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Sri Lanka Equity Forum » Stock Market Talk » Ceylon Grain Elevators - A Value Rich Stock

Ceylon Grain Elevators - A Value Rich Stock

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1 Ceylon Grain Elevators - A Value Rich Stock on Tue May 03, 2016 8:09 am

EquityChamp

avatar
Moderator
First topic message reminder :

Principle business activities
Selling of poultry feed & other animal feed, importing & selling of poultry equipment and related drugs, operating of poultry breeder farms, raising grandparent & parent stock, hatching & selling of day old chicks, operation of commercial farms & poultry processing.



Current business affairs
The company performed brilliantly during the year 2015 recording a revenue growth of 19% with a profit attributable to equity holders of Rs 943mn which was the highest in its 30 year history. The revenue performance were heavily influenced by the prevailing strong demand for the poultry related products in the country being the cheapest source of protein



Future outlook
The current demand for the poultry related products seems to be continuing for the next FY ahead while the production drops in nearby countries including India will create opportunities for export income if the company can increase the capacity.



Financial analysis
The stock's ROE has improved drastically but the PER has came down significantly compared to FY 2014. Though the stock's value gap is negative at CMP, it is evident that the share has more room for expansion. More importantly the company now become a more cash rich company as highlighted by the increasing positive gap between EPS & OFCPS



































 20142015
PAT attributable to equity holders80943
Equity28523794
EPS1.315.7
OCFPS1.846.8
PER          30.8            5.2
ROE2.8%28.4%
ROME3.3%19.2%
Value gap0.4%-9.2%
However it has been evident that the company's 2nd largest shareholder, Japfa LTD, is currently in the process of shedding their quantities in the market. They originally held 6mn shares and it has been estimated a further 4.2mn shares remain to shed as at 30th April 2016. Therefore this will create a stagnant effect on GRAN stock price movement and will require some time if the share to reach its true value.


41 Re: Ceylon Grain Elevators - A Value Rich Stock on Mon May 23, 2016 10:19 pm

Brinthan


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
EC Sir most of the members told this is the right time to exit polutry stocks like BFL,TAFL & GRAN...

AS YOU KNOW IN MY PREVIOUS POST I HAVE FAIR VALUE OF GRAN WITH AVG COST OF 81.5 ...

WHAT IS YOUR OPINION IN THE CURRENT MARKET CONDITION ???

EquityChamp


Moderator
@Brinthan wrote:EC Sir most of the members told this is the right time to exit polutry stocks like BFL,TAFL & GRAN...

AS YOU KNOW IN MY PREVIOUS POST I HAVE FAIR VALUE OF GRAN WITH AVG COST OF 81.5 ...

WHAT IS YOUR OPINION IN THE CURRENT MARKET CONDITION ???

My view is whoever saying that TAFL & GRAN is to be sold now is saying because they haven't moved to very high price compared to their expectation in short term. But if you look at their financials and the growth they have registered during last several quarters real investors won't sell at these levels. This is a stock with lot of intrinsic value. If you look at technical charts, daily charts indicating sell but weekly chart indicating neutral and monthly charts indicate buy. RSI's are @ 40s. The stagnation is due to willingness of the top shareholder to exit and still no institutional player look at this stock. But I strongly believe that its a matter of time that all these can turn upside down.
I am not deny the possibility than GRAN can come down to 70/75 level but which is a very good price for me to collect more.
Remember ASPI is projected to reach 7000 by September/October and with this undervalued stocks like GRAN & TAFL should reach their true values.

Thanks

Harry82


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Exit from poultry
Eg: TAFL,GRAN,BF

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@nimantha80 wrote:tafl 100 to 126.Gran stuck at 80.Just rotate GRAN people.This is simple logic.
GRAN kattiyata dan baba hambuna neda GRAN 74.TAFL 124 still

45 Re: Ceylon Grain Elevators - A Value Rich Stock on Mon May 30, 2016 10:02 pm

Suranga malli


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@nimantha80 wrote:
@nimantha80 wrote:tafl 100 to 126.Gran stuck at 80.Just rotate GRAN people.This is simple logic.
GRAN kattiyata dan baba hambuna neda GRAN 74.TAFL 124 still
Hambuna baba tika tika lokuwenna kalayak yanawanne...E wage Gran ekkath tika tika thamai udata yanne...

