Neo Corp International Ltd.

NEO CORP INTERNATIONAL LIMITED(NCIL) – BSE CODE-523820

NCIL is a Public Listed Company with an equity base of 38.02 million shares.

NCIL since its inception was dedicated towards making tailor made products under Packtech and now it has the status of one of the best and reliable suppliers in Packtech products internationally.

It has also entered two more segments of technical textiles namely Geotech and Agrotech.

It is listed only on BSE as of now. It was trading on NSE through Madhya Pradesh Stock Exchange (MPSE).MPSE is in the course of decognitiion hence NCIL permission to trade on NSE was withdrawn since 30^th January 2015. The company has filed an application for relisting and should be traded on NSE soon.

NCIL is also listed on Bourse de Luxembourg(Luxembourg Stock Exchange).

CHARTEREDINVESTOR PICK

Technical textile sector is one of the most innovative branch of the industry in the world, ranking as one of the five high tech sectors with the greatest potential for development. The success of technical textiles is primarily due to the creativity, innovation and versatility in  fibers, yarns and woven/ knitted/ nonwoven fabrics with applications spanning an enormous range of users. The ability of technical textiles to combine with each other and with others to create new functional products offer unlimited opportunities for growth.

Traditionally, North America and Europe have been the major markets for technical textiles in the past but in recent years, the sheer volume of demand from Asia Pacific has outpaced demand from North America and Europe. With better technology capabilities, ever increasing demand from different end user industries, technical textiles are expected have a huge market to cater to globally.

India’s export of technical textiles has grown from US$ 624.95 million during 2007-08 to US$ 1355.04 million in year 2012-13 with a CAGR of 17% indicates encouraging global demand for India’s technical textile products. Furthermore, the import of technical textiles has grown from US$ 835.82 million during 2007-08 to US$ 1434.97 million in year 2012-13 with a CAGR of 11% shows that Indian consumers have significant demand for technical textiles products.

These statistics highlight not only concerted domestic needs, but also India’s potential to address global demands, for technical textiles products. With advancing technology, higher integration with global markets and greater sensitization to market needs, the Indian technical textiles industry demonstrates significant potential, for the development of local industry and prospective entrepreneurs.

Technical textiles are an important part of the textile industry and its potential is still largely untapped in India.

NCIL MANAGEMENT:

Neo Corp is run by learned and highly experienced people from the related fields. Few of them are:

1.   Mr. Shrawan Kumar Patodi : Eminent Lawyer having vast experience in the field of low and 10 years of experience as export executive. Educational qualification - B. Com. M.A., LL.B. and D.H.B.

2.   Mr. Ladharam Patel : 40 years of experience in the manufacturing business.

3.   Mr. Rollande Coderre : An entrepreneur from Canada having experience in vast number of fields like packaging, construction, etc. Educational qualification - Degree in Business Administration and business accounts & finance

THE NUMBER GAME

Let us have a look at the financial results of past years.

Particulars	FY 2010-11	FY 2011-12	FY 2012-13	FY 2013-14	FY 2014-15(Trailing)
Sales	301.99	431.05	626.07	979.34	1307.57
Operating profit Margin	10.76%	11.36%	10.40%	9.91%	9.91%
Profit before interest and depreciation	36.02	55.72	71.49	101.80	128.92
Interest	14.78	22.23	27.43	42.28	54.11
Depreciation	2.72	4.45	6.28	9.67	13.12
Profit before Tax	18.53	29.05	37.77	49.85	61.69
Tax	2.62	7.84	8.81	19.95	21.74
Earnings for shareholders	15.92	21.21	21.13	30.01	39.95
EPS	10.27	5.61	5.59	7.94	10.52

The numbers speak a lot about its performance. The return on the capital employed in to company over a period of 3 years is above 16%. Also the cash flow has been improving. At current levels, NCIL is trading at 2.5 PE which is very much lower as compared to the industry PE of 22. Also the business has huge potential to grow. Trading at 60% of its book value provides huge ground for upmove.

CONTROL MEASURES:

The company has hired world class professionals for proper control over the business activities. This has helped to improve productivity, provide better services, reduced cost and increased returns especially on human capital. The company’s internal control systems are commensurate with the nature of its business and the size and complexity of its operations.

STRENGTHS:

·         NCIL products are of ISO quality standards and the BRC & Astho will enable NCIL to enter rich e markets.

