John Keells Holdings' (JKH) share has recovered during the past two months which analysts attribute to positive retail sentiment and strategic investments by some high network individuals (HNWIs).
The share has gained by 50% to Rs 78 on Wednesday from Rs 50 in January this year, after the stock crashed following the Lanka Marine Services (LMS) judgment by the Supreme Court in June 2008.
The stock which peaked at Rs 143 in mid June 2008 fell during the first two months of this year by almost 32.2 %, reaching its lowest at Rs.50 in January.
"This share has recovered especially during the past two to three weeks as there is positive retailer investment mainly because they feel the war will end. Also the interest rates are falling sharply. Therefore they want to increase their exposure to equity," an analyst said. JKH officials also said the stock was gaining due to the general sentiment in the market that the war is ending. “There is a feeling that with (our) wide exposure in leisure and property development, these two sectors will do well in a post-war environment,” one official said. Srimal Liyanage, Head of Research, Lanka Securities said though the current JKH performance has been low, it is a stock that will generate positive results when the country's economy turns around (with the cessation of hostilities).
"They have a lot of cash in hand and they can easily capitalize on future opportunities that are expected to emerge when the war is over," he said, adding that it is unlikely that the company will post good results in the short term.
"Bad dents in tourism, their ports sector not doing that well will affect the JKH bottom line."
Another analyst said the liquidity of the share is much more than the other main index strong stocks. "The JKH free float is larger than Sri Lanka Telecom (SLT) and Dialog. SLT has Rs. 72 billion market capitalization while 95% of this is held by two large shareholders. Dialog has Rs. 43 billion market cap while 83% is held by main shareholder Telecom Malaysia. JKH has approximately 71% free float. This has also been quite attractive to the top investors,” he added.
Mr. Liyanage said that the recent active participation from local funds (more buying) has helped this share to move up in price.
The second analyst noted that one of the compelling attractions of this share has been that the company does not have a controlling shareholder, pointing out that JKH is also the right company for a takeover. He said that following the recent steep decline in the share price, (from Rs 143 to Rs 78) JKH’s break up net asset value per share –(i.e. the net asset value that could be derived by individually selling its business units and real estate if necessary) could be higher than its share price. “As such the company is a good buy,” he said.
|
E-mail