John Keells Holdings PLC · CSELK:JKH.N0000
John Keells — Q3 FY2018 Earnings Presentation
40 slides from John Keells's earnings presentation, February 2018
Slide 1: Review of Q3 FY2018
Review of Q3 FY2018 Private & Confidential John Keells Holdings PLC 1
Slide 2: About JKH
About JKH ▪ Market cap of USD 1.50 billion ▪ No controlling shareholder - 97.5% free float ▪ Debt : Equity ratio of 13% ▪ The Board comprises of three Executive Directors and five Independent Non-Executive Directors John Keells Holdings PLC 2
Slide 3: Contribution to net profits; a gradual rebalancing of portfolio profitability
Contribution to net profits; a gradual rebalancing of portfolio profitability PAT attributable to equity holders 2014/15 2015/16 2016/17 Transportation 3% 4% 16% 21% 14% 1% 15% 22% Leisure 21% Property 13% 23% Consumer Foods 24% and Retail Financial Services 11% 36% 31% 31% 10% 4% Information Techno
Slide 4: Cumulative profitability update: for the year ended 31 March 2017
Cumulative profitability update : for the year ended 31 March 2017 PAT to equity holders of JKH FY2017 FY2016 Industry Group YoY Growth (%) (Rs. Million) (Rs. Million) Transportation 2,968 2,448 21 Leisure 4,165 3,684 13 Property* 508 1,179 (57) CF & R 3,165 2,655 19 Financial Services 1,978 1,665 1
Slide 5: Profitability update: Q3 FY2018
Profitability update : Q3 FY2018 PAT to equity holders of JKH Q3 FY2018 Q3 FY2017 Industry Group YoY Growth (%) (Rs. Million) (Rs. Million) Transportation 880 815 8 Leisure* 533 992 (46) Property 29 128 (77) CF & R 556 744 (25) Financial Services 1,465 1,089 35 Information Technology 57 153 (63) Tot
Slide 6: Profitability update: cumulative to Q3 FY2018
Profitability update : cumulative to Q3 FY2018 PAT to equity holders of JKH Q3 FY2018 Q3 FY2017 Industry Group YoY Growth (%) (Rs. Million) (Rs. Million) Transportation 2,690 2,156 25 Leisure* 1,234 2,389 (48) Property 114 197 (42) CF & R 1,819 2,436 (25) Financial Services 2,075 1,532 35 Informatio
Slide 7: Portfolio evaluation 2016/17; returns vs. effective capital deployed
Portfolio evaluation 2016/17; returns vs. effective capital deployed Adjusted ROCE (%) % of total effective Industry Group/Sector capital employed 70 Retail- 64% Retail 2 Consumer Foods - 62% 60 Consumer Foods 5 Financial Services 7 50 Information Technology 2 Transportation 14 40 Leisure 32 Financi
Slide 8: Aggressive investment pipeline of over USD 600 million during FY2019 and FY2020
Aggressive investment pipeline of over USD 600 million during FY2019 and FY2020 ▪ Aggressive investment pipeline exceeding USD 600 million over the next two years. Given the gestation period, the realisation of benefits from these investments is expected to accrue from FY2021 onwards ▪ Approximately
Slide 9: Leisure - overview
Leisure - overview ▪ Chain of Resort hotels in Sri Lanka ‾ 8 Resort hotels in strategic tourist destinations (1,000 rooms) ‾ 10% of the country’s 4-5 star class tourist accommodation ▪ 2 five star city hotels in Colombo (847 rooms) ▪ 240 roomed select service business hotel managed by Cinnamon; “Cin
Slide 10: Round trip offering in key tourist destinations; further potential to expand the Cinnamon footprint
Round trip offering in key tourist destinations; further potential to expand the ‘Cinnamon’ footprint ▪ Greater focus on asset light models as a part of the strategy to enhance the ‘Cinnamon’ footprint in Sri Lanka ▪ Land bank of 173 acres of freehold and 127 acres of leasehold land in addition to 5
Slide 11: Occupancies and average room rates
Occupancies and average room rates FY2017 FY2016 Sector Occupancy (%) ARR (US $) Occupancy (%) ARR (US $) City Hotels* 69 132 62 133 Resorts in Sri Lanka 80 93 79 92 Resorts in Maldives 89 305 85 311 Q3 FY2018 Q3 FY2017 Sector Occupancy (%) ARR (US $) Occupancy (%) ARR (US $) City Hotels* 65 124 73
Slide 12: Encouraging growth momentum of tourist arrivals to Sri Lanka
Encouraging growth momentum of tourist arrivals to Sri Lanka Tourist arrivals Annual tourist arrivals to Sri Lanka Year Growth (%) (In 000’s) 2,500 2008 438 - 2009 448 2 2,000 2010 654 46 1,500 2011 856 31 2012 1,006 18 1,000 2013 1,275 27 500 2014 1,527 20 2015 1,798 18 - 2016 2,051 14 2017 2,116 3