·         Worldwide ever increasing demand.

·         It is also into business of Geotech and Packteck. Thus agricultural and infrastructural activities will give impetus to the growth.

·         It has a large domestic market which helps to spread the risk.

·         New acquisitions will add further to increase in proximity and develop new and better customer relations.

·         NCIL has the highest production capacity of technical textiles in India.

 
WEAKNESS:

·         The market is price sensitive and thus is susceptible to pricing pressure.

·       Competition from other countries.

With a view to take on the competitors in the global markets, NCIL has been increasing its business and developing client relations. It had its business spread across 20+ nations and has been serving 550+ clients.

It has 6 subsidies namely

1.   Europlast Ltd

2.   Sacos Indigo Pvt Ltd

3.   Netflex Infracon Ltd

4.   Polybase Ltd

5.   Polylogic International Pvt Ltd

6.   IPC Packaging Co Ltd

Europlast Ltd was incorporated in UK in 1988 and was engaged in sourcing and distribution technical textiles. The acquisition of Europlast was very crucial. Europlast Ltd was operating for over a decade and established itself as the leading player in its business in Europe. Acquisition of Europlast has proved to be very much advantageous in the form of better customer services, reduction of risk on account of credit sales and also reaching out to more clients.

In the previous financial year NCIL made a big strategic more by acquiring IPC Packaging Co Pvt Ltd. IPC was acquired in November 2014. IPC Packaging Co. Pvt Ltd is based in Bangalore, the IT hub of India for the past 6 years and leading manufacturer of PP / HDPE woven FIBC, Jumbo Bags, sacks, Tarpaulins, Box Bags, PE Liner etc.. IPC has a huge hi-tech production plant spread over 2.6 million sq ft which is located very close to the Industrial sector. IPC was and is being run by veterans with experience of over two decades. This acquisition puts NCIL at the top in its business with highest production capacity in india.

In addition to the technical textile business, Neo Corp also represents Indian Oil Corporation Ltd as Del Credre Associate cum stockiest for the state of Madhya Pradesh. There are two production lines of 300 KTA each for Polypropylene (PP) with Spheripol technology license from Basell, Italy. The product portfolio includes entire range of Homopolymers, Block Copolymers and Random Copolymers.

There is a dedicated HDPE plant of 300 KTA using Basell (Hostalen) slurry process. The product portfolio includes Unimodal as well as Bimodal HDPE grades for various application segments such as Film, Blow Moulding and Pressure Pipes.

The low petroleum prices will benefit to a great extent the company’s polymer business.

http://www.business-standard.com/content/b2b-plastics-polymers/india-china-driving-global-specialty-polymers-market-114100800842_1.html
 

AWARDS AND RECOGNITIONS:

·          Neo Corp enjoys the Star Export House status recognized by the Government of India for the Company’s excellent export performance.

·        It has a Trading House Certificate which is valid for a period of 5 years which ends in 2019. A trading house is an exporter, importer and also a trader that purchases and sells products for other businesses.

·        On 22^nd September 2014 its Inhouse R&D Units recognization was renewed upto 31^st March 2017.

·         NCIL is also a member of the Flexible Intermediate Bulk Container Association(FIBCA).

Some industry related links

http://www.business-standard.com/article/economy-policy/india-s-technical-textile-market-may-touch-32-billion-by-2023-study-114070400796_1.html

http://articles.economictimes.indiatimes.com/keyword/technical-textiles

All the above discussions depict Neo Corp has a huge potential for a great upmove and will prove its mettle in the coming times.

Disclosure: It is safe to assume that I have vested interest in Neo Corp International Ltd and my opinion may be biased. Viewers must consult their financial advisors before any investment.

Happy investing. 

Risks involved in penny stocks.

Risks of Penny Stock Trading

The investing adage "buy low, sell high" is good advice. There's nuance to it, however. "Buy low" doesn't mean "buy the cheapest stock possible". Similarly "sell high" doesn't mean "wait for it to become the most expensive stock possible". In this context, low and high are relative terms which refer to the underlying value of the business itself: buy when it's undervalued and sell when it's overvalued.

Novice investors commonly look for extremely cheap stocks, figuring that a stock selling for Rs 1 has a lot more room to double or quadruple in value than a stick which sells for Rs 10. Novices commonly fall into the trap of looking for penny stocks to buy. This is risky, but you can avoid this.

