JKSB: Quarterly Highlights: People's Leasing & Finance PLC (PLC): 4QFY19
PLC Group reported a steep 49.7% decline in earnings for 4QFY19 mainly due to i) significantly larger impairment charges (Rs.457mn through a +159.7% YoY increase) reflecting increasing NPLs and the change in accounting standards from LKAS 39 to SLFRS 9, ii) a 50.9% YoY increase in taxes on financial services predominantly from the introduction of the Debt Repayment Levy and a 66.4% YoY increase in income tax expenses, iii) a worsened cost to income ratio (38.8% in 4QFY18 vs. 45.1% in 4QFY19) due to larger operating expenses during the quarter. While earnings for the quarter decreased significantly, full year earnings only faced a marginal decline of 4.2% YoY supported strongly by growth in NII (+26.2% YoY) and net earned premiums (+16.7% YoY), amid the flat cost to income ratio for the year. NIMs improved from 7.9% in FY18 to 9.1% in FY19.
We project full year earnings of Rs.4.5bn for FY20E (-3.3% YoY). However, slowdown in business and consumer activity due to prevailing economic conditions will negatively impact the company’s performance. PLC has consistently paid Rs.1.25 per share as dividend in the last few years and is in line to pay Rs.1.25 per share for FY19 which translates to a dividend yield of 9.1% at its current price of Rs.13.60. Recognition of SLFRS 9 reduced equity by Rs.1.1bn from retained earnings. At its current price of Rs.13.60, PLC trades at a P/BV of 0.70x (based on NAVPS as at end March 2019) and a FY20E P/E of 4.81x, at a premium to the JKSB finance 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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.