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Results for the Period Ended 31 December 2015:

John Keells Holdings (JKH) reported a net profit of Rs.3,895mn for 3Q16 (-10% YoY), resulting in a net profit of Rs.9,548mn for 1-3Q16 (+5% YoY).


Softlogic Finance (CRL) reported a net profit of Rs.102mn for 3Q16 (+67% YoY), resulting in a net profit of Rs.227mn for 1-3Q16 (+48% YoY).


Commercial Bank of Ceylon

CT CLSA -  Commercial Bank of Ceylon (COMB) 3Q2015 Results Summary - 19 November 2015

COMB reported an EPS of Rs.3.7 for 3Q2015 (-2% YoY and +23% QoQ), broadly in line with our expectations

Top line driven by growth in leasing portfolio, CASA improves to 50%, asset quality continues to improve with better NPA coverage

Efficiency improves, despite slower growth seen in non-core income

Marked to market losses continues to increase to Rs.6.4bn for 1-3Q2015 (with Rs.3.4bn reported during 3Q2015) amidst an unfavorable interest rate environment 

Outlook & Valuations


NP forecasts maintained at Rs.11,827mn (+4% YoY) for 2015E and at Rs.12,831mn (+7% YoY) for 2016E

COMB voting share underperformed the market during past three months and one year by falling -13% whilst the non-voting share out-performed the market by rising 9% during the past twelve months (compared to ASI’s 7% decline in past three and twelve months). Consequently, COMB voting share trades at a premium to the sector on PE multiples of 11.2X (PBV - 1.9X) for 2015E and 10.5X (PBV - 1.7X) for 2016E. The less liquid non-voting share trades at a 15% discount to the voting share on PBV multiples of 1.6X 2015E and 1.5X 2016E. The company provides an ROE of 17% in the medium term

COMB’s recent aggressive strategies to gain market share in the core banking space remains a strong case for bank’s sustainable growth in the near future. However, its treasury related activities during the recent past (i.e. aggressively betting against interest rate behavior) raises concern with regards to its historical conservative banking approach. Therefore, we believe COMB’s relatively high PBV multiples are no more justified at 1.9X on near term earnings. With the Bank however expected to provide above sector average ROEs during next two years, we expect both voting and non-voting shares to perform in line with the market in the near term.

Last Updated (Wednesday, 06 January 2016 15:09)


Sampath Bank

CT CLSA -  Sampath Bank (SAMP) 3Q2015 Results Summary - 18 November 2015


3Q2015 EPS of Rs.10.9 (+69% YoY and +16% QoQ), above our expectations on account of the foreign exchange gains recorded on foreign currency holdings

Outlook & Valuations

SAMP NP forecast revised up by 3% for 2015E to Rs.6,415mn (+22% YoY), amid the upward revisions in Non-Interest Income. Meanwhile, 2016E NP forecast broadly maintained at Rs.7,367mn (+15% YoY)

The SAMP share has outperformed the market 2015YTD rising +13% (vs. ASI’s decline of -7%), however declined in last three months by -7% (similar to ASI)

SAMP trades at a discount to the sector, at PER multiples of 6.9X for 2015E (PBV – 1.1X) and 6.0X for 2016E (PBV – 1.0X), providing above sector average ROEs of 17-18% for both years

The current discount for SAMP appears to be unwarranted given the potential growth in earnings, reduced pawning exposure, sector lowest NPA and above sector ROEs. Hence, we expect the share to outperform the market in the near term on the back of strong fundamentals. A short term price decline is possible in the event of a capital infusion to increase capitalization, though not expected to materially impact share price gains

Last Updated (Wednesday, 06 January 2016 15:11)


Aitken Spence Hotel Holdings

CT CLSA - Aitken Spence Hotel Holdings (AHUN) 2Q16 Results Summary - 19 November 2015

Quarterly Highlights:

2Q16 Net Profit (NP) of Rs.210mn (+81% YoY on a recurring basis, off a low base, down -33% from 2Q14), in line with our expectations, led by profit growth in both the Sri Lanka and Maldives sectors. 1H16 recurring NP consequently up +33% YoY to Rs.406mn


Outlook & Valuations:


AHUN recurring NP revised down by -8% to Rs.2,137mn for FY16E (+5% YoY) and by -9% to Rs.2,577mn for FY17E (+21% YoY); downward revision on account of political uncertainty and relatively modest growth in the Maldives, AHUN’s key market, and delays in opening of Turyaa Kalutara (The Sands), Heritance Negombo and Turyaa India

AHUN is liable to pay Super Gains Tax (SGT) amounting to Rs.137mn for the Group

The AHUN share underperformed the market over the past year, declining -15% YoY vs. the ASI’s decline of -7% and has been range bound during the past four years

Despite over 36 consecutive months of growth in tourist arrivals to Sri Lanka, the listed hotel space has provided mediocre returns to investors during recent years

The recent fall in share price to a one year low of Rs.65.0, on the back of overall market weakness has resulted in AHUN trading at PE multiples of 10.7X and 8.9X for FY16E and FY17E respectively, well below most larger listed hotels

AHUN remains one of the better investment options within the listed tourism sector as ongoing capacity expansion will allow the group to leverage its strong leisure brand equity and cater to the growth in tourist arrivals – expected to double in five years

While further short term price weakness cannot be ruled out, we advise medium to longer term investors seeking tourism exposure to accumulate the share on weakness

Last Updated (Wednesday, 06 January 2016 15:11)


National Development Bank

CT CLSA – National Development Bank (NDB) 3Q2015 Results Summary - 07 December 2015

NDB reported an EPS of Rs.5.1 (-32% YoY, +47% QoQ), below our expectations. Profits fell due to worsening (YoY) cost to income ratio and relatively higher impairment

Net Interest Spreads deteriorated slightly, deposits remained flat whilst loans grew 6% QoQ during 3Q2015

2016E fiscal proposals to increase NDB’s Effective Tax Rate by 5.5%


Outlook & Valuations:


NDB’s NP forecasts revised down by -13% and -14% to Rs.3,575mn (-14% YoY) and Rs.4,168mn (+17% YoY) for 2015E and 2016E respectively. Profits revised down on account of shrinking spreads and forecast tax increases for 2016E

NDB share underperformed the market falling -20% and -21% in last three months and YoY compared to market’s declines of -4% and -5% respectively. On revised earnings, NDB trades at a discount to the sector on PE multiples of 8.8X (PBV - 1.1X) for 2015E and 7.5X (PBV - 1.0X) for 2016E. NDB is forecast to offer ROEs of ~13% - 14% in the short to medium term

Investor appetite for NDB share is likely to remain weak in the near term amid mediocre near term return expectations. Nevertheless, given positive medium term outlook (i.e. +17% YoY EPS growth for 2016E), via growth from NDB’s high yielding SME and Micro finance segments (coupled with discount valuations), we believe the stock is likely to be favoured by value oriented investors in the medium term 

Last Updated (Wednesday, 06 January 2016 15:12)

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