TPL.N0000 (TALAWAKALE PLANTATIONS )

[yellow knifeTop contributor]

Warning 

The share I am going to talk TPL will go down in price by at least Rs 3 immediately after XD.. So its not for trading immediately..

Salary revision and uncertainty situation of the buyer nations will act adversely so its not a buying recommendation for those who think long term means less than two years..

TPL.N is identified by Hunter by executing his alchemist formula..My effort here is to do a deep analysis which is quantitative as well as qualitative by nature..

[yellow knifeTop contributor]

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[yellow knifeTop contributor]

Group Revenue has continuously gone up and 2014 is missing in above chart as 2015 is taken as 15 month .
Therefore the chart will give a slightly distorted pattern at the end. I took the information from ten year summary of the annual report of TPL

[First Guy]

Group Revenue has continuously gone up and 2014 is missing in above chart as 2015 is taken as 15 month .
Therefore the chart will give a slightly distorted pattern at the end. I took the information from ten year summary of the annual report of TPL

If you want a number to compare correctly, you can deduct the March quarter revenue from the 15 month figure to get the "2014" revenue.

I think they are going to change the accounting year end to March from December or already have.

[yellow knifeTop contributor]

Yes FG. they have added three months to 15 months and from next year they may shift to a March Company from the current December end.. However when evaluating above chart the Group revenue has been steadily going up.

[yellow knifeTop contributor]

The Chart below shows an Historical Overview of Sri Lankan tea industry. The production level of tea in the country for last 15 years has been remaining rather constant. 340 Million Kilograms was the maximum production of tea recorded and the lowest was 289.7 Million Kilograms. The variations are due to weather patterns and other than that overall production was not growing in the tea sector..

GSA means the gross sales average. this is the average sale price obtained over a period of time for a kilo of produce before any deductions such as Brokerage etc.

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[yellow knifeTop contributor]

Year	Tea Production	GSA	GSA
	Mn.Kg.	High Grown	Low Grown
2000	305.8	128.46	144.79
2001	295	135.56	154.5
2002	310	141.73	160.55
2003	303.2	138.31	160.86
2004	308.1	171.78	189.86
2005	317.2	172.24	199.01
2006	310.8	204.58	204.5
2007	304.6	252.46	298.66
2008	318.4	273.83	336.38
2009	289.7	319.73	387.07
2010	331.4	338.33	392.48
2011	327.5	329.95	381.27
2012	326.2	375.53	407.14
2013	340	402.98	469.91
2014	338	420.36	488.06

[yellow knifeTop contributor]

Now we have seen that TPL.N is recording continuous increase of Revenue.. Yet when we analyze the overall tea production of the country its rather stable.

Revenue generates from only two things : Price and Quantity

R=P*Q

If the quantity remains constant then the price should go up to generate an increase of revenue. As per the published information of Gross Sales Averages of Low Grown has overtaken High Grown Sales Averages..

[yellow knifeTop contributor]

The annual production of 338 Million Kilograms of 2014 consist of following sub sectors 

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[yellow knifeTop contributor]

Sri Lanka's contribution to global tea production

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[yellow knifeTop contributor]

When the total National Tea Production of Sri Lanka remains stagnant around 330 million kilograms per annum, TPLs tea production remain at 7 million kilo grams per annum and GSA has remained well below Rs 500.00

		2014	2013	2012
Production	Kilograms	7,025,842	7,291,178	7,654,863
GSA	Rs/Kg	494.64	467.77	415.55

[yellow knifeTop contributor]

One challenging aspect of Plantation Industry is its sources of Revenue namely price and quantity is well beyond the control of a company.

Climate and weather patterns decide the quantity and that is beyond the control of the company.

Price is decided at the auction and its based on international market and that aspect is also beyond control.

[yellow knifeTop contributor]

In this backdrop success of a plantation firm depends on effectively managing cost. That's where plantations of Richard Peiris Group namely Namunukula and Kegalle do not spend much even on annual report printing.

TPL.N is differently managed that they even grab the CA awards for annual reports. Annual Report of TPL.N 2014/15 is also very informative and also should have been an expensive effort.

[yellow knifeTop contributor]

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[yellow knifeTop contributor]

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[yellow knifeTop contributor]

In 2011 and in 2009 company was making negative earnings..

	2015	2013	2012	2011	2010	2009	2008	2007	2006	2005
EPS	10.08	7.31	9.09	-2.17	6.21	-0.94	4.6	4.19	3.38	4.44
Dividend	3	3	2.5	0	2.5	0	1.25	0	2.5	1.5

[yellow knifeTop contributor]

Net Assets Per Share was continuously going up for last 10 years

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[yellow knifeTop contributor]

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[yellow knifeTop contributor]

One good strategy followed by many good companies like TJL is reducing the debt to reach almost zero.

TPL.N seems to slowly getting rid of debt.

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[yellow knifeTop contributor]

Following Chart shows top ten Sri Lankan Tea Buyers

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[yellow knifeTop contributor]

Above chart shows the real problem with Sri Lankan Tea

Once Dr Rohantha Athukorala wrote an essay about the changing pattern of Sri Lankan tea buyers position. First it was England that became the first. Next Japan. Now that's Russia and Middle East. His argument was that the we could not maintain the big buyers. But I see it differently that the disposable income level of the countries. Those who can afford expensive tea are changing with the national economic growth.

Now the problem we are facing is UNCERTAINTY in our main buyer countries. Russia, Iran , Libiya and Syria as well as Iraq is facing economic problems thanx to so called JATHYANTHARAYA...

The Geo Political issues is the main concern for SL Tea and thats identified clearly in TPL annual report create another

[yellow knifeTop contributor]

Further the economic uncertainty in above countries create another problem. That is devaluing of the buyer nations currency which make SL TEA expensive to the buyer.

[yellow knifeTop contributor]

Sri Lankan Rupee appreciation against Russin Ruble was 41% and against Iranian Rial was 9.4% which made SL Tea expensive in respective countries.

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[yellow knifeTop contributor]

so when we say exporters will get benefit with Rupee depreciation against USD, tea industry will not get that much benefit...

[yellow knifeTop contributor]

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