Re: RICH.N0000 (Richard Pieris and Company PLC)

[BackstageTop contributor]

Heading towards 9/= ? YY ?

[BackstageTop contributor]

Richard Pieris’ stars, cash cows, question marks and dogs

First Capital Equities, a stockbroker, puts the listed group of companies through the Boston Consulting Group’s Growth-Share Matrix
March 22, 2017

Richard Pieris, a listed group of companies with around 40 businesses ranging from retail to manufacturing, plantations and financial services, gave shareholders 25% average annual returns in the five years to March 2016. Over the next three years, group revenue is estimated to grow 10% annually to Rs57 billion and earnings 14% to Rs3.5 billion, according to First Capital Equities. But where will the growth come from?

First Capital put Richard Pieris through the Boston Consulting Group’s (BCG) Growth-Share Matrix, classifying its business segments into four categories called stars, cash cows, question marks and dogs. The matrix was developed in 1970 to help companies decide what businesses to keep, sell or invest more in.

Stars

According to the BCG matrix, stars have large market shares in sectors with high-growth potential, and ideally companies should invest more in these businesses. Richard Pieris’ star is its retail business led by Arpico, a chain of hypermarkets (the combination of a department store and a supermarket) that contributed 50% to group turnover.

Retail is a high-growth business, with economic growth and urbanisation improving people’s incomes and lifestyles. “Demand will grow for luxury and semi-luxury goods, which represents most of Arpico’s offering,” First Capital says. Arpico’s revenue is estimated to grow 16% annually over 2017-19, and will benefit from economies of scale if the group invests in expansion.

Cows

Cash cows generate high turnover in mature, low growth sectors, and these businesses should be ‘milked’ for as long as possible. Richard Pieris has three of these.

The plastics and furniture manufacturing business is one cash cow, contributing 15% to group revenue. Earnings are estimated to grow 7% annually over the next three years to 2019, riding the housing and hotel construction boom.

The second cash cow is the rubber products business, which contributes 8% to the group’s topline. The group exports latex and hard rubber-based products like floor mats, jar seals, mattresses, pillows and shoe soles mostly to Europe. Group exports account for less than 10% of topline revenue, but Richard Pieris plans to grow the business by focusing on the Chinese market.

The third cash cow is the tyre re-treading business, which is expected to benefit from the 6.3 million vehicle population and growing secondhand car market, with high duties curbing imports. Margins are expected to improve due to a growing supply of low-cost used tyres – an input for the re-treading business – and rising demand for heavy duty vehicle tyres.

Questions marks

Questions marks are businesses with a small share of the pie in fast-growing markets. Companies need to decide what to do with these—either turn them into cash cows or stars with more investment, or sell. Richard Pieris has several question marks: the financial services business, including two finance companies (Richard Pieris Finance and listed Chilaw Finance), listed Arpico Insurance, and fund management firm Arpico Ataraxia Asset Management. These businesses yield relatively low returns.

Oil palm and rubber plantations managed by the group are other question marks.

The group manages three listed plantation companies – Namunukula, Maskeliya and Kegalle – that are diversifying into oil palm to improve profitability. Rubber plantations are making losses, which are offset by the group’s manufacturing and export businesses.

Dogs

The loss-making tea plantations are the group’s dogs, according to First Capital. Dogs are those businesses that are best let go of.

[yellow knifeTop contributor]

I have doubts about above interpretations...

For me

REXP, Namun, KGAL are cash cows....
There are not question marks as companies

[poor boyActive Member]

kgal and namu always produce good profits. last year kgal gave 45 rupees dividend . this year 5 rupees. i also cannot understand as to why this writer says plantation is a question.

[කිත්සිරි ද සිල්වාTop contributor]

Opinions differ.
Follow your heart.  

i also cannot understand as to  why this writer says plantation is a question.

[Afourer]

Guys, i deposited my RICH dividend cheues (2 cheques for 2 accounts) and both got returned. Bank note says "Payment stopped by drawer".

What can i do now? Bank is returning (by post) the cheques to my address.

[RanaTop contributor]

RICHARD PEIRIS & COMPANY PLC
Company ID:- RICH
Date of Announcement:- 01.Jun.2017
Rate of Dividend:- Rs. 0.50 per share / First Dividend
Financial Year:- 2016/2017
Shareholder Approval:- Required
AGM:- 30.Jun.2017
XD:- 03.Jul.2017
Payment:- 10.Jul.2017

[AjithR]

Thank you Rana

[කිත්සිරි ද සිල්වාTop contributor]

Will RICH pass two figure mark (as predicated recently) this time ?

[BackstageTop contributor]

Hope so, I sold half now waiting.

[කිත්සිරි ද සිල්වාTop contributor]

RICH finally hit rich with Double figures.
( Next Port of Call ? Any guesses please ? )

[CKActive Member]

RICH finally hit rich with Double figures.
( Next Port of Call ? Any guesses please ? )

You must be happy kith as this is one of your favourites. Congrats.

[කිත්සිරි ද සිල්වාTop contributor]

Richard Pieris & Company PLC - 05 07 2017

RICH – BUY (LKR 9.90) – 05th July 2017

Diversified into fast growing sectors (FMCG, finance, logistics, plantations, and manufacturing furniture & rubber products)
One of the largest corporate plantations in Sri Lanka (accounts for 6.4% of national Rubber production and 4.0% of Tea production)
High GP Margin of 26% in FY16/17
Growing ROE (ROE increased from 20% to 25% in FY16/17)
FY18 forecasted profit growth 38% YoY
Attractive valuation (FY17/18F: PE 4.65x, PBV 1.4x)
Target price (V) LKR.12.50 (upside 26.2%)
Rs.1.10 dividend announced for FY16/17 (11% Dividend Yield)

[rameez]

Heavy trading today as well, Is it due to inter company trading! Good for those who entered at 9
Anyone expecting it calm down next week.

[yellow knifeTop contributor]

2017

As we have discussed in REXP this company , the holding company of REXP has shown the same pattern. The revenue growth lies outstanding when compared with linear growth.


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[yellow knifeTop contributor]

Company has reported best EPS since 2011

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[yellow knifeTop contributor]

Net Assets has been slowly growing and it seems current market price of Rs 13 was on the cards

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[yellow knifeTop contributor]

Debt to Equity position.

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[yellow knifeTop contributor]

Relationship between Earnings and Dividends

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[rameez]

Very Useful Charts. Thanks.

[Ethical TraderTop contributor]

Thanks YK.

[pjrngroup]

THANKS YK.

[catseye]

Anybody received RICH dividend cheque or online payment?

[කිත්සිරි ද සිල්වාTop contributor]

Not yet.
There were so much disruption in the mail services last few weeks.

Anybody received RICH dividend cheque or online payment?

[catseye]

Not yet.
There were so much disruption in the mail services last few weeks.

Anybody received RICH dividend cheque or online payment?

Thanks Kith. Seems its not due to postal delay. I have given my bank account for direct deposit. So far they didn't do that. So may be delay in issuing the payments.