KAPI resistence level?

dipped to 60 today are we looking at the resistant level, so a lot of panic selling today...

U can click on this link to see the lengthy discussion including positive and negative about KAPI.....

http://forum.srilankaequity.com/t210-kapi-is-on-track-in-developing-new-projects

http://forum.srilankaequity.com/t1760-construction-and-manufacturing-to-drive-2011-stock-profits-keep-on-eye-kapi

I am currently doing the analysis of last quarter Financial statement, once i complete i ll post my analysis

Future Projects

1. Purchasing of Northern Power Company Private Limited, a 40MW HFO power plant located in Chunnakam, Jaffna, as the largest provider of electricity to the Jaffna Peninsula

2. KAPI’s subsidiary CML-MTD Construction (Pvt.) Ltd. Has received the contract to undertake many road and bridge construction projects across the nation.

3. Provide total solution for hydropower power plants in Sri Lanka one-stop-shop concept for mini hydropower companies in the country. In partnership with the world’s largest hydropower company, the Andritz Group.

4. Received contracts for the Southern Highway and other major highways and roads throughout the island.

5. KAPI won the bid to construct Colombo- Katunayake expressway

6. Expand and consolidate its subsidiaries of Walkers Piling and Walkers Engineering by installing two new piling machines worth Rs. 200 million, that has been ordered and two more are in the pipeline in expectation of the construction boom.

Financial Review....

Third quarter performance highlights that KAPI started to generate revenue from new contracts and projects, which have been pointed out in this post…

After the rights issue, as I predicted the 4th quarter and coming quarters results will be remarkable in terms of profit and its value… This 3rd quarter performance is the first step to entering into KAPI's new milestone....

KAPI 3rd quarter results @ Glance - ( Income Statement & Balance Sheet – Group)

Revenue For the quarter - Rs.653,195,579 – 129% increased

Revenue For 9 months - Rs.1,553,568,289 – 45% increased

Operational Profit For the quarter - Rs.179,910,318 – 520% increased

Operational Profit For 9 months - Rs.242,379,741 – 89% increased

Net Profit For the quarter - Rs.126,059,112 – 768% increased

Net Profit For 9 months - Rs.110,218,497 – 641% increased

EPS For the quarter (Before the Right issue) - Rs.22.05 whereas 2009- Rs.2.54

EPS For 9months (Before the Right issue) - Rs.19.28 whereas 2009 – Rs.2.60

Net assets Per Share (Before the Right issue) – Rs.47.18 ---- 2009 Rs. 43.35

The Financial highlights after the rights issue based on 3rd Quarter Results…


The Right Issue

Right issue 19:1 @ 33

Total Share issued on Rights ----------------- 108,639,283

Total Proceeds From Rights ----------------- Rs. 3,585,096,339.00

NAV/ Share After Rights

Equity ----------------------------------------------- Rs.479,584,783

Total Proceeds From Rights ----------------- Rs. 3,585,096,339

Total -----------------------------------------------Rs. 4,064,681,122

Total No of Shares After Rights-------------- 114,357,140

NAV Per Share ---------- Rs.35.54 ( Business Value Per Share)

Total Attributable Value to Equity Shareholder ------------ Rs. 269,778,996

Total Proceeds From Rights ----------------- --------------------Rs. 3,585,096,339

Total ----------------------------------------------- -------------------- Rs. 3,854,875,335

Total No of Shares After Rights----------------------------------- 114,357,140

NAV Per Share ---------- Rs. 33.70 ( Value /Share to Equity Shareholder)

EPS / Share After Rights

Total Group Earnings --------- ---------------------------------- Rs.110,218,497

Total No of Shares After Rights----------------------------------- 114,357,140

EPS/ Share ------------- Rs. .96

Total borrowing of Group ( As per Dec 2010)


Interest Bearing loans---------------------------------- Rs. 849,770,754

Non Interest Bearing loans--------------------------- Rs. 3,597,928,709 ( this may be received from related company to acquire the

company , stated in the propose of right issue)

