Interim Update of Textured Jersey Lanka PLC for Quarter Ending 31st March 2015

Melissa Pereira Mon Jun 29, 2015 4:38 pm

Annual revenue increased by 7.5% compared to previous year while gross profit margin slightly increased. Other income has increased by 64% YoY while distribution and administration cost has increased by 6.6%. Net profit attributable to common shareholders increased by 16% YoY while maintaining gearing at zero leve

We expect TJL to be on a solid growth platform for the coming years due to enhanced capacity, strategic investments along with regional expansion plans. While we maintain our position in the growth trajectory of selling price per unit, we have slightly revised the sales capacity growth upward on the back of expected increase in sales volumes from main customers (US and Europe). Declining energy cost due to cost savings from multi fuel boiler and declining momentum of yarn prices in short run would further ease down the cost structure while capacity utilization to be maintained at 90-95%. On the revised growth estimates of the company and reduced hurdle rate, our FCFE model values the counter at LKR 30.70, taking a cost of equity of 13%. We maintain our recommendation HOLD.

Please refer the link for more details - https://drive.google.com/file/d/0B6oYIOgoj7LDb3A0MjRmTU5HenM/view?usp=sharing