JKSB: Quarterly Highlights: Aitken Spence Hotel Holdings PLC (AHUN): 1QFY20
AHUN posted a marginal decline in revenues (-0.9% YoY) during 1QFY20 due to lower contributions from the Sri Lankan hotels & resorts sector stemming from the Easter Sunday attacks. Revenues from the Sri Lankan sector declined 27% (YoY) to Rs.747mn during the quarter while the South Asian and Middle East sector revenues grew by 9% (YoY) to Rs.2.8bn. Amortization expenses grew significantly (+437% YoY) to Rs.157mn during the quarter while other operating expenses declined by 8% (YoY) to Rs.2.1bn. Finance and income tax expenses increased sharply by 45% and 96% (YoY) respectively to Rs.326mn and Rs.138mn resulting in AHUN’s losses increasing to Rs.437mn during 1QFY20.
We currently project AHUN’s full year FY20E earnings to reach Rs.590mn. The Group is seeking to expand its hotel management business and is pursing growth through geographical diversification. The tourism industry has seen a rapid recovery of tourist arrivals supported by discounted prices and multiple promotional campaigns. We expect tourist arrivals to reach 1.7mn (-26% YoY) during CY19 with earnings from tourism expected to decline by 20%-25%. However, we believe earnings from tourism will recover to previous year’s levels during CY20. At the current price of Rs.24.90, AHUN trades at an FY20E P/E of 14.19x, at a discount to the Hotels and Travels sector in our coverage universe.
•JKSB is one of 15 founding members of the Colombo Stock Exchange with roots in share trading dating back to 1896, and is a subsidiary of John Keells Holdings PLC (JKH), the largest listed entity on the Colombo Stock Exchange with a market capitalization of US$ 1.3bn.
•JKSB’s core client base is Foreign Institutional Investors, Local Institutions and HNWI’s
•JKSB has a co-branded Research tie up with CIMB and a Research Referral agreement with Credit Suisse, along with trade execution relationships with several other global and regional securities firms.
•JKSB’s trade execution partners include Credit Suisse, CIMB, Merrill Lynch, Exotix, Daiwa, Convergex, Deutsche Asia Securities and Morgan Stanley
•JKSB is a research contributor to Bloomberg on ‘KEEL’
•The JKSB Research Universe covers 72 stocks across 15 sectors, with most Research efforts focused on approximately 45 of the more liquid counters.
•The JKSB Universe constitutes 67% of total market cap and approximately 80% of turnover at the CSE.
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