Earnings Review - Q1 FY 16

65, Braybrooke Place, Colombo 2, Sri Lanka

09 June 2016
research@bartleetreligare.com, +94 11 5220200

BRS Research
Chevron Lubricants Lanka PLC (LLUB: LKR 332.90)
Head of Research - Nikita Tissera
Tax concerns reverse an otherwise great story : HOLD Senior Research Analyst - Jennita Fernando

LLUBs Q1 FY 16 bottom line grew 32.7% YoY to LKR 986mn resulting in an EPS of LKR 8.22.
Higher volumes from both industrial and automobile sectors, savings from lower base oil
prices and growth in finance income (+42% YoY) bolstered quarterly earnings. The company Trading Snapshot
recorded probably its highest ever GP margin of 48.7% and EBIT margin of 41.6% in Q1 FY 16.
Top line grew 11% YoY to LKR 3.12bn mainly driven by volumes induced by discounts and Market cap (LKR mn) 39,948
Market cap (USD mn) 271
promotions. We believe the rise in motor vehicle registrations during FY 2015 (+56% YoY) to
Outstanding equity shares (mn) 120
aid lubricant volumes in the foreseeable future. Our previous BUY call was based on the re-
Public Holding (%) - Mar '16 49.00%
duced corporate tax of 15% and risk free rate of 9.95%. However we no longer look at tax
52-week High/Low (LKR) 415.00/300.00
reduction as a real possibility and have adjusted our forecast accordingly. We have arrived at
YTD ASPI return (%) -5.3%
a DCF based TP of LKR 314 and DPS inclusive total return of LKR 338 (+2% on CMP) pre-
YTD Stock return (%) -3.2%
subdivision, and downgrade to HOLD.
Dividend Yield (%) 7.2%
All figures in LKR mn 2012 2013 2014 2015 2016E 2017E 2018E
Beta 0.46
Revenue 11,754 11,197 11,520 11,564 12,060 13,206 14,833
Revenue growth (%) 6.5% -4.7% 2.9% 0.4% 4.3% 9.5% 12.3%
Gross profit 3,804 4,120 4,603 5,196 5,691 6,520 7,815
Gross profit margin (%) 32.4% 36.8% 40.0% 44.9% 47.2% 49.4% 52.7% Valuation Summary
EBIT recurring 2,913 3,174 3,566 4,143 4,737 5,440 6,613
EBIT margin (%) 24.8% 28.3% 31.0% 35.8% 39.3% 41.2% 44.6% CMP (LKR) 332.90
Profit attributable to equity holders 2,261 2,531 2,742 3,092 3,595 4,098 5,036
BRS EPS As Adjusted (LKR) 18.84 21.10 22.85 25.77 29.96 34.15 41.96 Intrinsic value (LKR) 314.56
BRS EPS growth (%) 13.7% 11.9% 8.3% 12.8% 16.3% 14.0% 22.9%
DPS (LKR) 24.00
NAV per share (LKR) 34.45 40.33 43.33 39.06 45.02 55.17 72.14
DPS (LKR) 11.00 15.00 20.00 23.00 24.00 24.00 25.00 Target price based on total return (LKR) 338.56
Dividend yield (%) 5.4% 5.6% 5.0% 6.7% 7.2% 7.2% 7.5%
P/E (x) 10.7 x 12.7 x 17.5 x 13.4 x 11.1 x 9.7 x 7.9 x Valuation method DCF valuation
P/BV (x) 5.9 x 6.6 x 9.2 x 8.8 x 7.4 x 6.0 x 4.6 x
ROE % 62.0% 56.4% 54.6% 62.5% 71.3% 68.2% 65.9% Total return % 1.7%
Source: Company data and BRS Equity Research Rating Hold
Top line growth steered by volumes
The top line grew 11% YoY to LKR 3.12bn in Q1 FY 16 aided by demand across industrial and LLUB Price Vs ASPI Movement
automobile sectors from both local and export sales. The company offered discounts and pro-
ASPI LLUB (LKR)
motions to share the benefit of lower base oil prices, resulting in higher volumes. Further, dur- ASPI
8000 LLUB 500
ing CY 2015, total motor vehicle registrations grew by ~56% whilst motor car registrations in-
creased by ~172% YoY to 106,000. The growth in automobile sector would bode well for LLUB in 450
7000
the medium to long term, as ~75% of its top line is dependent on the automobile sector. The 400
previously NBT exempt lubricant industry has now been slapped with 2% NBT together with the
6000 350
4% rise in VAT to 15%. However, the industry as a whole expects to pass these taxes to the end
customer, and we have not factored in the possible resultant impact on volumes, in our fore- 300
5000
casts. We have assumed a volume growth of 12% and price reduction of 3% in FY 2016E and 250
volume growth of 4% and price increase of 8% in FY 2017E and FY 2018E respectively.
4000 200
Apr-14 Nov-14 May-15 Dec-15 Jun-16
Margins expand with base oil price savings
LLUB achieved its highest GP and EBIT margins so far in Q1 FY 16, with the GP margin at 48.7%
DPS and Payout Ratio
(Q1 FY 15 42.5%) and EBIT margin at 41.6% (Q1 FY 15 35.5%). Such an achievement was
realised, as the company shifted its focus from maintaining market share to margin share, cou- DPS (LKR) %
pled with savings from lower base oil prices, despite the sluggish industry growth climate. We 32.00 DPS Payout ratio 120%
have maintained GP margins at ~46% and EBIT margins at ~38% from FY 2016E to FY 2018E. 28.00 100%
24.00
80%
Valuation ~2% upside on total return; downgrade to HOLD 20.00
We have revised the corporate tax rate to pre-budget level of 28%, given the delay in legalising 16.00
60%

