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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » POULTY INDUSTRY DEVELOPMENT & IMPACT ON #CIC

POULTY INDUSTRY DEVELOPMENT & IMPACT ON #CIC

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ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Hi Guys,

I am quite bullish with Chicken due to following. It is purely based on positive outlook of the poultry industry.

These counter have a huge potential due to;

1. Low supply of chicks in the local and international markets
2. Lowest ever grain prices
3. Increased demand for chicken domestically due tourism/increased consumer disposable income and internationally.
4. Projected escalating demand for Chicken due Christmas(December) and  New year(April) seasons.


It is strongly recommended this trend up to next June on wards. Who ever patiently collected are winners with higher gains and we have already witnessed currently too.


Target Prices of Counters in June 2016 


1. BFL    - Rs 360/-
2 TAFL   - Rs 190/-
3. GRAN - Rs 150/-

4. CIC.N - Rs 150/-
5. CIC.X - Rs 120/-



Further it is notable that even most of the above counters appreciated and still strong buying support is witness at these levels. However CIC.N and CIC.X have not witnessed its move from the blocks.

They have recorded a growth of 94% QoQ growth during 1Q 2015/16 FY. The above results were derived by an improved performance across most sectors with in the Group. The Agriculture and Livestock sector had an operating profit of Rs 473 million in the first quarter of 2015/16, an increase of 54% over the corresponding period last year.The increase in profitability is attributed to the performance of the agribusiness companies in the Group, including the dairy sector and CIC Feeds which showed a notable improvement from the previous year. 50% - 60% of the CIC group in concentrated on poultry business.

Many have sought after top 3 of the above list and CIC has a very good potential for all of us to gain at least 35% return if we enter at current price levels.


However all counters falls under the poultry industry are strongly recommended to buy considering this strong current financial earnings and very positive industry prospects to deliver significant profits with in next 2 years.



Happy Investments

BvsB

BvsB
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks Onthemoney...

Good Analysis...

Keep it up.. Smile

ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks BvsB.

I am enjoying times with SLEF and I have been following the forum. Overall its been pretty much handy if analysed properly except for some crap stuff.

Credit for Admin.

Happy Investments

ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Hi Guys,

It is the accumulation phase for CIC it seems. The order book suggest a picture in that nature. Similarly other poultry stocks are also been collected in phases. Specially BFL and GRAN.

However CIC is a counter not appreciated in relation to recent positive outlook of the industry. The quarterly reports of CIC will definitely surprise the investors for sure I guess. It is not only because of the poultry factor. Obviously poultry sector would contribute 50%-60% of the profits. However depreciation of currency effect as well as growth in agri business will contribute significantly to improve the bottom line of CIC.

Therefore a rational investor could invest and without risk in CIC since it has a very low chance of leading to a declining trend in market value. Even if falls it will rise faster due to low selling pressure in a bullish sentiment.

Happy Investments

EPS

EPS
Expert
Expert
ON THE MONEY - I LIKE YOUR TARGETS.

ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Hi EPS,
 
 
Higher levels of production are associated with the spread of intensive systems in which food conversion ratios are high.
 
 
Poultry production has increased its share of Sri Lanka's total livestock production – growing much faster than pork production.
Growth has been accompanied by great changes in the structure of production. The poultry sector is no longer dominated by hundreds of millions of smallholders keeping birds as a sideline activity. Many small farmers have given up production, especially in the economically more developed entities have established in the business.
 
 
Drivers of change in the poultry sector include, on the demand side, demographic changes – rising population and increased urbanization; income growth both in urban and rural areas; developments in transportation, the processing industry and retailing; rising per capita consumption; and the requirements of export markets. In rural areas, increased incomes from non-farm activities and better marketing infrastructure have reduced need for smallholders to keep poultry as a cash-generating sideline or for home consumption.
 
 
On the supply side, drivers of change include technological innovation and its diffusion – feed processing has played a decisive role; and the provision of better public services, such as technical innovation, extension, disease prevention and control, quality standards and information.
For the future, it is expected that demand will continue to rise and that the intensification process will continue.

Happy Investments

Teller

Teller
Moderator
Moderator
But a new census says 8-11% sri lankans are going away from meat consumption. This will be a real threat for the industry in coming years. I personally know there are lot of people who became totally vegetarian at the moment. I can see a real industry risk at the moment in medium to long term.


_________________




Teller said is said..

kumarweerarathne

kumarweerarathne
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
He he what a prediction buhh ha ga ... But it want be barrier to reach poultry on higher... And future vegetable market also at risk due to heavy use of chemicals.. Very Happy poor bimputh hikizz

BvsB

BvsB
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
All the factors are favorable for Poultry industry now....
Research says India also planning to double their Poultry  production in 2015-2016...