Vacations To Sri Lanka

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@nimantha80 wrote:
@nimantha80 wrote:tafl 100 to 126.Gran stuck at 80.Just rotate GRAN people.This is simple logic.
GRAN kattiyata dan baba hambuna neda GRAN 74.TAFL 124 still

Hambuna baba onna eka parata FLY karanda gatta. dan balan inda thiyenne kochchara udata fly karnwda kiyala  Very Happy

Brinthan

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Short term technical indicaters (5 Min,15Min,1hour )recommended to Strong buy but Daily indicaters show Neutral.So we have to wait until the strong message come from daily indicaters....


But the RSI is move to 30 to now 56 ..It is good to enter this level according to the RSI....

EquityChamp

avatar
Moderator
Good interpretation.

Brinthan

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanx..EC Sir If i got some knowledge only because of you..

50 Re: Ceylon Grain Elevators - A Value Rich Stock on Fri Jun 03, 2016 10:16 am

EquityChamp

avatar
Moderator
So GRAN came down to 74 level from the resistance levels of 80/82 and now again touching the resistance level. Lets see will it break this resistance at least now.

51 Re: Ceylon Grain Elevators - A Value Rich Stock on Fri Jun 03, 2016 11:17 am

hotstock


Manager - Equity Analytics
Manager - Equity Analytics
MACD is trending bullish

52 Re: Ceylon Grain Elevators - A Value Rich Stock on Fri Jun 03, 2016 11:33 am

EquityChamp

avatar
Moderator
I said in advance that the price can come down but if do then good to collect. Within less than 10 days it is back to the place where it was. This was a good investment/trading opportunity for both short-term as well as long-term investors.

jaya


Manager - Equity Analytics
Manager - Equity Analytics
@EquityChamp wrote:I said in advance that the price can come down but if do then good to collect. Within less than 10 days it is back to the place where it was. This was a good investment/trading opportunity for both short-term as well as long-term investors.

If Grain breaks resistant level 80.00, categorically BFL and TAFL will follow the same.

Brinthan

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
All technical indicaters including daily indicater recommend to Strong buy...The clear message is coming from Technical indicaters..Now we can enter this share...


RSI Now move to 58 from 30...

All indicaters are possitive and this is the ideal time to enter this share..

EquityChamp

avatar
Moderator
You have to watch for the resistanse level as well dear. 80/82 is the resistance level for this stock. If it can be breached with a volume of over 1mn shares then sure halt of 100/-.

Brinthan

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
EC SIR why u told 82 is the resistance level for GRAN...because of the past movements of this share or any the method..???

EquityChamp

avatar
Moderator
Yes. If you closely analyse the historical stock graph then you can see GRAN tried to break this level and move beyond but volumes were not that great hence it has fallen several times back to 70s.

Suranga malli

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Suranga malli wrote:
@nimantha80 wrote:
@nimantha80 wrote:tafl 100 to 126.Gran stuck at 80.Just rotate GRAN people.This is simple logic.
GRAN kattiyata dan baba hambuna neda GRAN 74.TAFL 124 still
Hambuna baba tika tika lokuwenna kalayak yanawanne...E wage Gran ekkath tika tika thamai udata yanne...
Malli kohamada baba lokuwunne...Thama baba olkuwenna thiyennawa...Wait n see...

59 Re: Ceylon Grain Elevators - A Value Rich Stock on Tue Aug 02, 2016 10:12 am

EquityChamp

avatar
Moderator
Grain seems to have established a new support line arround 78/- as oppose to previous 70-72 levels. It's good to gave a stedy move but slow one.

