WATA-OVERVALUED OR UNDERVALUED?

mark · 1 WATA-OVERVALUED OR UNDERVALUED? Thu Feb 24, 2011 11:42 pm

mark

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IS WATA UNDERVALUED OR OVERVALUED?

*current price-29Rs
*NAV-10.13
*shares volume-236Mn
*9 MONTHS ENDED PROFIT(group)-418Mn
*extra ordinary profit-72Mn(The profit achieved by the Company includes and extraordinary profit of Rs. 72 million which it recorded with the
transfer of the Net Assets of the Fast Moving Consumer Goods Sector (FMCG). (Refer note no. 34 and 35 of the
Company’s annual report 2009/2010)

*revised profit-(418-72)346Mn
*EPS for the 9 months-(346/236)=1.47Rs
*at least if we take average for the 12 months(1.47/3*4)=2Rs
*PE ratio(29/2)=14.5times
*PE ratios of leaders-KGAL(approx_7times)KOTA(around 9),HOPL(around 6)

*will WAGE HIKE affect on WATA?
------------------total revenue-3,407,485,000
------------------from tea segment-2,603,347,000
------------------percentage from tea-76%

*With Plantation worker wage revision due in April 2011 (current agreement will expire in March 2011), it’ll have a considerable impact on Profit margins in tea segment as a whole (tea is a highly labour intensive commodity). But since tea segment contributes only up to circa 20% of gross profit of NAMU, where Oil Palm and rubber which are less labour intensive crops constitute major portion of Profits, NAMU’s profit margins would have a lesser impact compared to its competitor firms which rely highly on tea.
(http://forum.srilankaequity.com/t1106-namunukula-plantations-namu-stronger-earnings-through-crop-diversification#6959)

*recently they form a subsidiary in Australia
(http://www.cse.lk/cmt/uploadAnnounceFiles/3431297768897_728.pdf)

i may be wrong.........WATA is overvalued to me in present conditions........
please share your thoughts,because i may be wrong......... Smile

BenZ · 2 Re: WATA-OVERVALUED OR UNDERVALUED? Fri Feb 25, 2011 12:20 am

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For me its fairly valued at this rate coz its from plantation sector
It has to face wages hike in this year too ... So operating cost will be risen more Exclamation

mark · 3 Re: WATA-OVERVALUED OR UNDERVALUED? Wed Mar 02, 2011 9:32 am

mark

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WATA may good for long term............

some points............

*WATA has also begun direct operations in Australia and New Zealand and has
recorded a substantial volume growth(http://www.cse.lk/cmt/uploadAnnounceFiles/3431297768897_728.pdf)

*WATA is looking at expanding its operations in Australia and New Zealand by introducing its flagship
brand “Zesta”.

*Sunshine Holdings PLC (SUN) expected to
undertake hydro power as well as leisure projects on assets of WATA..

*WATA has undertaken heavy investments in its palm oil segment
(Palm oil prices rose by over 166% since
December 2008 to US $ 1,171.22 per
metric ton in December 2010. Prices have
been further supported by rising crude
oil prices which also rose nearly 117%
during the same period.)

Rajitha · 4 Re: WATA-OVERVALUED OR UNDERVALUED? Sat Mar 05, 2011 11:15 am

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As a guy who is in to plantation sector a lot, I don't fancy WATA a lot. Mainly because of the huge amount of tea they have , the quite higher PE ratio and having a very high liquidity. I would say the future price of WATA will depend on how the wage hike hype and the real thing effect their tea estates! The silver lining for them is the higher number of Palm oil they have which did not reflect in there or any other palm oil plantation because of the meager plam oil output last quarter!

Actually I have shares of AGAL,ELPL,NAMU all three of the other palm oil plantations as they are trading at lower PE ratios, have less tea and exposer to rubber and have a plam oil mill that operates between the tree plantations! Also the rubber plantations like KEGAL (almost 80%) seems to have almost no impact of the wage hike and the already huge rubber prices ( over Rs 100-300) compared to last quarter bound to produce extra ordinary results for the coming quarters! Also plantations like HOPL,MAL that have exposer to tea are trading at PE ratios f below 5-6 ( both have higher rubber outputs also).

So if I were a new buyer I will not choose WATA for at least another few months as there seems to be better plantations for the money you spend.

