John Keells Holdings PLC · CSELK:JKH.N0000
John Keells — Q1 FY2020 Earnings Presentation
49 slides from John Keells's earnings presentation, September 2019
Slide 1: Investor Presentation Review of Q1 FY2020
Investor Presentation Review of Q1 FY2020 Version 1.3 This Investor Presentation should be read in conjunction with the JKH Annual Report 2018/19 to obtain a more comprehensive understanding of the drivers and strategies of our businesses
Slide 2: About JKH
About JKH ▪ Market cap of USD 1.10 billion ▪ No controlling shareholder - 99% free float ▪ Debt : Equity ratio of 25.7% ▪ The Board comprises of two Executive Directors and six Independent Non- Executive Directors 2
Slide 3: Portfolio profitability
Portfolio profitability PAT attributable to equity holders (%) 2016/17 2017/18 2018/19 15 23 22 Transportation 4 33 33 36 Consumer foods Retail 11 Leisure 17 1 Property 32 5 8 Financial 16 10 10 Services 20 4 Note: The above excludes the contribution from Other, including Information Technology and
Slide 4: Cumulative EBITDA: for the year ended 31 March 2019
Cumulative EBITDA : for the year ended 31 March 2019 FY2019 FY2018 YoY Growth Industry Group (Rs. Million) (Rs. Million) (%) Transportation 4,555 3,438 32 Consumer Foods 2,913 3,132 (9) Retail 2,146 2,520 (15) Leisure 5,017 6,330 (21) Property 323 1,382 (77) Financial Services 4,548 8,873 (49) Other
Slide 5: EBITDA: for the quarter ended 30 June 2019
EBITDA : for the quarter ended 30 June 2019 Q1 FY2020 Q1 FY2019 * YoY Growth Industry Group (Rs. Million) (Rs. Million) (%) Transportation 1,055 929 14 Consumer Foods 843 522 61 Retail 1,087 573 90 Leisure** (332) 228 (246) Property (12) 18 (163) Financial Services 774 865 (11) Total EBITDA 4,041 4,
Slide 6: Portfolio evaluation 2018/19; returns vs. effective capital deployed
Portfolio evaluation 2018/19; returns vs. effective capital deployed Industry group Effective capital employed (%) Adjusted ROCE (%) Cinnamon Life 24 Leisure 21 Property (Excluding Cinnamon Life) 13 IT - 54 Transportation 8 Financial Services 6 Retail 4 Consumer Foods 3 Plantation Services 1 Financi
Slide 7: Investment pipeline comprises primarily of Cinnamon Life
Investment pipeline comprises primarily of Cinnamon Life ▪ Investment pipeline comprises primarily of Cinnamon Life, where completion is staggered ▪ The realisation of benefits from these investments is expected to accrue from beyond the next 12-18 months, particularly with Cinnamon Life ▪ These inv
Slide 8: 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
Slide 9: 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 9
Slide 10: Capacity enhancements in the Port of Colombo
Capacity enhancements in the Port of Colombo • CICT - Colombo International Container Terminal • ECT - East Container Terminal • SAGT - South Asia Gateway Terminal • JCT - Jaya Container Terminal 10
Slide 11: Sustained volume growth in the Port of Colombo
Sustained volume growth in the Port of Colombo 7.05 6.21 5.74 Million TEUs 5.19 4.91 4.31 2013 2014 2015 2016 2017 2018 11
Slide 12: Rapid absorption of capacity in the Port of Colombo
Rapid absorption of capacity in the Port of Colombo Port Container handling SAGT capacity (TEUs) Port of Colombo - volumes ('000 TEUs) JCT 800,000 CICT Colombo 8 million 600,000 Hong Kong 21 million 400,000 Singapore 40 million 200,000 Shanghai 36 million 0 Q1 Q2 Q3 Q4 Q1 2018/19 2019/20 FY2019 FY20
Slide 13: Opportunities for growth in the Bunkering businesses
Opportunities for growth in the Bunkering businesses Bunkering Business (Lanka Marine Services) FY2019 FY2020 LMS Q1 Q2 Q3 Q4 Q1 Volume growth 20 2 9 (4) (16) ▪ LMS volumes were impacted by the continuous drop in base fuel prices during the months of May and June, which increased the selling price p
Slide 14: Consumer Foods - overview
Consumer Foods - overview ▪ Market leader in soft drinks, ice creams and processed meats ▪ Custodians of the consumer brands “Elephant House”, “Keells - Krest”: high brand 1Q FY20 earnings update: equity Consumer Foods industry group Key performance indicators (%) FY2016 FY2017 FY2018 FY2019 (Rs. mn
Slide 15: Low consumption patterns and penetration reflects potential for sustained growth
Low consumption patterns and penetration reflects potential for sustained growth Bulk vs. Impulse Split – Regional (%) ▪ The bulk-impulse mix of regional markets are 8 44 highly skewed towards the impulse markets, 30 70 92 56 demonstrating the significant growth potential for the impulse category. S
