JKSB Quarterly Highlights_Expolanka Holdings PLC (EXPO)_ 2QFY17
Note:
Expolanka Holdings PLC (EXPO) reported earnings of Rs.243mn (-38.2% YoY) for 2QFY2017. PBT was impacted by a significant write down in investment value of Amana Bank PLC shares and other passive investments held at group level. Operational expenses experienced sharp growth for the quarter (+20.7% YoY) as a result of the ongoing restructuring process which began in FY14. Earnings were also impacted by a sharp drop in exchange gains in comparison to the previous year as the volatility of the LKR against the USD remained stable as opposed to the significant depreciation experienced over the course of FY16. Group performance for the quarter was driven by a robust increase in top line (+16.6% YoY) despite margin contraction with gross margin -1.5 ppts YoY to 17.3% and operating margin -2 ppts YoY to 2.8%.
We revise our expectation of earnings to Rs.1,050mn for FY2017 (-6% YoY). The counter currently trades at a FY2017E P/E of 11.7x (5% discount to the industry average of 12.3x) and a P/BV of 1.0x (based on last reported book value) at a market price of Rs.6.30. The restructuring process and further divestment of passive investments is set to continue with growth expected in the Freight Forwarding division by virtue of sustained volume growth and sustained margins.
•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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