No panic at the moment... cheers

Teller

Teller
Moderator
Moderator
@kumar, no need to panic, this can happen medium to.long term. Even its a prediction. Im holding these shares. No doubt at all. But after i came to sri lanka i attended one profeamme which says people away from meet consumption due to many factors.
Im.not sure exactly this can happen or not.
And dont say like that poor Bimputh too. I am holding 3% of BLI from total portfolio. Personally i dont want to promote that. But i promote this behalf of the members. I know BLI can touch 200 levels because of one reason. Thats unique.... i have earned enough from the market so no need much money....


_________________




Teller said is said..

ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Teller wrote:But a new census says 8-11% sri lankans are going away from meat consumption.  This will be a real threat for the industry in coming years. I personally know there are lot of people who became totally vegetarian at the moment. I can see a real industry risk at the moment in medium to long term.

Hi Teller,

Thanks for your comment on possible adverse impacts on the industry. Can u quote your reference on latest census which says 8%-11% going away from meat consumption? what are the reasons for them to move away?  Does your source provide a trend analysis for the past 5 years?

I think more analysis needed in this case for us to consider this as a possible threat in to the industry! More valuable comments are all welcome and it would be effective subject to those information.

We have to analyse the future of the industry and its important. The size and dynamics of the feed industries in different countries reflects the significant level of growth in demand by consumers for poultry products.. Regional differences indicate the continuation of a strong demand for poultry feed in Asia, while the manufacturing output from European countries remains fairly static, reflecting industry consolidation. Various “drivers of change” will exert increasing influence in the future on the practical feeding of poultry, whether kept for broiler meat or egg production. For example, feed costs as a proportion of the variable costs for producers of poultry products will remain high, in particular, the protein sources included in diet formulations.

Anyhow in the mean time BFL has recorded an impressive bottom line as we all anticipated. I think I must revise the target to Rs 400+ value in time medium term. I believe recommendation also should be changed as strongest recommendations specially for #BFL and #CIC since minimum return could exceed 35%. However it is subject to volatility of individual counter performance and how it has appreciated during the last 6 months



Happy Investments

ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Hi Guys,

2Q16 Earnings Expectation of "CIC" by SC SECURITIES RESEARCH DIVISION


We expect CIC to continue with the operational performance reported in 1Q16 in to 2Q16 on the back of the following catalysts,

New developments in the Agricultural and Livestock to boost revenues.

Agriculture and Livestock Industry segment of the company, which has a revenue contribution more than 60.0% for the group revenue, demonstrated a positive growth of 5.0% during FY2015. Further, during 1Q16, the segment recorded a yoy growth of 24.0%. The growth was supported by investments in research and development of technology. We envisage the sustainable technology investments in this sector by CIC, would continue to ensure a stabilized top line for 2Q16 as well, from improved demand conditions for agri products including dairy and animal feed.

Growing sales from Consumer and Pharmaceutical segment to sustain during 2Q16

Also, we expect the group’s next highest revenue contributor, The Consumer and Pharmaceutical segment, to post solid results during 2Q16, mainly due to the overall increase in purchasing power and wage hikes in the country. Revenue of its Pharmaceutical business increased by 64% and Link Natural, which is the second highest contributor to segmental revenue increased its revenue contribution by 15.0%, during FY15. We expect the same growth momentum to prevail, during 2Q16.

Increase in disposable income levels to further facilitate revenues and profits

We trust that consumer confidence has increased during 2Q16 mainly due to current people centric budget proposals, growth in per capita income and the increase in disposable income levels. Hence we project overall solid demand for agri, consumer and industrial products of CIC for 2Q16 cf. with 2Q15. Further, as many constructions in the country have reached the finishing stages, we envisage that CIC has witnessed a steady demand for its recognized brands such as Dulux, Pentalite, Glidden, CISCO, and Nalco during the quarter ended.

Happy Investments

ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Teller wrote:But a new census says 8-11% sri lankans are going away from meat consumption.  This will be a real threat for the industry in coming years. I personally know there are lot of people who became totally vegetarian at the moment. I can see a real industry risk at the moment in medium to long term.

Hi Teller,

Were u able to collect the information that is required for further analysis on your comments made?


1. Can u quote your reference on latest census which says 8%-11% going away from meat 
    consumption? 
2. What are the reasons for them to move away?
3. Does your source provide a trend analysis for the past 5 years?


Anyway #CIC.N and CIC.X seems to be on accumulation stage and the order book clearly indicates the future direction of the company. Further in assessing the nature of buying pattern, it confirms as well. Apart from that all other poultry counters are on the consolidation phase and dragged down with heavy selling pressure. It is due to many investors are booking profits after reports. Almost all counters appreciated over 100% within the period and many have positions at very low prices in #BFL, #GRAN, # TAFL. 


