JKSB: Quarterly Highlights_People's Leasing & Finance PLC (PLC)_3QFY19
PLC reported a moderate 13.1% YoY increase in earnings for 3QFY19 which was complimented by robust growth in net interest income (+30.4% YoY) and net fee and commission income (+37.6% YoY) coupled with an improvement in the cost to income ratio (-1.15 ppts YoY to 48.3% in 3QFY19). Impairment charges (Rs.498mn in 3QFY19, a 9.7% YoY increase from 3QFY18) rose during the quarter, reflecting increasing industry wide NPLs due to difficulty in recoveries resulting from the subdued economic climate.
We project full year earnings of Rs.4.7bn for FY19E (-3.3% YoY). Our current earnings projections factor in pressure from additional impairment provisioning on adoption of SLFRS 9 (PLC estimates provisioning to increase by 10% - 20% once SLFRS 9 is adopted). At its current price of Rs.13.10, PLC trades at a P/BV of 0.68x (based on NAVPS as at end December 2018) and FY19E P/E of 4.44x, at a premium to 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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