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Sri Lanka Equity Forum » Stock Market Talk » Three Acre Farms PLC - A stock with growing profitability

Three Acre Farms PLC - A stock with growing profitability

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EquityChamp

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Moderator
First topic message reminder :

Principle Business Activities
Selective breeding, hatching and sale of commercial DOCs, grandparent farm operations, import grandparent DOCs, advance technology breeding and commercial broiler farming.

Industry Outlook
The country has seen a rapid expansion in the production of poultry related products on the back of expensive alternative of Fish and the other substitutes of meet such as pork and beef. The cheap nature of poultry products have attracted very high demand and thereby increased the suppliers. This trend has created growing demand for day old chicks; the main product of TAFL.

Financial Performance
The company has experienced continued growth in revenue every quarter recording a compounded quarterly revenue growth of 8.6% since Q4 2014. Its PAT margin has improved from 11.6% in Q4 14 to 33.2% in Q1 16 due to the efforts in increased productivity and decline in key raw material cost continuously.
Rs mnQ4 14Q1 15Q2 15Q3 15Q4 15Q1 16
Revenue414441493558598624
Revenue growth 6.5%11.8%13.2%7.2%4.3%
PAT4879107161203207
PAT margin11.6%17.9%21.7%28.9%33.9%33.2%
The company generates a substantial ROE of 45% in Q1 16 with a 4 quarter trailing EPS of Rs 28.9.

Valuation
An ROE of 45% in an any industry will be a tremendous achievement. At the CMP of Rs125.50 the stock is trading at a 4Q trailing PE of 4.3x. The current prices reflects a huge intrinsic value hence you are advised to collect the stock and hold in the medium term.

Thanks


EquityChamp


Moderator
No brother. My one is a long term holding. As similar to holding Nestle costing 90+ and CTC costing 30+ I am holding this and GRAN as well but will add little by little when the price comes down. Will not disclose my holding here Very Happy

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
What is short term target for TAFL EC ?  I think with the chicken price also increased we can see extraordinary earnings from TAFL. Retail interest will get higher day by day for TAFL

EquityChamp


Moderator
In short term it can reach 150/- but the price momentum has a link with GRAN price as well. Lets see how GRAN going to move.

EquityChamp


Moderator
For whom it may concern. Please glance through my newest forecast for TAFL.

























































Rs mnQ1 16 AQ2 16 FFY 14 AFY 15 AFY 16 F
Revenue624       64116772089     2,798
Gross Profit246       256219618     1,131
GP margin39.4%40%13%30%40%
PBT242       250174603     1,105
PBT margin38.8%39%10%29%39%
PAT207       211165551         940
PAT margin33.2%33%10%26%34%
Q2 results were forecasted taking into account the possible impacts caused by floods hence revenue and PAT growth is marginal. However Q3 & Q4 going to be superb once more given that increased demand for day old chicks, increased margins due to higher controlled price and increased consumption of chicken due to reduction in selling prices in non branded chicken stalls due to controlled price.

At CMP of 135/- the stock is trading at a forward PE of 3.4x which is unbelievably low for a company like TAFL whose earnings growth potential is phenomenal while the balance sheet is almost debt-free hence no interest rate risk. Further you can expect a dividend of at least Rs5 for FY 2016.

My valuations stand at Rs205.8 for medium term (two quarters from now) but the stock carries an intrinsic value of Rs290.4 in the longer run (one to two years from now) based on projected earnings.

Thanks

EquityChamp


Moderator
TAFL is not dragging down to 120 levels as previous instances insteed hs found support arround 135/-. When will be the next move is just a matter of time now. TAFL holders better to awake.

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
EC what will be ur target price for TAFL before the release of the quarter reports

EquityChamp

avatar
Moderator
Actually it depends. Mid term target of 205.8 is my valuation. But if all realize that this TAFL is not the previous TAFL (2010-2011) may be only one week is required to reach there.

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@kassachandimal wrote:EC what will be ur target price for TAFL before the release of the quarter reports


Friday evening they will release Financial report.

maybe before that.

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
yeah EC everyone should realize the real value of TAFL because it keep producing great quarter by quarter growth. Seems this will be the king of poultry in the future

kassachandimal


Manager - Equity Analytics
Manager - Equity Analytics
stockback what is the source

EquityChamp

avatar
Moderator
Well Q2 results are out with a revenue of 576 mn and a PAT of 146mn. Revenue shortfall of 65mn compared to my above posted forecast where as PAT was lower by 65mn due to low revenue, increase in costs and higher corporate tax rates.

Below is an analysis of Q2 result.
Rs mnQ1 16Q2 16Q2 15QoQYoY
Rev624576493-8%17%
GP246195135  
GP margin39%34%27%  
PBT242194118-20%64%
TAX354810  
Effective tax rate14%25%8%  
Similar to GRAN both the YoY growth in revenue and profits are superior but QoQ figures declined due abov mentioned factors.

These adverse effects are expected to turn around in the next quarter with renewed demand, improved whether, stabilising exchange rates as well as increase in revenue through new MRP.

