reports
- Naveed Majeed
Sri Lanka: Equity Strategy - Deep Value Unveiled As Hyperinflation Sub...
* As hyperinflationary dynamics begin to subside, the residual effect has unveiled a large dislocation in valuations of listed domestic players. * Steep price increases taken by domestic firms have been more than enough to offset a decline in volumes over 2022, resulting in strong revenue and earnings growth to new highs, despite a deteriorating macro picture. With the expansion in bottom line to new highs, it is our view that valuations need to adjust accordingly with the risk premium ...
JKH.N0000 JOHN KEELLS HOLDINGS PLC
ACL.N0000 ACL CABLES
CARG.N0000 CARGILLS (CEYLON) PLC
CCS.N0000 CEYLON COLD STORES
CTC.N0000 CEYLON TOBACCO
DIST.N0000 DISTILLERIES CO. OF SRI LANKA PLC
LLUB.N0000 CHEVRON LUBRICANTS LANKA PLC
HHL.N0000 HEMAS HOLDINGS
LION.N0000 LION BREWERY
NEST.N0000 NESTLE LANKA
GLAS.N0000 PIRAMAL GLASS CEYLON PLC
- Naveed Majeed
Ceylon Cold Stores: 3Q FY23 - Exposure to affluent customer base to dr...
We roll over valuations to FY24E and maintain our target price of LKR 53.00/share based on a 3-stage DCF valuation (+51.4% upside; +60.0% TSR). BUY. With recovering economic conditions in FY24E, we expect improving discretionary consumption among CCS’ customer base to support an overall pickup in volumes. Factoring in higher tax charges across operating segments, we continue to expect strong bottom line expansion. Our target price corresponds to an implied P/E multiple of 10.6x FY24E EPS, at ...
- Naveed Majeed
Sri Lanka: Consumer Sector Update 2023 - The Dividends of Recovery
* Steep price increases taken by domestic retail and consumer firms in 2022 were more than enough to offset a decline in volumes, resulting in strong revenue and earnings growth. * We saw a similar outcome unfolding in Turkey last year, where hyperinflation in the country led to record revenue and earnings growth for supermarket chains and consumer companies. * Recent electricity tariff and PAYE tax increases are negative headwinds for overall consumption in the near-term, but mode...
- Naveed Majeed
Ceylon Cold Stores: 2Q FY23 - Higher demand and lower costs to support...
We maintain our target price of LKR 53.00/share and our BUY rating based on a 3-stage DCF valuation (+39.8% upside; +43.0% TSR). CCS witnessed continued revenue growth while margins faced pressure in 2Q FY23E. However, in 2H FY23E, CCS stands to benefit as 1) consumption levels improve from a low base and 2) declining cost pressures support margin expansion. Our target price of LKR 53.00/share corresponds to an implied P/E multiple of 19.7x FY23E EPS, at a discount to CCS’ 10-year P/E multipl...
- Naveed Majeed
Ceylon Cold Stores: 1Q FY23 - Results remain resilient; poised for a r...
We use a 3-stage DCF valuation for CCS and arrive at a fair value of LKR 53.00/share (+51.9% upside; +55.9% TSR). CCS reported an EPS of LKR 0.97 for 1Q FY23, down 23.1% QoQ (+726.4% YoY). Group revenues of LKR 30.3bn were up 17.7% QoQ (+67.0% YoY), with Retail segment revenues up 22.9% QoQ and Manufacturing segment revenues up 1.6% QoQ. Overall, CCS benefitted from 1) demand conversion from the general trade channel due to better product availability in supermarkets and 2) inflation driving ...
- Naveed Majeed
Ceylon Cold Stores: 3Q FY22 - Demand pressures offset; margin expansio...
We rollover valuations to FY23E, with a post-split TP of LKR 70.00/share (-13.6% to old; +26.4% TSR). CCS reported an EPS of LKR 8.58 for 3Q FY22, coming above our expectations. Looking ahead, we expect price-driven revenue growth across the Retail and Manufacturing segments in the current inflationary environment. However, key positives for demand are 1) CCS’ concentration within the Western Province and 2) exposure to the HORECA channel as tourism recovers. Cost pressures will continue to b...
- Lakshini Fernando
Sri Lanka: Consumer SL - "Steady as she goes"; a sturdy rebound in 202...
We expect the consumer sector to see a steady recovery, supported by a gradual rebound in economic activity and income levels. The sector looks to provide more sustainable long term growth, rather than growth fueled by government concession to consumers. From a macro perspective, consumer demand and spending are slated to increase on the back of historically low interest rates and low consumption taxes. A domestic focused economic growth agenda would support higher labor demand, particular...
- Naveed Majeed
Ceylon Cold Stores: Sri Lanka: CCS SL - Positioned for demand recovery...
