Mann's Portfolio

[Ashar_Mann]

This is inter family transfer
Although this is my pick due to lack of fund my dad bought it and than i had to repay to transfer it into my Account and hence the same wasn’t mentioned above before in the thread
My average purchase is 412 ex-Bonus
So the thesis goes below
The LRPC Strand are specialissd PRODUCT only 2-3 companies are into manufacturing of the same
Usha martin being one of them
Margins are very high 18% almost at Operating level
DP Wires doesnt have same kind of margin peofile since they are into trading of the same where PBT Is mere 2%
They have 11.25 crores of Lands where they have inched up Capacity at every corner once their facility is utilized
See last year once they reach 100% at 70k MTPA They inched upto 84k now to 100k
They dont commit the capital upfront
Jitna demand utna woh badhyenge
They have did the same since 2018
I like this kind of capital prudent promoters

Their exceution is more than perfect imo
If i were to look at 5+ years i assume that the whole capacity might help them to remove trading business and focus on self manufactured business
I may be wrong but lets see

Also their plastic product portfolio has geo membrane which is used in swimming pools, also in Nuclear plants to some extent
They have Gov. Approved nuclear power entity as their clients which is great for such small co.

And last but not least Induction twmpered wires termed as shockers which are used in trains they have supplied the same in Mumbai Ahemdabad train project (Source: Client list)
And hence if quality are upto the mark we can expect the good orders considering Vikas in Bharat

Also they are almost fully integrated except for sourcing of raw Iron / steel
So this might give them cost advantage against the local unorganised supplier

This is very rough Idea hope i have put my thesis or picture clearly if not DM Will surely like to hear your views

Disclaimer - Invested and Baised. Not a registered Advisor and hence No Buy sell Recommendation

[rankamoksh]

Could you provide some more colour on your thesis on crown lifters, I am actively researching the stock. They have filled an announcement regarding high demand. Are promoters trustworthy?

[Rahil_Dasani]

sorry to interrupt here, this high demand text has been pasted in each of their announcements regarding crane addition.

no one can know whether the promoters are trustworthy or not, we can just judge them on their actions and other minor points.
from what i understand, the oldies left the leadership position and the younger ones have took helm, post them joining we can see significant changes in the biz and increased aggressiveness.
we can see the margins inc qoq.
promoter gave out dividend and declined his part of the total payout.

capex done here is huge with no benefit flowing down till the latest quarter, so all of it would start paying this yr.
after my talk with several industry participants, one thing is clear that the demand is very strong, and the leader sanghvi being a sort of a monopoly seems to be arm twisting clients.

please compare the rental yield between both crown and sanghvi, you will understand what is going on.

secondly people are getting worried about this debt funded capex, but fail to see the interest costs and calculate that as a % of ltb.

i am for sure biased lol
invested from lower levels

[Ashar_Mann]

Very well put Rahil.
Talking with some of the participants i found that they are getting the cranes from china on credit at very minimal interest rate which could actually be covered by may be 1-1.5 months Rental Yield
The new cranes Rental yield is Approx. 4% v.s. Sanghvi’s 2%
Margins should reflect the better picture from this Quarter in my opinion
Earnings will be Non-Linear Of course

And as far as promoter’s trust worthiness Goes
In my humble opinion promoter’s trust worthiness should be on the basis of his execution that he does
We are yet to see the execution.

Great to see you though rahil here always have looked upto the things you do at such a young age and kinda look upto you

Disclaimer - Invested From Lower levels and Baised

[Rahil_Dasani]

actually the roi from china isnt low, its more of china is giving them a longer time to pay off, so overall the roi is very low compared to the cashflow they will generate from the crane additions. this is how i am thinking.
also if you look at the numbers closely, they have been selling assets and the buying toh we can see in announcements, newer assets have higher yield.
leaving everything aside the demand is too strong, just be watchful of the cycle here.

really glad to hear that from someone of your caliber, we are all trying to survive and thrive.
dont look up to me yaar, look with me, will cover a lot more surface area, too many businesses to study, collaboration is key.

[Ashar_Mann]

Yes, I Heard Kareem sir has mastered the art of selling the fleet. Hence newer asset replaces the fleet and hence cashflow will be higher even if depreciation is higher
The story has to pan out though in terms of no.
This coming quarters will show their true earnings😀

[rankamoksh]

I was studying creative newtech, degarding their distribution business since it is just a trading business it has around 2-3% margins, the brands portfolio which they have are very premium and very good ratings on amazon, the sellers of these brands listed on amazon is not creative newtech so is it that they have no exclusivity with these brands or they sell to a firm which eventually sells D2C online and also are they supplying to any retailers such as croma, reliance retail etc. Also their head office in Mumbai has very bad google ratings, since they have signed an exclusive contract manufacturing deal with Honeywell they are able to command 15-20% EBITDA margins do they have any plans or are they doing contract manufacturing for any other brands?