60 Re: Ceylon Grain Elevators - A Value Rich Stock on Wed Aug 03, 2016 10:01 pm

EquityChamp

avatar
Moderator
Well, Q2 results are out with a revenue of 3537 mn and PAT of 350mn. Though this result is some what below my expectation it confirms that even within challenges this company can stand strong and I estimate still GRAN will surpass the profits achieved in 2015 by a minimum of 40%.

If I summarise what has happened with GRAN from Q1 to Q2 it would be like this.
 
Rs mnQ1 16Q2 16Q2 15QoQYoY
Rev366335373135-3%13%
GP620530355  
GP margin17%15%11%  
PBT506457230-10%99%
TAX8610729  
Effective tax rate17%23%13%  
YoY both revenue and profits grew remarkably however QoQ revenue drop by 3% and PBT drop by 10%. Why?
I anyway anticipated the QoQ revenue drop due to adverse whether prevailed in the country. The PBT decline is mainly due to revenue drop, escalating costs from raw materials and exchange rates resulting a 2pp drop in gross margins and increase in effective corporate tax rates to 23%.

This adverse situation will improve in next quarter due to following.
a) Stabilizing exchange rates (July already witnessed LKR appreciation)
b)Increase in maximum price of 1kg of chicken by Rs30 will improve the gross margins by 5 percentage points
c)demand shift from small scale players who are unable to sell at Rs410 towards branded chicken will boost the revenue in coming quarter

Now its very much certain that current performances are not similar to what this company demonstrated in 2010-11 period but it has more promising future. Moreover the retained earnings now standing at Rs3.3 bn with over 1.5bn as cash hence a good offering may be possible such as bonus issues and higher dividends. Therefore my general advice is keep holding your GRAN holdings and if the price fall below 75 level BUY some more quantity.




Quoting from CEO statement;
"The good results came from the sustained growth in revenue and efficient management, in spite of the challenges posted by  fluctuating exchange rates,  high cost of local maize, increase in taxes and adverse climatic conditions. The recent upward revision in the Maximum Retail Price of whole chicken with effect from 14 July 2016, would  help the Industry to cover the escalating cost of production to a certain extent

Thanks till the next quarter.

61 Re: Ceylon Grain Elevators - A Value Rich Stock on Wed Aug 03, 2016 10:27 pm

newer1


Senior Equity Analytic
Senior Equity Analytic
Next report definitely will be worse than this one with ongoing production failure.better to exit with chickens.
Thnks

62 Re: Ceylon Grain Elevators - A Value Rich Stock on Wed Aug 03, 2016 10:35 pm

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@newer1 wrote:Next report definitely will be worse than this one with ongoing production failure.better to exit with chickens.
Thnks


සත්ව ආහාර නිෂ්පාදනය සඳහා පමණක් බඩ ඉරිඟු ආනයනය කිරීමට අවසර ලබාදෙන බව මුදල් අමාත්‍යංශය පවසයි.

නිවේදනයක් නිකුත් කරමින් එම අමාත්‍යංශය පවසන්නේ ජීවන වියදම පිළිබඳ අමාත්‍ය මණ්ඩල අනු කමිටුව මගින් මෙම තීරණයට එළැඹ ඇති බවයි.

කුකුල් මස් නිෂ්පාදන වියදම ඉහළ යෑම වැළැක්වීමේ පියවරක් ලෙස සත්ව ආහාර නිෂ්පාදනයට අවශ්‍ය බඩ ඉරිඟු ආනනයනයට අවසර ලබාදෙන බව එම අමාත්‍යංශය පවසයි.

කිලෝග්රෑ මයක් රුපියල් 52යි ශත50 බැගින් සතොස හරහා මිල දී ගෙන රුපියල් 45ක සහන මිලක් යටතේ සත්ව ආහාර නිෂ්පාදකයින් හට  බඩ ඉරිඟු තොග ලබාදීමටද පියවර ගන්නා බව එම අමාත්‍යංශය පෙන්වාදෙයි.

