Kelani Cables 3Q net profits soar 228% to Rs. 67 million

Kelani Cables Ltd recorded a substantial increase in net profits for the third quarter ended December 31, 2006 with Rs. 67.3 million compared to Rs. 20.5 million for the corresponding period last year, an impressive increase of 228%.

The group recorded a net profit of Rs. 287 million for the nine-month period compared to Rs. 107 million for the previous corresponding period, an increase of 167%. Accordingly the annualised net profit of Rs. 383 million would result, in a very high earnings per share of Rs. 35.

The turnover for the nine-month period ended December 31 recorded Rs. 2,106 million against Rs. 1214 million for the corresponding period for 2005/06, an increase of 73.4%.

The company manufacturing power cables, telecommunication cables and enamelled winding wires is the premier company today providing high quality products to key government departments, Kelani enamel winding wires are indirectly exported to the European market through export processing zones in the country.

As evident from the substantial increase in profits and turnover the group has tremendously benefited from the construction boom in high rise commercial and apartment buildings and large scale housing projects in the country during the recent past.

Due to large housing projects proposed and several incentives given for infrastructure development in the recent budget the turnover and net profits of the group are expected to accelerate in the near to medium term.

The group which is a subsidiary of ACL Cables Ltd had a small paid up capital of Rs. 109 million and substantial reserves amounting to Rs. 1037 million with a ratio of almost 1:10.

The annualised earnings per share of Rs. 35 has a price earnings ratio of only 5.3 considering the price of Rs. 186 on February 27, which is a substantial discount to overall PE of 15.5 (February 26) and sectoral PE of 10.6. Ceylinco Stocks Brokers (Pvt) Ltd in their research paper dated February has valued the share at Rs. 302 and indicated the possibility of bonus/rights.