factFINDER wrote:Market Price (friday 13th May 2011)
AHUN = 94.50
KHL = 16.80
As at 31/12/2010
NAPS
AHUN = 24.23 (P/BV = 3.9)
KHL = 7.65 (P/BV = 2.19)
Earnings
4Q2010
AHUN = 0.80 (9 months - 1.29)
KHL = 0.14 (9 months - 0.0018)
AHUN - Market Capitalisation (Rs.)30,669,649,920.00
KHL - Market Capitalisation (Rs.)24,172,036,096.00
75% of AHUN - owned by SPEN
80% of KHL - owned by JKH
Which stock is better at the current market price??? your comments please.
AHUN-long term buy
*Aitken Spence Hotel Holdings PLC (AHUN) - backed by one of the top conglomerates in Sri Lanka, Aitken Spence PLC (SPEN), is a leading hotelier in the country with its operations spanning across the Asian as well as the Middle Eastern regions. The company presently owns or manages 27 hotels and resorts under the brands “Heritance”, “Adaaran” and “Aitken Spence Hotels & Resorts” in Sri Lanka,
the Maldives, India and Oman with a total room capacity of 2,300.
*AHUN currently owns and operates 6 hotels (of which 2 hotels with 64 rooms are currently closed for extensive refurbishment) with 565 rooms in Sri Lanka along with 2 other properties with collectively 216 rooms held as associates. The company also
manages 3 hotels in the upcountry. In the Maldives, the group owns and operates 7 hotels with 591 rooms under its premier foreign brand “Adaaran” while managing a total of 10 hotels in India and Oman.
*With the anticipation of greater arrivals to Sri Lanka in the medium term, AHUN embarked on several new projects in order to increase its capacity.
*EARNINGS OUT LOOK
--With a solid recovery in the local tourism industry along with an increase in AHUN’s room capacity, the company stands to enjoy strong returns in the medium term. AHUN continues to place strategic importance on delivering a niche, high quality product to the high yielding travellers, thus volumes will not be of great concern. However, the local segment is likely to see the closure of around 300 rooms during the off season period in 2011 (April – September) which should have only a marginal impact for earnings in FY12E. However, with most of its properties expected to be operational by the beginning of the winter season, we expect AHUN to recover its lost earnings through higher room rates and occupancies
---The group’s parent company SPEN, owns 100 acres of prime beach land in
Nilaweli where AHUN is expected to commence the development of a resort in the
medium term. This includes a 500 room property offering luxury villas, standard
rooms and apartments.
---AHUN places greater emphasis on expanding its footprint in Sri Lanka
given high potential exhibited by the industry. The Government aims to attract
an ambitious target of 2.5 million tourists by 2016 which would require at least
another 15,000 graded rooms to cater to this demand. Although local as well as
foreign operators have shown interest in expanding the room supply, we expect a
time lag of at least 2 years for these projects to become operational, until which
time, the current properties would enjoy high yields
---Despite its investments in Sri Lanka, we expect the South Asian segment to
be the largest contributor to group earnings, albeit a reduction in its share due to
increased contribution from the local segment. For forecasting purposes, we have
factored in an average occupancy of 75% in FY12E for the local segment on an
ARR of US $ 120 while for the Maldivian segment, we have included an occupancy
of 85% with an ARR of around US $ 293.
---Given the above, we expect AHUN to post Rs. 1,450 million in PAT for
FY11E, growing at a CAGR of around 28% during the next 2 years with the local
segment accounting for over 50% of operating profit. Adjusted for the minority
holdings, we expect earnings to equity to reach Rs. 958 million for FY11E, growing
at a CAGR of 33% during the next 2 years. On a forecasted EPS of Rs. 2.81 and
Rs. 3.82 for FY11E and FY12E respectively, the share is trading at a PE multiple
of 36x and 26x FY11E and FY12E earnings respectively, at a price of Rs. 100.10.
The share is therefore, trading at a slight premium to the sector which we believe
is warranted due to its high exposure to the Sri Lankan as well as the Maldivian
tourism industries compared to most other standalone properties
from JKSB
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