the proposed rate of 17.5% (refer sensitivity on pg 4). In addition, the risk free rate has risen by 12.00 40%
~2% and MPS by ~10% since the last review. Hence, our DCF based valuation has dropped to
8.00 20%
LKR 314 with a total return of LKR 338 and we downgrade to HOLD. The post-subdivision TP 2012 2013 2014 2015 2016E 2017E 2018E
should be halved from the current levels. On relative valuations, LLUB trades at a forward PER
of 11.1x (FY 2016E EPS LKR 29.96) based on CMP. The sector PER stood at 8.8x as at
08.06.2016. Page 1
For analyst certification and other important disclosures, please refer to the Disclosure and
Disclaimer section at the end of this report.
 Company Information Note

65, Braybrooke Place, Colombo 2, Sri Lanka

09 June 2016
research@bartleetreligare.com, +94 11 5220200

Chevron Lubricants Lanka PLC (LLUB) Year Ending 31st December

Summary Information
2012 2013 2014 2015 2016E 2017E 2018E

BRS EPS as adjusted (LKR) 18.84 21.10 22.85 25.77 29.96 34.15 41.96
Company profile BRS EPS growth (%) 13.7% 11.9% 8.3% 12.8% 16.3% 14.0% 22.9%
P/E (x) 10.7 x 12.7 x 17.5 x 13.4 x 11.1 x 9.7 x 7.9 x
Chevron is in the business of importing, manu- Reported EPS adjusted for split (LKR) 18.88 21.10 22.89 25.77 na na na
Sector PE (x) 9.9x 13.0X 22.1x 20.2x na na na
facturing and marketing of lubricants, greases,
P/E on reported EPS (x) 10.7 x 12.7 x 17.5 x 13.4 x na na na
brake fluid and specialty products. It is the mar- NAV per share (LKR) 34.45 40.33 43.33 39.06 45.02 55.17 72.14
P/BV (x) 5.9 x 6.6 x 9.2 x 8.8 x 7.4 x 6.0 x 4.6 x
ket leader with a ~52% market share in a very
Sector PBV (x) 1.6x 1.8x 2.7x 2.8x na na na
competitive industry with 13 licensed players. It DPS (LKR) 11.00 15.00 20.00 23.00 24.00 24.00 25.00
Dividend yield (%) 5.4% 5.6% 5.0% 6.7% 7.2% 7.2% 7.5%
also exports finished goods to Maldives and
FCFF (LKR 000) 2,846,205 1,587,596 1,740,841 3,088,287 3,755,529 4,018,632 4,883,773
Bangladesh, though on a relatively smaller scale. FCFE (LKR 000) 2,846,427 1,587,680 1,741,166 3,088,315 3,755,868 4,019,064 4,884,205
CFPS (LKR) 12.25 (0.27) (9.96) 8.74 1.29 9.48 15.69
The company relocated its blending plant to
P/CFPS (x) 16.5 x nm nm 39.4 x nm 35.1 x 21.2 x
Sapugaskande in November 2014 with an addi- Mkt price adjusted for splits 202.00 267.80 399.60 344.00 332.90 332.90 332.90
Weighted average shares (000) 120,000 120,000 120,000 120,000 120,000 120,000 120,000
tional capacity of ~20%.
Average mkt cap (LKR 000) 24,240,000 32,136,000 47,952,000 41,280,000 39,948,000 39,948,000 39,948,000
Enterprise value (LKR 000) 21,722,756 29,650,826 46,661,470 38,940,951 37,453,570 36,315,371 34,432,030
EV/Sales 1.8 x 2.6 x 4.1 x 3.4 x 3.1 x 2.7 x 2.3 x
EV/EBITDA 7.3 x 9.2 x 12.9 x 9.1 x 7.7 x 6.5 x 5.1 x
Revenue LKR 'mn % Growth (2012-18E) Income Statement (LKR 000)
12% 14,833 Revenue 11,754,046 11,197,152 11,519,891 11,563,854 12,060,002 13,206,090 14,833,080
10% Gross profit 3,804,084 4,120,303 4,602,816 5,195,832 5,691,454 6,519,980 7,814,707
4% EBITDA recurring 2,956,746 3,220,484 3,613,771 4,286,300 4,872,897 5,579,374 6,752,927
11,754 -5% 3% 0%
Depreciation and amortisation (43,836) (46,234) (48,009) (143,068) (135,608) (139,504) (139,672)
EBIT recurring 2,912,910 3,174,250 3,565,762 4,143,232 4,737,289 5,439,870 6,613,255
Interest income 34,638 279,044 91,810 175,350 197,538 213,568 333,047
