Renuka Group

Renuka Holdings PLC | Coco Lanka PLC | Renuka Agri Foods PLC

October2011

Renuka Holdings PLC

Earnings Review BUY | RHL.N - SLRs. 62.00 RHL.X - SLRs. 40.00
Statistics
Sector CSE Code Reuters Code Bloomberg Code RHL.N0000 - Voting Price (SLRs.) YTD Range (SLRs.) YTD Volume Issued Quantity RHL.X0000 - Nonvoting Price (SLRs.) YTD Range (SLRs.) YTD Volume Issued Quantity Market Cap: (SLRs.Mn) Market Cap: (USD.Mn) Investment Trust RHL.0000 RHL.CM RHL.SL

Background
Renuka Holdings (RHL) is the holding company of a diversified organization. RHL through its subsidiaries have diversified in to four area of business as follows. Agribusiness FMCG & Food Services Automotive Investment, Leisure & Property

62.00 49.90 - 87.20 30,423,000 43,750,000

RHL is listed on the Colombo Stock Exchange (CSE) under the Investment Trust sector, and is the ultimate parent of Coco Lanka PLC (COCO) and Renuka Agri Foods (RAL) which are listed on the CSE under the Beverage, Food & Tobacco sector. RHL marks its presence in the fast growing distribution & FMCG business through its recently acquired subsidiary Shaw Wallace Ceylon Limited which facilitates growth driven by synergies. Shaw Wallace Ceylon Limited inherits many well known own brands and is working towards transforming in to one of the largest FMCG manufactures in the country. RHL through its unlisted fully owned subsidiary owns prime real-estate in Colombo, having the intention to embark on property development with foreign collaboration. Further the company also intends to embark on niche tourism through boutique hotels, holding valuable properties in the Southern and Eastern coastal belts as well as in the Northern Province.

40.00 32.00 - 60.60 9,936,000 6,250,000 2,963 27

Major Shareholders-30th June 2011

Renuka Group Ltd Sri Lanka Insurance National Savings Bank Mr. S.V.Rajiyah Mr.Teruaki Ono 54.86% 5.71% 5.37% 3.60% 2.32%

Highlights

Financial Performance 1QFY11/12 1Q FY12 (SLRs.Mn) 1Q FY11 (SLRs.Mn) 373.6 96.70 119.0 88.00 31.01 YoY Change 213% 228% -57% -151% 211%
Price SLRs. 90.00

RHL.N PriceVolume

Volume Mn. 4 3 3 2 2 1 1 0

Revenue EBIT Net Profit Mart to Market Valuation Gain/(Loss) Earnings Excluding Mark to Market Valuation

1,170.8 317.53 51.2 (45.22) 96.46

80.00 70.00 60.00 50.00

RHL is enriched with its valuable land bank, which includes 385 perches of prime freehold land in Colombo. RHL intends to embark on a mixed property development project with foreign collaboration, on an 85perch lakefront land belonging to the company at the Gallface Terrace Colombo. Shaw Wallace Ceylon Ltd to be transformed in to one of the largest FMCG manufactures in the country having a strong distribution network, with Renuka Products being a dedicated manufacturing facility for the Shaw Wallace Group. Agribusiness margins to improve with the new product line of Coconut Water in Tetra packs. Commercial production to begin during January 2012 targeting the export market. Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

ShareVolume

Price

RHL|COCO|RAL

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Ear rnings Sum mmary & Ratios

Per riodended31stMarch 1 Rev venue(SLRs.M Mn) EBIT T(SLRs.Mn) Ne etProfittoEq quityHolders( (SLRs.Mn) *R RecurrentNetProfittoEqui ityHolders EPS S(SLRs.) Rec currentEPS(S SLRs.) DPS S(SLRs.) NAV V(SLRs.) P/E E(x) N X N X 2009 1,663 780 241 241 4.81 4.81 0.83 23.1 5.6 4.5 PBV V(x) 1.2 0.9 20.8% N X 26.75 21.50 43.75 6.25 50.00 1.8 1.2 18.1% 66.10 43.10 43.75 6.25 50.00 332 12.37 6.64 1.50 36.6 10.0 3.5 1.7 1.0 *10.6% 60.30 37.80 43.75 6.25 50.00 2011 2,697 888 *618 51 1.02 1.02 38.7 *14.7 *9.2 1.4 0.9 15.8% 62.00 40.00 44.52 6.43 50.95 1Q2012 1,171 318 51 355 6.97 6.97 1.00 44.0 8.9 5.7 2012F 5,085 1,299 355

ROE E Pric ce(SLRs.)

