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Sri Lanka Equity Forum » Stock Market Talk » Laxapana Batteries - A New Begining

Laxapana Batteries - A New Begining

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1 Laxapana Batteries - A New Begining on Thu Feb 11, 2016 8:24 pm

EquityChamp

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Moderator
First topic message reminder :

Background
The company was a dedicated torch and transistor battery manufacturing company in the past. However the company diversified into a new product range considering the market dynamics and doing so now marketing LAXAPANA brand zinc chloride & alkaline type AA and AAA batteries, CFL bulbs and safety wax matches and sanitary napkins under LILY brand name and also introduced a LAXPANA brand re-chargeable torch to the market.

Company Performance
Since the new product launch the company has achieved a remarkable revenue growth recording a significant revenue growth of 81% in FY14/15 with a PAT growth of 46% in the same year, however the company experienced a decline in profit margins due to new product development costs. With the realization of incremental revenues the margins are likely to improve over the next couple of years. Company NAV as at 30th Sep 2015 was Rs4.32. The ROE has improved to 8.7% in FY14/15 and remarkably improved to 20% during the first half of FY15/16.

The company is a relatively geared company where 45% of total assets were financed through borrowings. However the accumulation of positive operating cashflows will help the company to reduce the debt component gradually over the years to come.

According to the 1H results, the company is likely to achieve a revenue of Rs380mn for FY 15/16 and Rs540mn for FY16/17.Assuming a constant profit margin the estimated bottom line would be Rs33mn for FY15/16 and Rs47mn for FY16/17.

Opportunities and Challenges
The company's new product range is very much suited for modern day retail energy demand hence an investor can expect over 25% annual growth rate for the next few years. Probably the company will enter into the production of rechargeable batteries which goes in tandem with alkaline batteries.

However the new product range is to face stiff competition from both local as well as imported brands. Especially the imported brands will pose a significant challenge given their lower prices. However by offering a quality and durable product at a reasonable price should be enough to meet this challenge which is the focus of the company at the moment.

Valuations
Given the forecasted earning the share is currently trading at a forward PE of 9.3x @ a market price of Rs7.90 based on FY15/16 earnings and at a forward PE of 6.6x based on FY16/17 earnings. If the stock to trade at a 50% discount to sector PE the stock could be valued over Rs11.50 (based on FY16/17 earnings). Furthermore it is the company's policy to declare more than 50% of the profits as dividend so investors can expect a DPS of 50 cents for FY15/16 and a DPS of 70 cents for FY16/17.

Recommendation
Considering the huge growth potential of the stock backed by a high DY and low liquidity of the stock (only 39mn shares in issue) I recommend this is a BUY stock. The current depressed market may provide investors the golden opportunity to grab even for a lower price than the current price.

Thanks


26 Re: Laxapana Batteries - A New Begining on Fri Feb 26, 2016 6:55 am

EquityChamp


Moderator
@ the current price level of 7.20 the forward PE has dropped to 6x now which is a massive discount to the industry.

27 Re: Laxapana Batteries - A New Begining on Tue Apr 12, 2016 2:36 pm

EquityChamp


Moderator
Keep in mind that LITE has closed the market by clearing all the quantities offered @ 8/-. So after the new year holidays this stock will be one of the favourits to move up. Sometimes 9/- possible within very short period.

28 Re: Laxapana Batteries - A New Begining on Thu Apr 14, 2016 10:56 pm

Harry82


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
EquityChamp,


You are correct.
Move up to Rs 10.00 within a sort time

29 Re: Laxapana Batteries - A New Begining on Fri Apr 15, 2016 6:52 am

Harry82


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Smile Smile

30 Re: Laxapana Batteries - A New Begining on Wed Apr 20, 2016 7:32 am

Ok One


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks EC GL I love you I love you I love you

31 Re: Laxapana Batteries - A New Begining on Wed Apr 20, 2016 9:51 pm

hiransilva23


Vice President - Equity Analytics
Vice President - Equity Analytics
EC u hav any idea abt lite?itz nt moving I hope dt it definitely on today.

32 Re: Laxapana Batteries - A New Begining on Wed Jun 01, 2016 8:17 am

EquityChamp

avatar
Moderator
Here you have another great result. LITE has achieved a FY revenue of Rs416 mn with PAT of Rs46 mn Vs my forecast of Rs380mn of revenue and Rs33mn of PAT. Their last quarter performances have delighted me. So my dividend expectation of 50cents is well intact and in fact I think they can give about 60cents this time.
PER @ CMP is just 6.8x which is very attractive. Also a dividend yield (expected) of above 7% is very much attractive. A real value investment.

