STAF has exhibited overwhelming performance, posting a fourfold growth in net earnings YoY to LKR13.2 mn in 3QFY10. The cumulative 1-3QFY10 net profit has also recorded an impressive growth of 84% YoY to LKR28.9 mn.
STAF's revenue has not only been supported by high occupancy levels, but also by the improved room rates, where STAF sustained an occupancy level of 87% round the quarter and also maintained an Average Room Rate (ARR) of circa USD51.
On the back of increasing tourist arrivals, the strategic location of the Club Hotel Dolphin, reduced discounts to Tour Operators and increasing average room rates; we forecast the FY10 earnings to rise 22% to LKR46.6 mn and FY11E earnings to rise 62% to LKR75.4 mn. 3QFY10 results are in line with our forecasts, where the Net profit has surged by 213% to LKR13.2 mn (vs. LKR4.2 mn in 3QFY09).
The share is fairly valued at 23.4X FY10E earnings and 14.5X FY11E earnings. Further the share being trading at 1.8X 3QFY10 PBV (reported) and just 0.7X 3QFY10 PBV (revalued), we recommend - BUY
Sri Lanka Equity Analytics
World Trade Centre
Colombo, Sri Lanka
Email: info@srilankaequity.com
Web: www.srilankaequity.com
Wednesday, February 10, 2010
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