Num mberofShare es(Mn) N X NV VotingShare * B Based on 1Q a annualized EPS

XNonv votingShare

* Th includes S his SLRs.286.4mn as change in fair value of investment property. This has n n f p s
be excluded i arriving at R een in Recurring Net Profit Attribu t utable to Equi Shareholde ity ers.

1QFY12 Segmenta 2 alRevenue

1%

1QFY12 Segm mentalProfit tAfterTax

21% 45% 54 4% 15% 64% %

Agribusiness A FMCG,FoodS Services,Auto omotive) Distribution(F Investment,L Leisure&Prop perty

Agribusi iness Distribution(FMCG,F FoodServices, ,Automotive) ) Investm ment,Leisure& &Property

RHL|COCO|RA AL

Fundame ental Analysis Division s Capital TR RUST Researc (Pvt) Ltd ch

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Group Structure

RHL|COCO|RAL

Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

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Operational Overview
Agribusiness
RHLs fully owned subsidiary Renuka Agro Exports is the strategic apex of the Agribusiness. Renuka Agro Exports holds 50.6% of Coco Lanka PLC (COCO) that was restructured and transformed in to an Investment Trust, holding 50.09% of Renuka Agri Foods PLC (RAL). As part of the restructuring process Renuka Organics (Pvt) Ltd and Renuka Teas (Ceylon) (Pvt) Ltd that were earlier held by COCO was transferred to RAL as an expansion strategy at a consideration of SLRs.147m. Thus RAL is now the investment vehicle in Agribusiness.

FMCG & Food Services

RHLs 80% owned subsidiary Shaw Wallace Ceylon Ltd is a leader in FMCG and food services sector. It has one of the largest distribution networks in the country reaching over 56,000 outlets in the country through the direct dealer network, and indirectly to over 100,000 outlets. It owns well known household brands which are market leaders in their respective category such as Captain & Plaza Canned Fish, and agencies such as Ajinomoto flavor enhances. Reuuka Coconut Milk Powder is also distributed through this distribution network, and this will be the driving force behind Renuka Products (Pvt) Ltd the FMCG manufacturing arm of RAL and Shaw Wallace Ceylon Ltd.

Automotive
Presences in the automotive sector is through McShaw Automotive Ltd a joint venture between Shaw Wallace Ceylon Ltd and McLarens Holdings Ltd. Shaw Wallace having entered the automotive sector as the exclusive distributor of Delphi Lockheed brake oil in Sri Lanka, the joint venture has developed new lines of business in Lubricants, Radiator Coolant, Tyres & Tubes, Auto Part & Accessories, Batteries and Car Care Products. It has a strong distribution network of nominated and direct dealers, service stations, fuel stations, spare parts shops and franchise workshops.

Investment Leisure & Property

Coco Lanka PLC having transformed in to an Investment Trust, is engaged in managing a portfolio of listed equity and debt instruments. Renuka Investments hold non-controlling stakes of unlisted property development companies through which they have a noncontrolling share holding in the asset rich Cargo Boat Development Company PLC. Coco Hotels & Properties being a 100% owned subsidiary of RHL, owns lake front prime real estate in Colombo on which the company intends to embark on a mixed property development with overseas collaboration. The initial designing is in progress and the project will be financed through internally generated funds and borrowings. Coco Resorts & Villas also being a 100% owned subsidiary of RHL, is to embark on niche tourism through boutique hotels, holding valuable properties in the Southern and Eastern coastal belts as well as in the Northern Province.

RHL|COCO|RAL

Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

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Future Outlook
Outlook for RHL remains positive with strong growth potential in Agribusiness, and FMCG & Food Services. Acquisition of Shaw Wallace Marketing has great synergies which would facilitate island wide distribution of own brands of RAL. Renuka Products will be the dedicated FMCG manufacturing facility for Shaw Wallace, thus revenue from distribution of FMCG will improve rapidly as more and more products are added to its portfolio. The leisure industry in Sri Lanka is prospering with unfilled demand. Thus diversifying in to this segment is a timely decision having freehold land in the Southern and Eastern coastal belts as well as in the Northern Province. In future this segment would also bring in a significant contribution in terms of profit. The wayward market condition in the Colombo Stock Exchange has resulted in a marked-to-market (MTM) valuation loss amounting to SLRs.25.4mn in the equity investment portfolio during the 1Q FY11/12. We expect the market to recover during the 2H of FY11/12 thus the MTM loss will get reversed. However we have not included such reversal in our profit forecast.