33 Re: Laxapana Batteries - A New Begining on Wed Jun 01, 2016 4:06 pm

EquityChamp

avatar
Moderator
So now they have declared 55 cents just after I have commented about the possibility to declare a higher dividend than my initial target. So who ever invest in this stock based my analysis should be happy by now. Very Happy

34 Re: Laxapana Batteries - A New Begining on Wed Jun 01, 2016 4:09 pm

Harry82

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
thanks  EquityChamp

35 Re: Laxapana Batteries - A New Begining on Wed Jun 01, 2016 4:16 pm

hiransilva23


Vice President - Equity Analytics
Vice President - Equity Analytics
Im hapy.bt cost is 8.40.i had to avarage it

36 Re: Laxapana Batteries - A New Begining on Thu Jun 02, 2016 11:58 am

EquityChamp

avatar
Moderator
Laxapana Batteries is a liquid stock in the market. There are enough quantities between 8/- to 9/-. This has been the reason of its stagnation arround 8/- for the last so many months. But now....................???? Question

37 Re: Laxapana Batteries - A New Begining on Thu Jun 02, 2016 2:26 pm

EquityChamp

avatar
Moderator
Absorbing the market liquidity. Is this the beginning of a value run?

38 Re: Laxapana Batteries - A New Begining on Thu Jun 02, 2016 6:11 pm

bakapandithaya

avatar
Vice President - Equity Analytics
Vice President - Equity Analytics
@EquityChamp wrote:Absorbing the market liquidity. Is this the beginning of a value run?

LITE on the way to 10 Very Happy

39 Re: Laxapana Batteries - A New Begining on Thu Jun 02, 2016 7:42 pm

EquityChamp

avatar
Moderator
The ground is well set for a grand final. This time I can see 11.50 after watching how the stock traded in recent past.

40 Re: Laxapana Batteries - A New Begining on Thu Jun 02, 2016 9:57 pm

bakapandithaya

avatar
Vice President - Equity Analytics
Vice President - Equity Analytics
EC what is ur expected Sales nd profit for dis qtr

41 Re: Laxapana Batteries - A New Begining on Wed Jul 27, 2016 10:47 am

EquityChamp

avatar
Moderator
After dividend too the share is backing up to cum div price. This seems to me is a super growth stock available to buy below 10 rupees.

42 Re: Laxapana Batteries - A New Begining on Wed Jul 27, 2016 11:10 am

Shehan Dhanushka

avatar
Equity Analytic
Equity Analytic
EquityChamp  What are u think about lcem???

43 Re: Laxapana Batteries - A New Begining on Wed Jul 27, 2016 11:13 am

kapifm

avatar
Manager - Equity Analytics
Manager - Equity Analytics
Equity Champ.....why GSF Not Moving??

44 Re: Laxapana Batteries - A New Begining on Wed Jul 27, 2016 12:11 pm

EquityChamp

avatar
Moderator
@ Shehan - LCEM can't be valued based on their financials hence can't express any opinion. But it is moving based on speculation. if the speculator is smart he will make profits at the expense of others.

@ kapifm - GSF has shown a good improvement in their financials. But the current run was based on speculative deal. The effectiveness of the speculation will earn a good profit and if not it can cause losses. Why it is stagnating now is probably the speculator has already moved out from the stock by now with profits.

45 Re: Laxapana Batteries - A New Begining on Wed Jul 27, 2016 3:43 pm

kapifm

avatar
Manager - Equity Analytics
Manager - Equity Analytics
Dear EC,
appreciated,
well explained

46 Re: Laxapana Batteries - A New Begining on Fri Aug 12, 2016 11:53 am

EquityChamp

avatar
Moderator
Now LITE has reached the phycological 10/- mark. Now any one can see the value I was talking all these days.

47 Re: Laxapana Batteries - A New Begining on Fri Aug 12, 2016 11:56 am

ranjan01


Equity Analytic
Equity Analytic
They have not published the last quarter Question Question accounts yet ?

48 Re: Laxapana Batteries - A New Begining on Fri Aug 12, 2016 12:59 pm

ranjan01


Equity Analytic
Equity Analytic
I feel that their results must be good in  latest quarter.

49 Re: Laxapana Batteries - A New Begining on Mon Aug 15, 2016 1:06 pm

ranjan01


Equity Analytic
Equity Analytic
drunken drunken Basketball Basketball cheers cheers

50 Re: Laxapana Batteries - A New Begining on Mon Aug 15, 2016 4:23 pm

EquityChamp

avatar
Moderator
Another 10m + quarter for Laxapana. 20%+ growth YoY . Almost the same revenue as per the Jan-Mar quarter. Stable performance.

51 Re: Laxapana Batteries - A New Begining on Wed Aug 17, 2016 1:11 pm

pure equity


Equity Analytic
Equity Analytic
E C sir pls tell me about lite in this condition.  thanks

52 Re: Laxapana Batteries - A New Begining on Sat Aug 20, 2016 6:37 pm

pure equity


Equity Analytic
Equity Analytic
E C sir  still i am holding  this shares . i bought it last year.  i think company's  growth still good. is it wise to wait couple of quarter?    thanks

53 Re: Laxapana Batteries - A New Begining on Sat Aug 20, 2016 10:50 pm

EquityChamp

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Moderator
@pure equity wrote:E C sir  still i am holding  this shares . i bought it last year.  i think company's  growth still good. is it wise to wait couple of quarter?    thanks

As you can see based on 16/17 earnings my price expectation was above 11.50 and it has achieved through. This is the true value of this stock and I am glad that finally people have realized that. I need to see how this stock to be valued based on FY17/18 earnings but for now the current price seems to be fairly ok. It is no harm you holding this for some more time.