Overdraft ------------------------------------------------ Rs. 311,689,918

Total Borrowings --------------------------------------- Rs. 4,759,389,381

Total Interest Expenses.-----------------------------------Rs 112,228,527

The Purpose of right Issue

The purpose for which the proceeds of the issue are to be utilized
1. To capitalize loans received for the acquisition of companies previously
2. To acquire Northern Power Company (Pvt) Ltd
3. To Finance Working Capital of the company

http://www.cse.lk/cmt/uploadAnnounceFiles/9961288151500_444.pdf

The proceeds of this Rights Issue will be used for the 100% purchase of Northern Power Company Private Limited, a 30MW HFO power plant located in Chunnakam, Jaffna, as the largest provider of electricity to the Jaffna Peninsula. The balance of the Rights Issue proceeds will be used for capital expenditure and working capital requirements of the MTD Group of Companies.

http://srilankastockpicks.blogspot.com/2010/12/mtd-walkers-plc-announce-rights-issue.html

We do not know about the numbers of the loans received for the acquisition of companies previously and the amount required to acquire Northern Power Company (Pvt) Ltd. However I would say major part of the loan will be settled from the right issue. Hence Finance cost amounts Rs.67Mn will be reduced and this would strengthen the bottom line. This scenario will highlight only on 4th quarter results.

Let us workout the utilization of right issue

Total Proceeds From Rights ----------------- ----------Rs. 3,585,096,339

Interest Bearing loans---------------------------------- Rs. 849,770,754

Non Interest Bearing loans--------------------------- Rs. 3,597,928,709 ( this may be received from related company to acquire the company , stated in the propose of right issue)

Overdraft ------------------------------------------------ Rs. 311,689,918

Total Borrowings --------------------------------------- Rs. 4,759,389,381

We do not the company preference to settle the loan facility. As stated in the purposes of right issue announcement, part of non interest bearing loan will be settled from the right issue proceeds and part of interest bearing loan also will be settled…

We can see only the restructured and sound balance sheet from the 4th quarter by reflecting above numbers. Further income generate from new projects (mentioned in previous) also will contribute to strengthen the company performance and value…


Keep on Investing in growth sectors……


Happy Trading...


Disclaimer - This is not a buy or sell recommendation and also no promotion this shares, I have a enough qty in my portfolio.

trader911 wrote:dipped to 60 today are we looking at the resistant level, so a lot of panic selling today...

Best Buy to me for this at bargaining price.

Happy Trading

i bought kapi at 77.00
what will happen to KAPI?

i ALSO BOUGHT @ 72.
I THINK NEAR FUTURE IT WILL GO UP.
UNTIL WE WAIT & SEE.......

THIS IS CSE..........................

Look its the bottom to me.. ok this is CSE, I'm not suppose to say this..

Let us see the Financial as of 31.03.2011, this will give us the clear picture after the right issue, and how the company utilized the right issue proceeds.

Revenue is moved up Rs.1.9bn to 2.7bn out of that new investment in power generation contributed 333Mn, further all the business segments shows the growth.

To me gross profit is attractive is about 20% and reporting 510Mn. Other operational income 171Mn mainly contributed from the power generation ( New Investment ) amounts Rs.133Mn, Will see the exact nature of the income once annual report is released.

Yes we can argue the bottom line is inflated mainly due to the other operational income, However if u compare the balance sheet with previous quarter, the goodwill on acquisition is 506Mn as at 31.12.2010 and this has been written-off by 150Mn in the year end and reported to Rs.358Mn. Hence this written off eroded operational profit, So on conclusion Group earned approximately 80Mn operational profit when comparing with previous huge loss. This is good sign for the group.

And good sign is the group gearing status is well improved by settling the non interest bearing loan (may from the parent company for the investment activities) by 3Bn from the right issue proceeds. Further short term borrowing ( Overdraft) brought down 311Mn to 17Mn. This would improve the future profitability by reducing the finance cost.

Further the group assets base is increased comparing with previous year due to companies serious of new investment.

Interesting factor is some new investors are in the list of shareholding ( Bank of Ceylon, Seylan Bank and Standard Chartered Bank Singapore ) and other interesting factors is parent company did not dilute its holding.

