Wim plast

Stock Opportunities Untested - but worth a good look
142

Wim Plast latest annual report:

http://www.cellowimplast.com/images/wim%20plast%20-%20annual%20report%202016-17.pdf

As per the annual report, the new plant has become fully operational from November 2016.

144

Very poor Q1 FY18 result. Why they are not showing AIR cooler sales in segment revenue? Management is not transparent about AIR cooler business even in Annual Report

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Are you sure air cooler business is part of wimplast? Not all Cello branded businesses are part of wimplast.

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@vivek_mashrani Is cello air cooler part of WIM Plast? Why no segmental revenue reported?

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@hnk_so

Please do the due diligence of going through the entire thread or the company AR before posting queries to senior folks.
You will not have to scan through entire AR. The first page of the AR itself has a photo. You will be able to figure out if air coolers is a part of Wimplast or not. :slight_smile:

148

Yes, it seems to be part of wimplast.

From AR 2016-17
//
The Company is dealing with Plastic Moulded Furniture,Air coolers and Manufacturing of Mould during the year and there is only reportable
segment .i.e. Plastic Moulded Furniture
//

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149

There are so many group companies using the cello brand. From stainless steel water bottles to pens, looks like most of the products using cello brand are sold by privately held companies. Wonder if there could be conflict of interest here for the promoters.

150

I called investor’s contact of WIM PLAST following feedback i got
(1) Air cooler revenue is less than 10% , hence not reported under separate head but it included in other items
(2) This year drop in sales and PAT is due to GST and higher rate of GST. Now molded furniture under 28% GST which is 10% higher than earlier total tax.
(3) Air cooler business still growing and management is focusing for its growth. GST and demonetization disrupted its growth

If other members have additional point, please add.
Disc - invested at low level (before bonus) and would like to add if drop to 1200-1250

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151

Anybody know the reason behind the decrease in the Promoter shareholding??

It has come down to 70% from 75% in the past few quarters

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153

I have the following queries. Can anyone please advise:

  1. which entity owns Cello Brand? If it is not Wim Plast, is Wim Plast currently paying a royalty to the promoters to use the brand name? If it is Wim Plast, are the other entities of promoters paying a royalty to Wim Plast for using this brand name?

  2. what is the probability that the promoters will milk the listed entity of all its profits by charging high royalty to use the Cello brand name?

  3. Promoters have pared their stake by 5% over the last 3 years which may show their intention to reduce their interest and exposure in the listed entity. Considering this has been a zero debt company forever, it makes sense for promoters to have highest percent shareholding rather than reducing their stake.

  4. considering promoters have multiple businesses in similar plastics industry, what is their thought process to bring new ventures under their private entity or Wim Plast?

  5. have promoters shown their intent to bring other businesses under Wim Plast in a future date. If yes, there will also be a transfer pricing risk.

154

I think it is 1% of total sales.
http://www.nirmalbang.com/Upload/Wim%20Plast%20-Management%20Meet%20Update-%2029%20December%202016.pdf

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Thanks @hnk_so. 1% sounds reasonable considering Maruti pays 5.3%. This comes to 9% of PAT. But there are Multiple risks with promoters having conflicting interests in their different ventures.

156

Are you sure? Maruti gets platforms and r&d for the royalty. The heartect paltform for example could give you an idea of the development cost and the benefits to Maruti in terms of sales volume. So paying royalty is not bad if it turns out to be higher sales.

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157

While I am not sure what is the royalty norm for using the brand name, HUL pays 3.15% of turnover as royalty. While this may also include some R&D, this would be more comparable as I think R&D will not be much for consumer durables.

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158

If I’m not wrong, Wimplast only has the plastic business (furniture,etc.) and the air cooler business. The pens segment isn’t associated with the company.

Could any one provide what margins the company makes on both the segments?

159

I believe that the company is into

Cello Furniture - Chairs & Tables (including kids furniture)
Cello Bubble Guard Board - Wall panels, false ceiling, floor protector, door panel/partition, wall facing board.
Cello Flute Guard (including printing) - Hollow Corrugated Boards made from Polypropylene
Cello Air Coolers - Air coolers only
Infinity Cello - Almirahs / Racks etc

160

Excellent QoQ result but YOY flattish
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=3fe51236-772b-4b39-86ee-c5ad21ea12e8

161

Given the scenario where the crude oil prices are rising, I believe these players will see margin compression both on operating and net profit level.

Based on normalized NPM of ~10% which is too good by industry standards and assuming ~400 Cr sales next year, this is trading at forward PE of 27x…If this further corrects by ~20-30% then it will be very lucrative price.

Also, the contribution to growth from new plant does not seem to be much. Probably need to check on capacity utilization during the next AGM.

162

I could not find management focus on Air cooler business. No more coverage in quarterly report / company presentation or in recently published Annual Report 2018. https://linkintime.co.in/website/GoGreen/2018/AGM/Wimplast_Ltd/Annual_Report.pdf

If any one attending AGM, kindly discuss with management about Air Cooler business and post your feedback here.

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