It is wise to invest in value counters whom would become winners in the coming months in CSE than burning fingers with highly speculative counters which drives in current sentiments. We all must back our investments with proper valuations. May be the return would take time compared to speculative stocks. However in worse times such valuations would always stand still and support your decision. Further it always carries away the fear of loss of money in investing CSE in worse case. I have seen many members in SLEF commenting on such a basis when hard times arrive.


Happy Investments.

VALUEPICK

VALUEPICK
Expert
Expert
Globally poultry related stocks have outperform others stocks during last seven years on the long term basis as well.
 
Eg:
 
http://dcprogressive.org/2015/10/12/tyson-foods-hits-new-1-year-high-following-analyst-upgrade-tsn/
 
Tyson Foods Hits New 1-Year High Following Analyst Upgrade (TSN)
 
http://www.google.com/finance?cid=660198
 
Cal-Maine Foods Inc

(NASDAQ:CALM

ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks VP,

Globally people undergo a food crisis over the years. its not only for meat.

However as Teller quoted we need to assess the threats to the industry domestically. As a valued personal in SLEF, if u find such information why don't u put some inputs for the benefit for all members.

The current sentiments overlooks a very positive opportunities for all poultry related stocks. specially counters which have not picked up could have better chance for not falling back effect. Overall its the consolidation phase for all stocks.

Happy Investments

Ok One


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@ONTHEMONEY wrote:Thanks VP,

Globally people undergo a food crisis over the years. its not only for meat.

However as Teller quoted we need to assess the threats to the industry domestically. As a valued personal in SLEF, if u find such information why don't u put some inputs for the benefit for all members.

The current sentiments overlooks a very positive opportunities for all poultry related stocks. specially counters which have not picked up could have better chance for not falling back effect. Overall its the consolidation phase for all stocks.

Happy Investments
Very Happy Very Happy Very Happy
Thanks expert ......good job ..... I love you I love you I love you

peacockman


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@ONTHEMONEY wrote:Hi Guys,

I am quite bullish with Chicken due to following. It is purely based on positive outlook of the poultry industry.

These counter have a huge potential due to;

1. Low supply of chicks in the local and international markets
2. Lowest ever grain prices
3. Increased demand for chicken domestically due tourism/increased consumer disposable income and internationally.
4. Projected escalating demand for Chicken due Christmas(December) and  New year(April) seasons.


It is strongly recommended this trend up to next June on wards. Who ever patiently collected are winners with higher gains and we have already witnessed currently too.


Target Prices of Counters in June 2016 


1. BFL    - Rs 360/-
2 TAFL   - Rs 190/-
3. GRAN - Rs 150/-

4. CIC.N - Rs 150/-
5. CIC.X - Rs 120/-



Further it is notable that even most of the above counters appreciated and still strong buying support is witness at these levels. However CIC.N and CIC.X have not witnessed its move from the blocks.

They have recorded a growth of 94% QoQ growth during 1Q 2015/16 FY. The above results were derived by an improved performance across most sectors with in the Group. The Agriculture and Livestock sector had an operating profit of Rs 473 million in the first quarter of 2015/16, an increase of 54% over the corresponding period last year.The increase in profitability is attributed to the performance of the agribusiness companies in the Group, including the dairy sector and CIC Feeds which showed a notable improvement from the previous year. 50% - 60% of the CIC group in concentrated on poultry business.

Many have sought after top 3 of the above list and CIC has a very good potential for all of us to gain at least 35% return if we enter at current price levels.


However all counters falls under the poultry industry are strongly recommended to buy considering this strong current financial earnings and very positive industry prospects to deliver significant profits with in next 2 years.



Happy Investments
My Dear ONTHEMONEY,
very good analysis! Keep it up!!
You're right that the Investment in Poultry Counters for 2-3 Quarters is the best & Your Targets might be achievable before June (may be Before December or March...)
(by the by, The demand items are not only chickens but also Eggs)

ONTHEMONEY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Hi everyone,

Thank you for ur comments and appreciation.

We all should be vigilant on Macro factors causing threats and opportunities for any industry. Poultry industry posses a bright future ahead.

However collection on any of the above counters associate short term risk if bought at higher prices and its advisable to collect stocks which has not jumped out of the blocks to be on the safe side.

Happy Investments

fadhlilham

fadhlilham
Equity Analytic
Equity Analytic
@ONTHEMONEY wrote:Hi Guys,

I am quite bullish with Chicken due to following. It is purely based on positive outlook of the poultry industry.