To me this is very attractive to for the long term investment as the group has good project with government and also the new investment in Northern Power generation plant and recent acquisition Colombo Engineering service (marine engineering business) will boost the performance and the value of the business.

Disclaimer. This is not buy or sell recommendation and No promoting post

GJ wrote:i bought kapi at 77.00
what will happen to KAPI?

I think u should buy more and get to a lower average price...2-3 months ago investers were very interested in KAPI, but now it is bit resistance.

trader911 wrote:dipped to 60 today are we looking at the resistant level, so a lot of panic selling today...

This is another typical example of extremely high expectations and the reality.

People bought this share way way ahead of the game...
They may have to sit in the back seat few more quarters (for the sake of these small investors I hope KAPI will bounce back soon)

UKboy wrote:This is another typical example of extremely high expectations and the reality.

People bought this share way way ahead of the game...
They may have to sit in the back seat few more quarters (for the sake of these small investors I hope KAPI will bounce back soon)

UKboy, Agreed--you are correct

seyon wrote:
Keep on Investing in growth sectors……

Typical Guerilla Marketting Strategy

Numbers never lie, but people with vested interest do!!!

4th Quarter Financials:
Loss : (- 22,726,482)
EPS: (- 0.37)

Last Four Quarters (Trailing) Financials:
NAV: 33.77
Profit: 87,492,014
EPS: 1.44

Note: There is an other income of 171,587,507
If you take this other income, the EPS from their Core buisness would be Zero, if not Minus !!!

TelesHope wrote:Numbers never lie, but people with vested interest do!!!

4th Quarter Financials:
Loss : (- 22,726,482)
EPS: (- 0.37)

Last Four Quarters (Trailing) Financials:
NAV: 33.77
Profit: 87,492,014
EPS: 1.44

Note: There is an other income of 171,587,507
If you take this other income, the EPS from their Core buisness would be Zero, if not Minus !!!

Welcome dear friend after long time, Whenever u see my post related to KAPI only, You know this forum, just jumped and say something blindly and then vanished. I think out of your 75 posts in this forum, 90% comments to my post. I am very proud of myself that my post is very impressed than the other posts

My dear Friend take some time and do good analysis rather analyzing blindly..

Yes You can argue the bottom line is inflated mainly due to the other operational income, However if u compare the balance sheet with previous quarter, the goodwill on acquisition is 506Mn as at 31.12.2010 and this has been written-off by 150Mn in the year end and reported to Rs.358Mn. Hence this written off eroded operational profit, So on conclusion Group earned approximately 80Mn operational profit when comparing with previous huge loss.

http://print.dailymirror.lk/business/127-local/45918-mtd-walkers-impresses-at-lse.html

MTD Walkers impresses at LSE
SATURDAY, 04 JUNE 2011 00:00
Representing Sri Lanka Capital Market Day, MTD Walkers was the only infrastructure company amongst 10 other blue chip companies selected to make a presentation at this prestigious event.

Addressing the audience, Viraj De Silva, Chief Financial Officer, MTD Walkers said, “Following the end of the three-decade long war, Sri Lanka is in ‘build mode’ with US$7bn projects in the pipeline for the company in 2011-2015.” These projects, he pointed out, were all backed by the government and is a reflection of the country’s economic resurgence.

In the construction and piling sector, MTD Walkers is a top-ranked, only listed C-1 grade contractor to undertake projects for highways, bridges, ports and harbours, irrigation and water supply. The company is backed by a multi-national construction company with prior experience in large scale infrastructure development in an emerging economy.

MTD Walkers subsidiary, Northern Power plant is one of two IPPs operating in the North. With parts of the recently liberated North operating with less than 15% in electricity distribution, Northern Power is in the process of expanding its capacity, from 30mw to 50mw through 2021, implying an Internal Return on Revenue (IRR) of 25%.

With a full spectrum of engineering services, MTD Walkers recently signed a joint venture contract with China Shipbuilding to operate a floating dock at a cost of US$100mn in the new Hambantota port in Southern Sri Lanka. The company is also a principle sub-contractor to upgrade 200 telecommunication towers in Sri Lanka with a further 800 towers expected to be upgraded in the future.

