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Sri Lanka Equity Forum » Stock Market Talk » Ceylon Cold Stores - A valuable illiquid stock

Ceylon Cold Stores - A valuable illiquid stock

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EquityChamp

avatar
Moderator
First topic message reminder :

Q2 PAT up by 129% with 24% revenue growth and GP margin increase of 3pp meaning material costs have come down. Six month EPS 13.22 and NAV is 123.

2015/160 EPS (E) would be 28 and current PE is 13.5. PBV is 3.1. In medium term this share can reach Rs440. Solid investment for value investors.
Thanks Basketball


kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
A major foreign party has entered in to this value gem. Stats shows a major buy of more than 300000 CCS has been purchased today. It has to be gone straight to top ten holders or a top ten shareholder has up its stake. Buyer has to be surely not gambling at a price of 650. CCS will show great uptrend in near future.

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
if its  EPF then wrong decision to sell.

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
EPF never sells this GEM with loads of dividents right now

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@kassachandimal wrote:EPF never sells this GEM with loads of dividents right now
then it should be C.D.Kohombanwickramage

EquityChamp


Moderator
I thought of giving some extra piece to think as well as to value this stock. You can refer below table which is based on current numbers and trends but not included Waterfront financials.
 2014201520162017201820192020
Revenue (Mn)        26,330        30,969        37,633         43,456        50,180         57,945         66,911
Operating Profit (Mn)          1,541          2,160          3,896           4,780          6,022           7,533           9,368
PAT          1,218          1,525          2,875           3,585          4,516           5,650           7,026
EPS            12.8            16.1            30.3             37.7            47.5             59.5             74.0
PE 11x  16x  14x  17x    
DPS41118               21               26                33                41
You can see how the revenue trajectory till 2020 and how the profitability can moves. Also the PE can be observed in an increasing trend which means investors are rapidly chasing after this stock. Its currently trading @ 650/- and based on 2016/17 earnings forecasts it is trading at a forward PE of 17x.Based on 2020 earnings it is trading at a forward PE of 9x which is a hefty discount.

If you value this stock at a PE of 17x which is equal to current PE as well as current industry PE by 2020 this stock could value over Rs1200/- which means a growth potential of 100% from current levels within a period of 4 years. You can discount the price and see how much it would value today.
If you discount it at a cost of capital of 10% the current value should be 859. Of course you should include the next 4 years dividends as well which I had excluded.
So now you can see why the foreigners are so greedy on this stock. Now I have shown you the value propositions so that you can make informed decisions.
Thanks

fireshelter

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
YES EC CCS is a great value gem that foreigners are still chasing. 700 possible in near future

fireshelter

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Very Happy Very Happy Very Happy Very Happy

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
CCS Dividend due this week !!!!

fireshelter

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Very Happy Very Happy

kassachandi


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
EC what about CCS super results. I don't think even you anticipated such a great result. I'm sure you will post a new target value chart of this value gem.

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
pawilla nathiwenna math kawa ice cream hitu gala.beemath biuwa.

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
good quote nimantha. EC eagerly expecting your comments

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@kassachandimal wrote:good quote nimantha. EC eagerly expecting your comments
Q4,Q1 they benefit because of festival season and new year.There marketing is so creative in festival season.Last time it was"athurupasa charithre" as I remember.Guess what Q2,Q3 it is drought and you don't need marketing at all.I identified  this as a gem  at 150.

kassachandi


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
EC badly need your idea

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
CCS slowly buy  orders coming in

kassachandi


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Huge foreign buying again in this value GEM. CCS has lots of foreign attraction. Very soon it will upgrade to the next price level of above 700

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
CCS warming up  Basketball

Agape


Equity Analytic
Equity Analytic
Agreed-Next Level Rs 700-725-Am getting news that Foreigners are chasing this share

kalu_mahaththaya


Equity Analytic
Equity Analytic
I THINK, NO ONE CORRECTLY ANALYSED THIS SHARE YET. IF YOU CHECK THE PRICE LINE SINCE 2012, THE PRICE OF CCS HAS BEEN INCREASING CONSISTANTLY NOT CARINF THE MARKET CRASHES OR ANY OTHER HINDERENCES...THAT IS BECAUSE CCS IS EXPANDING THEIR MARKET EVERY YEAR MAKING CONSIDERABLE PROFITS AND ASSET GROWTH IN THEIR BALANCE SHEET...

EquityChamp

avatar
Moderator
I have upgraded the CCS earnings forecast based on the 1H financial results. It is currently trading at a forward PE of 15.3x based on 16/17 earnings and at a forward PE of 13.1x based on 17/18 earnings @ CMP of 664/-. It is still trading at a slightly discounted price compared to sector PEs. A great potential to appreciate further in mid term.
 2014201520162017201820192020
Revenue (Mn)        26,330        30,969        37,633         46,368        53,542         61,827         71,394
Operating Profit (Mn)          1,541          2,160          3,896           5,564          6,425           8,038           9,995
PAT          1,218          1,525          2,875           4,117          4,819           6,028           7,496
EPS            12.8            16.1            30.3             43.3            50.7             63.5             78.9
PE 11x  16x  14x  15x    
DPS41118               24               28                35                43
Thanks

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
Great work EC. CCS will move to 700 levels in no time

TARGET


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@kassachandimal wrote:Great work EC. CCS will move to 700 levels in no time
No time? Very Happy

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
Popular consumer foods brand Elephant House is getting bullish about future prospects judging by its decision to roll out a significant Rs. 5.7 billion expansion and modernisation plan.