Slide 13: Significant growth in Asian arrivals to Sri Lanka
Significant growth in Asian arrivals to Sri Lanka 2,500,000 2,000,000 Tourist Arrivals 1,500,000 1,000,000 500,000 0 2011 2012 2013 2014 2015 2016 2017 Calendar year North America Western Europe Eastern Europe Asia Others Total Source: Sri Lanka Tourism Development Authority John Keells Holdings PLC
Slide 14: Tourist arrivals to Sri Lanka lag well below regional peers
Tourist arrivals to Sri Lanka lag well below regional peers 40 35 30 25 Arrivals (Mns) 20 15 10 5 0 Malaysia Indonesia Thailand Vietnam Cambodia Sri Lanka 1990 2016 2017 Actual/Target Source: Governmental tourism websites John Keells Holdings PLC 14
Slide 15: Room inventory in Colombo lags far behind other popular regional capital cities
Room inventory in Colombo lags far behind other popular regional capital cities 70,000 60,000 60,000 50,000 40,000 31,790 30,114 30,000 26,113 20,000 9,100 7,600 10,000 5,019 0 Bangkok Manila Kuala Lampur Jakarta Ho Chi Minh Hanoi Colombo John Keells Holdings PLC 15
Slide 16: Pipeline of room inventory to support arrivals trajectory
Pipeline of room inventory to support arrivals trajectory ▪ Colombo is increasingly becoming an attractive location for City Hotel developments ▪ Expected 5-star room supply: Year of Development No. of rooms completion Sheraton* 306 2019 Grand Hyatt* 475 2019 Cinnamon Life 800 2020 Total rooms 1,581
Slide 17: Property - overview
Property - overview ▪ Four high-rise apartment complexes completed ▪ “7th Sense” on Gregory’s Road ▪ OnThree20 ▪ The Emperor ▪ The Monarch ▪ “Tri-Zen”- an 800 apartment residential development in central Colombo, with expected completion in FY2022/23. Pre-sales have commenced and initial bookings ar
Slide 18: One of the largest privately held land banks in prime city locations
One of the largest privately held land banks in prime city locations ▪ Key real-estate sites in Colombo; City Centre ▪ Cinnamon Grand premises : 8.03 acres (freehold land) ▪ Cinnamon Lakeside premises : 7.65 acres (leasehold land till 2081) ▪ Cinnamon Life : 10.80 acres (under development) Developab
Slide 19: Developable land bank of over 36 acres in central Colombo
Developable land bank of over 36 acres in central Colombo ▪ Prime developable land bank of over 36 acres held in central Colombo ▪ Opportunities for development at land banks held in Crescat City and Cinnamon Lakeside Vauxhall street land bank: ▪ Prime freehold land extent of 9.3 acres, held with a
Slide 20: Developable freehold land of approximately 25 acres in close proximity to Colombo city
Developable freehold land of approximately 25 acres in close proximity to Colombo city Bandaranaike International Airport ▪ Greater connectivity and reduction in travel time to Colombo city post construction of the outer circular expressway Thudella 18 Acres freehold ▪ Direct connectivity to the Por
Slide 21: Future development potential
Future development potential New developments 1. High end niche residential developments in prime locations, such as “7th Sense” on Gregory’s Road, to cater to the premium segment 2. Following the OnThree20 model, identifying similar properties in convenient locations to address the growing demand f
Slide 22: Scenic 500 acre land bank with an 18-hole golf course
Scenic 500 acre land bank with an 18-hole golf course Rajawella Holdings Limited (RHL) ▪ Acquisition of a majority stake in RHL to complement the Group’s leisure and property portfolios in September 2015 ▪ The 500 acre land in Digana includes an 18-hole, Donald Steel designed, Golf Course and develo
Slide 23: Cinnamon Life Integrated Resort
Cinnamon Life Integrated Resort John Keells Holdings PLC 23
Slide 24: Integrated development in Colombo
Integrated development in Colombo John Keells Holdings PLC 24
Slide 25: Integrated development in Colombo
Integrated development in Colombo John Keells Holdings PLC 25
Slide 26: Integrated development in Colombo
Integrated development in Colombo John Keells Holdings PLC 26
Slide 27: Cinnamon Life – construction progress