Sector Comparison
Sector PE (x) Sector PBV (x) Symbol NoofsharesMn FY10/11 NetProfit(SLRs.Mn) FY11/121Q FY10/11 EPS(SLRs.Mn) Annualized 2010/11 PER(x) Forward NAV PBV(x) MPS GUAR Ceylon Guardian Investment GREG Environmental Resources Investments 15.12 38.71 1.60 62.00 9.76 1.03 40.00 4.05 138.76 2.23 309.10 4.23 65.33 1.84 120.30 (302.48) 23.32 2.76 64.30 (158.21) 73.36 2.54 186.00 4.10 5.01 3.23 76.36 9.55 28.41 10.14 (0.21) 53.32 (1.18) 31.34 51.24 12.37 1567.35 32.36 699.66 11.87 (16.77) 1.21 (2.35) 5.93 = 22.9 = 3.3 RHL.N 43.75 618.47 RHL.X 6.25 GUAR 82.10 2657.02 CINV 98.51 1,169.28 GREG 315.48 380.42 ASCO 7.99 47.39

CINV Ceylon Investment ASCO Ascot Holdings

Valuation
During FY11/12 earnings are forecasted to grow by7% YoY on a recurrent basis to reach SLRs.355mn. The voting share is trading at a forward PE of 8.9x while the nonvoting is trading at 5.7x both of which are at a discount to the sector PE. These earning forecasts are based on conservative assumptions and can improve further especially in the case of a strong recovery in the Colombo Stock Exchange. Considering the low PE and PBV, and future prospects of the entity we give a medium to long term buy recommendation.

RHL|COCO|RAL

Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

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Coco Lanka PLC

Earnings Review BUY | COCO.N - SLRs. 65.00 COCO.X - SLRs.55.00
Statistics
Sector CSE Code Reuters Code Bloomberg Code COCO.N - Voting Price (SLRs.) YTD Range (SLRs.) YTD Volume Issued Quantity COCO.X - Nonvoting Price (SLRs.) YTD Range (SLRs.) YTD Volume Issued Quantity Market Cap: (SLRs.Mn) Market Cap: (USD.Mn) Bev.Food & Tobac COCO.0000 COCO.CM COCO.SL

Background
COCO which was formally engaged in manufacturing and marketing of agriculture products was transformed in to an investment trust by transferring its exposure in agribusiness to its subsidiary Renuka Agri Foods PLC (RAL). Accordingly Renuka Organics (Pvt) Ltd and Renuka Teas Ceylon (Pvt) Ltd was transferred to RAL during the year for a total consideration of SLRs.147mn. COCO is now engaged in managing a portfolio of listed equity and debt instruments, and is the holding company of RAL which is the investment vehicle to the agribusiness. Long Term Investments The company holds 221mn shares (50.09%) of RAL which is recognized at cost in the books of COCO. Note 1in this report illustrates the unrealized capital gain when RAL is valued at the current market price. Coco Hotels & Properties (Pvt) Ltd (formerly known as Island Capital (Pvt) Ltd) is a 100% owned subsidiary of RHL. COCO has paid a sum of SLRs.471mn as an advance payment to purchase shares of the said company. Once the issue is made Coco Hotels & Properties (CHP) will be 50% owned by and COCO. CHP owns a 85 perch prime land with lake frontage at the Galleface Terrace on which a mixed property development with foreign collaboration will take place in near future. Equity Share Portfolio During the 1Q of 2011 the company reported a loss of SLRs.16mn primarily due to the recognition of mark to market loss of this portfolio as a result of withered market conditions. Following a recovery in the equity market, these unrealized losses will hopefully get reversed. The following share portfolio is available as of 31st March 2011, and is adjusted for share splits, capitalization of reserves and scrip dividends which took place in the interim period. Company No.of Shares 150,000 250,000 92,600 300,150 51,000 5,000 10,000 10,000 MarketPrice (SLRs.) 393.00 174.00 130.00 199.90 218.20 327.00 136.00 99.00 MarketValue (SLRs.) 58,950,000 43,500,000 12,038,000 59,999,985 11,128,200 1,635,000 1,360,000 990,000 189,601,185 210,103,180 204,108,446 (20,501,995.0)