We maintain our TP of LKR 1,010/share for CCS; including a dividend of LKR 15.00/share, we arrive at a TSR of +49.5%. CCS reported an EPS of LKR 5.35 for 3Q FY21, down 10.7% YoY, in line with our expectations. Revenues were up 6.1% YoY to LKR 19.0bn, while EBIT came in at LKR 1.1bn with margins dropping 139bps YoY to 5.7%. Localised lockdowns in the Western Province affected CCS in 3Q FY21 as majority of its stores are located within the province. However, with the easing of lockdowns and vac...
- Isuri Munasinghe
- Kavinda Perera
- Lakshini Fernando
- Naveed Majeed
Sri Lanka: 2021 Equity Strategy - Zero In On The Recovery
* Colombo All Share Price Index ( recovered all losses since bottoming out in May 56 7 since May, +8.6% YTD) A Manufacturing drive led the gains opportunities remain in large caps that are yet to pickup * Negative interest rates is the key catalyst equities will remain the preferred asset class in 2021 amidst a low interest rate environment * We forecast ASPI to reach 7 400 7 600 in 2021 with local investors continuing to carry the mantle * Global investors would look to rebal...
SAMP.N0000 SAMPATH BANK
HNB.N0000 HATTON NATIONAL BANK PLC
COMB.N0000 COMMERCIAL BANK OF CEYLON
AAIC.N0000 SOFTLOGIC LIFE INSURANCE PLC
JKH.N0000 JOHN KEELLS HOLDINGS PLC
AEL.N0000 ACCESS ENGINEERING
CCS.N0000 CEYLON COLD STORES
HHL.N0000 HEMAS HOLDINGS
RCL.N0000 ROYAL CERAMICS LANKA
- Naveed Majeed
Ceylon Cold Stores: 2Q FY21 - Looking for some seasonal cheer to stabi...
With a strong result in 2Q, and expectation for more stable earnings in 2H, we revise our target price to LKR 920/share (previously LKR 790). Including a DPS of LKR 15.00, we expect a total return of +47.2%. BUY. CCS reported a 2Q FY21 net profit of LKR 890mn, up from LKR 278mn in 2Q FY20. In 3Q FY21E, we expect curfew conditions in the Western province to somewhat impact demand, albeit offset by consumers stocking up ahead of the festive season, given the uncertain conditions. Further escala...
- Mangalee Goonetilleke
Ceylon Cold Stores: Demand recovery on track as expected, upgrade to B...
We maintain our target price at LKR 790/share and including a dividend of LKR 15.00/share, we expect a total return of +19.9%. Hence, we revise our rating to a BUY from a HOLD. CCS reported a 1Q FY21 net loss of LKR 350mn. While revenues were down 26.0% YoY, CCS reported an EBIT loss of LKR 15mn, driven by the Retail business. By end June, footfall at Keells stores and volume growth at Manufacturing began to normalize. Looking forward, at Retail we continue to expect LSD to MSD same-store-s...
- Isuri Munasinghe
- Kavinda Perera
- Lakshini Fernando
- Mangalee Goonetilleke
- Naveed Majeed
Sri Lanka Focus List: 8 stocks – a mix of value and growth
Equities saw a ‘V-shaped’ recovery in May and June, largely driven by local participation, as foreign investors continued to exit. The ASPI has seen a measured upward move, and the trend seems to be continuing. With economic activities resuming, we see our base case economic scenario taking effect. While major debt-repayment concerns are somewhat easing, bond markets indicate that the fiscal risk is being priced in. We highlight eight stocks, which hold upside potential in the current envi...
- Mangalee Goonetilleke
Ceylon Cold Stores: Demand to stabilise from Q2 onwards
We incorporate the impact on earnings for FY21E and value CCS at LKR 790/share (previously LKR 995/share) based on our DCF-based valuation. With a dividend of LKR 15.00/share, we expect a total return of +13.4%. Hence, we revise our rating to a HOLD from a BUY. CCS reported a 4Q FY20 net profit of LKR 834mn, up ~66.0% YoY. Revenues were up 17.0% YoY while EBIT margins improved by 1.6pp YoY. With the lockdown only being lifted in mid-May, we expect 1Q FY21E earnings to see significant pressure...
- Mangalee Goonetilleke
Surge in consumer demand to drive further upside; upgrade to Buy
Improvement in disposable income to drive consumer demand We view the recent changes to the PAYE taxes and direct taxes as positive for the food retailing industry. Revisions to PAYE taxes will result in an increase in disposable income, especially those earning a monthly income below the LKR250,000 threshold. Added to this, c1.4mn public sector employees will also see a salary increase in January 2020. We believe this will result in a notable pickup in demand for consumer goods starting Dece...
- Shadhir Jannath
- Pasindu Perera
- Shadhir Jannath
- Shadhir Jannath
- Shadhir Jannath
Ford Equity International Rating and Forecast Report
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
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