JKSB: Quarterly Highlights: Teejay Lanka PLC (TJL): 1QFY20
TJL concluded a strong 1QFY20 recording a sharp growth in earnings by 62.40%. Topline grew by 19.15% during the quarter mainly due to 1) better capacity utilization 2) stronger order book and 3) acquisition of strategic customers which supported healthy quarterly earnings growth. Revenue growth was predominantly through volume growth of 6%, sales mix contribution of 1% alongside the depreciation of the rupee which further contributed 13% to overall revenues. GP margins saw an expansion from 10.45% - 11.88% due to capacity improvements and efficiencies stemming from operational excellence programs conducted during the quarter. Yarn prices continued to stabilize during the year due to a decline in yarn prices in India predominantly due to lower exports to China. The duty-free access given to countries such as Pakistan and Vietnam have also resulted in lower exports to China. Yarn prices have been stable for the past 3-6 months which is expected to continue towards Q2 and Q3 of FY20.
We currently project TJL’s full year FY20E earnings to reach Rs. 2,244 Mn driven mainly through volume growth supported by continuous capacity expansions. The acquisition of strategic customers together with increased focus on highly profitable synthetic segments will drive earnings for FY20E. The ongoing projects focusing on operational excellence coupled with stable yarn prices will enhance profitability further for the company. Export earnings from the apparel industry is expected to reach USD 5.5Bn for 2019 which widens the opportunity for export companies. At the current price of Rs.38.00, TJL trades at an FY20E P/E of 11.88x which is at a premium to the manufacturing 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.
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.