Financial Times

LWL increases market share
Lanka Walltiles Ltd. (LWL) has been able to expand market share and ward off competition from cheap tiles with a new pricing strategy backed by aggressive advertising. This is expected to give more value to the company, further enhancing its profitability and better investor returns in future, SC Securities said in a market report.

The principal activity of LWL is manufacturing and selling wall tiles for the export and local markets. The group consists of three wholly owned subsidiary companies namely, Lanka Wall Tile Meepe (Pvt) Ltd, Ceradec (Pvt) Ltd and Lanka Tile Trading (Pvt) Ltd.

The company also owns a 51% stake of Lanka Tiles Limited (LTL) and has diversified interests in plantations (51% stake in Ceytea - Horana plantations) as well as packaging (Uni- dil packaging Ltd).

Lanka Walltile Limited performed significantly during the year ending 2004 March 31, as opposed to the previous financial year. "It is noteworthy to mention that in order to stand up to challenges, the company embarked on a master plan where they increased the capacity utilization of both the factories efficiently," SC Securities said.

"LWL developed new products and designs which they offered to the market at affordable prices to shrug off cheap, low quality local competition." For instance, the company introduced 16" X 12" and 12" X 12" tiles which have found favour in local and international markets.

"These strategies have also given the company an extended market share thanks to the management's strategic thinking." The LWL brand is widely known in US and Canada and the company exported around Rs 306 million worth of tiles in year 2003/2004.

Net export sales of LWL registered a 5.3% increase from Rs 562 million in 2003 to Rs 592 million in 2004. The brokers said the LWL share is trading at Rs 60 levels and when compared with the book value of Rs 71.81 seems a good buy or undervalued.

"The company has got a good record of paying dividends every year and at present LWL has a dividend yield of 3.75% in comparison to the industry average of 5.41%."

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