IVL Shares Push Higher on Highly-Anticipated Strong Fourth-Quarter Earnings

Witawat (Ed) Wijaranakula, Ph.D.
Thu Jan 5, 2017

Indorama Ventures PCL (SET:IVL), 63.69% stake owned by Indorama Resources Ltd., as of December 30, 2016, is a Thailand-based holding company, investing in various companies in 21 countries in four major regions of the world, including the Asia Pacific, Europe, North America and Africa. The company’s portfolio is comprised of necessities and High Value-Added (HVA) categories of polymers, fibers, and packaging.

According to the company's website, Indorama Resources Ltd. is 99.98% owned by Port Louis, Mauritus-based Canopus International Ltd. in which Mr. Aloke Lohia, Indorama Ventures Group CEO, and his immediate family have voting rights of up to 76% and an equity interest of up to 50%, while Mr. Sri Prakash Lohia, founder and chairman of Indorama Corporation, and his immediate family have voting rights of up to 24%, and equity interest of up to 50%.

Indorama Ventures is focused on business areas including the manufacture and sale of polyethylene terephthalate (PET), which is used for beverage containers and food packaging, the manufacture and sale of polyester fibers and yarns, which are used for textile and industrial applications, and the production and trade of purified terephthalic acid (PTA), which is a white powder used in the production of polyester products. 

The company's subsidiaries include Indorama Petrochem Ltd, Indorama Holdings Ltd, TPT Petrochemicals Public Company Ltd, Indorama Polymers Pcl, Indorama Polyester Industries Pcl, Indorama Ventures Global Services Ltd, IVL Belgium N.V. and Indo Polymers Mauritius Ltd.

Indorama Ventures said on November 10, 2016 that its third-quarter 2016 revenues were 65.44 billion baht, missing the 72.00 billion baht consensus estimate of two analysts, according to the Financial Times. IVL posted third-quarter 2016 earnings of 0.62 baht per share, exceeding the 0.40 baht per share estimate of one analyst. 

In a press release, the company said most of the gain was attributed to higher volumes in the feedstock business from recent acquisitions in the USA and Spain. The next earnings announcement is expected on February 17, 2017. The consensus estimate is EPS of 0.58 baht, compared to EPS of 0.04 baht reported in the fourth-quarter 2015.

For 2015, the company reported a dividend of 0.48 baht per share, a 26.32% increase from 2014. According to the Financial Times, the 14 analysts covering the company expect dividends of 0.80 baht per share for the upcoming fiscal year, representing a year-over-year increase of 67.08%. 

From our technical viewpoint, IVL is bumping into the 36 baht resistance level and a breakout could take the stock to the 42 baht level. According to the Financial Times, the consensus amongst 15 polled investment analysts covering IVL gave the company an Outperform rating, with the median 12-month price target of 36.20 baht a share, as of January 2, 2017.

Disclosure: No position and no recommendation.


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