Gujarat Ambuja Exports: Promoter buy 53506 shares in August 2010: Annual Report 2010

Promoters have reported till date buying of 53506 shares in month of August 2010
Additional buying has been reported as follows:
August 20,2010: 32835 shares @ 27.59   905917.65
August 18,2010:   5000 shares @ 28.55   142750.00
August 13,2010:   1171 shares @ 28.95     33900.45

Including the already reported 14500 share @ 29.83 432,575.00 (link)
Total shares bought in August 2010 is 53506 shares @ 28.31 with investment of Rs 15,15,142.45

Gujarat Ambuja Exports Latest Annual Report for March 2010 is also available here (link)


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Bhatinda Chemicals: Value Buy!!

Bhatinda Chemicals (BCL Industries & Infrastructures Limited):
Current Market Price: 35.00
Market Cap: 21Cr
Sales TTM: 315.67Cr
Reserves: 26.08Cr
Debt: 54.64Cr
ROCE: 16.15%

Bhatinda Chemical has changed its name to BCL Industries and Infrastructures Limited. Companies main area of operation is Vanaspati Oil production (low margin business). Company has set up a Solvent extraction plant. Solvent extraction plant help extract more oil from the seeds and reduce the oil in the residue "Oil Cakes".
Bhatinda Chemicals had 1,38,50,000 convertible warrants at a price of Rs 50/= per warrant. issued in July 11,2008 with Jan 2010 as the expiry date for conversion of warrants.. Rs 5 was paid in advance and if the warrants are not converted then company keeps the Rs5 ie 6.9Cr
Well the stock has been quoting at 30-35 levels.. so look like the warrants did not get converted..(no increase in equity reported to BSE)

ROCE of 16.15% is really good .. but we really need to wait for the 2010 numbers to be published..as they can be skewed by the recovery writeoff's

Recently we did see that GAEL had a 10Cr profit increase between Audited and UnAudited results.

Bhatinda Chemicals also seems to be having similar problems
Audited Results March 2010 (Annual) Net Profit: 2.13Cr
UnAudited Results March 2010 (Annual) Net Profit: 1.12Cr

Thats Right thats a 90.17% positive difference between unaudited and audited results.

Negatives: Very little information available, listed only on BSE, not a liquid counter..

Conclusion: Company seems to have turned around.. stock price has been depressed to keep the investors from converting their warrants at 50 per share. Which basically means we have a company worth more than 50 per share available for 35. A Company with 315Cr Sales, 6.9Cr PBDIT (Profit Before Depreciation,Interest & Taxes) available for Market Cap of 21Cr. Not much that can go wrong with this "Cigar Butt" position. Recommended investment price is around 30-32 levels or lower ..

Promoter buying in GAEL Aug 10,2010

Recent SAST (Substantial Acquisition of Shares and Takeover) disclosures made by promoters of Gujarat Ambuja Exports Limited (GAEL):

10-11 August 2010 promoters of GAEL have purchased 14,500 shares from the open market at an average price of 29.83 per share. I have tried to collect all the SAST information publicly available about promoters buying and here is the list.

Please Note: This list is not a complete list as we are aware promoters have bought close to 400,000 (4 lakh shares Link ) and the sum total of the above list is for 195,899.

Conclusion: Promoters are buying and in fact as early as June 17,2009 promoters had bought at 25.60. From the list I would infer that:
1. Stock is quite fairly distributed and not much is available for promoters to buy.
2. The February to March 2010 downturn has yielded 133,719 shares which is very good for long term investors and promoters
3. Promoter buying will reduce liquidity in the long term helping support higher prices.
4. As we already know good news is not being projected (like the 60Cr Net profit Link) which means accumulation stage is still "on" and this is not a price to sell. This has also been confirmed by the recent buying by promoters at 30 levels.
5. We must continue to do SIP (Systematic Investment Plan) with free funds on a monthly.. weekly basis.

