Century Plyboards-Hameed-25jul2k5

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Century Plyboards-Shaping up as a major growth story
CMP Rs 131,15 BSE 532548 BUY (Not applicable for day-traders.)
CENTURY Plyboards (India) Ltd, the largest plywood producer in the country, is planning to integrate into timber plantation with an investment of over Rs 100-crore. This would be followed up with the setting up of a medium density fine board unit or a particle board plant. For the year ending March 2005, Century's Revenues ratcheted upwards of Rs 167 crore, with after tax profits placed at Rs 7.7 crore. Effectively this translates into a FY05 EPS of Rs 8.85, and gives the scrip a PE of 14.8 on the last reported earnings.
The stock has moved into strong hands offlate with Reliance Capital Trustee account picking up 8.79 per cent equity in the concern. The promoters own a significant 74.82 per cent of the equity and PCB's own another 3.9 per cent. The public participation is virtually absent, as the total ownership at large is just 12.6 per cent.
Growth plans are immense
Century Ply has submitted a proposal to the State Government, asking for an allocation of 3,000 hectares of wastelands in the Sunderban region. The Rs 100-crore investment would be spread over seven years. However, as the Sunderban region has high salinity, the timber available from the proposed plantation might not be suitable for plywood production.
Hence, Century is contemplating the setting up of, either a medium density fine board plant or a particle board unit. Currently, Century Plyboards is importing timber from Malaysia and Burma. The company's monthly timber consumption is 3,000 cubic metres and the imported cost is approximately Rs 3.5 crore.
New laminated boards plant has gone on stream
Earlier this year, the West Bengal Chief Minister Mr Buddhadeb Bhattacharjee, inaugurated the company's new pre-laminated boards plant. The capacity of this plant is around 30,000 boards per month. The unit cost Rs 35 crore, which was funded through debt and internal accruals.
Fiscal 2006 would be a year of spectacular growth
While Century Plyboards registered a turnover of Rs167 crore (Rs 130 crore) in fiscal 2005, net profits remained flat at Rs 8.85 crore (Rs 9 crore). During fiscal 2005-06, the turnover is likely to jump up to Rs 250 crore and after tax profits likely to exceed Rs 13 crore. Thus, fiscal 2006 EPS is being projected at 13. A PE of 15, would see the Century Plyboards scrip at Rs 195 in a year from now.
Growth would be facilitated with export of laminates to the US-based Wilsonart International Inc, which is the world's largest manufacturer of laminated surfaces. Century Plyboards has entered into a similar sort of agreement with a Singapore based marketing company. While exports contributed 20 per cent of revenues in fiscal 2004, they will rise to 50 per cent in 2006.