පසුගිය දා කුකුලු මස් නිෂ්පාදන සඳහා රජය පාලන මිලක් නිකුත් කළද එම මිලට කුකුලු මස් නිෂ්පාදන අලෙවි කල නොහැකි බවට ව්‍යාපාරිකයින් ප්‍රකාශ ඉදිරිපත් කරන ලදී.

කෙසේවෙතත් පාලන මිල උල්ලංඝණය කරමින් භාණ්ඩ අළෙවි කරන වෙළදුන් සොයා තවදුරටත් වැටලීම් සිදුකිරීම පිළිබදව ද, අමාත්‍ය මණ්ඩල අනු කමිටුවේ අවධානය යොමු වූ බව මුදල් අමාත්‍යංශය පවසයි.

http://sinhala.adaderana.lk/news/62707/%E0%B7%83%E0%B6%AD%E0%B7%8A%E0%B7%80-%E0%B6%86%E0%B7%84%E0%B7%8F%E0%B6%BB-%E0%B7%84%E0%B6%AF%E0%B6%B1%E0%B7%8A%E0%B6%B1-%E0%B6%B6%E0%B6%A9-%E0%B6%89%E0%B6%BB%E0%B7%92%E0%B6%9F%E0%B7%94-%E0%B6%9C%E0%B7%99%E0%B6%B1%E0%B7%8A%E0%B7%80%E0%B6%B1%E0%B7%8A%E0%B6%B1-%E0%B6%85%E0%B7%80%E0%B7%83%E0%B6%BB%E0%B6%BA%E0%B7%92

63 Re: Ceylon Grain Elevators - A Value Rich Stock on Wed Aug 03, 2016 10:50 pm

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@EquityChamp wrote:Well, Q2 results are out with a revenue of 3537 mn and PAT of 350mn. Though this result is some what below my expectation it confirms that even within challenges this company can stand strong and I estimate still GRAN will surpass the profits achieved in 2015 by a minimum of 40%.

If I summarise what has happened with GRAN from Q1 to Q2 it would be like this.
 
Rs mnQ1 16Q2 16Q2 15QoQYoY
Rev366335373135-3%13%
GP620530355  
GP margin17%15%11%  
PBT506457230-10%99%
TAX8610729  
Effective tax rate17%23%13%  
YoY both revenue and profits grew remarkably however QoQ revenue drop by 3% and PBT drop by 10%. Why?
I anyway anticipated the QoQ revenue drop due to adverse whether prevailed in the country. The PBT decline is mainly due to revenue drop, escalating costs from raw materials and exchange rates resulting a 2pp drop in gross margins and increase in effective corporate tax rates to 23%.

This adverse situation will improve in next quarter due to following.
a) Stabilizing exchange rates (July already witnessed LKR appreciation)
b)Increase in maximum price of 1kg of chicken by Rs30 will improve the gross margins by 5 percentage points
c)demand shift from small scale players who are unable to sell at Rs410 towards branded chicken will boost the revenue in coming quarter

Now its very much certain that current performances are not similar to what this company demonstrated in 2010-11 period but it has more promising future. Moreover the retained earnings now standing at Rs3.3 bn with over 1.5bn as cash hence a good offering may be possible such as bonus issues and higher dividends. Therefore my general advice is keep holding your GRAN holdings and if the price fall below 75 level BUY some more quantity.




Quoting from CEO statement;
"The good results came from the sustained growth in revenue and efficient management, in spite of the challenges posted by  fluctuating exchange rates,  high cost of local maize, increase in taxes and adverse climatic conditions. The recent upward revision in the Maximum Retail Price of whole chicken with effect from 14 July 2016, would  help the Industry to cover the escalating cost of production to a certain extent

Thanks till the next quarter.