Interest expense (309) (117) (451) (38) (471) (600) (600)
Exceptionals/non-recurrings 4,563 421 4,839 - - - -
Tax expense (845,630) (921,697) (952,800) (1,226,709) (1,347,205) (1,554,530) (1,910,068)
Net income 2,261,263 2,531,480 2,741,995 3,091,835 3,595,430 4,098,308 5,035,634
Profit attributable to equity holders 2,261,263 2,531,480 2,741,995 3,091,835 3,595,430 4,098,308 5,035,629
Statement of Financial Position (LKR 000)
2012 2013 2014 2015 2016E 2017E 2018E 2018E Cash and cash equivalents 2,517,244 2,485,174 1,290,530 2,339,049 2,494,430 3,632,629 5,515,970
Inventories 2,132,118 1,928,704 1,746,241 1,308,619 1,472,910 1,654,373 1,935,616
Trade receivables 986,882 1,252,068 1,130,140 1,111,409 1,227,425 1,516,508 1,703,342
Revenue breakdown Fixed assets 215,813 1,296,651 2,243,616 2,195,827 2,150,569 2,143,125 2,151,785
Shortterm investments - - - - - - -
Local sales Export sales
Total assets 5,947,508 7,052,472 6,476,801 7,045,005 7,431,253 9,056,928 11,446,077
Trade payables 897,497 1,059,802 652,962 627,179 859,198 1,130,488 1,269,764
8% Interest bearing debt -short term - - - - - - -
FY 2015 Interest bearing debt -long term - - - - - - -
8%
Total liabilities 1,813,195 2,212,451 1,277,590 2,357,975 2,028,794 2,436,161 2,789,676
Shareholders equity 4,134,313 4,840,021 5,199,210 4,687,029 5,402,459 6,620,767 8,656,401
Total equity 4,134,313 4,840,021 5,199,210 4,687,029 5,402,459 6,620,767 8,656,401
FY 2014 Net debt (cash) (2,517,244) (2,485,174) (1,290,530) (2,339,049) (2,494,430) (3,632,629) (5,515,970)
Total capital employed 4,134,313 4,840,021 5,199,210 4,687,029 5,402,459 6,620,767 8,656,401
Casf flow (LKR 000)
Cash flow from operations 2,913,609 2,715,618 2,735,614 3,183,705 3,845,628 4,150,261 5,031,671
92% Net working capital 494,835 72,850 (120,785) 394,146 (49,841) (223,627) (357,874)
92%
Capital expenditure (67,627) (1,128,106) (995,097) (95,446) (90,439) (132,061) (148,331)
Free cash flow 2,845,982 1,587,512 1,740,517 3,088,260 3,755,190 4,018,200 4,883,341
Investing cash flows (63,064) (1,127,685) (990,258) (95,188) (90,248) (132,061) (148,331)
Equity capital - - - - - - -
Dividends paid (1,380,000) (1,620,000) (2,940,000) (2,040,000) (3,600,000) (2,880,000) (3,000,000)
EPS (LKR) Trend in EPS and DPS Net borrowings - - - - - - -
DPS (LKR)
Other financing cash flows - - - - - - -
45.00 28.00
Net cash flow 1,470,545 (32,067) (1,194,644) 1,048,518 155,381 1,138,200 1,883,341
40.00 EPS DPS Key ratios
24.00
Revenue growth (%) 6.5% -4.7% 2.9% 0.4% 4.3% 9.5% 12.3%
35.00 EBIT growth (%) 7.4% 9.0% 12.3% 16.2% 14.3% 14.8% 21.6%
20.00
Gross profit margin (%) 32.4% 36.8% 40.0% 44.9% 47.2% 49.4% 52.7%
30.00
16.00 EBITDA margin (%) 25.2% 28.8% 31.4% 37.1% 40.4% 42.2% 45.5%
25.00 EBIT margin (%) 24.8% 28.3% 31.0% 35.8% 39.3% 41.2% 44.6%
12.00 Net profit margin 19.2% 22.6% 23.8% 26.7% 29.8% 31.0% 33.9%
20.00 ROCE % 79.9% 70.7% 71.0% 83.8% 93.9% 90.5% 86.6%
15.00 8.00 ROE % 62.0% 56.4% 54.6% 62.5% 71.3% 68.2% 65.9%
Payout ratio (%) 58.4% 71.1% 87.5% 89.3% 80.1% 70.3% 59.6%
10.00 4.00 Debt/equity (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2012 2013 2014 2015 2016E 2017E 2018E Net debt/equity (%) -60.9% -51.3% -24.8% -49.9% -46.2% -54.9% -63.7%
Gearing (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Interest cover (x) nm nm nm nm nm nm nm