What is a penny stock? It's a stock that generally sells for less than five dollars per share and trades outside of a major exchange. These stocks are cheap for a reason: they usually belong to companies in bankruptcy or other financial troubles. These stocks are popular in certain circles, but they're very risky. You might also hear them referred to as microcap stocks or pink sheet stocks. It's all the same thing.

Why Do People Get Started Trading Penny Stocks?

A cheap stock may seem on the surface to give you good value for your money. If you ten thousand rupees, you can buy 20 shares of Tata Motors at Rs 500 and 20000 shares of some random stock selling for Rs 0.50. Which would you rather have twenty shares or twenty thousand? Psychologically speaking, it seems like it's easier for something selling for Rs 0.50 to go up to a Rs 1 (doubling your money) than it is for Tata Motors to go up to Rs 1000 (doubling your money).

The problem is that the value of a stock depends on two things. First, its value is whatever someone's willing to pay for it. With millions of shares changing hands every day, millions of people are judging what stocks are worth. Two, the value of a stock depends on the value of the business behind it. It's much better to own a company that's making money than it is a company that's losing money. People are willing to pay a little more for the privilege of owning part of a successful business than they are to own part of a failing business.

Most of the time, a stock price below a dollar means that people think the business is in trouble. Most of the time, they're right. Even if you've found likely candidates, penny stock trading is one of the riskiest types of investing.

Struggling Companies and Buyouts

It gets merged with another company. Sometimes that happens, or sometimes a stock gets bought out entirely. In that case, the acquiring company will often make a bid for the troubled company, based on what they think the company is really worth. That's probably the value of the assets: real estate, inventory, existing contracts minus existing liabilities.

In the case of an acquisition, the acquiring company may either pay existing stockholders a fixed price per share or convert shares of the acquired stock into shares of the new parent company at some ratio.

Sometimes this is a good deal. Sometimes it's a fair deal. Any profit you make depends on the price you paid. If it's below the acquisition price, you might make a little profit. In this situation, timing is everything. You have to buy the stock for less than what it will sell for.

How do you know what it'll sell for? You have to figure out what the company as a whole is worth—its inventory, any existing contracts, any investments, the value of real estate, and the opportunity costs of acquisition. That's a lot of financial analysis for a company that'll probably go bankrupt.

Selling Penny Stocks is a Difficult Task

Of course, to buy a stock at the right price, you have to find someone to sell it to you at that price. That's not easy. Unlike a normal stock, where people buy and sell based on actual value of what the company can actually make, penny stock trading relies on speculation. Everyone who owns the stock is waiting for it to turn around somehow. Maybe you'll get lucky and someone who bought it for Rs 0.20 a share is willing to unload a few thousand shares at Rs 0.50 a share, but it's more likely that anyone who bought it wants to make 10 or 20 or 50 times profits.

The same goes for getting out of a stock. Sure, you bought it at Rs 0.25 a share and good news has raised it to Rs 0.50 a share, and you think you're as lucky as you're ever going to get, but are there enough buyers at Rs 0.50 a share for you to sell all of your shares?

Penny stocks have very little liquidity. There aren't many buyers and sellers because they're so risky. Unlike a share of Reliance stock you can buy or sell pretty much anytime near the asking price, there aren't enough buyers and sellers who agree on prices, so their prices have wild swings. You're going to have to have great timing and even better luck to sell at the price you had in mind. That's after you've gone through all of the hoops in How to Buy Penny Stocks.

Sure, you can wait for the company to turn around—but most don't. Most don't get acquired. Most go out of business.

If you're looking to get rich while day trading penny stocks that lack liquidity, will work against you. If you're at all ethical—if you're not defrauding other people with pump and dump scams—you're relying on luck, and luck is a poor investment strategy. As well, patience works against you. You have to race around the clock before these poor companies go out of business altogether. That "hot penny stock tip" you just saw in email? That's someone's desperation trying to trick you into buying what he really wants to sell.

People often ask where to buy penny stocks. You can generally buy them through any reputable stock broker, though you'll likely have to sign a disclaimer that you understand the risk of smallcap trading. In shadier corners of the Internet, you can find businesses which purport to specialize in these trades, but trust may be an issue. Any reputable stock broker will have to run you through several pieces of paperwork to ensure that you understand the risks of this type of investing.