Let's talk about GAS

nkalansu · 1 Let's talk about GAS Fri Dec 16, 2011 9:12 pm

nkalansu

Senior Manager - Equity Analytics

Posts : 335
Equity Stars : 4021
Reputation : 58
Join date : 2011-06-11
Age : 43

I have purchased LGL.X at 21 to 24 range. Is it a wise decision?

I am a long term investor. (i.e. 2 to 3 years)

TortoizePlus · 2 Re: Let's talk about GAS Fri Dec 16, 2011 10:06 pm

TortoizePlus

Manager - Equity Analytics

Posts : 197
Equity Stars : 3944
Reputation : 14
Join date : 2011-02-05

@nkalansu wrote:I have purchased LGL.X at 21 to 24 range. Is it a wise decision?
I am a long term investor. (i.e. 2 to 3 years)

What were the reasons behind the decision.. Then we can discuss about this..

nkalansu · 3 Re: Let's talk about GAS Fri Dec 16, 2011 10:24 pm

nkalansu

Senior Manager - Equity Analytics

Posts : 335
Equity Stars : 4021
Reputation : 58
Join date : 2011-06-11
Age : 43

Future prospects

It is an essential commodity.

When there is economic growth, need for energy is high

With the increase of living standards and increase of income people tend to shift to modern lifestyles which require high energy consumption.

Speculations and speculative behavior

There is a rumor that Gov. going to hand over the management of Litro to LGL (can't confirm)

Lot of high net worth guys have bought this at very high prices. (N share between Rs. 45 to 55 range)

EPF has bought N share at Rs. 48/= big quantity.

Financials ..................

Increased revenues

Increased profits year on year

Increased ROE

PER. PBR are acceptable.

Also last time they paid a good dividend too. Rs. 1.50 per N and X shares.

Compared to N share X is at a discount I think.

So I feel long term prospects are good. I have taken this decision based on fundamentals and future prospects.

Please if you could find some faults... and advise me why i should not buy more.....

Last edited by nkalansu on Sat Dec 17, 2011 5:45 am; edited 1 time in total

TortoizePlus · 4 Re: Let's talk about GAS Fri Dec 16, 2011 10:59 pm

TortoizePlus

Manager - Equity Analytics

Posts : 197
Equity Stars : 3944
Reputation : 14
Join date : 2011-02-05

This is good share and no question on it. Since you are going to hold this for 2-3 years, sure you will get a good return.

I agree with all your points except the management issue because of the current government policies. The government is in a position to acquire some of private owned companies back. So it is highly questionable that the Government will handover the management of Litro to LGL at this time. Anyway it a way of creating a monopolyalso.. But anything can happen..

Who are the main suppliers of Gas to LGL? Do you know? Are they import from somewhere?
If I can rember, at the time when SHELL is in operation, the GOSL is the main supplier of Gas to LGL? I may be wrong and don’t know about the agreement. If it is the GOSL who supplies Gas to LGL then how about the sustainabilty of this supplier chain.

Please see the last paragraph of page 5 in the Annual report.

“Although our performance is credible, It was achieved with many obstacles. The reduction of the supply of LP Gas output from Ceylon Petrolium Cooperation (CPC) refinary to LAUGH from 100% to 50% is worth mentioning in this review, since it has a significant impact of the pricing of the domestic cylinder of your company.”

Lets thik GOSL reduce it supply of LPGas further to LGL. They have to increase the price and have to compete with Litro provided by GOSL at a low rate. This will affect to their market share significantly.

chamith · 5 Re: Let's talk about GAS Sat Dec 17, 2011 5:35 am

chamith

Assistant Vice President - Equity Analytics

Posts : 827
Equity Stars : 4672
Reputation : 76
Join date : 2011-01-31
Location : England

Its worth looking into the following post;

http://forum.srilankaequity.com/t2831-third-player-to-enter-sri-lanka-s-lp-gas-market

nkalansu · 6 Re: Let's talk about GAS Sat Dec 17, 2011 6:11 am

nkalansu

Senior Manager - Equity Analytics

Posts : 335
Equity Stars : 4021
Reputation : 58
Join date : 2011-06-11
Age : 43

@nkalansu wrote:Future prospects

It is an essential commodity.

When there is economic growth, need for energy is high

With the increase of living standards and increase of income people tend to shift to modern lifestyles which require high energy consumption.

Speculations and speculative behavior

There is a rumor that Gov. going to hand over the management of Litro to LGL (can't confirm)

Lot of high net worth guys have bought this at very high prices. (N share between Rs. 45 to 55 range)

EPF has bought N share at Rs. 48/= big quantity.

Financials ..................

Increased revenues

Increased profits year on year

Increased ROE

PER. PBR are acceptable.

Also last time they paid a good dividend too. Rs. 1.50 per N and X shares.

Compared to N share X is at a discount I think.

So I feel long term prospects are good. I have taken this decision based on fundamentals and future prospects.

Please if you could find some faults... and advise me why i should not buy more.....

Please see the following.............

bakapandithaya · 7 Re: Let's talk about GAS Sat Dec 17, 2011 11:40 am

bakapandithaya

Vice President - Equity Analytics

Posts : 1447
Equity Stars : 6260
Reputation : 58
Join date : 2011-09-17

I think LGL.X is good price 2 collect

TortoizePlus · 8 Re: Let's talk about GAS Sat Dec 17, 2011 1:38 pm

TortoizePlus

Manager - Equity Analytics

Posts : 197
Equity Stars : 3944
Reputation : 14
Join date : 2011-02-05

I read this article at the time EPF bought LGL shares but I dont think GOSL will create a monopoly situation for LPGas in SL because Gas was a critical political issue when SHELL had the monopoly.

On the other hand GOSL can co-operate with LGL over the management and will allow more palyeres to operate in SL. Anything can happen in SL and it depends on how far LGL management having a close relationship with GOSL top level officiers and politicians.

WildBear · 9 Re: Let's talk about GAS Sat Dec 17, 2011 5:14 pm

WildBear

Assistant Vice President - Equity Analytics

Posts : 723
Equity Stars : 4385
Reputation : 65
Join date : 2011-07-02

@TortoizePlus wrote:I read this article at the time EPF bought LGL shares but I dont think GOSL will create a monopoly situation for LPGas in SL because Gas was a critical political issue when SHELL had the monopoly.

On the other hand GOSL can co-operate with LGL over the management and will allow more palyeres to operate in SL. Anything can happen in SL and it depends on how far LGL management having a close relationship with GOSL top level officiers and politicians.

GOSL become a significant stake holder in LGL with recent EPF deal.

Sponsored content

Latest topics

Let's talk about GAS

1 Let's talk about GAS Fri Dec 16, 2011 9:12 pm

nkalansu

2 Re: Let's talk about GAS Fri Dec 16, 2011 10:06 pm

TortoizePlus

3 Re: Let's talk about GAS Fri Dec 16, 2011 10:24 pm

nkalansu

4 Re: Let's talk about GAS Fri Dec 16, 2011 10:59 pm

TortoizePlus

5 Re: Let's talk about GAS Sat Dec 17, 2011 5:35 am

chamith

6 Re: Let's talk about GAS Sat Dec 17, 2011 6:11 am

nkalansu

7 Re: Let's talk about GAS Sat Dec 17, 2011 11:40 am

bakapandithaya

8 Re: Let's talk about GAS Sat Dec 17, 2011 1:38 pm

TortoizePlus

9 Re: Let's talk about GAS Sat Dec 17, 2011 5:14 pm

WildBear

10 Re: Let's talk about GAS

Sponsored content