Kotagala Plantations PLC engages in the cultivation, manufacture, and sale of tea and rubber in Sri Lanka. The company was founded in 1992 and is based in Colombo, Sri Lanka. Kotagala Plantations PLC is a subsidiary of Lankem Plantation Holdings Limited.
Name No. of Shares Percentage %
1 Lankem Plantation Holdings Ltd 12,100,000 37.81%
2 Lankem Tea & Rubber Plantations (Pvt) Ltd 9,602,100 30.01%
3 Secretary to the Treasury 3,800,556 11.88 %
Kotagala Plantations Plc (KOTA) posted Rs. 56 million in PAT for 1QFY11, declining 7% over the comparative quarter albeit an 18% increase in revenue driven by high commodity prices. The fall in earnings was attributed to the increase in cost of production over the 1QFY10
Despite lower gross margins at group level, operating profit in 1QFY11 recorded a 4% yoy growth thanks to significant savings on administrative expenses due to better efficiency. Certain cost items that were previously included under administrative expenses have been transferred to direct costs, thereby reducing the indirect costs. Net finance costs remained high during the quarter as long term interest bearing borrowings almost doubled from the end of 1QFY10.
In January 2010, the company acquired a 19.84% stake in C. W. Mackie PLC and a 41.7% stake in York Hotels (Kandy) Ltd. on March 2010.
Last few qtrs earnings without other income;
31/12/2010 - 223.9 Mn
30/09/2010 - 126.16 Mn
30/06/2010 - 47.58 Mn
31/03/2011 - 79.6 Mn
Profit for last 04 Qtrs - 477.24 Mn
No. of Shares : 32 Mn
EPS = 14.91
KOTA can be Valued at Plantation Sector PE of 24.3;
Sector PE Share Valuation = EPS 14.91 x PER 23.75 = Rs. 354.11/- level.
Due to KOTA's high exposure to Tea which can be affected from wage hike, uncertainity, etc... lets take Fair Value of sector PE as a 50% discount to normal value which is 12.15, hence if we re-calculate taking this as the fair sector PE;
Fair Share Valuation = EPS 14.91 x Fair sector PER 12.15 = Rs. 181.16/- level.
Current Share Price = Rs. 168.8/-
On technical basis, counter attracts all indicators to be on up side;
KOTA, with around 4,989 hectares under rubber cultivation, is one of the larger rubber producers in the country.
The company produces both latex crepe and sole crepe, both of which have seen sharp increase in price levels. The company is now fully equipped to manufacture all 3 kinds of sheet rubber; pale crepe, sole crepe and RSS. In addition to its current product portfolio of tea and rubber, KOTA has embarked on a program of utilising its uncultivated bare land in the low country with Palm oil in FY11. Initially, around 110 hectares will be cultivated and it is expected to increase up to 1,000 hectares in the coming years, which should have a positive impact on group earnings in the medium term.
KOTA’s tea production is dominated by high grown teas which account for as much as 75% while the remainder is low grown teas.
On the contrary, rubber prices may have a small hard time due to Japan's Tsunami crisis, therefore; a reduction in Q2FY12 could also be evident. However Q1 results would not be heavily affected as by 31-03-11, the qtr is over.
However, counter is poised ot perform better or if worst at the current rates..
Future outlook was taken from JKSB report.. So Up to you for further analysis...
Last edited by smallville on Sat Mar 19, 2011 2:00 pm; edited 1 time in total (Reason for editing : mentioning of extracts from JKSB report)