[Ashar_Mann]

Hey Rankamoksh,
I guess insta 360x is also a enterprise business.
which is basically a trading business.
they are national distributor for Samsung Display, Insta x360, Etc…
You can’t expect the National distributor to supply each and every product themselves.
ese karenge to value chain kese chalegi?
the thing might have happened is that Creative instead of doing all themselves might have sold the same to this Company

the brand Business - “Exclusivity is in Honeywell business” see the picture below

For that matter any honeywell SKU are through Secure connection only (Creative’s subsidiary)

Now, They haven’t signed “Contract Manufacturing” Deal, They have signed Brand licensing deal, meaning that All brand patents are owned by Creative. the products are made by “Honeywell and Creative Approved Factory”
hence the factory is Contract Manufacturer
Contract Manufacturing is low margin business and hence they don’t intent to enter the same
Instead they are having compete asset light model of business.

Hence for your point there is exclusivity but sab we can’t see siting at the end of value chain

@rankamoksh

are they supplying to any retailers such as croma, reliance retail etc

Yes they are infact recently visited Reliance digital and inquired about honeywell’s Air purifier which they stated they had to order it from some entity since it’s out of stock which in turned turned out to be this one

@rankamoksh

they have any plans or are they doing contract manufacturing for any other brands?

Yes they’ve indicated Once the Honeywell business reaches say 220-230 crores of revenue they’ll sign another brand

Reviews are from service perspective they are distributors and not the service provider if your camera goes bad
it’s Insta’s Responsibility to fix it and not Creative hence most of the reviews might go for toss

I prefer to look at amazon comment or Flipkart’s comment on product rather than this google since i have experienced that some comments may be bought out

@rankamoksh

degarding their distribution business since it is just a trading business it has around 2-3% margins

Also Couldn’t understand what is wrong with 2-3% margins i mean this is free cash without any investment in Fixed assets. This is cash cow business
Just go through Transcript and you’ll get it

For me SOTP is more than CMP
Ckart has inter generated more than 400 crores of Revenue and Any startup can be valued at 2-3x At sales minimum
Brand licening business can be worth easily 1500 crores if they achieve the target of 500 crores in next 2 years from Honeywell and New brands are cherry on Top

And Traditional cash cow business can be valued at 15-20 PE at max generating around 40 Crores of NP 2 Years down the line

And Hence SOTP is Far more than 500-600 Cr MCAP that i Entered

[rankamoksh]

Read its credit rating looks like 60% revenue will be coming from honeywell business, (correct me if my interpretation is wrong),

I was going through the DRHP and found its two listed competitors .

Looks like compuage infocom is facing serious headwinds attaching its credit rating and redington has historically traded at PE around 10-15 so Creative Newtech’s PE at around 35 is maybe because of their changing business model from low margin distribution business to contract manufacturing of honeywell business.

Their brand share seems to have evolved as in 2017 in their RHP majority share was of Sony, Samsung and LG, I see they have brands which are niche which could command better margins IMO.

The promoter is an IIM bangalore Alumni and has good experience but do they have the capability to do contract manufacturing for more brands is my question. Currently reading about the history of the company and trying to understand their MOAT would appreciate your input.

[Ashar_Mann]

Hey i dont know about compuage info but yes redington is the distributor and not the Brand licensee of Apple
Creative is Brand licensee of Honeywell
Their Enterprise bsuiness is kind of overlapping with Redington but still Creative is National Distributor it passes down the product in Value chain
Where as redington sab khud karta hee

Tbh in electronics component there is literally no one doing brand licensing

Hence you’ll not find core competitor → To understand the business model go through Page ind or Jubiliant foods

If you see tradtional business model you can say 50% Overlap with redington

I’m sorry your intepretation about the Credit rating is wrong Creative has it’s chain of distributor network that follows the supply path for almost every products in their portfolio

And hence the customer conventration

Honeywell’s business is mere 10% of revenue
They have vision to scale upto 2500 - 3000 crores of revnue even by 2030

See the moat is simple - Honeywell wont come to india and sell this white goods - Investement chaiye, Forex Risk, Credit Risk, Operation ka karcha and much more.
Hence Brand licensee - The audit of honeywell and its clearence required 2 years for creative
Switching time is very very very High
This is the moat in my opinion
The board seems quite competent

PE Is percperation of growth in earnings
Is the blended margins become 2x from 2% to 4%
The Profit CAGR Is very Hugh and hence highh PE

Go through earnings call in my opinion

Disclaimer - Invested and Baised

[rankamoksh]

How exactly do they do contract manufacturing judging the company by its past it is majorly been a distribution focused business for niche brands. Ideally they should be focusing on distribution and honeywell would find a contract manufacturer.

