● Ceylon Tobacco (CTC) has posted a net profit of LKR832 mn in 3Q09 (up 37.7% YoY) whilst cumulative 1-3Q09 earnings are also up by a strong 39.9% YoY to LKR2,094 mn.
● Earnings have been driven by a 7% YoY growth in net revenues to LKR3,030 mn, supported by a shift into high margin brand/product mix along with the company's focus on effective cost rationalization.
● We are revising up our forecast 2009E net profit by 20.4% to LKR3,325 mn whilst raising projected 2010E net profit up by 10% to LKR3,658 mn on the back of the company's continued focus on improving its brand mix coupled with successful cost rationalization exercises.
● The share is fairly valued on 10.1X forecast 2009E net profit and 9.2X projected 2010E net earnings. Further given the historical dividend payout ratio of circa 85%, we believe the share would continue to be a dividend play.
SRI LANKA EQUITY ANALYTICS
World Trade Center
Colombo
Sri Lanka
Email: sriventure@gmail.com
Web: www.srilankaequity.com
Tuesday, November 17, 2009
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