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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » ROYAL CERAMICS PLC (RCL.N0000)

ROYAL CERAMICS PLC (RCL.N0000)

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1ROYAL CERAMICS PLC (RCL.N0000) Empty ROYAL CERAMICS PLC (RCL.N0000) Sat Aug 06, 2011 10:16 pm

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Royal Ceramics Lanka PLC is engaged in holding of investments, and the manufacture and sale of wall tiles and floor tiles. The Company's segments are Tile & Associated products, Paints & Allied Products, Packaging Material, Finance, Sanitary Ware, Plantation, Aluminium and Other. The Company manufactures and retails porcelain and ceramic tiles under the brand name Rocell. The Company's subsidiaries include Royal Porcelain (Private) Limited, which is engaged in manufacturing and marketing of floor tiles and wall tiles; Rocell Bathware Limited, which is engaged in manufacturing and marketing of sanitary ware; Ever Paint and Chemical Industries (Private) Limited, which is engaged in manufacturing paints and allied products; Rocell Pty Limited, which is engaged in wholesale and retailing of floor tiles, wall tiles and bathware in Australia and Lanka Ceramic PLC, which is engaged in manufacturing and marketing of raw materials to ceramic industry and holding of an investment property.

RCL, owned 51% by Vallibel One limited, is a holding company of 2 tile manufacturing plants in Horana and Ehaliyagoda and a newly developed bath ware plant in Homagama.
The company is the holder of a famous brand, “Rocell” and has set a benchmark in premium quality standards in the tile industry. Further, the company enjoys a 55% market share of the local floor tile market and is the cost effective provider among competitors.

Lets have a look at the company financial summery for ten years;

ROYAL CERAMICS PLC (RCL.N0000) Rcl10

The Company - RCL
From 2007 - 2008 we see the expenses of the company has risen and current liabilities hold a higher ground hindering the working capital. And in 2009 company has managed to bring it down to a positive figure of 43.9 Mil and then in 2010 to 14Mil a little lower but again in 2011 they've made it over 100Mil.
(calculations; Working Capital = Current Assets - Current Liabilities)

since 2008, dividend payments have been increasing starting from 0.50 to 2.50 in 2011. Though % wise this seems a drop from 45% to 20%, I think this 20% is a fair value in terms of the growth.

After the Net profit drop in 2007 to 152 Mil (more than 50% from the figure of 2006 of 321Mil) we saw a further drop of 25% in 2008 but in 2009, the company has started to regain the momentum in 2010 it made a whooping figure of 710Mil which was an increase of 345% copmared to 2009. Again in 2011, the company managed to record a 93% growth in net profit than the previous year
which was a remarkable comeback in my openion although this was supported heavily by other income portion.
Also we have to really take note this other income portion because it has been playing a vital role in adding revenue to the bottom line since 2007 as well.

ROE has been very high since 2006 (26.93%) and came down to 12.3% in 2007 then again to 7.3% in 2008. Since then we see a higher growth capability has shown by the company growing the figures to 30.49% in 2010 and 40% in 2011.

NAVPS bring 30.94 and the last close being 147, PBV stands at 4.75.

Claculated EPS;
Net profit = 1,373,825,000
No. of shares = 110,789,384 (post Capitalisation as at 31-03-11)

EPS = 12.4, a slight different from announced EPS of 12.66 which I think could be the group figure.

Considering the latest financials as of 30-06-11, company EPS stands at 1.01 for the qtr and group EPS shows a marginal increase at 3.53 compared to same qtr in 2010.

Acquisitions;
The Company has acquired  20.03%  stake of Lewis Brown & Company Limited at a cost of Rs.621.2 Mil on 16th of June 2011. However it has not been consolidated for the further Quarter ended 30th June 2011.
Further more, the Company has acquired 100% stake of Ever Paint and Chemical Industries (Pvt) Limited (retail name - Colorbrite) on 1st of April 2011 at a cost of Rs.70.35 Mil.
However the latter shows a minus net asset value of 16.49 Mil and Goodwill of 86.47 Mil which tallies the acquisition cost of Rs.70.35 Mil. With the cash and cash equivalent of 5.22 Mil of the new subsidiary this brings a net cash outflow of 75.56 Mil to the RCL.

Top 12 Major Share Holders as of 30-06-11;

ROYAL CERAMICS PLC (RCL.N0000) Rcl_sh10

The percentage of shares held by the public as at 30th June 2011 - 40.3%

Future outlook
As per the introduction of  mr. W D N Perera, RCL is planing to invest around Rs. 3 billion to build
a third tile factory in Kiriwattuduwa, Homagama. Work on the plant was supposed to kick off in June 2011, and they have already contracted overseas companies to supply the machinery. The project will be partly funded through debt and internally generated cash and expected completion in about 18 months time.
The plant will add 12,000 square meters per day to RCL production lines. They expect to have adequate stocks to supply the market with this.
This addition would boost production capacity immensly.

