New research report: Korado Bulgaria – a well-managed company in a recovering market

Korado Bulgaria

Korado Bulgaria

Korado Bulgaria, the leading steel panel radiator producer in Bulgaria, delivered 10% CAGR of the top line and a 7x rise in its bottom line over the last 5 years with remaining free capacity to take on the recovering construction industry in Europe as new EU energy efficiency regulations kick in and macroeconomic conditions improved considerably – this is what ELANA Trading analysts say in their updated corporate profile of Korado Bulgaia.

Reaping profits from well-executed capacity expansion CAPEX

After major capacity expansion investments in late 2014 and beginning of 2016, Korado Bulgaria is currently reaping considerable profits from booming capacity utilization as lower manufacturing costs in Bulgaria remain a competitive advantage vs. Western European production. Volumes sold rose 50%+ over the last 5 years with new bathroom radiator product delivering margin growth.

Strong cost control and low leverage support surge in margins

Despite commodity prices fluctuations, the Company sustains strong cost control and low debt levels which led to surge in margins – EBITDA and net profit margins more than tripling over the last 5 years. Cost control and low leverage also a competitive advantage to large, higher production cost and more leveraged Western European competitors.

Steady free cash flow generation and lucrative investor returns

With major CAPEX accomplished, Korado Bulgaria generates steady free cash flows and lucrative returns to investors. ROE tripled over the last 5 years to 17% in 2016 and rising. In 2015, Korado Bulgaria initiated dividend distribution with a lucrative 4.7% average dividend yield over the last 3 years despite tripling in market value. Upcoming dividends to yield 5% on average over the next 5 years.

The Company is also actively working on improving its stock liquidity. In August 2017 it distributed a 50% stock dividend (free shares). It is also planning to double the free float available on the market from the current 16% to approximately 33%. The latter is expected by ELANA Trading analysts to give a further boost to stock liquidity and market performance. Accordingly, it is among the best corporate governance companies on the market with an 80% dividend payout and considering 6-months dividend payouts. In October 2017 the Company started working with ELANA Trading as market-maker.

Korado Bulgaria overview

Korado Bulgaria is a leading steel panel radiator producers in Bulgaria. The Company is part of the Czech Korado Group, being a low cost manufacturing base.

The Company’s core operations are steel panel radiators with 1.2 million pieces per annum capacity under 4 shifts operations with single type of radiators. It has 2 welding lines for steel panel radiators with 433k pieces produced in FY2016. The Company’s main products in the segment are positioned both on the premium and low price end of the market with two corresponding brands – Kingrad and Radik, respectively. In April 2016, Korado Bulgaria added tubular bathroom radiator production capacity, manufacturing 51k pieces for the first year of the line’s operation.

Approx. 70% of the Company’s production is distributed via the parent company in the Czech Republic.

Korado Bulgaria is listed on the Bulgarian Stock Exchange, trading on the top Premium segment of the market. It is part of the BGBX40 market index tracking the 40 top traded stocks on the market.

Find out more in the updated Corporate profile of Korado Bulgaria by ELANA Trading analysts