RCL - Royal Ceramics

Royal Ceramics Sep net down 35-pct on rising costs

ECONOMYNEXT - Profits at Sri Lanka's listed Royal Ceramics fell 35 percent to 440.5 million rupees in the September 2018 quarter on rising interest expenses and higher production and distribution costs, interim accounts showed.

Earnings were 3.98 rupees a share in the quarter. For the six months to end September 2018, earnings were 7.12 rupees a share on a profit of 789.2 million rupees, down 34 percent from a year earlier, accounts filed with the Colombo Stock Exchange showed.

Royal Ceramics, a unit of listed Vallibel One Plc, was trading 2 rupees lower at 75 rupees.

In the quarter, revenue grew 10 percent from a year earlier to 8.3 billion rupees while cost of sales grew a faster 26 percent to 5 billion rupees which contracted gross profits by 13 percent to 2.4 billion rupees.

Distribution costs rose 26 percent to 1.1 billion rupees and administrative expenses rose 24 percent to 471 million rupees.

Net finance cost increased 52 percent to 463 million rupees.

Borrowings had increased 21 percent from six months to earlier to 18.3 billion rupees at end September.

-Listed Subsidiaries-

Royal Ceramics has two listed subsidiaries, Lanka Ceramics Plc and Lanka Walltiles Plc.

Profits at Lanka Walltiles Plc fell 80 percent from a year earlier to 82 million rupees in the September quarter.

Earnings per share was recorded at 1.58 rupees in the quarter. In the six months to end September earnings were 2.45 rupees a share on a profit of 125.2 million rupees, down 75 percent from a year earlier, interim accounts filed with the Colombo Stock Exchange showed.

Lanka Walltiles was trading 2.90 rupees lower at 72 rupees.

In the quarter, revenue grew 11 percent to 4.8 billion rupees but cost of sales grew a faster 29 percent to 3.8 billion rupees, leading to a 26 percent decline in gross profits to 1 billion rupees.

Distribution expenses rose 27 percent to 491 million rupees, administrative costs rose 27 percent to 293 million rupees and finance costs soared 116 percent to 192 million rupees.

Profits at Lanka Ceramic fell 91 percent from a year earlier to 11.8 million rupees in the September quarter as revenues fell 4 percent to 45.4 million rupees and cost of sales grew 7 percent to 26.5 million rupees.

Profits were impacted by other incomes falling 92 percent from a year ago to 10 million rupees.

Lanka Ceramic last traded at 132.50 rupees. (COLOMBO, 13 November 2018)

RCL Update

December quarter too followed the same trend with YoY PAT down due to higher interest cost. However company was able to turnaround in March with YoY growth in earnings. If they could further manage the interest cost in June 19 quarter they can show a growth in YoY PAT. Historically June quarter revenue to be lower compared to other quarters one should expect lessor PAT in June quarter QoQ.

The stock price was declined to 75/- level as at the beginning of 2019 and further slipped below 60/- by end of May.

However since then the technical charts display some bullish sentiments in the stock pushing back to 70/- levels as at last Friday.

Positive factors for the stock price;
a) Good profit in March quarter and expected good report (YoY) for June quarter
b) Market positive momentum has started to trickle down to RCL as well
c) Current price is only 1/3 rd of its NAV
d) RSI is at 72 moved beyond 70/- levels for the first time for the year with more investor buying interest

Update after week-end posting

RCL stock price picked up by another 5/- and back @ year-beginning price level.

Some good volumes seen trading today.

RSI moved to 79 from 73 last Friday.

EPS - 23.75
Book Value - 207.51
Current Price 73.60

Yes SLS talked about this @ 60's..., But I didn't enter.

How is entering @ current price...? (June quarter will not be good for all manufacturing sector shares...)

Is it good for waiting till result...?

RCL has a big seller it seems. How ever this is a value share. Will take its time to go up. If you can buy and hold it is a good one. The best way is to read the financial reports of the last two quarters Vs. Last year and then analyse for your self, rather than taking only current picture.

Fireandwater wrote:RCL has a big seller it seems. How ever this is a value share. Will take its time to go up. If you can buy and hold it is a good one. The best way is to read the financial reports of the last two quarters Vs. Last year and then analyse for your self, rather than taking only current picture.

Thanks dear...

What would happen if this decision get revised that was implemented in Nov-2015?

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Today fell below 80 as well and reaching almost lower band of neutral RSI. Maximum it can drop another couple of rupees and move back towards 85/- if negative news are fully factored in the market by tomorrow.

Encouraging daily chart however volumes are not good yet. From 52 in 38 second day to 67 now. High volumes can take it to 80 under the current market context.

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A significant volume is trading though the price is still stagnate below 65. Seems to me is that institutional play is there. According to my analysis RCL's intrinsic value is far greater than the current market price. Worthy to study this share bit serious now.

Huge Foreign selling but locals buying everything around 64-65. Have to wait till the foreign selling is over for the price to move higher.

seek wrote:What would happen if this decision get revised that was implemented in Nov-2015?

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So it got implemented

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What was the source please