65.00 45.50 - 95.00 21,147,195 21,600,000

55.00 36.50 - 70.00 4,827,070 1,800,000 1,503 14

Major Shareholders-30th June 2011

Renuka Agro Exports Ltd Sri Lanka Insurance Corp. Renuka Hotels Ltd Mr.K.C.Vignarajah Capital Alliance Holdings Lt 50.60% 4.02% 3.02% 2.78% 2.04%

Price SLRs. 95.00 85.00 75.00 65.00 55.00 45.00

COCO.N PriceVolume

Volume '000 1,600 1,400 1,200 1,000 800 600 400 200 0

Oct10

Feb11

Dec10

Apr11

DistilleriesCompanyPLC DFCCBankPLC HattonNationalBankPLC SampathBankPLC LankemCeylonPLC RoyalceramicPLC LankaCeramicPLC Total BookValueasat31stMarch2011 TotalCostoftheSharePortfolio MarktoMarketValuationloss (Asat28thSeptember2011)

ShareVolume

Aug11

Oct11 Price

Jun11

CeylonTobaccoPLC

RHL|COCO|RAL

Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

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Investment Property The company holds a 215 perch land with 30,000 sq.ft of building as an investment property which was last revalued during March 2009 at SLRs.92.7mn. Companys policy is to revalue such assets every three years, thus there will be possible revaluation gain recognized during FY11/12.

Earnings Summary & Ratios

2010 Revenue(SLRs.Mn) EBIT(SLRs.Mn) NetProfittoEquityHolders(SLRs.Mn) EPS(SLRs.) DPS(SLRs.) Equity NAV(SLRs.)*Note1 P/E(x) PBV(x)*Note1 ROE Price(SLRs.) N X N X N X 1,285 611 147 6.30 1.00 947 40.47 6.5 5.0 1.0 0.8 15.6% 41.00 31.50 21.60 1.80 23.40 2011 2,058 569 161 6.89 1.00 1,219 52.10 11.6 8.4 1.5 1.1 13.2% 79.90 57.90 21.60 1.80 23.40 1Q2012 479 121 18 0.78 1,149 49.11 *22.4 *17.5 1.4 1.1 *6.4% 69.90 54.60 21.60 1.80 23.40 2012F 2,101 605 148 6.32 1.00 1,274 54.43 10.3 8.7 1.2 1.0 11.6% 65.00 55.00 21.60 1.80 23.40

NumberofShares(Mn) N X *Basedonannualizedearnings NVotingShare

XNonvotingShare

*Note1NAVAdjustmentforUnrealizedCapitalGains

Value Unrealized Capital Gain/Loss 200 1,459 210 190 (21) 1,238 1Q2012 2012F 107.35 0.61 0.51 1,259

InvestmentinRALatbookvalue(SLRs.Mn) InvestmentinRALatcurrentmarketprice(SLRs.Mn) Bookvalueoflistedequity(SLRs.Mn) Currentmarketvalueoflistedequity(SLRs.Mn) TotalUnrealizedGain(SLRs.Mn)

NAVAdjusted(SLRs.) PBVVotingShare PBVNonvotingShare

102.03 0.69 0.54 Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

RHL|COCO|RAL

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Renuka Agri Foods PLC

Earnings Review BUY | RAL.N - SLRs. 7.30
Statistics
Sector CSE Code Reuters Code Bloomberg Code Price (SLRs.) YTD Range (SLRs.) YTD Volume Issued Quantity Market Cap: (SLRs.Mn) Market Cap: (USD.Mn) Bev.Food & Tobac RAL.N0000 RAL.CM RAL.SL 7.30 5.00 - 8.50 277,867,655 401,250,000 2,929 27

Background
RAL is a BOI approved company and commenced operations in July 2003. The company is entitled for a 12 year tax holiday from the date of commencement followed by a concessionary rate of 15% for a further period of 12 years. RALs principal activity is manufacturing and marketing of coconut based food and beverages which includes, ultra heat treated coconut milk in aseptic packages, coconut milk powder, coconut milk and coconut beverages. Today the company is fully equipped with state-of-the-art food processing technologies and has become countrys most diversified coconut factory. Its longstanding business partner Grace Foods (UK) Plc and its parent company GraceKennedy Ltd are one of RALs strategic shareholders, and together they own 8.66% of the issued capital. Nearly 95% of the sales of RAL were generated overseas while local distribution was limited to supermarkets until recent times. With the acquisition of Shaw Wallace Ceylon by RHL, the local distribution of RAL products is now happening in wide scale with an eminent growth in revenue and profitability.

