JKH streamlining strategic investments

John Keells Holdings (JKH) is in the process of streamlining its strategic investments, in a bid to enhance the company’s shareholder value in the long term, stock market analysts say.

This year, the country’s premier conglomerate sold off some of its food related leisure businesses, which were the Pizza Hut Chain, Delifrance and most recently the Unawatuna Walk Inn Ltd on the southern coast.

“JKH’s borrowing costs are high and ever increasing, compared to other blue chip corporates,” a stock market analyst said, explaining that the company is raising funds to finance the construction of Emperor and Monarch apartment complexes which will be possible through such divestments. “Crescat Restaurants contributed only Rs. 9 million in profits last year which is very low. Added to the burden its fixed costs are also very high. Pizza Hut profits were even lower,” he added, further explaining that this is a very good move as these “small” contributes in profits are a ‘headache’. JKH sold its restaurants’ business Keells Restaurants (Pvt) Ltd (Pizza Hut Chain) and Crescat Restaurants (Pvt) Ltd (Delifrance Chain) to Pizzakraft Overseas (Pvt) Ltd, an Indian company in March this year, while at the end of last month it divested Unawatuna Inn at Rs. 89.2 million to an undisclosed recipient.