Chevron Lubricants (LLUB) has posted a net profit of LKR375.9 mn in 4Q09 (vs LKR31.5 mn 4Q08) due to high gross profit margin enjoyed on the back of low raw material cost whilst 2009 net earnings too have increased to LKR1,494.9 mn (up 57.7% YoY), broadly inline with our expectation.
The turnover grew by a marginal 2.1% YoY in 4Q09 whilst the revenue during 2009 dipped by 2.4%. Sales volume during 2009 has witnessed a circa 8% drop. However, the gross profit grew by a strong 162.4% YoY during 4Q09 and 45.6% in 2009 mainly due to a near 40%-50% dip in base oil prices which reached US $ 1800 levels per MT in October 2008.
On the back of rising economic activity in the North & East especially the anticipated revival in agriculture and fisheries we project 2010E net profit to grow by 31.5% YoY to record LKR1,965.8 mn given the base oil prices remain relatively stable.
The share is attractive on 10.3X2010E forecast net profit and 9.7% dividend yield. Maintain BUY.
Sri Lanka Equity Analytics
World Trade Centre
Colombo, Sri Lanka
Email: info@srilankaequity.com
Web: www.srilankaequity.com
Tuesday, March 2, 2010
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