John Keells Holdings Plc · CSELK:JKH.N0000
John Keells — Investor Presentation (May 2019)
49 slides from John Keells's investor presentation, May 2019
Slide 1: Investor Presentation: Review of FY2019
Investor Presentation Review of FY2019 Version 1.0 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 John Keells Group - Confidential
Slide 2: About JKH
About JKH ▪ Market cap of USD 1.14 billion ▪ No controlling shareholder - 99% free float ▪ Debt : Equity ratio of 23.7% ▪ The Board comprises of two Executive Directors and six Independent Non- Executive Directors 2 John Keells Group - Confidential
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% 32% 1% Property 5% 8% Financial 16% 10% 10% Services 20% 4% Note: The above excludes the contribution from Other including Information Te
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 31 March 2019
EBITDA : for the quarter ended 31 March 2019 Q4 FY2019 Q4 FY2018 YoY Growth Industry Group (Rs. Million) (Rs. Million) (%) Transportation 1,282 497 158 Consumer Foods 1,103 864 28 Retail 827 580 42 Leisure 2,375 2,540 (7) Property 195 1,158 (83) Financial Services 1,590 6,459 (75) Other, incl. IT an
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 Plantations 1 Financial Serv
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 in
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
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 John Keells Group - Confidential
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 John Keells Group - Confidential
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 John Keells Group - Confidential
Slide 12: Rapid absorption of capacity in the Port of Colombo
Rapid absorption of capacity in the Port of Colombo 800 Port of Colombo - volumes ('000 TEUs) Port Container handling capacity (TEUs) CICT Colombo 8 million JCT 600 Hong Kong 21 million SAGT Singapore 40 million Shanghai 36 million 400 Q4 Q1 Q2 Q3 Q4 Volumes 2017/18 2018/19 % YoY 4Q Earnings update:
Slide 13: Opportunities for growth in the Bunkering businesses
Opportunities for growth in the Bunkering businesses Bunkering Business (Lanka Marine Services) 2017/18 2018/19 LMS Q4 Q1 Q2 Q3 Q4 Volume growth 20 20 2 9 (4) ▪ LMS revenue recorded an increase although profitability was impacted by the appreciation of the Rupee Port of Hambantota ▪ Strong opportuni
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 equity 4Q Earnings update: Consumer Key performance indicators (%) FY2016 FY2017 FY2018 FY2019 Foods industry group Growth of fr
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% demonstrating the significant growth potential 56% for the impulse category.
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 4Q Earnings update: Retail FY2016 FY2017 FY2018 FY2019 (%) industry group EBITDA (Rs.milllion) 1,537 2,010 1,975 1,623 (Rs. mn) Q4 Q4 EBITDA margin 6.9 6.7 5.3 3.6 2018/19 2017/18 EBIT margin 5.8 5.7 4.0 2.0 EBITDA 827 580 ▪ Profitability margins were imp
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; potential to expand Cinnamon footprint
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
Slide 22: Occupancies and average room rates
Occupancies and average room rates FY2019 FY2018 4Q Earnings update: Leisure Sector EBITDA EBITDA industry group Occupancy ARR Occupancy ARR Margin Margin (%) (US $) (%) (US $) (Rs. mn) Q4 Q4 (%) (%) 2018/19 2017/18 City 48 128 22 64 127 27 EBITDA 2,375 2,540 Hotels* Sri Lankan 80 90 28 81 91 28 • L
Slide 23: Impact analysis: Easter Sunday attacks 2019
Impact analysis: Easter Sunday attacks 2019 ▪ Sri Lanka witnessed a series of coordinated attacks on Easter Sunday, 21 April 2019, which resulted in a death toll of over 250 people and injured over 500 individuals. ▪ The attacks targeted several religious establishments and three city hotels includi
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: Easter Sunday attacks: recovery and way forward
Easter Sunday attacks: recovery and way forward ▪ The GoSL has proactively initiated a range of measures and concessions to help the revival of the tourism industry.: ▪ Implement a public relations campaign to curtail the negative global media coverage whilst working towards the removal of adverse t
Slide 26: 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 2016 2,051 14 ▪ Tourist arrivals from Janua
Slide 27: 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 27 John Keells Group - Confidential
Slide 28: 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 28 John Keells Group - Confidential
Slide 29: 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 29 John Keells Group - Confidential
Slide 30: 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 31: 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 32: 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 33: 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 34: 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 Cinnamon Lakeside 7.40 acres leasehold land ▪ One of the largest privately owned land Cinnamon Life banks 7.1 acres freehold 3.03 acres leasehold ▪ Opportunities for devel
Slide 35: 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 36: Robust development pipeline; on-going developments
Robust development pipeline; on-going developments Number of units sold Cumulative sales (units) 4Q Earnings update: Property industry as at 31 March ‘19 group Cinnamon Life: (Rs. mn) Q4 2018/19 Q4 2017/18 The Residence at Cinnamon Life 136 EBITDA 195 1,158 Suites at Cinnamon Life 110 • Performance
Slide 37: 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 38: Cinnamon Life Integrated Resort
Cinnamon Life Integrated Resort 38 John Keells Group - Confidential
Slide 39: Integrated development in Colombo
Integrated development in Colombo 39 John Keells Group - Confidential
Slide 40: Integrated development in Colombo
Integrated development in Colombo 40 John Keells Group - Confidential
Slide 41: John Keells Group - Confidential
41 John Keells Group - Confidential
Slide 42: As at December 2018
As at December 2018 42 John Keells Group - Confidential
Slide 43: As at May 2019
As at May 2019 43 John Keells Group - Confidential
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 John Keells Group - Confidential
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 4Q Earnings update: Market share (%) 14 13 13 13 14 14 Financial Services industry GWP growth (%) 8 8 17 19 22 11 group Recurring net profit (Rs.Mn) 791 881 1,127 1,313 4,002* 1,640 (R
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 FY2019, and does not constitute an issue prospectus or a financial analysis. This Investor Presentation s
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