● Chevron Lubricants (LLUB) has posted a net profit of LKR486.8 mn (up 65.6% YoY) in 3Q09 due to high gross profit margin enjoyed on the back of low raw material cost whilst cumulative net earnings too have increased to LKR1,118.9 mn (up 22.1% YoY).
● The turnover has dipped by 11.3% YoY in 3Q09 whilst the sales volume has witnessed a circa 6%-8% drop. However, the gross profit grew by a strong 61.5% YoY during 3Q09 mainly due to a near 40%-50% dip in base oilprices which reached US $ 1800 levels per MT in October 2008.
● LLUB has planned (subject to shareholder approval) to increase the number of shares by way of a sub division of each existing ordinary share to two shares (two for one). This will increase the issued number of shares from its current 60mn to 120 mn and thus increasing the liquidity.
● We revise up the forecast net profit to LKR1,432.5 mn (up 26.4% YoY) in 2009E supported by the better performance in 3Q09 whilst expecting stable earnings in 4Q09. Further, 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 33% YoY given the base oil prices remain relatively stable.
● The share is attractive on 8.5XFY09E forecast net profit and 6.3% dividend yield.
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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