The company can benefit from the local construction industry which is currently one of the prime beneficiaries of the post-war economic boom, with construction activities taking place across the northern and eastern regions.

The government has forecasted an economic growth this year of 8.5 percent, however; the IMF has forecast a more conservative economic growth of 7 percent. And the ceremic industry is expected to grow by 21%.

Continuous turmoil in the Middle East and North Africa, is having an impact on oil prices, inflation and hurt export prices.

It was stated on the annual report that galloping crude prices have also hurt RCL fuel supply bill.
Concerns are that RCL are in an energy-dependent industry and its not always possible to pass on fuel shocks to the end users.
Therefore this is a significant impact to the bottom line and the fierce competition forces RCL to abide by the current pricing strategy.

Also there was a concern over shortage of clay and feldspar from local suppliers which are hurting their raw material inputs. The alternative is to import raw materials from China, Taiwan or India, which would be more expensive, but high in quality.
But at the same time China and india exported ceramic goods are coming to the SL market at a cheap rate in the midst of Indian imports being tariffed @ 100% Tax.

RCL's brand name "Rocell" is a lifesttle choice that differentiates it from the rest from market share. And among peers like LWL, TILE and CERA, RCL stands at a discount to its revenue growth.

ROYAL CERAMICS PLC (RCL.N0000) Rcl-gr10

As per the 31-03-11 Group Figures;

Gross Revenue = 6413 Mn
Gross Profit = 2656 Mn
Other Income = 216.3 Mn
PAT = 1459 Mn

No of Shares = 110.8 Mn
EPS = 13.17
As of 5th Aug 2011 CSE equity market data, Manufacturing sector PER = 18.80. Taking this as the base for a valuation;
Current Price = 147 is at a trailing PER of 7.82.

This is just a valuation on hypothetical assumptions, not a BUY/SELL Recommendation.



Last edited by CHRONICLE™ on Sat Jun 05, 2021 1:17 pm; edited 6 times in total (Reason for editing : Corrected the 2010 EPS figure)

2ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sat Aug 06, 2011 10:21 pm

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
my wish for u dear friend, and thanks for the article as well

3ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sat Aug 06, 2011 11:03 pm

Monster

Monster
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Excellent work on your 1000th post. Congratulation!

4ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sun Aug 07, 2011 12:22 am

windi5

windi5
Moderator
Moderator
Very good informative post.Thanks for posting.congratz for your 1000 post. I love you

5ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sun Aug 07, 2011 10:43 pm

Tiger

Tiger
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Thanks for sharing + rep

I am also bullish on RCL but waiting for entry point.

6ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sun Aug 07, 2011 11:18 pm

mark

mark
Expert
Expert
haha.small changed the avatar Wink
good one,thanks for sharing,rep

relate to post...

a good company with potential and fundamentals,better to watch for it

*NBVPS (Rs.)47.12
*Forecast earnings FY12E Rs. 1,737.00Mn
*PER (x) 9.50

from-JKSB

7ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Mon Aug 08, 2011 1:26 am

Faz


Stock Trader
THANKS FOR YOUR SUMMARY/ ANALYSIS.. FOUND IT VERY USEFUL. well done

8ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Mon Aug 08, 2011 7:01 pm

JennyFunny


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks for sharing Smallville..

9ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Mon Aug 08, 2011 7:39 pm

Hawk Eye

Hawk Eye
Expert
Expert
Smallville Thanks for sharing.
Under the Group Financial Summary EPS for 2010 need to be corrected.

10ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Mon Aug 08, 2011 7:40 pm

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics
RCL is picking up.... Smile

11ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Fri Aug 26, 2011 8:56 am

tanzanite

tanzanite
Senior Equity Analytic
Senior Equity Analytic
Fantastic!!! guys...this is the way this forum should operate.... The true meaning is in posts like this one, its educational and knowledgeable and those who are new to the market has so much to learn, about companies and the businesses. Whoever started this forum, I want to congratulate u!!!!! Pl continue to share your knowledge for inexperienced investors. Some of you have years and years of experience. Its far blessed to give than receive too!!!

12ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sat Aug 27, 2011 12:14 pm

stockanalytic

stockanalytic
Manager - Equity Analytics
Manager - Equity Analytics
Excellent S.ville. (+) from me.

13ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sat Aug 27, 2011 12:33 pm

Rocky

Rocky
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
The resistance of this share was good. Most shares tooka beating during the down turn on CSE. Shows the confidence level.

I have already invested.

14ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sun Aug 28, 2011 8:04 pm

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics
RCL and SAMP..,.. financials results are good. both can operform well.

Richard_Branson


Stock Trader
Future tile prices are going down due to new tax decrease. Government wants destroy the monopoly in tile industry.   All tile companies are own by Dammika Perera. 

Next quarter tile companies profits goes down...!!

RCL expecting around 90 - 100 in end of this year.

16ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sun Nov 08, 2015 8:56 pm

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
 Richard_Branson ,
Are you Sri Lankan???
There are many tile companies in sri Lanka.


Macksons Tiles Lanka (Pvt) Ltd

Ranjith Terrazzo (Pvt) Ltd 
Presstona Tiles Lanka (Pvt) Limited

17ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sun Nov 08, 2015 9:11 pm

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
 largest importers 


Naveen Ceramic (Pvt) Ltd. becomes Sri Lanka's pioneers and largest importers 


Miyako is a leading tile importing company in Sri Lanka



Free Lanka Granite (Pvt)Ltd.

18ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Sun Nov 08, 2015 9:21 pm

kumarweerarathne

kumarweerarathne
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
I don't think .. More imports will drive da govt to loosing reserves.. So they will keep da import taxes higher or stable as it is. And they need to encourage local production isn't it?

19ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Mon Nov 09, 2015 8:19 am

capitallinkceylon


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Obviously it might come down to 100 to 90 level if govt removes import tax on tile. 
That's the on only downside for this stock.

Look at there earnings, Its one 1 1/2 qtr report financials can support this current price level. 
Im collecting this these days, I used half of my quota allocated for RCL these days at 112. I'll buy again after the budget is announced. 

As mentioned by members before in this forum i don't think govt will jeopardizes one of few developing manufacturing sectors we have.

20ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Mon Nov 09, 2015 6:09 pm

Richard_Branson


Stock Trader
Dear Harry82,

I am Foreign Investor from Austria. And very recently I joined with this forum to get the idea about of Colombo Stock Exchange. 

See I told you yesterday, today became reality.   Actually (RCL.N000) is good share. But due to this government influence price has gone down. today it went down around 3 rupees. See what will happen by end of this month.

But I am sure price will not go down after 90 rupees.  What I have notice 75 % Sri Lankan share market is running on government and other influence.  It doesn't mater whether company performed well or not.

Think twice...!!

21ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Mon Nov 09, 2015 7:51 pm

Yahapalanaya

Yahapalanaya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
RCL is trading at 50% discounted price.This price will be good even tile import tax removed.If it go down further,then there will be further opportunity for collection.But RCL is not a crap share.We will see in future.

Shocked Shocked Shocked

22ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Mon Nov 09, 2015 8:06 pm

charith666lk


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Yahapalanaya wrote:RCL is trading at 50% discounted price.This price will be good even tile import tax removed.If it go down further,then there will be further opportunity for collection.But RCL is not a crap share.We will see in future.

Shocked Shocked Shocked
p/e=4.9, pbv= 1, d/y= 4.5%, ROE= 22.3%......... RCL is real gem

23ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Wed Nov 11, 2015 6:29 pm

Richard_Branson


Stock Trader
Dear Yahapalanaya ,

RCL share price is going further down. But it do not go beyond the 95. Actually RCL good share.  but not worth in this quarter.

See told I week a ago, this share price would go down. It almost became reality. That is way of Sri Lanka share market.

24ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Wed Nov 11, 2015 10:21 pm

Yahapalanaya

Yahapalanaya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Richard_Branson wrote:Dear Yahapalanaya ,

RCL share price is going further down. But it do not go beyond the 95. Actually RCL good share.  but not worth in this quarter.

See told I week a ago, this share price would go down. It almost became reality. That is way of Sri Lanka share market.
More than 6 EPS in this Q.
Not worth in this quarter!!!!!!!!
Shocked Shocked Shocked

25ROYAL CERAMICS PLC (RCL.N0000) Empty Re: ROYAL CERAMICS PLC (RCL.N0000) Wed Nov 11, 2015 10:47 pm

capitallinkceylon


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
It's very much worth at current price but do I think price will go down further?? YES...

That's because i don't believe in this unpredictable govt. they say they are business friendly but does something totally opposite.
I have minor fear of cutting down of import tax on construction materials such as tile. If that happen, all tile sector share prices will come down by at least 10%.


It's better to buy some now and wait and see until the budget is announced. That's what I did, I bought a bit and waiting to buy more RCL after the budget.

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