SPEN which has exposure to Tourism, Logistics, Power generation, Plantations and other services generates 83% of its net earnings from the chief contributing Tourism sector whilst still trading below the Leisure sector with a 24% discount. The group currently yields a ROE of 11.4% (FY14) whilst earnings which grew at 16% CAGR, FY10-FY14 are expected to grow c.16% YoY in FY15E-FY16E. We forecast net profit of LKR4,247.6 mn for FY15E (up 15.7% YoY) and LKR4,932.9 mn for FY16E (up 16.1% YoY). The stock trades on 10.4x forecast FY15E net profit and 8.9x estimated FY16E net profit whilst trading at a discount of c.18% to its sum of the parts valuation of LKR127.4.
Therefore we maintain our recommendation BUY.