KEGALLE PLANTATIONS PLC (KGAL.N0000)

What do you think of KGAL ?

This share has come down from all time of LKR285 in February 2011 to LKR90 this week. The decline in share price is partly due to the bearish trend of the market and partly due to Industry/company Specific.


The attached file to have a discussion and not a promotional material.

Please share your thoughts & comments.

File attached here=====> http://research.srilankaequity.com/t213-kegalle-plantations

Where can I upload a file size of above 1MB??

price came down due to margin pressure.
what is the current pe ratio (90 rupees)

lokuayya wrote:price came down due to margin pressure.
what is the current pe ratio (90 rupees)

about 4-5

kama wrote:

lokuayya wrote:price came down due to margin pressure.
what is the current pe ratio (90 rupees)

about 4-5

Please see the details below for the Plantation Sector from Capital Trust.



From Bloomberg

greedy wrote:Where can I upload a file size of above 1MB??

u can try mediafire.com.. then publish the link here.. or zip the word or excel file and attach it in research..

lokuayya wrote:price came down due to margin pressure.
what is the current pe ratio (90 rupees)

it started because of the rubber demand decrease and price coming down. Also the wage hike had a big impact.

yes ,price drop mainly due to rubber price and other political things,
but last few days sharp drop due to force selling and ,margin pressure

smallville wrote:

greedy wrote:Where can I upload a file size of above 1MB??

u can try mediafire.com.. then publish the link here.. or zip the word or excel file and attach it in research..

I had attached there but later removed as that section intended for research reports from broker firms.

greedy wrote:

smallville wrote:

greedy wrote:Where can I upload a file size of above 1MB??

u can try mediafire.com.. then publish the link here.. or zip the word or excel file and attach it in research..

I had attached there but later removed as that section intended for research reports from broker firms.

uploaded to research section =====> http://research.srilankaequity.com/t213-kegalle-plantations

Also note that the parent company has been collecting this for a long time. They have more than 70% now (as i remember)
Now they started collecting NAMU as well

greedy wrote:

greedy wrote:

smallville wrote:

greedy wrote:Where can I upload a file size of above 1MB??

u can try mediafire.com.. then publish the link here.. or zip the word or excel file and attach it in research..

I had attached there but later removed as that section intended for research reports from broker firms.

uploaded to research section =====> http://research.srilankaequity.com/t213-kegalle-plantations

Thanks greedy for the very good analysis. My guess is we may have to wait and see next couple of quarters performance as the rubber price drops continuously. if the company on track in producing the consistant results ( We can not expect when the rubber price drops) this price level is very much attractive. Next important factor is current mkt trend, We are not sure about mkt behavior, if the mkt settle in between 5000 - 5500, We may be able to buy shares even less than the current price.

Awesome work greedy!
really appreciate sharing this. so much we need to know abt KGAL in one simple presentation.

One thing i'm surprised is that having a good EPS over the quarters and a good cash position, it has not paid considerable dividend, especially when the parent company has around 70% of the stake.
Maybe they want to collect as much as possible and have a good payout?

We see a small movement in plantation stocks now. I guess the reason behind this as increase in Rubber & Tea prices in rupee terms due to rupee depreciation. See attached images below;

The above reply strictly a buy/sell/hold recommendation.

greedy wrote:We see a small movement in plantation stocks now. I guess the reason behind this as increase in Rubber & Tea prices in rupee terms due to rupee depreciation. See attached images below;

Many due to currency devaluing I guess. But from early Dec/Jan there is a slighly improvement in rubber world price also in Feb/March.

well as I suspected now they pay a massive dividend after parent collected a lot.

XD date 29th,any idea about tomorrow and Wednesday?

npp wrote:well as I suspected now they pay a massive dividend after parent collected a lot.

Correct.. Unlike other times this div is huge.. And this time parent has a massive amt of shares

these two dividends should considerably reflect in RICH's dividend also I'm guessing. greedy?

npp wrote:these two dividends should considerably reflect in RICH's dividend also I'm guessing. greedy?

or its done with the purpose of showing a certain level of profitability?

npp wrote:these two dividends should considerably reflect in RICH's dividend also I'm guessing. greedy?

RICH is a share I have not looked at much in the past & never Invested too .. I guess .

RICH recent Dividend payments ;

Financial Year 2010/2011 Interim 0.20 +Final 0.10) 0.30 per share in total LKR 581mn (1,938mn shares*.30)
Financial Year 2011/2012 (Interim) 0.40 per share in total LKR775mn (1,938mn shares*.40)

I looked at RICH accounts. RICH's cash position is not that promising to pay dividends. The company not the group should have adequate cash to pay dividends. If you look at the latest accounts of RICH for the Q/E 31/12/2011, RICH at the company level has a net short term borrowings of LKR1,721mn.....

Short term borrowings (possibly ODs & other Borrowings) LKR 1,799mn
Cash at bank and in hand LKR 78mn
Net short term Borrowings LKR 1,721mn


Unless they get more dividends form subsidiary companies they wont be able to pay bigger dividends like what they paid in interim (40 cents/share).

