JKH reported an EPS of LKR 1.91 after deducting LKR 1.14bn of change in insurance contract liabilities in Q1 FY 16. The recurring EPS was LKR 2.90. Group EBIT grew 42.6% YoY to LKR 2.06bn with an EBIT margin of 9.8% (Q1 FY 15 – 7%). As expected, CF & R sector contributed the highest to both, group EBIT (50%) and top line (40%) with both manufacturing and retail sub segments’ performance. The Leisure sector followed with a 30% contribution to EBIT and 22% contribution to group revenue, although EBIT dropped 29.5% YoY due to partial closure of Lakeside. We expect the performance of CF & R sector and Leisure sector along with healthy finance income and growth in associate profits to drive JKH’s net earnings in the forecast period. Our revised SOTP valuation stands at LKR 208 (+20.2% to CMP) for the existing business. With the ~13% fall in MPS since the last review, JKH continues to be a high conviction BUY.
john keells Holding PLC - Upside continues
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