Envisaging an exciting future, De Silva highlighted a JV with China-listed Anhui to build a 75km highway in Southern Sri Lanka with an expected revenue of US$250mn. The Company is also studying a proposal to construct Sri Lanka’s first toll road (US$850mn Colombo-Kandy expressway) as well as piling related projects to construct low cost housing for 40,000 families. Additionally, a US$200mn worth of water treatment project is under consideration.

De Silva further said that with the government’s fast-tracked infrastructure development programmes including Airports, Ports, Highways, Land Reclamation within the City of Colombo, Water and Sanitation, Railways, as well as tourism related, mixed development and power generation projects encapsulates the growth of the country and the vast opportunities available for MTD Walkers.

Gaja wrote:http://print.dailymirror.lk/business/127-local/45918-mtd-walkers-impresses-at-lse.html

MTD Walkers impresses at LSE
SATURDAY, 04 JUNE 2011 00:00
Representing Sri Lanka Capital Market Day, MTD Walkers was the only infrastructure company amongst 10 other blue chip companies selected to make a presentation at this prestigious event.

Addressing the audience, Viraj De Silva, Chief Financial Officer, MTD Walkers said, “Following the end of the three-decade long war, Sri Lanka is in ‘build mode’ with US$7bn projects in the pipeline for the company in 2011-2015.” These projects, he pointed out, were all backed by the government and is a reflection of the country’s economic resurgence.

In the construction and piling sector, MTD Walkers is a top-ranked, only listed C-1 grade contractor to undertake projects for highways, bridges, ports and harbours, irrigation and water supply. The company is backed by a multi-national construction company with prior experience in large scale infrastructure development in an emerging economy.

MTD Walkers subsidiary, Northern Power plant is one of two IPPs operating in the North. With parts of the recently liberated North operating with less than 15% in electricity distribution, Northern Power is in the process of expanding its capacity, from 30mw to 50mw through 2021, implying an Internal Return on Revenue (IRR) of 25%.

With a full spectrum of engineering services, MTD Walkers recently signed a joint venture contract with China Shipbuilding to operate a floating dock at a cost of US$100mn in the new Hambantota port in Southern Sri Lanka. The company is also a principle sub-contractor to upgrade 200 telecommunication towers in Sri Lanka with a further 800 towers expected to be upgraded in the future.

Envisaging an exciting future, De Silva highlighted a JV with China-listed Anhui to build a 75km highway in Southern Sri Lanka with an expected revenue of US$250mn. The Company is also studying a proposal to construct Sri Lanka’s first toll road (US$850mn Colombo-Kandy expressway) as well as piling related projects to construct low cost housing for 40,000 families. Additionally, a US$200mn worth of water treatment project is under consideration.

De Silva further said that with the government’s fast-tracked infrastructure development programmes including Airports, Ports, Highways, Land Reclamation within the City of Colombo, Water and Sanitation, Railways, as well as tourism related, mixed development and power generation projects encapsulates the growth of the country and the vast opportunities available for MTD Walkers.

was about post this,,,this is a good mediam term stock, want be surprise if it runs on monday for this article..

yea maybe..

Wow; When the KAPI is become as blueship company, we didn't get any announcement from CSE. On what ground it is considered bluship company. Maybe wrong information.

Nice to hear company has plenty of new projects in its hand, so we can expect good performance in future

After seeing the recent article in Daily Mirror on 04 June 2011, I looked in to the financials of MTD Walker. Meantime something caught my attention from Seyons post.