The dividend payments coming from KGAL & NAMU can boost company level cash balances a bit;

KGAL LKR7.50 per share*17.5mn shares ======> LKR131mn
NAMU LKR4.50 per share *14.5mn shares =====> LKR66mn

Together LKR197mn dividends to RPC Planation management services limited which in turn may pay dividends to RICH. But these dividends are 10cents per share of RICH (LKR197mn/1,938mn shares of RICH).

My guess is that these dividends will not have big boost to RICH cash position to pay dividends. However, one has to consider dividends from other subsidiaries of RICH as well..

greedy wrote:

npp wrote:these two dividends should considerably reflect in RICH's dividend also I'm guessing. greedy?

RICH is a share I have not looked at much in the past & never Invested too .. I guess .

RICH recent Dividend payments ;

Financial Year 2010/2011 Interim 0.20 +Final 0.10) 0.30 per share in total LKR 581mn (1,938mn shares*.30)
Financial Year 2011/2012 (Interim) 0.40 per share in total LKR775mn (1,938mn shares*.40)

I looked at RICH accounts. RICH's cash position is not that promising to pay dividends. The company not the group should have adequate cash to pay dividends. If you look at the latest accounts of RICH for the Q/E 31/12/2011, RICH at the company level has a net short term borrowings of LKR1,721mn.....

Short term borrowings (possibly ODs & other Borrowings) LKR 1,799mn
Cash at bank and in hand LKR 78mn
Net short term Borrowings LKR 1,721mn


Unless they get more dividends form subsidiary companies they wont be able to pay bigger dividends like what they paid in interim (40 cents/share).

The dividend payments coming from KGAL & NAMU can boost company level cash balances a bit;

KGAL LKR7.50 per share*17.5mn shares ======> LKR131mn
NAMU LKR4.50 per share *14.5mn shares =====> LKR66mn

Together LKR197mn dividends to RPC Planation management services limited which in turn may pay dividends to RICH. But these dividends are 10cents per share of RICH (LKR197mn/1,938mn shares of RICH).

My guess is that these dividends will not have big boost to RICH cash position to pay dividends. However, one has to consider dividends from other subsidiaries of RICH as well..

you may have a point, but,
the recent 0.40/- dividend was anyway paid out of a non-recurrent gain.
but according to few historical reports, RICH has always maintained that amount of borrowings (group & company). Yet it paid the 0.10/- final dividend in May 2011 (0.20/- interim in Nov 2010)
this was when KGAL paid 2.50/- interim and 0.50/- final later on and NAMU paid 1/- interim and 0.70/- final later on.

*my points here are only based on the dividends paid by KGAL and NAMU this year compared to last. I have not taken the time to research any other points at this time.

npp wrote:

greedy wrote:

npp wrote:these two dividends should considerably reflect in RICH's dividend also I'm guessing. greedy?

RICH is a share I have not looked at much in the past & never Invested too .. I guess .

RICH recent Dividend payments ;

Financial Year 2010/2011 Interim 0.20 +Final 0.10) 0.30 per share in total LKR 581mn (1,938mn shares*.30)
Financial Year 2011/2012 (Interim) 0.40 per share in total LKR775mn (1,938mn shares*.40)

I looked at RICH accounts. RICH's cash position is not that promising to pay dividends. The company not the group should have adequate cash to pay dividends. If you look at the latest accounts of RICH for the Q/E 31/12/2011, RICH at the company level has a net short term borrowings of LKR1,721mn.....

Short term borrowings (possibly ODs & other Borrowings) LKR 1,799mn
Cash at bank and in hand LKR 78mn
Net short term Borrowings LKR 1,721mn


Unless they get more dividends form subsidiary companies they wont be able to pay bigger dividends like what they paid in interim (40 cents/share).

The dividend payments coming from KGAL & NAMU can boost company level cash balances a bit;

KGAL LKR7.50 per share*17.5mn shares ======> LKR131mn
NAMU LKR4.50 per share *14.5mn shares =====> LKR66mn

Together LKR197mn dividends to RPC Planation management services limited which in turn may pay dividends to RICH. But these dividends are 10cents per share of RICH (LKR197mn/1,938mn shares of RICH).

My guess is that these dividends will not have big boost to RICH cash position to pay dividends. However, one has to consider dividends from other subsidiaries of RICH as well..

you may have a point, but,
the recent 0.40/- dividend was anyway paid out of a non-recurrent gain.
but according to few historical reports, RICH has always maintained that amount of borrowings (group & company). Yet it paid the 0.10/- final dividend in May 2011 (0.20/- interim in Nov 2010)
this was when KGAL paid 2.50/- interim and 0.50/- final later on and NAMU paid 1/- interim and 0.70/- final later on.

*my points here are only based on the dividends paid by KGAL and NAMU this year compared to last. I have not taken the time to research any other points at this time.

You too have a point I guess . But what is the motive to sell Asian Alliance Insurance? I guess RICH was under pressure because of less dividend payments in the past. The motive for sale could be a payment of dividend.. (I'm not 100% sure)

See the dividend history

FY2011/2012========> 0.40
FY2010/2011========> 0.30
FY2009/2010========> 1.00 (before Subdivision of shares 1:15)
FY2008/2009========> Nil
FY2007/2008========> Nil

I guess a final dividend of 10 to 20 cents maximum .

greedy wrote:


But what is the motive to sell Asian Alliance Insurance?

RICH has started their own insurance business. So they may have found no need to keep another as they can dispose AAIC with capital gain.