● Conglomerate, John Keells Holdings (JKH) has recorded a 11.4% YoY growth in operating profit during 2QFY10, however the bottom line has dipped 43% YoY to reach LKR575.5 mn. This is partially on the back of the one off capital gain of LKR1,025 mn from the divestment of AMW in 2QFY09. However, the 2QFY09 net earnings includes the one off charges (circa LKR725 mn) suffered by the group due to the Supreme Court Judgement relating to Lanka Marine Services (LMS).
● Key sectors such as Transportation (Net Profit up 4,496.4%), Leisure (NP up 43.2%) and Financial services (NP up 42.8%) have shown improved performance in 2QFY10. But Property Development (NP down 37.9%) and Consumer Food & Retail (NP down 143.7%) sectors have underperformed mainly on account of cyclical nature of revenue recognition and capacity building costs coupled with reduced activity levels.
● On recurring earnings we forecast JKH's FY10E net profits to grow by 5.1%YoY to LKR4,984.3 mn whilst we expect the FY11E earnings to reach LKR5,954.1 mn (up 19.5% YoY). This would be driven by better earnings growth from the Leisure sector from winter 2010 onwards and higher contribution from the Transportation and Consumer Food segments.
● The share is currently trading on 17.2X, FY10E earnings, 14.4X projected FY11E earnings and 1.7X PBV.
SRI LANKA EQUITY ANALYTICS
World Trade Center
Colombo
Sri Lanka
Email: sriventure@gmail.com
Web: www.srilankaequity.com
Friday, November 6, 2009
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