HIKKADUWA PLC
Under the management of the Jetwing Group, the company hopes to position
itself as the go-to property on the Hikkaduwa beach strip. By providing benchmark
service and customer experience for a low price, the company aims to attract a
steady stream of customers during the whole year, be it season or off-season.
In the first of its kind venture in the southern region, the no frills concept will
be a driving force for the new age, young tourists who are seeking comfortable
and secure accommodation, within a limited budget. The company will further
enhance this value proposition and will create a vibrant market in this niche.
Moreover, the Company has identified that Hikkaduwa has a dynamic and
colourful beach and night life which make it a unique and popular destination for
tourists and locals alike. Given the vibe of Hikkaduwa, the company has identified
the impetus for tourists and guests to walk the streets of Hikkaduwa, be it for a
morning stroll or an evening out, and the fact that guests in this area spend very
little time inside the hotel itself.
For this reason, the Company has plans to build a ‘Food Village’ on the land
opposite the Hotel which will be home to restaurants, bars and coffee shops.
The outdoor style concept will be ideal for Hikkaduwa where people walking by
looking for an interesting place to eat, relax or just enjoy the pulse of the town can
walk in and feel right at home. The new addition will be modelled on the ‘Dutch
Hospital’ concept where an ethnic Sri Lankan feel will shine through.
The Galle highway has also attracted many locals to stop over in Hikkaudwa for
a quick bite or a drink, a process which will now take only an hour or two. The
management feels that this Food Village will attract many locals to come and
enjoy the rhythms of Hikkaduwa whilst being a perfect revenue booster for the
property.
Plans for the development are currently under way and the management hopes
to complete the project by the middle of 2016
BRR earnings
2013/2014 FY. 0.22 EPS
2014/2015 FY (0.60) EPS due to closed 9 months for renovations.
2015/2016 FY 0.13 EPS
But 2015/2016 FYs last quarter hotel earned 0.20 cents for 3 months after renovations with 100% capacity.
This hotel is full of occupancy whole over the year so easily it can post average 0.24 cents EPS quarterly.
So annualized EPS will be 0.96 Cents with out considering new developments.
If food village starts Annual EPS can jump to 1.25 Levels.
Based on current market scenarios Hotel sector should be traded above 30 X sector PER.
In this case BRR can revalue Rs.37.50 levels.
Still BRR trades around 15 x PE so this should be adjusted soon.
It reported 61.8 million revenue for 15\16 FY but last quarter revenue 24.2million
So I expect 130 million revenue in coming 4 quarters.
Hotel has very rich cash flow and good retained earnings too.
Nearly 100 million cash and equivalent and 2 million very very less debt .
It's a minium peg ratio hotel in CSE.
BRR has only issued 53.7 million shares from that 53.2 million locked with largest 20 share holders.
Only 500,000 shares available in the market to trade.
In this coming FY , I'm 100% it can go 1.50 rupee EPS with out any doubt.
By invest on BRR , with in very limited time 300% possible (2-3 years)
This is a good share as lower peg ratio, cash and equivalent nearly 1.50 per share, lowest bank debt like 2 million etc..
BRR recorded nearly 500% growth YOY. This hotel is no having season or off season break so this is a cash cow.
This is a super shade I can ever recommend for members benefit.
If you have proper understanding of financial reports ,you never say "NO" to this BRR
Annual report
http://www.cse.lk/cmt/upload_report_file/1322_1469620657442.pdf
31.03.2016 quarter financials.
http://www.cse.lk/cmt/upload_report_file/1322_1464691410.pdf
GL