Aitken Spence Hotel Holdings' (AHUN) has recorded a net profit of LKR210.5 mn in 3QFY10 from a loss of LKR105.8 mn in 1HFY10, which is directly attributable to the reviving domestic tourism with higher occupancies and earnings from its Maldivian hotels.
We believe that with the complete end to 3 decade long terrorist conflict coupled with the favourable macro economic outlook, 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 have been upgraded and ready for the boom.
Backed by the slower recovery of the South Asian sector which accounts for a plus 80% of the top line, we revised down our forecast net profit to LKR423.5 mn (down by 28.5% YOY) in FY10E and LKR851.8 mn (up by 101% YoY) in FY11E.
The share has gained three-fold (246%) since the end of war on 18th May 2009 whilst we believe further upside possible with growing earnings materialising in the coming quarters. AHUN is fairly valued on 37.7X forecast FY10E net profit and 18.7X projected FY11E earnings whilst it is trading on a PBV of 3.2X, we maintain - BUY
Sri Lanka Equity Analytics
World Trade Centre
Colombo, Sri Lanka
Email: info@srilankaequity.com
Web: www.srilankaequity.com
Friday, February 5, 2010
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