Further you can see that Rs8-9 was the long held resistance level for this stock but with this week's resurgence it has form a new resistance at Rs11 so be happy and enjoy how your investment delivers return for you. Now you have to see the prices in 2018 or 2019 not next year as it is quite certain now as what will be the price going to be.

Thanks and GL.

54 Re: Laxapana Batteries - A New Begining on Sat Aug 20, 2016 11:12 pm

pure equity


Equity Analytic
Equity Analytic
thanks E C sir. but NAV is below 5 rs. so  share price may be little bit come down ?

55 Re: Laxapana Batteries - A New Begining on Sat Aug 20, 2016 11:27 pm

karuna


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Lite .n can get a profit too long termly . But I hope better to exit now . Because we cannot guarantee it will make profit next year.  

It's function with interm financial results and asi number 5800 to 6600 asi 800 units use for 8 to 12 
Probably why they stay until financial report.  

However journey is happened 12 may be not necessarily to buy . if you brought 12 u had to stay another 400 or 500 units for sell above 14/15 with there beta base sometime.  

So I hope better to follow some other fundamental share.

56 Re: Laxapana Batteries - A New Begining on Wed Aug 31, 2016 9:31 pm

EquityChamp

avatar
Moderator
When I picked up this stock it was 7.90. Then with the capital gain saga it slipped to below 7/- as well. But after six months now how it looks like. Has established my value targets and stay above that. Also gave a handsome dividend of 50 cents. Total return for an investor who bought @ 7/- would be 79% in six months. (capital gain Rs 5/- + Dividend 0.5/-)

These are the matters to be discussed in public forums. Investors should know the value gaps . But mostly things which are in discussion in this forum are speculation and manipulation in nature. Fundamental discussions are very rare. Sad to write this.

57 Re: Laxapana Batteries - A New Begining on Thu Sep 01, 2016 12:07 am

Eng Krishantha

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Expert
Expert
@EquityChamp wrote:When I picked up this stock it was 7.90. Then with the capital gain saga it slipped to below 7/- as well. But after six months now how it looks like. Has established my value targets and stay above that. Also gave a handsome dividend of 50 cents. Total return for an investor who bought @ 7/- would be 79% in six months. (capital gain Rs 5/- + Dividend 0.5/-)

These are the matters to be discussed in public forums. Investors should know the value gaps . But mostly things which are in discussion in this forum are speculation and manipulation in nature. Fundamental discussions are very rare. Sad to write this.

true..

58 Re: Laxapana Batteries - A New Begining on Thu Sep 01, 2016 12:41 am

Teller

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Moderator
LITE is one of good analysis from EC.

59 Re: Laxapana Batteries - A New Begining on Thu Sep 01, 2016 7:27 pm

lal62

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Stock Analytic
Stock Analytic
I am a new comer  to the forum and was  in search of a site to read sound and unbiased stock market  analysis ( discussions) , Seen and read quite a few So far , like to mention that obviously  EC stands well above , and thanks for being so.

60 Re: Laxapana Batteries - A New Begining on Thu Sep 01, 2016 10:05 pm

EquityChamp

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Moderator
Welcome lal62 to the forum. As an early advise want to say that 90% talks going in this forum are speculative promotions based rather than discussing plusses and minuses of individual stocks. It is not like the past and at the moment the past glory had diminished alarmingly. So you need to think and digest more than normal course of action about most of the discussions happening here otherwise you can be a victim of a trap.

Good luck for the future.

61 Re: Laxapana Batteries - A New Begining on Fri Sep 02, 2016 1:17 pm

lal62

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Stock Analytic
Stock Analytic
Then new to the market couldn't avoid  myself  burning the finger in 2008  ,after few years  returned back with bit broader understanding and still survive as my thing is only medium to long term  .I appreciate your  advice and comments , Thanks ,your statistics speak  volumes of the true state of affairs in the market.Then again,   fundamentally sound stocks when they are low is a safer way for me to handle at the moment , I guess

62 Re: Laxapana Batteries - A New Begining on Sun Apr 09, 2017 9:41 am

EquityChamp

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Moderator
It's truly a new beginning for LITE. Within a year for an investor who bought @ 7/- or 7.50 have two dividends. 55 cents and now 77 cents. The stock is trading at 11.80 as at 7th April. Dividend yield alone is close to 20% within one year and capital appreciation is more than 50%. Its at the very correct time I have revealed this stock in this forum. cheers

63 Re: Laxapana Batteries - A New Begining on Tue Apr 11, 2017 7:00 am

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
Mr.EChamp what is ur idea about RICH ?

64 Re: Laxapana Batteries - A New Begining on Wed Apr 26, 2017 10:17 pm

EquityChamp

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Moderator
Surpassed 12 as well. Are there any winners from LITE?

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