Major Shareholders-30th June 2011

Coco Lanka PLC Mr.Talib Tawfiq Al Nakib Greeven Holdings Ltd Grace Foods UK Ltd Mr.A.M.T.T.Alghani & Mrs.A.T.T.T Al Naqib 50.09% 6.94% 6.48% 5.61% 3.31%

Price SLRS. 9.00 8.00

RAL PriceVolume

RenukaAgriFoodsPlc ManufacturingCoconutbased food&beverages

7.00 6.00

100% RenukaOrganics(Pvt)Ltd

100%
5.00

Volume Mn. 45 40 35 30 25 20 15 10 5

RenukaTeas(Ceylon) (Pvt)Ltd

Exportcoconutandspiceproducts Holds the organic certification and provide organic coconut raw

ExportvalueaddedCeylonTea. Raw tea will be provided for the expected beverage expansion 100%
100%

ShareVolume

Price

50%

50% RenukaProducts (Pvt)Ltd FMCG Manufacturing Unit

Kandy PlantationsLtd

CampbellTeas (Pvt)Ltd ExportTea Products

RenukaTrading (Pvt)Ltd Investment Property

Organic cultivationof agricultural products

60%

CeylonForestry (Pvt)Ltd Plantingand managingof Forestry

CeylonBotanical (Pvt)Ltd

100%

Investmentin Agricultural property

RHL|COCO|RAL

Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

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Earnings Summary & Ratios

2010 Revenue(SLRs.Mn) EBIT(SLRs.Mn) NetProfittoEquityHolders(SLRs.Mn) +/YoYGrowth EPS(SLRs.) DPS(SLRs.) Equity(SLRs.Mn) NAV(SLRs.) P/E(x) PBV(x) ROE Price(SLRs.) NumberofShares(Mn) 1,091 446 181 9% 0.45 0.10 795 1.98 7.3 1.7 23% 3.30 401.25 2011 1,221 343 144 21% 0.36 0.10 877 2.19 15.9 2.6 16% 5.70 401.25 1Q2012 466 115 68 301% 0.17 955 2.38 9.0 2.6 28% 6.10 401.25 2012F 2,050 585 302 110% 0.75 0.10 1,217 3.03 9.7 2.4 25% 7.30 401.25

Operational Overview

PrincipalProducts CeylonTea
Coconut and Organic Products Renuka Agri Foods Plc itself is one of the largest and most diversified coconut based food and beverage companies which facilitate a highly integrated network of growing, manufacturing and distribution in to global markets. The Groups own plantations and the network of out-growers are managed under Kandy Plantations Ltd which supplies about 16% of the raw nuts requirement where as the balance requirement for production is purchased from the outside market. Renuka Organics (Pvt) Ltd is the administrator for Organic certified products and it is engaged in export of its own organic certified products. Renuka Organics together with its subsidiary Kandy Plantations, supply the organic coconut raw material to RAL for the production of organic coconut products.

CoconutandOrganic Products

Forestry

RHL|COCO|RAL

Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

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Ceylon Tea Tea is obtained through the Colombo Tea auction and graded in house before sent for further processing. The Renuka Teas Ceylon (Pvt) Ltd undertakes the production and export of value added tea mainly in categories of black tea, green tea and flavoured & herbal tea. The production is carried out in terms of bulk tea packing, production of tea bags (single and double chamber) and loose tea packing. Key export markets of Renuka Teas are Europe, US, Caribbean Islands and Africa. About 80% of the export revenue generated from tea is from the companys own brands. Forestry The group made its primary entry to forestry through its sub subsidiary Ceylon Forestry (Pvt) Ltd. considering the growing demand for forestry products within the country. Currently the group owns a site in Matale which consists of Teak, Broadleaf Mahogany and Khaya planted and this site will remain as a long term investment of the group until the biological asset valuations standards are properly adopted within the country.

PrincipalMarkets&Distribution
Renuka Agri Foods Plc has a strong worldwide market base of 62 countries and it is continuously growing. The groups export markets include Africa, Middle East, East Asia, and Europe being its largest overseas market. Thailand, Indonesia, Malaysia and Philippines are the key rivals in export trade. The company commenced its local operations by selling coconut products to local food service channels in 2006. Since then RAL products were made available to consumers mainly through Supermarkets. Today through Shaw Wallace Renuka Products are made available not only in supermarkets but also in thousands of retail & grocery shops across the length and breadth of the country.

