JKSB: Quarterly Highlights: Softlogic Holdings PLC (SHL): 1QFY20
SHL concluded the first quarter of FY20 posting revenue growth of 7.2% (YoY) where the Financial Services segment (+20.0% YoY) was the core contributor. The unprecedented Easter Sunday attacks resulted in a severe impact on the Group’s Retail, Healthcare and Leisure segments during the quarter. GP margins improved from 36.3% to 37.1% (YoY) during the quarter although EBIT margins declined from 11.7% to 10.0% (YoY) due to higher operating expenses (+17.2% YoY) resulting from the opening of Asiri Hospital Kandy and expansion of supermarkets. Net finance costs increased 51.1% (YoY) to Rs.1.5Bn during the quarter primarily contributed by the Healthcare and Retail & Telecommunication segments where net finance costs grew 85.8% and 86.3% (YoY) respectively to Rs.412Mn and Rs.907Mn.
We currently project SHL’s full year FY20E earnings to reach Rs.30Mn. Fast recovering tourism industry and declining interest rates is expected to spur economic activity and drive consumption which augurs well for the Group. At the current price of Rs.15.40, SHL trades at a premium to the diversified 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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