These counter have a huge potential due to;

1. Low supply of chicks in the local and international markets
2. Lowest ever grain prices
3. Increased demand for chicken domestically due tourism/increased consumer disposable income and internationally.
4. Projected escalating demand for Chicken due Christmas(December) and  New year(April) seasons.


It is strongly recommended this trend up to next June on wards. Who ever patiently collected are winners with higher gains and we have already witnessed currently too.


Target Prices of Counters in June 2016 


1. BFL    - Rs 360/-
2 TAFL   - Rs 190/-
3. GRAN - Rs 150/-

4. CIC.N - Rs 150/-
5. CIC.X - Rs 120/-



Further it is notable that even most of the above counters appreciated and still strong buying support is witness at these levels. However CIC.N and CIC.X have not witnessed its move from the blocks.

They have recorded a growth of 94% QoQ growth during 1Q 2015/16 FY. The above results were derived by an improved performance across most sectors with in the Group. The Agriculture and Livestock sector had an operating profit of Rs 473 million in the first quarter of 2015/16, an increase of 54% over the corresponding period last year.The increase in profitability is attributed to the performance of the agribusiness companies in the Group, including the dairy sector and CIC Feeds which showed a notable improvement from the previous year. 50% - 60% of the CIC group in concentrated on poultry business.

Many have sought after top 3 of the above list and CIC has a very good potential for all of us to gain at least 35% return if we enter at current price levels.


However all counters falls under the poultry industry are strongly recommended to buy considering this strong current financial earnings and very positive industry prospects to deliver significant profits with in next 2 years.



Happy Investments

You missed some main main point of CIC
1.When oil prices come down the demand for bio fuels (where maize is used) come down when demand for maizes comes down, when demand for maize comes down maizes prices come down in world markets
2.CIC invested LKR 700 mn in a maize cultivation project  
3.demand for maize from the local poultry industry is 350,000 MT while 190,000 MT is imported
3.when LKR is devalued local demand for local maize has increased

VALUEPICK

VALUEPICK
Expert
Expert
@ONTHEMONEY wrote:Thanks VP,

Globally people undergo a food crisis over the years. its not only for meat.

However as Teller quoted we need to assess the threats to the industry domestically. As a valued personal in SLEF, if u find such information why don't u put some inputs for the benefit for all members.

The current sentiments overlooks a very positive opportunities for all poultry related stocks. specially counters which have not picked up could have better chance for not falling back effect. Overall its the consolidation phase for all stocks.

Happy Investments
I have lot of vegetarian friends globally. We have to respect for their opinions because they are the one which will try to safeguard animal right. End of the honey bees means end of the human race.
 
There are lot of thing to learn in this sector. Every industry has risk and returns. We should try to minimize risk by keeping good investment strategy and good risk management system.
 
Actually main reason for local poultry sector recovery is tourism boom. In some period cost of production can go up when we see hot grain market. We are not going to see in the near future and even for 2016. In developed world when cost goes up they naturally will increase price of their products. These days they are enjoying low commodity inflation. As a result of this their purchasing power has gown up.  Still Fed has not raised their interest rate. When they gradually begin to raise their interest rate, USD could become stronger especially toward end of 2016, 2017 and 2018. Strong dollar means weak commodity prices.
 
Locally still they have some more capacity in the poultry sector. Currently, if I am correct even non listed Pusselawa has some export market in Miramar. There is some growth isn’t it? However no industry will have supper perform all the time. There could be short term issues time to in any industry. Intelligent value investors will analyse long term prospects rather than short term trend. When they select companies they will select value companies having long term growth potential. They will look for companies having better cost and risk management system as well. When we pick stocks in this sector we should pay attention to better farm management system as well.
 
There will be demand for food as long as population growth is there. China cannot supply fully locally all types of meat. They have to import countries such as the USA, Australia and New Zealand in the coming years. There will be some opportunities for Asian countries as well. However Asian population is growing faster than other countries. They will have to feed their own people first.
 
Future earnings will drive stocks prices in the long run. It is better to have some idea about at least four to eight quarter of forward earnings as well. Those who have good knowledge about industry and trend will make better decisions in stock markets. Some can identify major move in industry and major uptrend in stock prices. They will just stay calm. Therefore those who new to the market should learn as much as possible before they buy and sell stocks. Why don’t we study earning of selected companies in some sectors during next eight quarters? Then we can get better idea. We should study our stocks before buying and after buying as well.  I would like to stay with simple businesses that I know very well.
 
There is should be special reasons to buy stocks and special reasons to sell stocks. In bull markets stocks prices will go up. In bear market stock prices will go down. Remember in bull market pull back create great opportunities.

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