Future Outlook
Renuka Agri Foods Plc is currently on a major expansion drive toward building up its own value based on the groups synergy. Beverage Expansion Project RAL entered in to an agreement with GraceKennedy Ltd to manufacture coconut water based and other beverages packed in aseptic retail packaging, of which commercial operations will begin early next year. Accordingly RAL invested in a new manufacturing plant that has the capability of producing a range of related beverages using fruit, milk and tea as raw materials. Coconut water packaging will be done at the initial stage and the project will eventually be expanded in to manufacturing of fruit juices, ice tea and isotonic beverages. GraceKennedy is expected to buy 20% out of the total production while the balance will be sold in local end export markets under the Renuka brand. Greenfield Plantation Project - The project is expected to be initiated upon the commencement of the beverage expansion project in January 2012. Accordingly 5000 acres of state land from East or Northern Western parts of the island will be considered. This will basically to provide raw materials to the production of value added coconut products.

RHL|COCO|RAL

Fundamental Analysis Division Capital TRUST Research (Pvt) Ltd

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Distribution Infrastructure Local - Shaw Wallace Ceylon Ltd being a higher value added distribution company which generates 70% of sales from its own brands, will pave the way to realize its synergetic advantage by establishing a strong distribution channel within the country. Accordingly, RAL entered into an agreement with Shaw Wallace Food Services Ltd for distribution of Renuka coconut milk powder and Tanagana Tea to catering channel. Renuka Product Pvt Ltd a sub-subsidiary of RAL, will become the dedicated FMCG manufacturing arm to Shaw Wallace Ceylon Ltd which will add variety and value to their product portfolio. Overseas - The group has drawn its plans to set up a subsidiary in UK, one of its key export buyers to oversee the marketing operations of RAL and its subsidiaries. This will allow the company to set up an intermediary stock of its own branded products for a better promotion. Going forward the company is expected to post strong earnings and improve margins through strong distribution, new product development and strong synergies developed within the group.

Sector Comparison
Sector PE (x) Sector PBV (x) = 15.3 = 4.2 Symbol NoofsharesMn FY10/11 NetProfit(SLRs.Mn) FY11/121Q FY10/11 EPS(SLRs.Mn) 1QAnnualized 2010/11 PER(x) Forward NAV PBV(x) MPS LAMBKotmaleHoldings SOYConvenienceFoods 10.8 2.38 3.1 7.30 17.3 18.11 2.7 48.80 (64.5) 20.84 3.8 78.90 21.0 48.52 2.5 120.80 24.6 82.46 5.1 420.00 15.0 19.55 5.4 104.80 17.4 78.19 3.1 240.20 0.67 20.3 2.81 20.4 (1.22) 19.6 5.74 111.4 17.06 22.1 7.01 10.8 13.80 7.9 67.5 0.36 22.1 2.40 (9.2) 4.02 57.4 1.08 11.7 18.98 41.3 9.73 55.2 30.37 RAL 401.3 144.0 LAMB 31.4 75.3 TSML 30.0 120.7 LMF 40.0 43.4 SOY 2.8 52.2 TAFL 23.5 229.1 BFL 16.0 485.9

TSMLTeaSmallholderFactories TAFLThreeAcreFarms

LMFLankaMilkFoods BFLBairahaFarmsPlc

Valuation
During FY11/12 earnings are forecasted to grow by 110% to reach SLRs.302mn. Based on the forecasted earnings and the sector PE of 15.3x the share is undervalued and has the potential to reach SLRs.11.48. We give a buy recommendation for RAL considering its future growth prospects and the steep discount in the share price when compared to the sector.
TheinformationandtheopinionscontainedhereinwerecompiledbyCapitalTRUSTResearch(Pvt)Ltd,andarebasedoninformationobtainedfromreliable sourcesingoodfaith.However,suchinformationhasnotbeenindependentlyverifiedandnoguarantee,representationorwarrantyexpressedorimpliedis madebyCapitalTRUSTResearch(Pvt)Ltdanditsrelatedcompaniesastoitsaccuracyorcompleteness.Thisreportisnotandshouldnotbeconstruedasan offertosellorasolicitationofanoffertobuyanysecurity.NeitherCapitalTRUSTResearch(Pvt)Ltdnoritsrelatedcompanies,directorsandemployeescanbe heldliablewhatsoeverforanydirectorconsequentiallossarisingfromanyuseofthisreportortheinformationcontainedherein.

RHL|COCO|RAL

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