (Karunaratne),” Fernando said.
“I’m not overseeing that. Now there is a new Assistant Governor. I’m speaking because I know of the operations previously,” she explained.
Sri Lanka’s EPF had not invested in listed banks stocks until 2009. In 2005 the EPF had bought stock in NDB with monetary board approval. A forensic audit said into EPF said the investment policy was changed in 2011.
Investments in stock trades were later ratified by the Monetary Board. (Colombo/Jan31/2020)

Ekanayake90

Ekanayake90
Senior Equity Analytic
Senior Equity Analytic
@Cliff777 wrote:EPF already owns 4.2% of TKYO.X. Currently EPF share of investments in the CSE is 3% of its portfolio. They are planning to raise it to 6% in 2020 as it was in the news. So it is highly likely that EPF will increase its stake in TOKY.X during the year. Further, this also means that circa LKR 36 billion additional funds will be invested in the CSE by the EPF this year if they raise their stake to 6% of its portfolio which they clearly announced.

Yes , they will.
Unlike traders they will consider future earnings potential of construction sector. ($15 billion investments in port city)
Tokyo will easily do 10+ Earnings next five years.

Cliff777


Stock Analytic
Stock Analytic
Yes that's what I proposed earlier also. Now that the Chinese workers are returning to work the Port City Construction work will commence as reported which will immensely benefit TOKYO. I don't get why Teller is thinking otherwise. The daily RSI value is almost 30 which means the share is oversold and now is the perfect time to buy the share. Further, the ROC Price indicator is rising indicating technically that the share price is poised to rise.

Arrowrisk

Arrowrisk
Manager - Equity Analytics
Manager - Equity Analytics
Last year First and Final dividend was Rs.0.30    27.08.2019

Ekanayake90

Ekanayake90
Senior Equity Analytic
Senior Equity Analytic
Last year EPS - (1.23) DPS RS 0.30 paid when the company making losses

9M(current yr) EPS - 4.25 (DPS RS 1.2-1.5 can be expected)

Arrowrisk

Arrowrisk
Manager - Equity Analytics
Manager - Equity Analytics
@Ekanayake90 wrote:Last year EPS - (1.23) DPS RS 0.30 paid when the company making losses

9M(current yr) EPS - 4.25  (DPS RS 1.2-1.5 can be expected)

Current share prices;
OSEA Rs.16.00  and dividend declared Rs.1.25
TKYO Rs.41.00 and expected dividend Rs.1.20 or 1.50

OSEA is better at this point in time.

Cliff777


Stock Analytic
Stock Analytic
OSEA pays higher dividend because their growth potential is low. I think what one needs to focus on when deducing the future share price is growth potential of the firm, profitability and of course the technical position. Considering these the potential share price increase of TKYO will be greater than the OSEA dividend yield of 7.81% by 12 May, which is the payment date of OSEA dividend. Unlike TKYO, OSEA YoY profits has fallen.

Ekanayake90

Ekanayake90
Senior Equity Analytic
Senior Equity Analytic
@Cliff777 wrote:OSEA pays higher dividend because their growth potential is low. I think what one needs to focus on when deducing the future share price is growth potential of the firm, profitability and of course the technical position. Considering these the potential share price increase of TKYO will be greater than the OSEA dividend yield of 7.81% by 12 May, which is the payment date of OSEA dividend. Unlike TKYO, OSEA YoY profits has fallen.

Agreed .
Construction related companies have a higher growth potential next 5-6 years(25+% growth per year 🤞) & we are yet to see the impact of recent Tax cuts. Along with TOKYO ACL, APLA , CIND will create lots of wealth to the share holders .