Cinnamon Life – construction progress 27
Slide 28: John Keells Holdings PLC
John Keells Holdings PLC 28
Slide 29: Development programme
Development programme Conferencing ; capacity (4,837 pax) in three venues and car park facility (2,450 slots) 800 guest room hotel. Include conferencing, banqueting, 7 specialty restaurant and entertainment facilities Rentable mall and entertainment space of 372,000 Sq. Ft (Gross – 518,000 Sq. Ft) F
Slide 30: Transportation - overview
Transportation - overview ▪ 42% stake in SAGT ▪ SAGT capacity: 2 million TEUs ▪ Largest cargo and logistics service provider in the country ▪ Leading bunkering services provider ▪ Joint Ventures with Deutsche Post for DHL air express and A P Moller for Maersk Lanka ▪ GSA for Jet Airways, KLM Royal D
Slide 31: The strategic location of the Port of Colombo linking key shipping routes
The strategic location of the Port of Colombo linking key shipping routes GWADAR BAHL KARACHI KOLKATA MUMBAI VISHAKHAPATNAM CHITTAGONG CHENNAI YANGON ADEN KOCHI LAMU MOMBASA DAR-ES-SALAM PORT LOUIS CAPE TOWN John Keells Holdings PLC 31
Slide 32: Capacity enhancements in the Port of Colombo
Capacity enhancements in the Port of Colombo 32 John Keells Holdings PLC
Slide 33: Rapid absorption of capacity in the Port of Colombo
Rapid absorption of capacity in the Port of Colombo ▪ Container handling capacity in the region Port Container handling capacity (TEUs) Colombo 8 million* Hong Kong 21 million Singapore 40 million Shanghai 36 million Sources: Government HK ▪ Port of Colombo utilisation Total Port of Colombo volumes
Slide 34: Consumer Foods - overview
Consumer Foods - overview ▪ Market leader in soft drinks, ice creams and processed meats ▪ Custodians of the consumer brands “Elephant House”, “Keells”: high brand equity Profitability margins - CF GP margin EBITDA margin PBT margin Q3 FY2018 (%) 30 16 9 Q3 FY2017 (%) 35 22 14 Key performance indica
Slide 35: Low consumption patterns and penetration reflects potential for sustained growth
Low consumption patterns and penetration reflects potential for sustained growth Carbonated Soft Drinks - Per Capita Ice Cream – Per Capita Consumption Consumption (Litres) (Litres) 52.0 39.0 2.4 2.0 1.9 31.4 1.5 19.0 10.0 Philippines Thailand Singapore Malaysia Sri Lanka Singapore Sri lanka Malaysi
Slide 36: Retail - overview
Retail - overview Present share of modern retail No. of outlets Keells Super* 79 Cargills 338 Arpico 41 Laugfs 31 * As at 15th March 2018 • Although outlets are profitable in the first year of operations, the aggressive outlet rollout undertaken has resulted in a margin contraction in the short term
Slide 37: Rapid expansion to capitalise on low retail penetration levels
Rapid expansion to capitalise on low retail penetration levels Modern trade density – population (’000) per store Keells Super forecasted coverage 132 FY2018/19 47 30 21.0 7.3 4.7 4.5 3.7 3.6 3.4 3.0 2.5 1.9 0.9 Source: Retail and shopper trends in the Asia Pacific, AC Nielsen ▪ Comparatively higher
Slide 38: Financial Services – Insurance sector overview
Financial Services – Insurance sector overview ▪ Union Assurance (JKH Stake : 93.8%) ▪ Gross written premiums: UA growth of 22% against an industry growth of 13% in CY2017 Key performance indicators: CY2012 CY2013 CY2014 CY2015 CY2016 CY2017* Life Insurance Market share 14% 14% 13% 13% 13% 14% Premi
Slide 39: Financial Services – Banking sector overview
Financial Services – Banking sector overview ▪ Nations Trust Bank (JKH Stake : 29.9%) ▪ Focus on SME / retail strategy ▪ Franchise for American Express cards Key performance CY2012 CY2013 CY2014 CY2015 CY2016 CY2017 indicators Loans and advances growth 20.0% 12.1% 19.5% 22.4% 23.7% 25% Industry (LCB
Slide 40: Thank You
THANK YOU This document was produced by John Keells Holdings PLC for information purposes only. The information contained in this document are a review of the financial information pertaining to Quarter 3 of the Financial year 2018, and does not constitute an issue prospectus or a financial analysis
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