On the medium to long term (6 months to 1 year) I would project a 100% price increase is on the cards.
Generally promoter buying will be done for at least 300-400 % return (look at Venky's price move from 120 levels to 700+  giving 500% return and Venky's still going up ). We can be confident of the direction of price rise based on the fundamentals of GAEL: 400CR Market Cap, 1400Cr sales, 116CR Gross Profit and 60Cr Net Profit

PN: These are my personal views and opinion.. based on publicly available data about GAEL. Please do your own deep dive before investing. Share prices are liable to move in both direction and there is always a possibility to loose money.


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Sunrise Senior Living (SRZ): June 2010 Results Review

SRZ Sunrise Senior living is one of the largest Assisted living Services provider's with revenues of 1.4 billion Dollars TTM (Twelve Trailing Months).

Let us look at the 10Q filing data for June 2010. here are some observations.
SRZ Debt Total Debt as of June 2010: 323.932 million. Total annual interest payment of debt would be 11.70 million. SRZ has cash in hand of 42.75million.

Out of 323.932 million dollars of debt 70.281 million of debt is in default.

Looking at the info I would conclude only 22.87 million in Variable Interest Entity is of concern.
The community mortgage debt of 41.8 million is non recourse to SRZ.

Yes the important question is that how many communities would fall under the 42.21 million mortgage are we looking at 100% of remaining consolidated communities??
(The worst case scenario of loosing the revenues if the mortgages are not renegotiated.)

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Another interesting fact is the "Schedule" of remaining 253.65 million debt of SRZ.

1. 3rd Qtr 2010 has only German debt schedule so we should see good positive numbers (my take) as we have only one major German debt related cash outflows (which will be paid by the assets so we should see an increase in cash in hand)
2. 4th Qtr 2010 is where we will see a lot of action cause you have 90.76 million of scheduled debt maturities. 4th Qtr will also give SRZ a chance to prove its viability by getting the debt renegotiated.
3. "Thereafter" SRZ will be looking slim and trim with debt of 90.6 million

My Take: SRZ management might start paying off Q4 debt in Q3 itself (specially Bank Credit Facility) and we might see some of the renegotiation of community mortgages in Q3 which would really show that SRZ management is working hard in the right direction. It will also help confirm that creditors are supportive of SRZ's long term viability.

Operations:
We get a glimpse of SRZ's current state of affairs.. Operating deficit guarantee.. from Jan 2010 to June 2010 SRZ has not paid a cent in Operating Deficit Guarantee.

I would conclude targets that were set for the year 2010-11 have been met for the past 6 months as far as Managed communities are concerned. This is good news cause managed communities are the largest source of earnings for SRZ.
Another important fact is "Any payments made as part of operating deficit guarantee and debt payment guarantee is recoverable out of future cash flows of the venture or from the proceeds of the sale of the communities."

Major expenses of payment of debt and operating deficit guarantee that are incurred when the communities are new and being stabilized are finally deducted when the communities become cash flow positive or the community is sold. So all the debt payment guarantees and operating deficit guarantee expenses in Germany and other non performing communities will flow back into SRZ when the community is sold?? Bonus cash flows when German communities are sold!!

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Segment results show us that SRZ has really made some good progress in Qtr ending June 2010 from an operations perspective.

- North American Operations have an operating profit of 20.89 Million.
- The Consolidated communities, North American Development, Unallocated Corporate and eliminations are dragging down the results.
- The real surprise is "The German Management Company" is showing 0.39 million profit due to weak dollar (Thanks Ben!! - Not you  "Obi-Wan Kenobi" The Jedi Master .. I was talking to "Ben Bernanke")

Conclusion: SRZ has progressed well on the path of recovery. Once the cleanup expenses are paid for we should be doing good. Considering the fact that current Enterprise value is 547.56 million which includes 323.9 million of debt. After the cleanup.. in year 2011 SRZ could be a company with 120 million debt.. so fast forward to Jan 2011 right now you can buy SRZ with a Jan 2011 Enterprise value of 300million a much more lean and mean SRZ.