I am not agree with some points.

specially you have compare Q-Q, we should compare Y-Y bcz this type of business has seasons.

specially next two quarters are performing very well. then can make nearly 25 EPS for this year.

last four quarters they made 20.62 ESP

in that case P/E is 3.9

EC what you think about next two quarters. Price Band expansion and allowed  to import Corn /Maize  these very positive factors for next few quarters. and also world market Corn/Maize price dropping sharply. please mention your idea about this matters.

troy

avatar
Moderator
lot of selling in 80-81 range... how much more???

TARGET


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
MW not in top 20 of gran. Maybe in 21 position. .

EquityChamp

avatar
Moderator
Further I have noticed that Japfa has shed a further 800,000 shares during the 2nd quarter. I assume they havn't changed their mind to sell the stake completely. Sometimes recent days also they might be selling and another foreign party will be buying too.
Anyways the wait @ 80s might be continue for a further period and it seems that investors need to be patient for some more time.
GL

67 Re: Ceylon Grain Elevators - A Value Rich Stock on Thu Aug 04, 2016 10:33 pm

hiransilva23


Vice President - Equity Analytics
Vice President - Equity Analytics
Meka nam koi wele hari yanawa.allannat bari weida danne na

68 Re: Ceylon Grain Elevators - A Value Rich Stock on Thu Aug 04, 2016 11:36 pm

chamil1


Manager - Equity Analytics
Manager - Equity Analytics
@EquityChamp wrote:Further I have noticed that Japfa has shed a further 800,000 shares during the 2nd quarter. I assume they havn't changed their mind to sell the stake completely. Sometimes recent days also they might be selling and another foreign party will be buying too.
Anyways the wait @ 80s might be continue for a further period and it seems that investors need to be patient for some more time.
GL


What JAPFA sold in the early part of second quarter is different.


Now they will sell only if someone asks for a quantity and not at their will. That is what LOLC securities has said. Yesterday's quantity was also like that. Otherwise much bigger quantities could have been sold

69 Re: Ceylon Grain Elevators - A Value Rich Stock on Tue Aug 23, 2016 10:16 am

EquityChamp

avatar
Moderator
Its time to buy this stock. Now 84/- and the big seller is selling his stake to whoever the interested buyre. BUY.

70 Re: Ceylon Grain Elevators - A Value Rich Stock on Tue Aug 23, 2016 10:30 am

EquityChamp

avatar
Moderator
This is what I was keep telling you all. Watch for that big transaction and from the moment you see it go and buy it. Its today.

Thanks

71 Re: Ceylon Grain Elevators - A Value Rich Stock on Tue Aug 23, 2016 11:27 am

kapifm

avatar
Manager - Equity Analytics
Manager - Equity Analytics
Dear EC

to day i have Exit with 20% Profit @ 88 ....believe that i Have Hold for Bit Long...

72 Re: Ceylon Grain Elevators - A Value Rich Stock on Tue Aug 23, 2016 11:32 am

TARGET


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@kapifm wrote:Dear EC

to day i have Exit with 20% Profit @ 88 ....believe that i Have Hold for Bit Long...
Opps.. big mistake my friend.. try to collect again

73 Re: Ceylon Grain Elevators - A Value Rich Stock on Tue Aug 23, 2016 11:33 am

kapifm

avatar
Manager - Equity Analytics
Manager - Equity Analytics
TARGET.....

Thanks Machaan....i will collect   AEL Very Happy

74 Re: Ceylon Grain Elevators - A Value Rich Stock on Tue Aug 23, 2016 11:35 am

TARGET


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@kapifm wrote:TARGET.....

Thanks Machaan....i will collect   AEL Very Happy
Ok. Both are ltechnically strong buy.. Very Happy

EquityChamp

avatar
Moderator
Foreign holding decline by 1.4mn today. And the seller should have some quantities remain and it is certain that there will be buyers for that quantity as well. Lets get into this now.

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@EquityChamp wrote:Foreign holding decline by 1.4mn today. And the seller should have some quantities remain and it is certain that there will be buyers for that quantity as well. Lets get into this now.
exactly the amount of morning sell.So jafpa sold half of the amount

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@nimantha80 wrote:
@EquityChamp wrote:Foreign holding decline by 1.4mn today. And the seller should have some quantities remain and it is certain that there will be buyers for that quantity as well. Lets get into this now.
exactly the amount of morning sell.So jafpa sold half of the amount


are there any foreign buying. 