Page 2
Source: LLUB Annual Reports and BRS Research
 BRS Equity Research

Q1 FY 16 Performance

All figures in LKR 'mn Q1 FY 16 Q1 FY 15 Q4 FY 15

Revenue 3,120 2,812 2,958

YoY growth % 11.0% -5.9% 7.8%

QoQ growth% 5.5% 2.5% -1.3%

Cost of sales (1,600) (1,616) (1,612)

Gross Profit 1,520 1,196 1,346

Gross Profit margin % 48.7% 42.5% 45.5%

Recurring Net Profit 986 743 713

BRS EPS as adjusted (LKR) 8.22 6.19 5.94

YoY growth % 32.7% -2.7% 28.5%

QoQ growth% 38.2% 33.8% -14.5%

NAV per share (LKR) 47.27 49.52 39.03

ROCE % 76.5% 61.7% 83.9%

ROE % 57.4% 47.1% 62.5%

EV/Sales (x) 2.9 4.0 3.4

EV/EBITDA (x) 7.4 12.3 9.1

Lubricant Industry Vs LLUB Sales and Market Share

LLUB Sales Quantity (KL)

Market share (%)
Qty (KL)
Total Market Sales (KL)

70 70,000
Market share
60 60,000

50 50,000

40 40,000

30 30,000

20 20,000

10 10,000

0 0
2010 2011 2012 2013 2014

Source: PUCSLand BRS Equity Research

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 BRS Equity Research

Sensitivity of corporate tax rate to total return

We have used 28% tax rate as the base case, as the 17.5% proposed rate is yet to be legalised. Hence, we
have done a sensitivity to consider both scenarios.