Cliff777


Stock Analytic
Stock Analytic
 TOKYO CEMENT (TKYO.N: LKR41.00, TKYO.X: LKR34.00) - Despite a remarkable 1H’20, TKYO likely to witness a modest 2H’20 stemming from a slowdown in economic activities & adverse weather in 3QFY20…

 
Equity holders profit of Tokyo Cement (TKYO.N: LKR41.0, TKYO.X: LKR34.0) rose by ~2.5x YoY (however dipped ~68% QoQ) to LKR257.4 mn in 3QFY20 predominantly driven by (i) improved GP margins (up ~907 bps YoY to 27%), (ii) widened EBIT margins (up ~639 bps YoY to 10%) and (iii) reduced income tax burden (down to ~23% of PBT in 3Q’20 cf. ~151% in 3Q’19) for the quarter reviewed. Thus, group NP margin expanded to ~3% in 3Q’20 (cf. -2% in 3Q’19).
OUTLOOK: Group GP margins likely to be suppressed in the near term and hover around  ~26% levels - given the (i) ~8% reduction in 50 Kg Bag cement selling prices owing to the recent tax cuts (TKYO currently sells a 50kg bag at LKR1,005 cf. LKR1,095 before in 2019), (ii) expected surge in freight charges owing to the recently implemented rule on ships to use low Sulphur fuel oil  and (iii) PAL increase of 2.5% to ~10% from 1st Jan 2020.
We thus expect an erosion in TKYO’s FY20E profits. We therefore revise down TKYO net earnings to LKR2.1 bn in FY20E (cf. LKR3.6 bn forecasted before) owing to (i) a much likely slowdown in country’s economic growth during 1H’2020 -owing to a temporary standstill in Chinese led large ticket projects stemming from the Coronavirus epidemic, (ii) comparatively lower performance in 3Q’20 due to adverse weather conditions disrupting construction work, (iii) subdued use of fly-ash suppressing GP margins on a QoQ basis owing to the partial closure at Norochcholi power plant in 3Q’20, (iv) downward price revision in 50 kg cement bags due to the tax cuts in Dec’19, (v) increase in PAL by 2.5% from Jan’20, (vi) higher freight cost due to the newly enacted rule on ships to use low Sulphur fuel oil from 1st Jan’20 and (vii) lower revenue recognition from large ticket government led projects due to delays in commencement. Additionally, the group is currently experiencing a slight delay in receiving payments from Chinese led infrastructure projects, as most of the Chinese contractors have not yet returned from their New Year vacation.
Nevertheless, sentiments likely to rebound in FY21/22E given the expected boost in Construction sector. We expect the overall economy to regain some traction post the impending general elections in April’20 with the resumption of several large scale construction projects including (i) building of Light rail transit, (ii) expansion of the airport terminal, (iii) construction of  other three phases of Central Expressway, Rathnapura Expressways and other proposed elevated highways along with (iv) proposed work at Port city and Mega polis.
Valuations : Backed by the total return of +35% & probable uptick in Construction sector, we maintain our recommendation at BUY. Based on an implied PE of 8.9x (taking a discount on regional cement producers trailing PEs), the voting share derives an upside of +30% to its fair value of LKR55.0 over the coming year. Additionally, the non-voting share is expected to trade at a ~17% discount to the voting share and reach an intrinsic value of LKR45.6. Further, TKYO trades at 6.7x FY21E recurrent earnings for Voting and 5.5x for Non-Voting whilst yielding a dividend of +6% and a ROE of ~17-18% over FY21/22E.
Meanwhile, owing to the overall lackluster market sentiments the voting share has weakened +13% YTD whilst the ASPI has only dropped ~5%. Hence, we expect TKYO has potential to grow over the coming year given the expected spur in the home builders market, revival in consumer sentiments and a boost in the construction industry. Therefore, maintain BUY.
 
 
Softlogic Equity Research


According to the BOI however import of raw material is exempted from PAL

ThilinaM

ThilinaM
Vice President - Equity Analytics
Vice President - Equity Analytics
useless share . its running on losses??

Cliff777


Stock Analytic
Stock Analytic
It's a BUY recommendation

Cliff777


Stock Analytic
Stock Analytic
PwC estimates FDI flows during the construction stage to be around US$ 5.6 billion of the Port City.


http://www.dailymirror.lk/business-news/Port-City-land-likely-to-be-priced-above-Rs-13mn-per-perch-PwC-report/273-183638

ThilinaM

ThilinaM
Vice President - Equity Analytics
Vice President - Equity Analytics
trend stuck

ChooBoy


Manager - Equity Analytics
Manager - Equity Analytics
TOKYO CEMENT COMPANY (LANKA) PLC (TKYO.X0000) - Page 4 83423e10

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