The Purpose of right Issue

The purpose for which the proceeds of the issue are to be utilized
1. To capitalize loans received for the acquisition of companies previously
2. To acquire Northern Power Company (Pvt) Ltd
3. To Finance Working Capital of the company

When I went through the last year annual report I noted in page 33 that the group liabilities included amounts due to its parent company MTD capital BHD. Rs.845 Mn and further stated that this is not expected to be repaid in foreseeable future. This amount has now come down to 130 mn in the latest financial year.This means Company utilised portion of its IPO proceeds to pay back the Malaysian Parent Company. Only good thing about this is Company wont lose from Exchange losses when converting the borrowings in future. Also note that these loans are non interest bearing loans

Mean while Last year Company ceased 02 of its subsidiaries operations due to its ability to continue as going concern entities. These Companies were supported financially by Parent Company

Though the Revenue has increaed by 39% compared to last year GP increased by only 7%. I expect this trend to follow in future as well. Because KAPI undertakes capital intensive projects. Whatever new contracts it secures, equally it will have to spend on Capital intensive Investments as well. Also last 3 quarters GP% are 15%,18%,16% for Q2,Q3and Q4. which shows it is comming down compared to last year average 25%

The article says "USD 7 bn worth of projects in pipe line for the Company" in 2011-2015. I dont know whether it means total goernment project or the projetcs awarded to MTD Walker. If Company has secured USD 7Bn worth of projects How are they going to finance it? it nearly worth 700bn in LKR value ,140bn on avg per year.

The Companys DE ratio was 1489% last year and has come down to 83.76% after the IPO which is still high. I doubt that the Company will go for further rights issue in future to finance these projetcs

When identifying a future value stock its true that it has to have a durable competitve advantage. those companies will have a low DE ratio and low depreciation % of GP.

Other members in the forum may have different views and see things in different angle. Such opinion will help me to learn more and will benefit the other members in the forum as well

Please share your opinion

Good Luck

Hawk Eye wrote:After seeing the recent article in Daily Mirror on 04 June 2011, I looked in to the financials of MTD Walker. Meantime something caught my attention from Seyons post.


The Purpose of right Issue

The purpose for which the proceeds of the issue are to be utilized
1. To capitalize loans received for the acquisition of companies previously
2. To acquire Northern Power Company (Pvt) Ltd
3. To Finance Working Capital of the company

When I went through the last year annual report I noted in page 33 that the group liabilities included amounts due to its parent company MTD capital BHD. Rs.845 Mn and further stated that this is not expected to be repaid in foreseeable future. This amount has now come down to 130 mn in the latest financial year.This means Company utilised portion of its IPO proceeds to pay back the Malaysian Parent Company. Only good thing about this is Company wont lose from Exchange losses when converting the borrowings in future. Also note that these loans are non interest bearing loans

Mean while Last year Company ceased 02 of its subsidiaries operations due to its ability to continue as going concern entities. These Companies were supported financially by Parent Company

Though the Revenue has increaed by 39% compared to last year GP increased by only 7%. I expect this trend to follow in future as well. Because KAPI undertakes capital intensive projects. Whatever new contracts it secures, equally it will have to spend on Capital intensive Investments as well. Also last 3 quarters GP% are 15%,18%,16% for Q2,Q3and Q4. which shows it is comming down compared to last year average 25%

The article says "USD 7 bn worth of projects in pipe line for the Company" in 2011-2015. I dont know whether it means total goernment project or the projetcs awarded to MTD Walker. If Company has secured USD 7Bn worth of projects How are they going to finance it? it nearly worth 700bn in LKR value ,140bn on avg per year.

The Companys DE ratio was 1489% last year and has come down to 83.76% after the IPO which is still high. I doubt that the Company will go for further rights issue in future to finance these projetcs

When identifying a future value stock its true that it has to have a durable competitve advantage. those companies will have a low DE ratio and low depreciation % of GP.

Other members in the forum may have different views and see things in different angle. Such opinion will help me to learn more and will benefit the other members in the forum as well

Please share your opinion

Good Luck

Very good insight from another angle. + rep.

Good input Hawk Eye,

I also noticed about the depreciation of GP. one thing you have to consider the revenue recognition of the contracts is merely based on the % of completion

Picked from accounting policies

(c) Construction Income
Revenue is recognized by reference to the stage of completion. Stage of completion is measured by reference to the work certified by qualified engineers.

However the cost incurred will not line with stage of completion, sometime in initial stage particular contract will incur more cost. Hence once the contract project is completed only u will be able to figure abou the GP margin ( This is the industry practice)

Further this year KAPI has received some new contracts, so there are in the initial stage of completion. this may be the reason for the depreciation of GP.