FY 2016E Total return

Tax rate Upside on TR
NP (LKR 'mn) Forward PER(x) (LKR)

17.5% 3,959 10.1 364.10 9.4%

28% 3,595 11.1 338.56 1.7%

Source: BRS Equity Research

Valuations assumptions

Based on a free cash flow valuation we have arrived at a target price of LKR 314.56 . Our valuations are based
on the following assumptions:

WACC 12.2%
Terminal growth rate - 3%
Risk free rate 11.96% (previous - 9.95%)

Sensitivity of target price to risk free rate & growth rate

Risk free rate (Five year bond rate)

314.56 10.0% 11.0% 11.96% 12.0% 13.0%

Growth rate 2% 339.39 318.36 300.78 300.09 284.06

3% 359.47 334.85 314.56 313.78 295.54
4% 385.11 355.49 331.56 330.64 309.48

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 BRS Equity Research

Financial Analysis

Income statement - Chevron Lubricants Lanka PLC

Year Ending 31st December 2012 2013 2014 2015 2016E 2017E 2018E
Net turnover 11,754,046 11,197,152 11,519,891 11,563,854 12,060,002 13,206,090 14,833,080
YoY growth % 6.5% -4.7% 2.9% 0.4% 4.3% 9.5% 12.3%
Cost of Sales (7,949,962) (7,076,850) (6,917,075) (6,368,022) (6,368,548) (6,686,110) (7,018,373)
YoY growth % 5.1% -11.0% -2.3% -7.9% 0.0% 5.0% 5.0%
Gross Profit 3,804,084 4,120,303 4,602,816 5,195,832 5,691,454 6,519,980 7,814,707
YoY growth % 9.5% 8.3% 11.7% 12.9% 9.5% 14.6% 19.9%
Gross profit margin 32.4% 36.8% 40.0% 44.9% 47.2% 49.4% 52.7%
Other operating Income 12,294 7,061 13,140 10,900 7,103 8,000 8,800

Total SG & A expenses (898,904) (952,694) (1,045,356) (1,063,501) (961,268) (1,088,110) (1,210,251)
YoY growth % 15.2% 6.0% 9.7% 1.7% -9.6% 13.2% 11.2%
Total depreciation (43,836) (46,234) (48,009) (143,068) (135,608) (139,504) (139,672)
EBIT including non-recurring items 2,917,473 3,174,670 3,570,601 4,143,232 4,737,289 5,439,870 6,613,255
Non-recurring items 4,563 421 4,839 - - - -
EBIT excluding non-recurring items 2,912,910 3,174,250 3,565,762 4,143,232 4,737,289 5,439,870 6,613,255
YoY growth % 7.4% 9.0% 12.3% 16.2% 14.3% 14.8% 21.6%
EBIT margin 24.8% 28.3% 31.0% 35.8% 39.3% 41.2% 44.6%
EBITDA excluding non-recurring items 2,956,746 3,220,484 3,613,771 4,286,300 4,872,897 5,579,374 6,752,927
YoY growth % 7.1% 8.9% 12.2% 18.6% 13.7% 14.5% 21.0%
EBITDA margin 25.2% 28.8% 31.4% 37.1% 40.4% 42.2% 45.5%

Finance Income / Cost 193,983 278,927 129,033 175,312 205,345 212,968 332,447

Recurring profit before tax 3,106,893 3,453,177 3,694,795 4,318,544 4,942,634 5,652,838 6,945,702
YoY growth % 12.8% 11.1% 7.0% 16.9% 14.5% 14.4% 22.9%
Income tax expense (845,630) (921,697) (952,800) (1,226,709) (1,347,205) (1,554,530) (1,910,068)

Profit after taxation 2,261,263 2,531,480 2,741,995 3,091,835 3,595,430 4,098,308 5,035,634
YoY growth % 13.7% 11.9% 8.3% 12.8% 16.3% 14.0% 22.9%