I think foreign buying also there. bcz one party collected last few weeks very slowly

mahasona


Equity Analytic
Equity Analytic
This is net foreign selling ,if foreign buyers were there the amount sold by Japfa is higher than 1.4Mn,Maybe they have cleared there holding.

Gran was kept under pressure for too long,now the pressure is released,it will see the moon in no time.

Out of the chicken lot GRAN will deliver the highest return.

79 Re: Ceylon Grain Elevators - A Value Rich Stock on Tue Aug 23, 2016 10:16 pm

ONTHEMONEY


Manager - Equity Analytics
Manager - Equity Analytics
Hi Guys!

JAFPA sold almost 50% of its stake today! It is confirmed news that JAFPA sell order is over at Rs 80/-.Brockers are LOLC and there is no sell orders for remaining quantity!

Considering the today's turnover I believe now #GRAN has enough fire power to collect even if it is sold at higher prices!Extremely undervalued counter and has to catch up #TAFL. Based on earnings and NAV it will clear Rs 100/- very shortly. I don't think technical charts will justify the movement since it is a catch up activity! 

Good luck

EquityChamp

avatar
Moderator
2nd round of sell off is today. Day by day the stinking barrier is easing off. A well crafted game plan for a valuable counter.

NZ BOY

avatar
Moderator
They are excellent if they push today more retail selling around 100 they push sell orders around 95 collecting nicely

82 Re: Ceylon Grain Elevators - A Value Rich Stock on Wed Aug 31, 2016 10:11 pm

EquityChamp

avatar
Moderator
As I analysed and said the group who are fall in love with GRAN still not ready to let it find its true potential still purposely holding it to keep it close to 90-92 levels. No need to panic and exit but to hold on the retail investors patiently. They still have some of the foreign party's holdings to dispose at their will. Look t the below share holding statistics.
 

As at today GRAN foreign holding amounts to 35.96 Mn shares. According to 30th June quarter statement the following are the share holding by the other three major foreign shareholders other than Japfa.
Prima   - 27.27Mn
Supra   - 5.18Mn
Eka      - 2.27Mn
 

Total 34.72 Mn so there is a balance of 1.26Mn shares in the hands of foreigners. Don't think that this entire amount is in the hands of other foreigners so Japfa should still have a holding in between 0.5mn to 1mn.
 

Why I show these facts to you is to show you the true picture and help you to take the correct decision without getting panic unnecessarily and sell/buy ill advised. Trust that I have educated all of you enough to make informed decisions.
 

Thanks

83 Re: Ceylon Grain Elevators - A Value Rich Stock on Wed Aug 31, 2016 10:56 pm

chamil1


Manager - Equity Analytics
Manager - Equity Analytics
Machang, 

MELLON BANK N.A.-COMMONWEALTH OF MASSACHUSETTS  682,740 shares

I know 3 others hold  240,000 shares in total. I don't know whether they sold very recently. 

So even if Japfa holds, it is not significant compared the market buying.

EquityChamp

avatar
Moderator
Yes machang. I missed Mellon Bank as well as Astrue Alpha Fund, both together will form the balance 1.26Mn shares. So conclusion is Japfa's holdings have been divested fully at a price range below 90. Also people bought and buying these days are buying at a cost above 80 or within a price band of 80-90. So we can reasonably assume the target line is @ 90. Therefore from their onwards if we set a mid term appreciation of 50% the target price should be Rs135/- Then the derived target price for TAFL will automatically will be 175/- based on the gap between these two before the Japfa story begins.

So now you are all know what is going to come and action now.

Thanks

kadik


Manager - Equity Analytics
Manager - Equity Analytics
agreed.. but some brokers are telling that person who brought at 80 from JAFPA is selling...is it wrong.??

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