Judging by its current portfolio of brands it looks like a company that is focused on gaming industry as well as GenZ customers so looks like a company to ride the premiumization trend.

Since around 65% of business comes from enterprise, how does it work, does it mean they directly supply to businesses for end use and who are their major enterprise customers, could not find this information in AR.

Also Since they categorize different brands under FMSG, FMEG and FMCT is this the business segments that supplies to dealers who then sell to end consumers.

[Ashar_Mann]

@rankamoksh

contract manufacturing

They find factory that can manufacture the product → Honeywell Audits it
and they ensure Quality by Quality control system of Creative

@rankamoksh

should be focusing on distribution

They are focused on distribution side of business → Manufacturing me woh nahi jayenge since the margin is wafer thin.

@rankamoksh

around 65% of business comes from enterprise, how does it work, does it mean they directly supply to businesses for end use

Yes. Kind of But not the end user. May be regional distributor jiska States pr hold ho they sell it to them
The customer of such regional distributor are corporates → so yaa indirectly
Please understand value chain and you’ll get it

@rankamoksh

Also Since they categorize different brands under FMSG, FMEG and FMCT is this the business segments that supplies to dealers who then sell to end consumers.

Couldn’t understand this part sorry

[FawaazTheInvestor]

Congratulations on the investment and great results from Crown Lifters. What is your opinion on Tara Chand Infra and their rental yields who operates in the Same Segment with a larger capex and newer cranes compared to Crown Lifters? Feeling optimistic about Infra Proxies after Sanghvi and Crown’s Results?

Thanks,
Fawaaz.

[Ashar_Mann]

Thanks. I was just going through Tarachand’s concall the same is in my Track list too since i guess 5-6 months
few points why Tarachand is different than any other crane rental company

1. Tarachand is dependent upon the capex cycle of the economy they don’t have any contribution from the wind energy
2. Sanghvi’s no. you see are the den of Wind energy portfolio if you go through their presentation more than 50% of Revenue is directly from wind energy and 2-3% from EPC players of wind energy

Now for Tarachand the revenue comes from 2 types of projects → long term capex projects in underlying sector which are of 2 years or more and maintenance projects which are of 2 -3 months duration

Considering the elections in this year i doubt there will be ramp up in the economy as a whole before results in traditional capex. the same can be taken from concall. they are planning to add 40-50 crores of machines to the fleet in next FY around 22 - 25% of net block and unlike other industries there’s no gestation period here day 1 p chaddha sakte ho on rent
and hence for me that 7-8 months of no ramp up was the situation for me
for crown the top line is too small to have this effects

I’ll consider buying the same if i get good price

[prav.br]

Did you check DP wires quarterly results? They were disappointing.

[Ashar_Mann]

Margins Have eroded like anything and so is the business, couldn’t figure out why and the reason behind the same trading volume to Manufacturing volume is 1:1 which used to be 1.4:1 still the margins dipped kind of strange since manufacturing has high margin then trading business
company used to share Investor presentation but that is also stopped
Have made the position negligible few shares just to track untill then I have shifted the same into my old Holdings, I’ll still keep the company under watchlist Just in case the financials Improves I’ll not shy taking the position @ higher price.
Till then I preferred to churn the position
The Portfolio right now is as Follows (in order of weights → Highest to lowest)

1. SKP Bearings
2. Creative Newtech
3. Crown Lifters
   (Top 3 is more than 70% of the pf)
4. Yasho Industries
5. Galaxy Bearings
6. Misc. (tracking position around 7%)

(Note - Above weights are MV weights as cost weights are hard to measure and keep the track of it)
Above isn’t the buy sale recommendation but Will love to hear VP members views
Thanks

[rankamoksh]

Crown lifters has recently done QIP in which Niveshaay has also participated, thanks to your research was able to build some position in it.

[Ashar_Mann]

As Q1 of CY comes to end,
There is a little change in PF
Have added Mold Tek technology as implied growth rate is mere 11-12% for 17.5% Growth rate,

In this dip have also added SKP bearings,
The acquisition seems very interesting to me, ADD which EU has on Indian imported steel products there might be way around to the same by sending RM to france increasing cost advantage against local competitor

Let’s see how the same pans out

As on 31-3-24 PF stands as (in terms of highest to lowest weights)

1. SKP Bearings
2. Crown Lifters
3. Creative Newtech
4. Yasho Industries
5. Galaxy Bearings
6. Mold - Tek Technology
7. Misc. (< 4 %)

(Have not sold anything Changes in % highly due to MV changes)

No Buy/Sell Reco.
Baised on all of the above business