Earnings per share - unadjusted (1) 18.88 21.10 22.89 25.77 29.96 34.15 41.96
Earnings per share - BRS adjusted (2) 18.84 21.10 22.85 25.77 29.96 34.15 41.96

Source: Company Financial Reports and BRS Equity Research

Note 1: Based on earnings as reported (unadjusted for non-recurring) share data adjusted for splits and super gains tax
Note 2: EPS adjusted for share split, consolidations and non recurring information

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 BRS Equity Research

Financial Analysis

Income statement - Chevron Lubricants Lanka PLC

Year Ending 31st December 2015 Q1 16 Q2 16E Q3 16E Q4 16E 2016E 2017E 2018E
Net turnover 11,563,854 3,120,035 2,854,901 3,016,504 3,068,563 12,060,002 13,206,090 14,833,080
YoY growth % 0.4% 11.0% 2.1% 0.6% 3.7% 4.3% 9.5% 12.3%
Cost of Sales (6,368,022) (1,600,212) (1,473,102) (1,652,526) (1,642,708) (6,368,548) (6,686,110) (7,018,373)
YoY growth % -7.9% -1.0% -3.0% 1.9% 1.9% 0.0% 5.0% 5.0%
Gross Profit 5,195,832 1,519,823 1,381,799 1,363,977 1,425,855 5,691,454 6,519,980 7,814,707
YoY growth % 12.9% 27.1% 8.1% -0.9% 5.9% 9.5% 14.6% 19.9%
Gross profit margin 44.9% 48.7% 48.4% 45.2% 46.5% 47.2% 49.4% 52.7%
Other operating Income 10,900 1,103 2,000 2,000 2,000 7,103 8,000 8,800

Total SG & A expenses (1,063,501) (221,924) (237,092) (249,185) (253,067) (961,268) (1,088,110) (1,210,251)
YoY growth % 1.7% 11.7% -9.0% -13.7% -19.8% -9.6% 13.2% 11.2%
Total depreciation (143,068) (37,256) (32,821) (32,781) (32,750) (135,608) (139,504) (139,672)
EBIT including non-recurring items 4,143,232 1,299,002 1,146,706 1,116,793 1,174,788 4,737,289 5,439,870 6,613,255
Non-recurring items - - - - - - - -
EBIT excluding non-recurring items 4,143,232 1,299,002 1,146,706 1,116,793 1,174,788 4,737,289 5,439,870 6,613,255
YoY growth % 16.2% 30.1% 12.1% 2.4% 13.9% 14.3% 14.8% 21.6%
EBIT margin 35.8% 41.6% 40.2% 37.0% 38.3% 39.3% 41.2% 44.6%
EBITDA excluding non-recurring items 4,286,300 1,336,258 1,179,527 1,149,574 1,207,538 4,872,897 5,579,374 6,752,927
YoY growth % 18.6% 29.3% 11.5% 2.1% 13.0% 13.7% 14.5% 21.0%
EBITDA margin 37.1% 42.8% 41.3% 38.1% 39.4% 40.4% 42.2% 45.5%

Finance Income / Cost 175,312 44,310 53,286 54,504 53,245 205,345 212,968 332,447

Recurring profit before tax 4,318,544 1,343,312 1,199,992 1,171,297 1,228,033 4,942,634 5,652,838 6,945,702
YoY growth % 16.9% 30.7% 12.7% 2.9% 12.9% 14.5% 14.4% 22.9%
Income tax expense (1,226,709) (357,391) (329,998) (322,107) (337,709) (1,347,205) (1,554,530) (1,910,068)

Profit after taxation 3,091,835 985,921 869,994 849,190 890,324 3,595,430 4,098,308 5,035,634
YoY growth % 12.8% 32.7% 9.1% 1.7% 24.8% 16.3% 14.0% 22.9%

Earnings per share - unadjusted (1) 25.77 8.22 7.25 7.08 7.42 29.96 34.15 41.96
Earnings per share - BRS adjusted (2) 25.77 8.22 7.25 7.08 7.42 29.96 34.15 41.96

