Coppertech eyes big sales

Coppertech Industries---the copper product manufacture—are expecting a big sales boost from continuous casting and rolling (CCR) production line.

In September 2021, the company started commercial production of CCR wire, which was procured under the initial public offering (IPO) fund. The company is expected to increase sales by 160 per cent to Tk 180 crore in a year, according to an equity note prepared by EBL Securities Ltd.

The CCR project's annual output is expected to be 1,200 tonnes, which is worth around Tk 110 crore at the current market price of Tk 900 per kg.

On December 29, 2018, the Bangladesh Securities and Exchange Commission (BSEC) approved the IPO proposal of Coppertech Industries. The company raised capital worth Tk 20 crore by offloading 20 million shares under the fixed price method.

In the first nine months (Jul’21-Mar’22) of FY’22, sales increased by 60 per cent and stood at Tk 75 crore as against Tk 47 crore in FY’21.

Owing to the added sales receipts from the CCR production line and relatively static fixed costs in 9M '22, the company has been able to register substantial topline growth.

As a result, earnings per share (EPS) have advanced to Tk 1.49 in 9M '22 from Tk 0.78 in the previous year, representing a 90 per cent increase YoY.

The EPS at the end of FY '22 will continue its upward momentum since sales usually remain prosperous during Apr-Jun quarter, said the EBL Securities report.

Coppertech Industries have signed a deal with Mohammadi Electric Wires and Multi Products Limited in January 2022, where the company will earn around Tk 52 crore revenue annually based on the prevailing market price of copper wires until the agreement expires.

In December 2021, Coppertech announced the signing of a deal with the state-owned PVC cable company, Eastern Cables Ltd, to supply 100 tons of finished copper wire worth Tk 11 crore.

It has taken the decision to purchase land adjacent to its factory location at Madhabpur in Hobiganj measuring 32 decimals at an estimated cost of Tk 2.3 crore.

The newly purchased land indicates that the company may use it for future expansion plans for business activities and production capacity.

As per the EBL Securities study, around 66 per cent of the raw materials are imported. Since most of its raw materials are sourced from different countries against payment of foreign currency, recent volatility in the exchange rate may have an adverse impact on the cost structure and profitability of the company in upcoming earnings disclosure.

The CCR wire manufacturing production line generates slightly higher manufacturing overhead than the existing production line, it said.

Moreover, the company incurred higher operating expenses in 9M’22 while operating expenses were 5.6 per cent of the revenue as against the 4.5 per cent average of the last three years, due to higher marketing and advertising costs.

Besides, the operating profit margin decreased by 2.2 percent and stood at 20.8 per cent in 9M '22 as against the 23 per cent average of last three-year.

The company has reported a net profit after tax of Tk 75 crore in the first 9-month period of FY22, with an increase of 60 per cent from the corresponding period.

Besides, the net asset value per share was Tk 13.08 as on March 31, 2021.

Also, the reported net profit after tax is Tk 9 crore and EPS is Tk 1.49 for the 9-month period ended on March 31, 2021.

Coppertech Industries sources its raw materials from both international and indigenous markets. The majority (66 per cent of the raw materials are imported and remain procured from indigenous sources.

The company manufactures and trades industrial copper products, namely, copper busbar, copper rods, copper strips, copper wire, copper pipe, and copper tubes.

Consumer industries for the products are power plants, air-conditioning and refrigerator manufacturers, engineering workshops, electronic product producers, electric car manufacturers, solar panel producers, and other local customers.

It was listed with the Dhaka and Chattogram bourses in 2019 and has been carrying out share trading under the "B" category by providing dividends regularly.

The company’s share price declined by 1.23 per cent to Tk 48.10 on the Dhaka Stock Exchange on Thursday.

Coppertech Industries paid a 5 per cent cash dividend to its shareholders for the year that ended on June 30, 2021.

The company reported EPS of Tk 1.02 and consolidated NAV per share of Tk 12.10 during the period.