Slide 16: Retail - overview
Retail - overview ▪ The Retail industry group consists of two business verticals; ▪ Supermarkets ▪ Office Automation ▪ “Keells” is a chain of ~10,000 square foot modern grocery retail outlets Modern Retail Penetration (%) 70 49 48 43 40 16 Singapore Malaysia Hong Taiwan Thailand Sri Lanka Kong Prese
Slide 17: 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 current coverage 132 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 modern trade
Slide 18: Supermarkets - overview
Supermarkets - overview Profitability margin FY2016 FY2017 FY2018 FY2019 1Q FY20 earnings update: Retail industry EBITDA (Rs. million) 1,537 2,010 1,975 1,623 group EBITDA margin (%) 6.9 6.7 5.3 3.6 (Rs. mn) Q1 FY2020 Q1 FY2019* EBIT margin (%) 5.8 5.7 4.0 2.0 EBITDA 1,087 573 ▪ Profitability margin
Slide 19: 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 lean luxury hotel managed by Cinnamon; “Cinnamon red” ▪
Slide 20: Round trip offering in key tourist destinations
Round trip offering in key tourist destinations; further potential to expand the “Cinnamon” footprint ▪ Greater focus on asset light investment 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 ad
Slide 21: Expanding the Cinnamon footprint
Expanding the “Cinnamon” footprint ▪ "Cinnamon Hakuraa Huraa Maldives” and "Cinnamon Bentota Beach Bentota“ - reconstruction of new hotels with expected completion in December 2019 ▪ The industry group commenced the construction of "Cinnamon red Kandy" in the heart of the hill capital of Sri Lanka i
Slide 22: Occupancies and average room rates
Occupancies and average room rates FY2019 FY2018 1Q Earnings update: Leisure industry group Sector EBITDA EBITDA Occupancy ARR Occupancy ARR Margin Margin (%) (USD) (%) (USD) (Rs. mn) Q1 Q1 (%) (%) 2019/20 2018/19* City 48 128 22 64 127 27 EBITDA (332) 228 Hotels* • Leisure performance was Sri Lanka
Slide 23: Easter Sunday terror attacks April 2019: impacts and way forward
Easter Sunday terror attacks April 2019: impacts and way forward ▪ Post the series of coordinated attacks on Easter Sunday, 21 April 2019, Cinnamon Grand commenced accepting new bookings soon Post-crisis recovery after the incident while its restaurants were opened to the public initiatives from 30
Slide 24: Easter Sunday attacks: recovery seen to be in 12-18 months
Easter Sunday attacks: recovery seen to be in 12-18 months ▪ Studies of other travel destinations that were Estimates by the World Travel and Tourism council show the average recovery time in months by type of crisis: impacted by similar terrorism incidents indicate that destinations typically requi
Slide 25: Trend of tourist arrivals to Sri Lanka
Trend of tourist arrivals to Sri Lanka Annual tourist arrivals to Sri Lanka ('000) 2,500 Tourist Growth Year arrivals (%) 2,000 (In 000’s) 2010 654 46 1,500 2011 856 31 1,000 2012 1,006 18 500 2013 1,275 27 2014 1,527 20 - 1985 1996 2007 2018 2015 1,798 18 ▪ Tourist arrivals from January – June 2019
Slide 26: Significant growth in Asian arrivals to Sri Lanka
Significant growth in Asian arrivals to Sri Lanka 962,395 966,731 938,697 822,272 Tourist arrivals 640,045 527,656 383,748 334,274 245,753 2010 2011 2012 2013 2014 2015 2016 2017 2018 Calendar Year Source: Sri Lanka Tourism Development Authority 26
Slide 27: Tourist arrivals to Sri Lanka lag well below regional peers
Tourist arrivals to Sri Lanka lag well below regional peers 40 35 30 Arrivals in millions 25 20 15 10 5 0 Malaysia Indonesia Thailand Vietnam Cambodia Sri Lanka 1990 2018 Actual/ Target Source: Governmental tourism websites 27
Slide 28: Room inventory in Colombo lags far behind other regional capital cities
Room inventory in Colombo lags far behind other popular regional capital cities 60,000 31,790 30,114 26,113 9,100 7,600 5,019 Bangkok Manila Kuala Lampur Jakarta Ho Chi Minh Hanoi Colombo 28
Slide 29: 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 Cinnamon Life 800 1Q 2021 ITC 350 2021 Ritz Carlton* 473 2022 Total rooms 1,623 *
Slide 30: Property - overview
Property - overview ▪ “John Keells Properties”; explore property development opportunities by leveraging on brand equity ▪ Focused strategies for expansion via developer/landowner tie ups ▪ Catering to different target market segments: “7th Sense” on Gregory’s Road ▪ Luxe Spaces ▪ Metropolitan Space
