ASIAN ELECTONICS
 
  

 
 

SHARETIPSINFO >>Research Reports >> ASIAN ELECTRONICS (17-04-2009)

 

LISTING
CMP
Rs 26
52 WEEK HIGH/LOW
Rs 219/Rs17
FACE VALUE

Rs 10

PE RATIO

4

VOLUME

173076

P/BV
0.08

COMPANY OVERVIEW:
Company got established in the year 1965. Management change took place in 1980 thereafter it became part of Shah Group. In 1980 Mr. Suresh H Shah took over this sick company and turn around it. The company became leader in the Capacitor Industry.
AEL is involved in design, manufacturing and marketing of Energy Efficient Product and specializing in lighting solution.
Asian Electronics Ltd (AEL) diversified into lightning Industry in the year 1998.
AEL has institutional customer base. It enjoys the confidence of more than 500 institutional customers spread across the entire industry segment.


Product Range:
Energy Efficient Lighting System.
Range of Luminaries-Asian & Asian Raymold
Intelligent Lighting System
Low Tension & High Tension Switched Capacitor system
High Tension substation Load Management System

Distribution Network:
AEL has the distribution network of more than 300 distributors servicing a wide network of retailers across the country.
Production Facilities:
AEL has world class manufacturing facility at Nashik, Silvasa and Solan (HP).


PLASTIC TO POWER NEW BUSINESS YET TO SEE COMMERCIALISATION:
AEL has acquired the technology from Prof.Alka Zalgaonkar for converting waste plastic into hydrocarbon and in turn to convert into power. AEL manufactures equipment to set up plant to make power from plastic waste.

INVESTMENT RATIONAL:
GOVT. thrust on efficient power consumption is a big opportunity for the growth of AEL.
Growing need for energy saving device will generate good business for the company.
Company has unique technology to produce power from the plastic. This technology will fetch good amount of revenue for the company in future.
Company is providing lighting solution to retail outlet and Mall; these are growing at rapid pace.
Company has innovative plan to market its product on deferred payment basis.
Acquired technology from Prof.Alka Zadgaonkar for converting waste plastic into hydrocarbon and in turn to convert into power. This will add to top line and bottom line in the future.
Good distribution Network will help the company reaching the potential customers.

KEY RISK:
An unfavorable movement in the exchange rate can increase the cost of imported inputs.
Competition from organized and unorganized sector.
Plastic to Power is new technology, how the benefits of the technology realized on commercial basis is still to be seen. Any change in this could affect the future earning potential of the company.

SHAREHOLDING PATTERN:

 

 

NO.OF SHARES

% OF TOTAL

PROMOTER

10009190

 

33.49%

 

INSTITUTION

1671168

 

5.59%

 

GENERAL PUBLIC

18204586

 

60.92%

 

GRAND TOTAL

29884944

 

100%

 

 

FINANCIAL:

 

 

31/03/05

31/03/06

31/03/07

31/03/08

TOTAL SALES

113.48

163.64

380.06

222.37

EXPENDITURE

-86.71

-124.89

-277.39

-163.23

OPERATING PROFIT

26.77

38.75

102.67

59.14

DEPRECIATION

-7.72

-8.4

-8.99

-10.25

PBIT

 

19.05

30.35

93.68

48.89

INTEREST

 

-6.27

-7.8

-16.63

-23.4

PBT

 

12.78

22.55

77.05

25.49

TAX

 

-0.43

2.6

-10.42

-0.73

EXTRA ORD INCOME

0

0

0

-178.82

PAT

 

12.35

25.15

66.63

-154.06

CHANGE IN TOTAL SALES: CAGR IN TOTAL SALES IS 25.13%.
CHANGE IN OPERATING PROFIT: CAGR IN OPERATING INCOME IS 30.23%.

CHANGE IN NET PROFIT:
Negative Net profit figure seen in FY2008 is due to the negative extraordinary income otherwise the operation is fully profitable. We are leaving the extraordinary figure to get the real glimpse of the change in Net Profit.


CAGR IN NET PROFIT IS 25.3%.

KEY HIGHLIGHTS:
Total Income grew at CAGR of 25.13%.
Operating Income grew at CAGR of 30.3%.
Net Profit grew at CAGR of 25.3%.In this we have excluded extra ordinary loss in the FY2008 because operation was profitable and inclusion of extraordinary loss could not have reflected true earning capacity of the firm.

RATIOS:

 

 

31/03/05

31/03/06

31/03/07

31/03/08

EPS

 

4.133199

8.417001

22.2992

-51.5596

OPM

 

23.59006

23.68003

27.01416

26.59531

NPM

 

10.88297

15.3691

17.53144

-69.2809

INTEREST COVER

3.038278

3.891026

5.633193

2.089316

KEY HIGHLIGHTS:
EPS grew from Rs 4.1 in FY2005 to Rs22.29 in FY2007 but took a beating in FY2008 and EPS was Rs-51.5 this drastic fall or loss is because of extra ordinary loss.
OPM improved over a period of 4 years by 3 percentage points from 23.5 to 26.5.
NPM improved from 10.8 in FY2005 to 17.5 in FY2007 but due to loss in FY2008 NPM turned negative.
Interest cover declined from 3 in FY2005 to 2 in FY2008 due higher interest outgo as company embarked the expansion drive and ventured into new related business ie; generation of power from plastic.

COMPARISION OF Q3FY2009 WITH Q3FY2008:

 

 

31/12/07

%CHANGE

31/12/08

TOTAL SALES

45.44

21.50%

 

55.21

EXPENDITURE

-32.4

 

 

-42.41

OPERATING PROFIT

13.04

-1.84%

 

12.8

DEPRECIATION

-2.64

 

 

-2.48

PBIT

 

10.4

 

 

10.32

INTEREST

 

-6.39

 

 

-8.6

PBT

 

4.01

 

 

1.72

TAX

 

0.03

 

 

-0.1

PAT

 

4.04

-59%

 

1.62

 

KEY HIGHLIGHTS:
Sales increased by 21.5% in Q3FY2009 as compared to Q3FY2008.
Operating profit declined by 1.84% in Q3FY2009 as compared to Q3FY2008 due to higher input cost.
Net Profit down by 59% due to higher interest outgo and the lower base effect.

VALUATION:
At Cmp of Rs27 it is trading at 4.2 xs. We value the company at 10 xs. This gives the fair price to be somewhere near Rs42 per share. We have accounted for the risk associated in the business by downgrading the growth in earning from 25% to 10%. In ideal case PEG should be near 1.
Other good reason to buy is that the stock is trading below its book value. As and if noticed by the market, the price will catch the right valuation.

CONCLUSION:
We expect good return from the counter. Investor should accumulate on every dip. The investment horizon should be eight month to one year.

 

     

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