Colombo Dockyards PLC- Interim Update

Melissa Pereira Fri Jul 10, 2015 3:52 pm

Quarterly revenue decreased by 13% compared to corresponding previous quarter while gross margins increased to 14.12% from 11.5% QoQ. Other income portion also reduced by 13% while distribution and administrative cost increased marginally. However with improved gross profit, net profit managed to gain 1.4% more compared to corresponding previous quarter.….
……. DOCK's price has declined to 5 year low on less than expected performance in last couple of years. But we estimate the counter to be over sold, and the company is expected to return back to historical average levels on recovering from cost overruns by increasing exposure to offshore supply vessel building and ship repairs in the next couple of years. Given that its order book has been already filled till FY17 and also considering the monopolistic position of the industry, LOSEC forecasts company earnings to record 22% CAGR over next three years. Accordingly, our FCFE model values the counter at LKR 200.50, taking a cost of equity of 13%. We revise our recommendation upwards to BUY.
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