John Keells Holdings, the parent of Ceylon Cold Stores (CCS), on Friday revealed that a new ice cream plant, with an investment of Rs. 3.2 billion, and a modern bottling line at a cost of Rs. 2.5 billion are due to commence shortly. The move is to cater to the envisaged demand and address existing capacity constraints.

For CCS the investment is the biggest in recent years and for JKH it is equally significant in the diversified blue chip’s manufacturing business.

The expansion move comes on the back of the improved performance of JKH’s consumer foods and retail business. In the first quarter this business segment generated a group profit before tax of Rs. 1.6 billion, up by 55% from a year earlier. CCD’s first half revenue rose by 31% to Rs. 21 billion and gross profit by 39% to Rs. 3.78 billion. Pre-tax profit grew by 56% to Rs. 2.68 billion and after tax by 52% to Rs. 1.9 billion.

The Elephant House brand offers 18 flavours of soft drinks and 32 flavours of ice creams. The retail sector has over 50 Keells Supermarkets.  “Profitability of the Frozen Confectionery and Beverage businesses were driven by double-digit growth in volumes and improved margins,” said JKH Chairman Susantha Ratnayake, who disclosed that JKH Group profit before tax in 2Q grew by 14% to Rs. 5.17 billion and the first half figure by 16% to Rs. 8.75 billion.



The new plants for CCS are expected to be completed in two years. The Elephant House brand is celebrating 150 years of operation this year. The existing bottling plant was commissioned in 1998.

In the 2Q, the manufacturing business saw revenue of Rs. 3.78 billion, up from Rs. 3 billion a year earlier, while the segment’s result was Rs. 1.05 billion, up from Rs. 688 million. 

The retail business’ revenue was Rs. 7.15 billion, up from Rs. 5.2 billion while the segment’s result was Rs. 292.5 million, up from Rs. 210.8 million. For six months manufacturing turnover grew from Rs. 5.9 billion to Rs. 7.4 billion and that of retail from Rs. 10.3 billion to Rs. 14 billion. The pre-tax profit of manufacturing rose to Rs. 2.2 billion from Rs. 1.2 billion and that of retail rose from Rs. 430 million to Rs. 755 million.

The Retail sector continued its strong performance with steady growth in average basket values and customer footfall contributing positively towards a year-on-year growth in same store sales coupled with a notable incremental contribution from the newly opened outlets. Nine new outlets have been opened during the period under review and a further 11 outlets are due to be opened during the remainder of the financial year.

Last year the CCS Company contributed approximately 79% to the Group’s profits and accounted for 72% of its total assets. 

Both companies achieved their best performance to date in terms of revenue and profit, surpassing those set in 2014/2015. As a result, the Group experienced a significant growth of 88% in consolidated profit after tax to Rs. 2.87 billion.

In FY16, the beverage and ice-cream categories achieved volume growths of 26% and 21% respectively against the previous year. This volume growth saw the company’s top line grow by 25%, thus facilitating a 94% growth in profits due to the high operating leverage of the business. Retail saw top line growth of 22% in the Retail business on account of the same store sales growth of 13%. After tax profit grew by 156% to Rs. 905 million. 

The robust growth in sales and the bottomline at CCS comes despite the company earlier this year fearing a moderation of consumption.

Sri Lanka’s carbonated soft drinks market is estimated at 216 million litres with per capita consumption of approximately 10 litres. The CSD market grew by an estimated 20% during the year, supported by the consumption boom in 2015. The frozen confectionery market is estimated at 40 million litres per annum, while per capita ice cream consumption is around 2 litres, still below its regional counterparts. This market is expected to have grown by 18% in 2015. -




 See more at: http://www.ft.lk/article/578681/Elephant-House-gets-bullish--kicks-off-Rs--5-7-b-expansion#sthash.Lc1hdtLN.dpuf

kalu_mahaththaya


Equity Analytic
Equity Analytic
CCS WILL GO BEYOND RS.1000/- WITHIN 2 MONTHS...

kassachandi


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Target did you see now what is "no time" means?

EquityChamp

avatar
Moderator
As I have written already the current level of profitability will drive the share price t0 1,200+ by 2020. You can calculate the annual compounded growth rate for four years from current price levels. This is another AAA+ investment grade stock for me.