Slide 31: Industry potential
Industry potential ▪ Low levels of urbanisation within Sri Lanka in comparison to regional peers ▪ Annual condominium supply far below regional peers Annual condominium supply in regional cities 53,796 38,000 2,187 KL Ho Chi Minh City Colombo Source: KL: CBRE property market outlook 1Q 2018 (forecas
Slide 32: Low penetration of apartment living in Colombo
Low penetration of apartment living in Colombo 5% 20% 30% 36% 40% 45% 50% 90% 95% 80% 70% 65% 60% 55% 50% 10% Greater Singapore Thailand Thailand Malaysia Malaysia India (Chennai) India Colombo (Central (Outskirts) (Central KL) (Greater KL) (Bangalore) Bangkok) Apartments Landed houses Source: Compa
Slide 33: 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 ▪ One of the largest privately owned land banks ▪ Opportunities for development at land banks held in Crescat City and Cinnamon Lakeside Vauxhall street land bank Cinnamon
Slide 34: Developable freehold land of approximately 25 acres near Colombo city
Developable freehold land of approximately 25 acres in close proximity to Colombo city ▪ Greater connectivity and reduction in travel time to Colombo city post construction of the outer circular expressway ▪ Direct connectivity to the Port City Colombo and a multi modal transportation hub to be deve
Slide 35: Robust development pipeline; on-going developments
Robust development pipeline; on-going developments Number of units sold Cumulative sales (units) 1Q FY20 earnings update: Property as at 30 June ‘19 industry group Cinnamon Life: (Rs. mn) Q1 2019/20 Q1 2018/19 The Residence at Cinnamon Life 135 EBITDA (12) 18 Suites at Cinnamon Life 109 • Profitabil
Slide 36: Robust development pipeline: 500 acre land bank with golf course
Robust development pipeline: Scenic 500 acre land bank with an 18-hole golf course Rajawella Holdings Limited (RHL) ▪ Owners of a majority stake in RHL to complement the Group’s leisure and property portfolios ▪ The 500 acre land in Digana includes an 18-hole, Donald Steel designed, Golf Course and
Slide 37: Cinnamon Life Integrated Resort
Cinnamon Life Integrated Resort 37
Slide 38: Integrated development in Colombo
Integrated development in Colombo 38
Slide 39: Integrated development in Colombo
Integrated development in Colombo 39
Slide 40: Veet
Veet 40
Slide 41: As at end June 2019
As at end June 2019 41
Slide 42: As at September 2019
. ——— x , As at September 2019 42
Slide 43: As at September 2019
As at September 2019 43
Slide 44: Development programme
Development programme Conferencing ; capacity (4,837 pax) in three venues and car park facility (2,450 slots) 800 guest room hotel, including conferencing, banqueting, 7 specialty restaurants and entertainment facilities Rentable mall and entertainment space of 372,000 Sq. Ft (Gross – 518,000 Sq. Ft
Slide 45: The growth in Indian MICE travel to complement Cinnamon Life
The growth in Indian MICE travel to complement Cinnamon Life Indian Outbound MICE (Millions) 2.11 1.94 1.78 1.63 1.5 2017 2018 2019 2020 2021 Source: MasterCard 45
Slide 46: Financial Services – Insurance sector overview
Financial Services – Insurance sector overview ▪ Union Assurance (JKH Stake : 90%) ▪ Committed to a “digital first” business model with an investment of over Rs. 800Mn to become the largest digital insurer in Sri Lanka ▪ Developing Bancassurance channels - UA entered into exclusive bancassurance pa
Slide 47: Financial Services – Insurance sector overview
Financial Services – Insurance sector overview Key performance indicators CY2013 CY2014 CY2015 CY2016 CY2017 CY2018 1Q FY20 earnings Market share (%) 14 13 13 13 14 14 update: Financial Services GWP growth (%) 8 8 17 19 22 11 industry group Recurring net profit (Rs.mn) 791 881 1,127 1,313 4,002* 1,6
Slide 48: Financial Services – Banking sector overview
Financial Services – Banking sector overview ▪ Nations Trust Bank (JKH effective economic interest : 32.16%) ▪ Focus on SME / retail strategy ▪ Franchise for American Express cards Key performance indicators CY2013 CY2014 CY2015 CY2016 CY2017 CY2018 Loans and advances growth (%) 12.10 19.50 22.4 23.
Slide 49: 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 FY2020, and does not constitute an issue prospectus or a financial analysis. This Investor Presentation s
John Keells Holdings — Q1 FY2020 Earnings Presentation on 6ix