Source: Company Financial Reports and BRS Equity Research

Note 1: Based on earnings as reported (unadjusted for non-recurring) share data adjusted for splits and super gains tax
Note 2: EPS adjusted for share split, consolidations and non recurring information

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 BRS Equity Research

Financial Analysis

Statement of Financial Position - Chevron Lubricants Lanka PLC

As at 31st December 2012 2013 2014 2015 2016E 2017E 2018E
Non Current Assets
Property Plant & Equipment 215,813 1,296,651 2,243,616 2,195,827 2,150,569 2,143,125 2,151,785
Non Current Receivables 94,109 81,152 66,274 90,101 85,920 110,292 139,364
Deffered Tax Asset 1,341 8,723 - - - - -
311,263 1,386,526 2,309,890 2,285,928 2,236,488 2,253,417 2,291,149

Current Assets
Inventories 2,132,118 1,928,704 1,746,241 1,308,619 1,472,910 1,654,373 1,935,616
Receivables and Prepayments 986,882 1,252,068 1,130,140 1,111,409 1,227,425 1,516,508 1,703,342
Cash and Cash Equivalents 2,517,244 2,485,174 1,290,530 2,339,049 2,494,430 3,632,629 5,515,970
5,636,245 5,665,946 4,166,911 4,759,077 5,194,765 6,803,511 9,154,928

Total Assets 5,947,508 7,052,472 6,476,801 7,045,005 7,431,253 9,056,928 11,446,077

Equity and Reserves

Stated Capital 600,000 600,000 600,000 600,000 600,000 600,000 600,000
Retained Earnings 3,534,313 4,240,021 4,599,210 4,087,029 4,802,459 6,020,767 8,056,401
Shareholders funds 4,134,313 4,840,021 5,199,210 4,687,029 5,402,459 6,620,767 8,656,401

Non Current Liabilities

Defined Benefit Obligation 87,328 122,060 119,902 125,557 135,299 147,619 158,983
Deffered Tax - - 101,596 173,641 189,634 189,634 189,634
87,328 122,060 221,498 299,198 324,933 337,253 348,617

Current Liabilities
Trade and Other payables 897,497 1,059,802 652,962 627,179 859,198 1,130,488 1,269,764
Current Tax 468,370 490,590 403,131 711,599 844,664 968,420 1,171,295
Dividends payable 360,000 540,000 - 720,000 - - -
Bank Borrowings - - - - - - -
1,725,867 2,090,392 1,056,093 2,058,777 1,703,861 2,098,908 2,441,060

Total Liabilities 1,813,195 2,212,451 1,277,590 2,357,975 2,028,794 2,436,161 2,789,676

Total Equity and Liabilities 5,947,508 7,052,472 6,476,801 7,045,004 7,431,253 9,056,927 11,446,077

Source: Company Financial Reports and BRS Equity Research

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Financial Analysis

Cash flow - Chevron Lubricants Lanka PLC

Year Ending 31st December 2012 2013 2014 2015 2016E 2017E 2018E
Cash flow from operating activity
EBIT 2,917,473 3,174,670 3,570,601 4,143,230 4,737,289 5,439,870 6,613,255
Depreciation 43,836 46,234 48,009 143,068 135,608 139,504 139,672
Property, plant & equipment written off 1,090 1,034 123 167 - - -
(Profit)/loss on disposal of PPE (4,563) (420) (4,839) (258) (102) - -
Provision for bad and doubtful debt - 11,102 (2,506) (5,379) - - -
(Reversal of provision)/Provision for impairment on trade receivables (280)
Finance income/expense adjustment 159,654 43,356 37,674 15,241 8,278 - -
Defined benefit obligation 16,600 19,813 22,477 18,532 23,470 24,000 24,000
Operating cash flow before changes in working capital 3,165,745 3,325,328 3,700,630 4,338,115 4,910,277 5,603,374 6,776,927
Changes in Working Capital 494,835 72,850 (120,785) 394,146 (49,841) (223,627) (357,874)
Cash generated from Operations 3,660,580 3,398,178 3,579,845 4,732,262 4,860,437 5,379,747 6,419,053
Interest received - 235,690 97,834 154,569 197,538 213,568 333,047
Interest paid (309) (117) (451) (38) (471) (600) (600)
Denfined benefit obligation paid (701) (9,662) (7,473) (8,228) (13,728) (11,680) (12,636)
Tax paid (745,961) (908,471) (934,141) (1,694,859) (1,198,147) (1,430,775) (1,707,192)
Super gains tax paid - - - - - - -
Net Cash from Operating Activities 2,913,609 2,715,618 2,735,614 3,183,705 3,845,628 4,150,261 5,031,671

