Chicks bullish Perpetual Capital buys 10% stake in Grain Elevators

Friday, 11 February 2011 02:08 - - {{hitsCtrl.values.hits}}

Perpetual Capital, an investment fund has picked up 10.3% stake in Grain Elevators of the Singapore’s famous Prima Group, a move reflecting bullishness in the food and beverage sector of the country.

The 10% threshold was passed yesterday when Perpetual picked up around 1 million shares of Grain.

In total 1.3 million of its shares traded between a high of Rs. 250 and a low of Rs. 237.50, before closing at Rs. 239.70, up by 70 cents. In comparison to Rs. 74.70 closing in 2010, Grain at yesterday’s peak had skyrocketed by 234% or Rs. 175.30.

Analysts speculated part of the increase is due to the interest by Perpetual whilst high networth investor Ishara Nanayakkara of LOLC-Browns fame had picked up around 2.5% stake and top investor Nimal Perera collecting 1% stake.

Perpetual which comes under the banner of Free Lanka Group, also has a 15% stake in HDFC Bank, which too has been trading at record highs.

Analysts linked strong interest on Grain by Perpetual, Ishara and Nimal to their strong belief of massive upside in Grain’s earnings. The reason being the food crisis in the country as well as rebound in tourism has boosted the demand for day-old chicks. The assessment is that at present the poultry industry is struggling to cope up with the rapid demand. In the market a kilo of chicken is cheaper than even some vegetables signifying the strong upside for companies such as Grain.

Market sources viewed the trio’s interest in Grain more to with capital appreciation than strategic hence the new shareholding is unlikely to unsettle Prima Singapore which holds 45.5% stake.

Whilst full year results are pending, in the first nine months of 2010, Ceylon Grain Group net turnover for the 3rd quarter 2010 was Rs.1,942.6Mn as compared to Rs.1,755.8Mn during the 3rd quarter of 2009, an increase of Rs.186.8Mn or 11%. Group net turnover for the first nine months of 2010 was Rs.5,675.7Mn compared to Rs.5,179.8Mn during the same period of 2009, an increase of Rs.495.9Mn or 10%.

Group has reported a net profit of Rs.145Mn during the 3rd quarter of 2010 as compared to net profit of Rs.13.3Mn reported in the 3rd quarter of 2009. For the first nine months of 2010, the Group has reported a net profit of Rs.298Mn compared to net profit of Rs.91.4Mn reported in the first nine months of 2009.