JKSB: Quarterly Highlights: Odel PLC (ODEL): 1QFY20
ODEL recorded a marginal growth in revenue (+3.1% YoY) during the quarter mainly due to the impact endured by the retail industry from the Easter Sunday attacks. GP margins remained largely flat while EBIT margins declined significantly from 11% to 0.2% (YoY) during the quarter primarily from an increase in admin expenses (+26.6% YoY). Sharply higher finance costs (+88.7% YoY) resulted in ODEL posting a loss before tax of Rs.234Mn during 1QFY20.
We currently project ODEL’s full year FY20E earnings to reach Rs.103mn. As the leading fashion retailer, the Group continues to invest and anchor itself in most new malls offering global brands to customers. Trimming down of consumer discretionary spending is expected in the short term stemming from subdued economic activity although growth in tourism augurs well for future opportunities for the Group as a substantial component of business is generated from tourists. At the current price of Rs.26.20, ODEL trades at an FY20E P/E of 69.22x, at a discount to the trading 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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