ACL Cables PLC - 2Q16 Earnings Review--SC Securities Research

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[Hawk Eye]

Updated with latest RM prices and Quarterly Report

The principal raw materials used in the production of wires and cables are copper and aluminum as conductive materials and plastic and rubber for insulation. All the raw materials are at its lowest, therefore input cost of Cable companies are low and margins are high.

Copper decreased to 2.08 USD/LB on Tuesday November 17 from 2.12 USD/LB in the previous trading day. Copper averaged 3.05 from 2010 until 2015, reaching an all time high of 4.58 in February of 2011 and a record low of 2.08 in November of 2015.
Aluminum decreased to 1471 USD/Tonne on Monday November 16 from 1490 USD/Tonne in the previous trading day. Aluminum averaged 1802.73 from 1989 until 2015, reaching an all time high of 3271.25 in July of 2008 and a record low of 1022.70 in November of 1993.
Rubber increased to 157.10 JPY/kg on Tuesday November 17 from 156.20 JPY/kg in the previous trading day. Rubber averaged 264.45 from 2010 until 2015, reaching an all time high of 526.40 in February of 2011 and a record low of 154.90 in November of 2015
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ACL cables
Annual Sales
2009/10---: 7,242 Mn
2010/11---: 9,569 Mn
2011/12---: 10,306 Mn
2012/13---: 11,326 Mn
2013/14---: 11,446 Mn
2014/15---: 14,427 Mn

Latest Quarterly Sales- 2015/16
2015/16 –Q1 -3,327Mn
2015/16 –Q1 -3,352Mn

Sales grown by 26% during the year 2014/15.
… During the second half of 2014/15, there was a surge in sales in the Dealer market and in the Institutional market including the Ceylon Electricity Board which is our most important Customer. This was mainly due to the increase in infrastructure development activities of the Government as well as those of the Private sector… Annual Report 2014/15- MDs Review

Compared to June and September there is a marginal drop in sales, but the GP margin improved by further 2% increasing the bottomine

Gross Profit - Annual
2009/10---: 16%
2010/11---: 13%
2011/12---: 17%
2012/13---: 16%
2013/14---: 17%
2014/15---:  18%

Gross Profit -Quarter
2015/16---Q1: 22%
2015/16---Q1: 24%


As highlighted above, most of the raw material related  to cable production was high during 2011. It is clearly reflected in ACL cables performance  as well, by reporting a low GP margin % for 2011 and high at 2015.  And the forecast prices  for these metals are expected to be remain low

EPS-Annual
2014/15-Q1- 0.51
2014/15-Q2-2.86
2014/15-Q3-3.92
2014/15-Q4-7.26

EPS- Latest Qtr
2015/16-Q1- 4.41
2015/16-Q2- 4.56

Annualized – 17.94
Again the trend I note in the revenue and profit pattern are, they report a low revenue and profit for June Qtrs and keeps improving for the balance 3 Qtrs. Accordingly June  2015/16 Quarter has been a good start for them With a Revenue of 3.35Bn , GP margin 22% and EPS 4.41. Though the September Quarter sales hasn’t improved much due to unfavorable conditions from politics, economy and Industry the improving GP margin due to falling RM prices has pushed the bottomline

Cash Balance
2009/10---: 99 Mn
2010/11---: (284) Mn
2011/12---: 137 Mn
2012/13---: 402 Mn
2013/14---: 314 Mn
2014/15---:  631 Mn

2015/16 Q1 : 801 Mn
2015/16 Q1 : 1544 Mn


Very healthy cash position. This will reduce their finance cost in coming  Qtrs, and giving room for more expansions
   
Net  Assets/Share
2009/10---: 69.85
2010/11---: 70.45
2011/12---: 87.54
2012/13---: 95.48
2013/14---: 101.84
2014/15---:  123.39
2015/16 Q1 : 127.82
2015/16 Q2 : 130.55

HE

[malan 100]

Thanks hawk eye. Very useful information