i want to draw attention of this thread towards this company pokarna…
this company is a manufacturer of quartz , using breton stone technology , which is considered to be of superior quality. essentially a commodity play, where the company mainly supplies to the oem market , and has recently been in pursuit to establish as a brand…
the market is mainly export, to US, where the demand is currently huge and has been estimated to be on a growth trajectory of 25% cagr as mentioned by the management in one of the recent concalls…
the chief competitor is the chinese quartz, which currently holds, 60percent of the market share in the US…
the company has planned 130% capex in this segment which is scheduled to come online 18months from now [18 months had been the guidance since q4 concalls, land acquisition has been complete, machinery has been ordered ]
http://www.stoneupdate.com/news-info/latest-stuff/1554-china-quartz-surfaces-to-face-new-tariffs
the potential of this antidumping duty if imposed , can be exciting …
the Us production lines, currently enjoys lesser margins than what even pokarna enjoys…
the reason for the same was unexplained by the management
in the recent concall., they were asked what can be the potential pricing effect of their products if this duty imposition occurs, quite surprisingly, the reply that came, was they wouldnt just go and increase the price of their quartz, just because of the duty imposition…
the company has also difficult in directly passing on the RM price hikes[heavily dependant on crude, resin being a chief rm] , instead what they have done is introduced new patterns of quartz at a higher price , and removed the previous patterns form the market, as a modus to pass on the increased rm costs…
the company also has a granite business., which is currently in state of over supply mainly form the production line in brazil, whos color are in good demand in the US market, and indian colors seems to be losing the pricing power, with the declining segmental margins qoq…
the quartz topline has been attractive in terms or growth , a significant amount of capex oncoming in quartz, probable duty imposition [25 to 100%]on chinese quartz which holds the majority of the market share, and a pricing upcycle trigger possibility from the US production lines…
disclaimer… not invested