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ANSA McAL Research Analyst: Ravi Kurjah Email Contact: [email protected] Last Updated: January 2016 67.60 67.40 67.20 250 67.00 200 66.80 150 66.60 100 66.40 Volume Traded January-16 December-15 November-15 66.00 October-15 66.20 0 September-15 50 August-15 2012 14.8% 5.6% 17.4% 10.8% 173.0% 15.5% 21.8% 15.8 2.0 1.5% 11.73 300 July-15 2013 12.4% 6.3% 18.7% 11.9% 173.0% 12.5% 12.3% YE 2012 11,307.20 5,892.50 1,024.30 633.30 $3.67 $0.80 11.88 511.20 Share Data Trailing P/E (x) P/B (x) D/Y Mkt. Cap ($bn) AMCL price & volume trend : January 2015 - January 2016 June-15 2014 12.5% 5.4% 17.7% 11.2% 150.0% 15.3% -17.3% YE 2013 12,230.90 6,217.70 1,164.40 742.00 $4.31 $1.10 5.52 563.20 350 $66.63 $67.50 $66.40 0.35% May-15 Performance Ratios ROE ROA Operating margin Net profit margin Current ratio Total debt/equity Working cap. growth YE 2014 13,116.70 6,105.40 1,080.00 684.90 $3.97 $1.30 (1.80) 956.10 Trading Data Last price 52 Wk. High 52 Wk. Low YTD/Chg % April-15 Three Year Review Total assets Total revenue Operating profit Net profit EPS DPS Sales Growth Free cash flow Sep-14 YOY % chg. 12,310.20 6.94% 6,251.40 8.33% 1,516.00 2.39% 224.20 9.32% 146.90 9.19% $0.86 8.14% 12.4% 0.11% March-15 Sep-15 13,164.20 6,772.40 1,552.20 245.10 160.40 $0.93 12.5% February-15 Highlights (TT$ mn) Total assets Total equity Total revenue Operating profit Net profit EPS ROE Overview: The Ansa Mcal Group of companies is a local company headquartered in Port of Spain and has been doing business since 1881 and is one of the largest conglomerates in the Caribbean. It has subsidiaries in the manufacturing, brewing, finance, insurance, real estate, automobile retailing, media and service sectors. January-15 AMCL Banking 31-Dec TTD Thousands ANSA McAL Limited Trading Symbol Sector FYE Currency Share Price Economic Review Following a dismal first half of 2015, domestic economic activity was depressed in the third quarter of 2015. Real GDP contracted by 1.5%and 2.2% (on a year-on-year basis) in the first and second quarters of 2015, respectively. Real GDP subsequently declined by 2.0% in the third quarter of 2015.The energy sector was affected by weak global oil and gas prices and low output and was estimated to contract by 4.7% in 2015. For 2016, Government revenues will contract in 2016 as oil prices continue to trend lower, leading to a widening of the fiscal deficit. In its 2016 budget, the new government has proposed a suite of tax reforms, including the creation of a new revenue authority, which will take at least a year to institute, and an increase of the business levy, which is unlikely to generate returns amidst slowing growth. Business Monitor International (BMI) expects Trinidad and Tobago to remain in recession through 2016 which will weigh on corporate and personal tax revenues. However, the reintroduction of property taxes and a widening of the VAT tax base will drive revenue expansion in 2017, when the economy is expected to return to positive growth. Segment Review Non-energy sector real GDP was relatively flat (-0.1%) in the first nine months of 2015, as opposed to relatively healthy growth of 2.9% in the corresponding period in 2014. The Construction, Manufacturing and Distribution sub-sectors, which collectively account for close to 45.0% of the non-energy economy, all recorded anemic performances in 2015. With very limited new large-scale project start-ups during the period, the Construction sector grew by 1.0% compared with an expansion of 3.1% in the same period in 2014. In the Manufacturing sector, real output declined by 1.3% as weak construction activity spilled over to producers of key inputs. Initial estimates also suggest marginal growth of 0.6% in the Distribution sector. Financial Performance Review For the three months ended September 2015 AMCL's total revenue improved by a marginal 0.19% year-on-year. In the current period, P/E has been the lowest, falling for three sequential quarters from 16.68x in Q4014 to 15.98x currently. In quarterly segment analysis, two out of four sectors third party revenue fell, namely the Insurance & Financial services and Media, Services & Parent company sectors fell 3.65% and 2.48%. Overall return on common equity was 12.49%, 1.5% lower than the previous quarter and 0.56% lower than the three quarters for the year average of 12.56%. In December 2015, ANSA McAl backed away from a bid offer of BBD7.20(USD3.60) per share for shares in Banks Holdings Ltd., stating that the offer was not in line with AMCL long term strategy of attaining a 51% majority stake in the company which was no longer mathematically possible. Valuation Based on Ansa Mcal's performance, steady dividend payments and group diversity, this stock is valued at TTD57.18. On the market AMCL has been trading flat since 2014, ranging between a share price of TTD67.50 and TTD66.15. For the stock price to break through the current range, the company would have to exceed investors' expectations and improve dividend payout considerably. AMCL's current market price stands at TTD66.63 making it overvalued by the market. Disclaimer & Disclosure This report has been prepared by First Citizens Investment Services Limited, a subsidiary of First Citizens Bank Limited. It is provided for informational purposes only and without any obligation, whether contractual or otherwise. All information contained herein has been obtained from sources that First Citizens Investment Services believes to be accurate and reliable. All opinions and estimates constitute the author’s judgment as at the date of the report. First Citizens Investment Services does not warrant the accuracy, timeliness, completeness of the information given or the assessments made. Opinions expressed may change without notice. This report does not constitute an offer or solicitation to buy or sell any securities discussed herein. The securities discussed in this report may not be suitable to all investors, therefore Investors wishing to purchase any of the securities mentioned should consult an investment adviser. We, First Citizens Investment Services Limited hereby state that (1) the views expressed in this Research report reflects our personal view about any or all of the subject securities or issuers referred to in this Research report, (2) we are a beneficial owner of securities of the issuer (3) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this Research report (4) we have acted as underwriter in the distribution of securities referred to in this Research report in the three years immediately preceding and (5) we do have a direct or indirect financial or other interest in the subject securities or issuers referred to in this Research report.