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
CCS have given an improved 1st interim dividend of 8rs. So by looking at this we can estimate an annual dividend of around   32-35 this year. What a GEM this is.  Basketball

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
What a share this is. CCS never gave me losses. 725 and still going strong

EquityChamp

avatar
Moderator
@EquityChamp wrote:As I have written already the current level of profitability will drive the share price t0 1,200+ by 2020. You can calculate the annual compounded growth rate for four years from current price levels. This is another AAA+ investment grade stock for me.
Its a 15% compounded growth rate for a 4 year investment plus a dividend yield of 3% to 5% annually. Better than any of the fixed income instrument in the market.

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
Yes EC. Can u please answer my question in ur Swisstek thread

DANIDU


Manager - Equity Analytics
Manager - Equity Analytics
Thought to bring up this thread for review and education purpose . CCS is good investment for long run. it has appreciated much but have feeling that it will do more....

This is not a recommendation for any body to buy but better to get an update from EC.  

see the below link when I was requesting a help to identify some best stocks unfortunately, I missed TAFL at 125 on that time but my chance came back now.

http://forum.srilankaequity.com/t50601-future-gems-kind-help?highlight=kind

EquityChamp

avatar
Moderator
My discounted price, taking into account next four years profit of CCS, which was 859/- is achieved today. The share is riding on its illiquidity even under current market conditions.

By the way now it seems the price is heated too much. If you are new then let the price to cool off for a while and then decide. Remember my long term target has been 1,200/-.

Thanks

DANIDU


Manager - Equity Analytics
Manager - Equity Analytics
වර්ණ සංකේත භාවිතයෙන් පසු පැණිබීමවල සීනි 10% කින් අඩුවේ
පැණි බීම වර්ගවල අඩංගු සීනි ප්‍රමාණය සඳහන් කෙරෙන වර්ණ සංකේත ක්‍රමය භාවිත කිරීම ඉකුත් අගෝස්‌තු පළමු වැනිදා සිට අනිවාර්ය කිරීමෙන් පසු බොහෝ පැණි බීම නිෂ්පාදකයන් සිය පැණි බීම වර්ගවල අඩංගු සීනි ප්‍රමාණය සියයට 10 කින් පමණ අඩු කර ඇති බව අනාවරණය වී ඇතැයි සෞඛ්‍ය පෝෂණ හා දේශීය වෛද්‍ය කටයුතු අමාත්‍යංශය පවසයි.

පැණි බීම වර්ගවල අඩංගු සීනි ප්‍රමාණය තවත් අඩුකරලීමට අවශ්‍ය පියවර ඉදිරියේදී ගන්නා බව අමාත්‍යංශය කියයි. එමෙන්ම පුද්ගලයකු දෛනිකව පරිභෝජනය කළ යුතු සීනි ප්‍රමාණය ද වර්ණ සංකේත ක්‍රමය යටතේ පැණි බීම බෝතල්වල සඳහන් කිරීමේ හැකියාව සොයා බලාගෙන යන බවත් එවැන්නක්‌ ක්‍රියාත්මක කරන තෙක්‌ පුද්ගලයකු දෛනිකව පරිභෝජනය කළ යුතු වන සීනි ප්‍රමාණයට ආසන්න වූ කොළ පැහැති වර්ණ සංකේතය දක්‌වා ඇති පැණි බීම භාවිත කරන ලෙස සෞඛ්‍ය අමාත්‍යංශය මහජනතාවගෙන් ඉල්ලා සිටී.

දියවැඩියාව ඇතුළු බෝනොවන රෝග මෙරට පැතිරීම පාලනය කිරීමේ අරමුණින් ක්‍රියාත්මක කර ඇති මෙම වර්ණ සංකේත ක්‍රමය නිසි පරිදි ක්‍රියාත්මක වන්නේ ද යන්න පිළිබඳව වෙළෙඳපොළේ අලෙවි කෙරෙන ආහාර පාන සෞඛ්‍යාරක්‍ෂිත ද යන්න සොයා බැලීම සඳහා මෙම මස 28 වැනිදා සිට දෙසැම්බර් 03 වැනිදා දක්‌වා කාලය තුළ ජාතික ආහාර සුරක්‍ෂිතතා සතියක්‌ ක්‍රියාත්මක කෙරෙන බව සෞඛ්‍ය සේවා අධ්‍යක්‍ෂ ජනරාල් වෛද්‍ය පාලිත මහීපාල මහතා ඉකුත් 23 වැනිදා කොළඹ සෞඛ්‍ය අධ්‍යාපන කාර්යාංශයේ 

පැවැති ප්‍රවෘත්ති සාකච්ඡාවකදී ප්‍රකාශ කළේය.

Divaina

Ryan Hudson


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
CCS major earning increase is from exports and keells super in addition to ice cream and soft drinks

EquityChamp

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@EquityChamp wrote:As I have written already the current level of profitability will drive the share price t0 1,200+ by 2020. You can calculate the annual compounded growth rate for four years from current price levels. This is another AAA+ investment grade stock for me.

It seems that I don't need to wait till 2020. At the going rate the share looks set to reach 1,200/- by this year itself. Very Happy

EquityChamp

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CCS touched 1,000. There should be winners through CCS by now, are there any? Laughing

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