Investing Activities
Purchase of property, plant & equipment (67,627) (1,128,106) (995,097) (95,446) (90,439) (132,061) (148,331)
Proceeds from disposal of PPE 4,563 421 4,839 258 191 - -
Short term investments uplifted & maturity - - - - - - -
ST Investments made during the year - - - - - - -
Net cash used in investing activities (63,064) (1,127,685) (990,258) (95,188) (90,248) (132,061) (148,331)

Financing Activities
Short term loans obtained / (settled) to related parties - - - - - - -
Dividends paid (1,380,000) (1,620,000) (2,940,000) (2,040,000) (3,600,000) (2,880,000) (3,000,000)
Net Cash in financing activities (1,380,000) (1,620,000) (2,940,000) (2,040,000) (3,600,000) (2,880,000) (3,000,000)

Increase Decrease In Cash and Cash Equivalents 1,470,545 (32,067) (1,194,644) 1,048,518 155,381 1,138,200 1,883,341

Source: Company Financial Reports and BRS Equity Research

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Top 20 shareholders as at 31 March 2016

Name of the shareholder No of shares %

1 Chevron Ceylon Limited 61,200,000 51.00

2 HSBC INTL NOM LTD-SSBT WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND 6,133,248 5.11

3 Cigroup Global Markets Limited Agency Trading Prop Securies A/C 2,954,168 2.46

4 BNYM SA/NV- Blackrock Froners Investment Trust PLC 2,221,717 1.85

5 HSBC Internaonal Nominees Ltd-SSBT-Aberdeen Instuonal CommingledFunds, LLC 1,880,000 1.57

6 RBC Investor Services Bank- COELI SICAV I- FRONTIER MARKETS FUND 1,829,851 1.52

7 HSBC INTL NOM LTD-BP2S LUXEMBOURG-ABERDEEN GLOBAL FRONTIER MARKETS EQUITY FUND 1,812,968 1.51

8 BNYM SA/NV-NEON LIBERTY EMERGING MARKETS FUND LP 1,788,676 1.49

9 Caceis Bank Luxembourg S/A BARCA GLOBAL MASTER FUND LPOGIER 1,592,496 1.33

10 HSBC Internaonal Nominees Ltd-BPSS Lux Aberdeen Global Asian Small companies fund 1,445,487 1.20

11 Cargo Boat Development Company Limited 1,400,000 1.17

12 Renuka Hotels Limited 1,400,000 1.17

13 Nothern Trust Global Services London S/A VERDIPAPIRONDET ODIN EMERGING MARKETS 1,322,097 1.10

14 HSBC INTL NOMINEES LTD-BP2S LONDON- ABERDEEN ASIA SMALLER COMPANIES INVESTMENT TRUST 1,296,360 1.08

15 Mellon Bank N.A.- Florida Rerement System 1,068,603 0.89

16 Employees Provident Fund 1,007,958 0.84

17 HSBC INTL NOM LTD-SSBT PARAMETRIC EMERGING MARKETS FUND 1,001,814 0.83

18 Crescent Launderers & Dry Cleaners (Pvt) Ltd 1,000,000 0.83

19 CB NY S/A WASATCH FRONTIER EMERGING SMALL COUNTRIES CIT FUND 950,060 0.79

20 HSBC INTL NOMINEES LTD-SSBT-FRANK RUSSEL TRUST COMPANY COMINGLED BENEFIT FUNDS TRUST GNA-6QH3 904,539 0.75
Source: Q1 FY 16 interim financial statements

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