Further more the company now invests in its entirety in biological assets by using internally generated funds which gives you a strong signal of company's strength. Further the retained earning now stands at 1.3bn hence something like higher dividend or bonus issues will be highly likely.

Therefore my advise to you all is to keep on buying this fundamentally sound business.

Thanks

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@kassachandimal wrote:stockback what is the source


experience

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@EquityChamp wrote:Well Q2 results are out with a revenue of 576 mn and a PAT of 146mn. Revenue shortfall of 65mn compared to my above posted forecast where as PAT was lower by 65mn due to low revenue, increase in costs and higher corporate tax rates.

Below is an analysis of Q2 result.
 
Rs mnQ1 16Q2 16Q2 15QoQYoY
Rev624576493-8%17%
GP246195135  
GP margin39%34%27%  
PBT242194118-20%64%
TAX354810  
Effective tax rate14%25%8%  
Similar to GRAN both the YoY growth in revenue and profits are superior but QoQ figures declined due abov mentioned factors.

These adverse effects are expected to turn around in the next quarter with renewed demand, improved whether, stabilising exchange rates as well as increase in revenue through new MRP.

Further more the company now invests in its entirety in biological assets by using internally generated funds which gives you a strong signal of company's strength. Further the retained earning now stands at 1.3bn hence something like higher dividend or bonus issues will be highly likely.

Therefore my advise to you all is to keep on buying this fundamentally sound business.

Thanks


forget about last quarter.

according to this quarter also this stock is highly undervalue

Guys some people after selling stock they are demoting dont trap on this.

Defiantly next quarter Revenue is growing more 8% and Profit margin is growing more-than 8%

price band increase 8%, that is effect to the business revenue and profit.

today Government authorized import or Corn/Maize

World Market Corn/Maize price are dropping sharply.

Q-Q profit drop for what reason. next quarter that is fixed now. then why worry

EquityChamp

avatar
Moderator
Whoever the person or group of persons kept TAFL at these prices have kept it so long than necessary. I must tell that it is enough and enough for ever. He/They should let it to find its true value without forcefully suppressing it.

chamil1


Manager - Equity Analytics
Manager - Equity Analytics
@EquityChamp wrote:Whoever the person or group of persons kept TAFL at these prices have kept it so long than necessary. I must tell that it is enough and enough for ever. He/They should let it to find its true value without forcefully suppressing it.

Agree with you EC . Maybe to align TAFL and GRAN. 

However no need to worry about TAFL.  The "group" is now in control of TAFL   Very Happy

EquityChamp

avatar
Moderator
As I said without noticing to any one of you TAFL's support level has increased to around 150/- within two months time. Very good. We haven't see much of overall market rally during this period but TAFL is showing a strong sustained trend.
If we look at the charts then we could see a trend reversal happened at around Rs148/-. The reliability of the reversal still at medium level because it is yet to see a three continuous outside ups. Yet the RSI level of 64 and the much better next quarterly report expectation can push the newly establish support level towards 165/-170/- during the next one month or so, so better to keep study the pattern of the stocks next movement.
Thanks

EquityChamp

avatar
Moderator
A summarized PAT forecast for 2016 FY is given below.

Q1 16 - Rs 207Mn
Q2 16 - Rs 146Mn
Q3 16 - Rs210Mn
Q4 16 - Rs225Mn

EPS for 2016 (E) Rs 33.5
PE @ 145 - 4.3x

Expecting the Q3 report by this Friday.

Thanks

EquityChamp

avatar
Moderator
TAFL Q3 actual of 181 Vs my target of 210. The negative gap is due to the shortfall in revenue. Anyway still good performance.

DANIDU


Manager - Equity Analytics
Manager - Equity Analytics
Base on EC's strong recommendation, I bought some TAFL, Thank you for that. Can it be next good share like NEST, CCS?

I remember your Recommendation on CCS few month ago and holding it up to now for L/T.  Very Happy

EquityChamp

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Moderator
I believe on my numbers brother. The thing is that these shares can be available to sell at unbelievable prices due to the things happening aroundd us.

ruwan326

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@EquityChamp wrote:I believe on my numbers brother. The thing is that these shares can be available to sell at unbelievable prices due to the things happening aroundd us.
Panic sellers.... price does not matter Very Happy Very Happy Very Happy Very Happy Very Happy Very Happy Very Happy
People who see crocodiles in water pots lol!

EquityChamp

avatar
Moderator
TAFL yet to deliver the value for investors. Yet patient investors should hold on to the stock.

reyaz

avatar
Manager - Equity Analytics
Manager - Equity Analytics
Sri Lanka is an island where true magic happens. The spirits and the smiles in people in this nation is brought to you by traditions. The main source of income is through agriculture. Poultry farming also generates income and so does dairy products. Companies that should come to your mind is bfl, tafl, gran, llmp and plantation companies

reyaz

avatar
Manager - Equity Analytics
Manager - Equity Analytics
By viewing the previous post you should get the feeling that we don't need a government to improve businesses. Ot is the Entrepreneurs and investors who make or break the financial market. NOT THE STINKY CLEAN SUIT EMPTY POCKET BANKS! affraid

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