● Aitken Spence Hotel Holdings' (AHUN) has recorded a net profit of LKR8.6 mn in 2QFY10 compared to LKR45 mn loss in 1QFY09, whilst recording a cumulative loss of LKR105.8 mn for 1HFY10.
● The earnings growth in 2QFY10 is directly attributable to the reviving domestic tourism with higher occupancies and earnings from Maldivian hotels which were above expectations.
● With the complete end to the 3 decade long terrorist conflict coupled with the favourable macro economic outlook, we believe the hotel sector would mark a turnaround in the near future. AHUN will be a prime beneficiary of this situation, with 09 properties in all strategic locations in the island which are upgraded and ready for the boom.
● Having factored the strong earnings outlook of an industry poised for growth, we forecast AHUN to reach a net profit of LKR712 mn (up by 20.2% YOY) in FY10E and a LKR925 mn (up by 29.8% YoY) in FY11E.
● The share has gained 83% since the end of war on 18th May 2009 and we believe further upside is possible with growing earnings in the coming quarters. AHUN offers good value on 11.8X forecast FY10E net profit and 9.1X projected FY11E earnings whilst it is trading on a PBV of 1.6X,
Saturday, November 14, 2009
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