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Sunday, August 25, 2019

Kingfa Science&Technology: Scuttlebutt Update.

Scripscan: Kingfa Science&Technology ltd
Cmp:540rs
Traded in:NSE-BSE
Mcap:650crs

Quote: Kingfa India came with spectacular set of numbers where it’s profit vaulted from 60 lakhs to 10crs even under this slowdown. The company which showed 19crs of Pat last year should double the same in the present fiscal.

1..Top-line could double in next 3-4 years. Current market share for auto in India 24%. In couple of years it can exceed 50%. Current product mix 80% (auto) - 20% non auto.This mix may be revised to 60% auto - 40% other in long term.

2..Chakan plant could start production soon.Key focus of Company may shift to Engineered plastics (E.P.) in India. Total E.P. market in India 50 kt, current kingfa sells 3 to 4 kt. Nylon, ABS, PCABS are key targets.

3..It is likely that DSM India will feel pressure once Kingfa focuses on Nylon. DSM purchased SRF E.P. business (12,000 tons per annum), because it was a complimentary fit (4 wheeler presence added to 2 wheeler presence). 

4..July production volume was 6000 tons. Highest in the history of the company. As Chakan ramps small production, Jejuri will likely ramp down.

5..Long Glass Fibre projects are taken for specific small projects. Good product. In future it is likely that Kingfa will put LGF line as volume comes in

6..Major exports likely to commence in 2021.No major cost difference in polymer prices between China and India. In fact Reliance is bit more expensive.

7..Kingfa China  may strategically shift some export Business from China to India. 2021 supposed to be strong export year. Kingfa adjusts for crude cost with a quarter lag

8..In 4 to 5 years, it is likely that E.P. will be 40% of business, PP will be 60%. Key drivers could be :China market growth to moderate sharply going forward - like a developed market, while India has huge potential to scale.India could be export hub, China US concerns are also creating a long term strategic push for such a move.

9..Automotive:Electric vehicles should be very good for business. Lightweighting is a key initiative, and EP are a key solution.In EV, Battery casing, door panels, metal grills etc. are key products for replacement.Kingfa could be working with some German Tier 1 producer for such projects already.

10...Motherson key strategic global customer, large volumes rumored to be under discussion.MG Hector - 85 Kg all rumored to be supplied by Kingfa. Suzuki potential biz. 12 kt per annum.

Conclusion: Anything that can do so well under such slowdown only showcases what it can do when the sentiments changes for good. We remain positive on the future prospect of the company.

Btw : Happy to introduce our Sebi registered investment advisory services. Please click our website Equitywealth to know more about it.

Regards,
Team Equitywealth 
www.equitywealth.co.in

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