● Asian Hotels & Properties (AHPL) has recorded a near 26.1% YoY increase in earnings to LKR122.0 mn in 2QFY10 due to the minority loss of LKR39.1 mn (vs a minority profit of LKR16.1 mn in 2QFY09). However, despite the LKR23.3 mn minority loss the 1HFY10 net profit has dipped 24.7% YoY to LKR176.1 mn (vs a minority profit of LKR18.3 mn in 1HFY09).
● Earnings have been affected by the Property Development sector (net profit of LKR61.2 mn in 1HFY10 vs LKR235.2 mn in 1HFY09) with sales of the apartment tower 'Emperor' being sluggish and delays in receiving payment for already sold units.
● Thanks to the insurance claim for damages in Cinnamon Lakeside (TRAN) the hotel sector (Cinnamon Grand and TRAN) earnings increased to LKR114.9 mn during 1HFY10 vs a loss of LKR1.3 mn in 1HFY09, weathering the impact of lower average occupancy levels of circa 55%. TRAN was not operational for more than two months during the first half of FY10 as it was closed for refurbishment.
● Forecast net profit to dip by 13.2% YoY to LKR461.0 mn in FY10E whilst projected FY11E earnings are estimated at LKR790.2 mn (up 72% YoY). This is mainly on the back of improving tourist arrivals and more percentage of property sector earnings recognized in FY11.
● The share is attractive on just 1.3X PBV even though it trades at a high multiple of 36.0X forecasted FY10E earnings and 21.0X forecasted FY11E net profit. Further share offers good value due to its dynamism (derived from the John Keells group), ability to develop and market premium properties and also the envisaged dominant position of its five star hotel properties.
SRI LANKA EQUITY ANALYTICS
World Trade Center
Colombo
Sri Lanka
Email: sriventure@gmail.com
Web: www.srilankaequity.com
Saturday, November 14, 2009
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