Slstock · 5 Re: WATA-OVERVALUED OR UNDERVALUED? Sat Mar 05, 2011 11:55 am

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mark wrote:IS WATA UNDERVALUED OR OVERVALUED?

*current price-29Rs
*NAV-10.13
*shares volume-236Mn
*9 MONTHS ENDED PROFIT(group)-418Mn
*extra ordinary profit-72Mn(The profit achieved by the Company includes and extraordinary profit of Rs. 72 million which it recorded with the
transfer of the Net Assets of the Fast Moving Consumer Goods Sector (FMCG). (Refer note no. 34 and 35 of the
Company’s annual report 2009/2010)

*revised profit-(418-72)346Mn
*EPS for the 9 months-(346/236)=1.47Rs
*at least if we take average for the 12 months(1.47/3*4)=2Rs
*PE ratio(29/2)=14.5times
*PE ratios of leaders-KGAL(approx_7times)KOTA(around 9),HOPL(around 6)

*will WAGE HIKE affect on WATA?
------------------total revenue-3,407,485,000
------------------from tea segment-2,603,347,000
------------------percentage from tea-76%

*With Plantation worker wage revision due in April 2011 (current agreement will expire in March 2011), it’ll have a considerable impact on Profit margins in tea segment as a whole (tea is a highly labour intensive commodity). But since tea segment contributes only up to circa 20% of gross profit of NAMU, where Oil Palm and rubber which are less labour intensive crops constitute major portion of Profits, NAMU’s profit margins would have a lesser impact compared to its competitor firms which rely highly on tea.
(http://forum.srilankaequity.com/t1106-namunukula-plantations-namu-stronger-earnings-through-crop-diversification#6959)

*recently they form a subsidiary in Australia
(http://www.cse.lk/cmt/uploadAnnounceFiles/3431297768897_728.pdf)

i may be wrong.........WATA is overvalued to me in present conditions........
please share your thoughts,because i may be wrong.........

Mark,
I would rather like to say WATA is fairy valued given the premium place ( name wise) it holds in the Sector. But I would not go with WATA at this stage due to its significant exposure into tea.

mark · 6 Re: WATA-OVERVALUED OR UNDERVALUED? Sat Mar 05, 2011 12:29 pm

mark

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@ slstock and rajitha..............
and BENZ also..............
agree with you both................ Smile

Monster · 7 Re: WATA-OVERVALUED OR UNDERVALUED? Sun Apr 03, 2011 4:41 pm

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Losses force Watawala Agro to close down

There was a loss of around Rs. 5 to 6 million which led to the liquidation of Watawala Agro Ltd, a subsidiary of Watawala Plantation, according to the Chief Financial Officer of Watawala Plantations, N.A.L. Cooray.
“We had to close down because the project was a loss with the particular banana crop not yielding desired produce,” said Cooray.
He added that the particular banana crop purchased from leading banana people – Dole Company had been found to be a dry zone plant and did not take to the wet fertile land in Watawala.
The shareholders of Watawala Agro Ltd decided to wind up the company and accordingly, a special resolution was passed on March 28, 2011 to wind up the company voluntarily and Waduge Nalith Suranjaya Fernando and Samanthi Haddegoda were appointed as liquidators of the company. (SO)

http://www.thebottomline.lk/2011/04/03/page34.html

mark · 8 Re: WATA-OVERVALUED OR UNDERVALUED? Sun Apr 03, 2011 4:45 pm

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Monster wrote:Losses force Watawala Agro to close down

There was a loss of around Rs. 5 to 6 million which led to the liquidation of Watawala Agro Ltd, a subsidiary of Watawala Plantation, according to the Chief Financial Officer of Watawala Plantations, N.A.L. Cooray.
“We had to close down because the project was a loss with the particular banana crop not yielding desired produce,” said Cooray.
He added that the particular banana crop purchased from leading banana people – Dole Company had been found to be a dry zone plant and did not take to the wet fertile land in Watawala.
The shareholders of Watawala Agro Ltd decided to wind up the company and accordingly, a special resolution was passed on March 28, 2011 to wind up the company voluntarily and Waduge Nalith Suranjaya Fernando and Samanthi Haddegoda were appointed as liquidators of the company. (SO)

http://www.thebottomline.lk/2011/04/03/page34.html

wow thanks for refreshing................now this shows the image i tried to forecast....... Cool