SRZ is a case of finance gone awry.. look at Ford as a brand and look at SRZ as a brand. Ford survived bankruptcy due to good financial planning. SRZ has a much stronger brand (within the assisted living space) and once the financial planning is in place (hopefully by mid 2011) I would expect SRZ to be a 22.91 dollar stock (1.4 Billion Enterprise value)

Link to Original SEC Filing
Link to Old SRZ Blog

"The Future Definition of Wealth"

The energy equation is changing fast. Death of OIL is but guaranteed.

Looking at definition of money, wealth .. we need to understand something ... Wealth/Money can be equated to energy consumption. For example.
- Rich household and a Poor household .. the basic activity is same.. food clothing and shelter the only difference is "Energy Consumption" levels. A Rich household of 4 will consume 4 times or more the energy consumed by a "Poor household" providing the same basic activity.
- Transportation: The basic functionality is same .. reach from point A to point B.. but a Rich man transportation and a poor man transportation is different in terms of level of energy consumption.

Every aspect of life can be measured/translated valued in terms of energy consumption.. the important fact is wealth of a person is defined in the amount of energy consumed to carry out the basic requirements of a human being "Food clothing and shelter"

New Energy Equation:
Now with the dawn of "End/Death of Oil" which is well known fact. how will the definition of "Wealth", "Rich" change?? The Rich are spearheading "Environmental awareness" "Carbon Footprint" well aware of the fact that "They" (The Rich) have the largest footprint as far as energy consumption is concerned..

Today wealth is attributed to your "Energy Consumption" levels. As already stated before a Rich household spends 4 times or more energy as compared to a "Poor" household fulfilling the same basic requirements of "Food , Clothing and Shelter"

So the question I am trying to ask is what will be the definition of Wealth/Rich in the future?

This is a very very important question from an investment perspective cause.. everyone .. I mean "Cattle Class" would be aspiring for the same "Wealth".. demand for what is going to be definition of "Wealth" is going to be tremendous. Look around you .. everyone aspires for a "Car",  a big house and all that defines the current definition of "Wealth", "Rich".

Lets dig a little deeper..

Wealth is created by providing value addition. Value addition is done by buying something that is cheap (abundant) and selling it (creating a demand/marketing it) to the masses at a premium. The current definition of "Wealthy" is based on the simple fact that "Energy" (in the form of Oil) is abundant..

- Energy has been accumulated "cheap" (in the form of oil fields, coal mines, gas deposits)
- Energy is then value added/transformed into (petrol, electricity, gasoline)
- Demand is created by defining "Wealthy" as "big house, big car, gadgets"
- Everyone starts aspiring for "Wealth" demand skyrockets for energy.

Wealth of the Future

The most important thing that we must do is define correctly "Wealth of the Future". There are very few criteria required to define "Wealth of the Future" The most important points are:

1. The wealth of the future should be abundantly available for the next 200 years
2. The wealth of the future could be accumulated/hoarded by few "Cheap" right now.
3. The wealth of the future should be simple and have the ability to be value added/transformed repackaged.
4. The wealth of the future should be something to "Aspire for" "Dream of"

Conclusion
- The demand for "Gold" right now could be because people "The Rich People" have not yet defined for sure what is going to be the next "Black Gold" .. so they have been stocking up the "Yellow Metal" hoping to exchange "Gold" for the "Future Wealth" (Smart - Very - Smart)
- Another observation is that you don't need to own "Black Gold" you could have made money just by being "IN" one of its "Value Added" products.. "Cars, Gadgets, Computers"
- Easy money lies in  "Future definition of Wealth" as there is going to be very high demand and short/controlled supply.
- Another important thing is "Yellow Metal" is perceived to be a store of value even in this day and age.. (which is a hogwash)
- "Black Gold", Oil reserves in the future will still be perceived as a store of value just like "Yellow Gold" is being treated like "King".. also because Oil has a utility value unlike "Yellow Metal"

"GOLD (Yellow metal) can be dumped for sure!!" buy basics industries of Food, clothing and Shelter.
Large Population is no longer necessary.. population reduction is "ON"
The verdict is yet to be passed...

