total payout for financial year ’05 tops Rs 1 bln
John Keells Holdings Limited last week announced a scrip issue and
final dividend on the increased capital that sent its total gross
payout for the financial year ended 31 March 2005 to over a billion
chairman Vivendra Lintotawela said the Board of Directors has recommended
to shareholders a scrip issue of one ordinary share for every five
existing ordinary shares. It has also recommend to shareholders
the payment of a final dividend of 10 percent on the increased,
post-scrip issue, capital.
the scrip issue, the issued capital of JKH will increase to about
398 million shares. "With the final dividend of 10 percent
on the increased capital, the total gross payout for the financial
year ended 31 March 2005 will be approximately Rs. 1,060 million,"
Lintotawela said in a statement.
is an increase of 33 percent from the payout of Rs. 795 million
in the previous year. The conglomerate's share price has risen sharply
in recent weeks owning to speculation about the bonus and following
Sri Lanka's inclusion in CalPERS' permissible market list.
Research said that despite reporting only three percent year-on-year
growth in its 3Q05 net profit on 25 February 2005, the JKH share
has risen 15.7 percent since then to Rs 160, amidst strong local
buying. Foreigners have however been significant net sellers during
this period, the brokers noted.
said in a report the day before the bonus announcement that JKH
has a good track record of scrip issues, giving three share bonuses
since mid-2000. "It also possesses ample capital reserves for
further issues, with capital reserves amounting to Rs 6 billion
and other reserves Rs 3.8 billion as at December 2004."
has sufficient reserves even for a one for one bonus but its recent
"excellent" share price has reduced any necessity for
an overly generous bonus, Asia Research said. "It is our opinion
that foreign institutional shareholders, who have been largely sellers
of JKH during the past month amidst premium valuations and likely
unexciting short term earnings growth, are in fact likely to reduce
exposure further in the event of likely share price appreciation
following any generous bonus."
JKH board is expected to favour retaining the bulk of its reserves
to support the share price during times of unjustified price weakness
or unwelcome predators, Asia Research said.
term investors may perceive any bonus announcement as an opportunity
to reduce exposure, as JKH's FY05E and 1H06E earnings are likely
to fall short of market expectations due to a likely sharp slowdown
in the contribution from its resort hotels and possible easing of
growth momentum in its transportation sector."
several of JKH's smaller sectors such as F&B, financial services
and IT have all disappointed over the past year, enhanced contributions
from the Monarch apartment complex in FY06E should enable stronger
longer-term earnings growth, they said.