Bright Horizons: Navigating Tourism's Growth Revival
THE FORTRESS RESORTS PLC
RHTL.N0000
Current Price: LKR 20.40
Fair Value: LKR 32.00 (FY25E)
BUY
Highly attractive resort targeting upper class tourists
The Fortress Resorts PLC, is a luxury boutique hotel in Galle, Sri Lanka which has invested in its
subsidiary, La Forteresse (Pvt) Ltd. and La Forteresse (Pvt) Ltd, provides lodging, food, beverage and
other hospitality industry related activities. The Company accommodations consists of 53 rooms
including fortress room, ocean room, beach room, beach splash room, ocean loft suites and fortress
residence suites.
Bottom line plunges by 108.6% YoY amidst cost escalations
RHTL recorded a decline in bottom line of 108.6% for 1QFY24 recording a loss of LKR 3.5Mn resulted by
the high finance and administrative cost increase by 48.1% YoY. Despite the downturn the top line grew
marginally by 5.7% YoY to 133.2Mn deriving optimism for its prospects of recovery in the future.
Furthermore, Gross Profit margin also displayed a decline YoY recording 59.2% compared to 70.4% in
1QFY23.
Bottomline of the company is forecasted to grow at 27% YoY in FY25E.
While RHTL remain hopeful of a steady recovery of political stability, the group will continue to
strategize accordingly to attract guests, grow business opportunities and create sustainable value for all
stakeholders. RHTL's growth strategies for the year 2022 and beyond includes identify niche markets
and reach out to the relevant audience through various partnerships with SLH (Small Luxury Hotels of
the World). Also, the company is expecting to widen to the Indian market with special focus on the
wedding industry. Considering the steady economic recovery RHTL anticipate the operating expenses
to ease contributing to a growth in the bottom line. Considering the potential of the company and the
heightened tourists arrivals we anticipate a Net Profit target of LKR 186.2Mn and LKR 263.4Mn for
FY24E and FY25E, respectively with an improved occupancy of 50%. BUY
P/E 31 March
Estimates (LKR 'Mn)
Revenue
FY19
FY20
FY21
FY22
FY23
FY24E
FY25E
FY26E
788
489
75
349
435
599
734
945
206
4
-235
7
-75
168
235
312
210
27
-176
33
-20
186
236
295
1.9
0.2
(1.6)
0.3
(0.2)
1.7
2.1
2.7
-87%
-743%
119%
160%
1038%
27%
25%
EBIT
Net Profit
Adjusted EPS (LKR)
YoY Growth (%)
Valuations
PER (x)
PBV (x)
DPS
10.8x
82.8x
N/A
68.4x
N/A
12.1x
9.6x
7.7x
1.2x
1.3x
1.4x
1.4x
1.4x
1.3x
1.1x
1.0x
0.5
4.1
0.4
0.4
0.4
DY (%)
4.9%
4.9%
0.0%
0.0%
0.0%
3.3%
4.2%
5.2%
Dividend Payout
ROE
52.9%
11.3%
405.7%
0.0%
0.0%
0.0%
40.0%
40.0%
40.0%
1.5%
-11.0%
2.0%
-1.2%
10.4%
11.7%
12.7%
PER based Valuation
Earnings (LKR 'Mn)
No. of Shares ('Mn)
FY24E
FY25E
186
236
111
111
EPS
1.7
2.1
Expected Average PER
15.0x
15.0x
Target Price
25
32
First Capital
A Janashakthi Group Company
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