I do not have the answer of "The future definition of Wealth".. I would like "You" to help define the most important question from an investment perspective. Ideas are eagerly awaited.

Gujarat Ambuja Exports: June 2010 Result Review: Strong Buy!!

Gujarat Ambuja Exports:
CMP: 28.50
Market Cap: 390.15Cr
Reserves (March 2010) : 392.58Cr
Debt (March 2009): 90.32Cr
Sales TTM: 1408.75Cr

Gujarat Ambuja Exports has reported its June 2010 Quarterly results and from the first impression we can say the results are fair and in line with the expected results. A deeper review says the results could actually be better than what has been reported. Lets just dive into the details.

1. The Operating profits before depreciation for June 2010 is 10.07% which have improved from 8.87% in June 2009 and are in line with March 2010 (10.24%) operating margins.
2. As mentioned in March 2010 result review Gujarat Ambuja Exports revenue mix is improving with sales increasing for higher margin "Maize Processing Division" and sales reducing for lower margin "Other Agro Processing Division"
-  Maize Processing Division is 32.95% of revenues in June 2010 improving from 26.09% in March 2010 quarter and compared to year end March 2009 (13.47%).
- Other Agro Processing Division which was 75.10% of the revenue mix in year ending March 2009 is now down to 46.70% a sharp drop but we must acknowledge "Other Agro Processing Division" is still the majority and the largest division of GAEL's June 2010 revenues
3. "Other Agro Processing Division" as we just mentioned is still the largest chunk of GAEL's Revenues in June 2010 and as we can see the Operating Profit Margin for "Other Agro Processing Division" in June 2010 is 0.60% which is really very low and looks to be an under reporting of profits. The lowest Operating Margin for "Other Agro Processing Division" from our table of quarterly results of  June2009, March 2010 and yearly results of March 2010, March 2009 is 5.22%. Even an Avg value comes out to be: (0.60 + 9.18+5.33+5.22+5.49)/5 = 5.16%. Assuming 5.16% operating margins for "Other Agro Processing Division" we could expect June 2010 segment profit from sales of 13250.26 is 683.71Lakh (6.84Cr)
PN: this is just an assumption on my part and we are guessing .. cause we must remember GAEL is an Agro Processing Export firm and there could be many external variables which could have actually resulted in a profit margin of just 0.60% .. We can however safely assume that this poor result for "Other Agro Processing division" is an exception and we can expect GAEL's Division to perform better in the future.

So I must conclude that the management has been conservative in reporting its June 2010 quarterly numbers and we can expect GAEL to perform better in the future.

I have another table that I would like to share which is sure to make GAEL shareholders jump with joy.
The GAEL management along with the June 2010 quarterly results has also reported the March 2010 Audited Results and the Audited results for year ending March 2010 report a net profit of 60.03Cr. If we look at the unaudited March 2010 Annual report the Net profit reported was 49.28Cr so the management has been quite modest in not highlighting the 21.8% positive jump in reported Net profit between Audited and unaudited results.
The free reserves of GAEL has also increased from 274.57Cr in March 2009 to 392.58Cr which is 118Cr addition to reserves in one year!! Exceptional Value!!

Please find below the Audited and unaudited March 2010 results for everyone to appreciate the surprise present from GAEL management.

Conclusion: Gujarat Ambuja Exports is what we can say "Un-Auditably HOT Stock" a "MUST HAVE" value buy in everyone portfolio. The company shares will surely respond to the deep value that GAEL has displayed. I would assume GAEL to report 70-80Cr Net Profit (Audited ;-) for the year ending March 2011 which would be a market cap of 700 to 800Cr at the minimum!!


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