We analysed Century Plyboards’ (CPBI) FY17 Annual Report and key takeaways are:
* CPBI posted revenue/EBITDA/PAT growth of 11%/13%/13% for FY17 led by higher contribution from commercial veneer and laminate divisions, even as the plywood division posted flat growth due to demonetization and subdued real estate activity during FY17.
* Plywood sale volumes/revenues have grown at a 7%/10% CAGR over FY13-FY17 while laminate sale volumes/revenues at a 16%/18% CAGR over the same period.
* Average capacity utilization for the plywood division in FY17 stood at 84% vs. 94% in FY16 due to capacity expansion at the company’s Guwahati unit. Average capacity utilization for the laminates division improved from 89% in FY16 to 103% in FY17.
* GST implementation is expected to reduce the pricing differential between branded and unbranded plywood products by 10-20%. In laminates, the pricing differential has reduced by ~10% due to a lower tax rate (18% under GST vs. 28% earlier).
* Company currently has 1,800 dealers across India. About 90% of CPBI’s sales are derived through nation-wide retail channels.
* CPBI has incurred Rs 759mn (4.7% of sales) on Advertisement & Promotions in FY17 vs. Rs 629mn (4.3% of sales) in FY16.
* CPBI’s new MDF plant in Punjab is expected to start commercial operations by 1HFY18-end. Management expects the plant to operate at 60% utilization in FY18. The new particle board plant has already stated operations in FY17 and generated revenues of Rs 165mn during the year.
* CPBI has lined up a capex of Rs 2.9bn over the next two years, which includes increasing its laminate capacity by 50% in FY18.
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