Bright Horizons: Navigating Tourism's Growth Revival
HAYLEYS LEISURE PLC
CONN.N0000
Current Price: LKR 25.60
Fair Value: LKR 40.00 (FY25E)
BUY
CONN is 67.6% owned subsidiary of export conglomerate Hayleys (HAYL.N)
Hayleys Leisure PLC's hotels, resorts, and boutiques consists of 10 properties with 418 rooms,
of which 09 are scattered across the resplendent island of Sri Lanka and the other, a luxurious
resort in the Maldives.
CONN net loss decreased to LKR 134.1Mn in 1QFY24 (1QFY23: loss of LKR 240.7Mn)
The improved performance during the quarter was largely on the back of declining finance
expenses, which declined by 67.3% YoY to LKR 66.8Mn. Furthermore, group topline for 1QFY24
significantly grew by 91.1% YoY to LKR 578.3Mn whilst gross margin improved to 57.1% from
49.5% in 1QFY23.
CONN to witness faster recovery benefitted by occupancies
CONN underwent some challenging times during 2021 and 2022 owing to the pandemic which
harshly effected the tourists arrivals to meet with a sharp decline. Moving into 2023 resulted
by faster than expected recovery in tourism industry, the economy gradually painting its
recovery from the global pandemic and the economic downturn influenced by various
government strategies and various promotions, the 1QFY24 has shown that the company has
gradually recovered from its bottom. CONN's exposure to the Maldives, which has made a
remarkable recovery, reaching pre-pandemic levels, along with its presence in the coastal
segment of Sri Lanka and boutique-style hotels, leads us to anticipate occupancy levels of 70%
in FY24E. Additionally, with the rapid resurgence of arrivals, we expect Average Room Rates
(ARR) to increase, boosting margins in the coming years. Therefore, considering the company's
potential and the sector's outlook, we have upgraded our forecasted net profit to LKR
358.0Mn from LKR 345.0Mn for FY24 and LKR 535.1Mn for FY25E. Hence, we recommend a
BUY rating for the company.
Adjusted EPS (LKR)
YoY Growth (%)
Valuations
P/E 31 March
Estimates (LKR 'Mn)
Revenue
FY19
FY20
FY21
FY22
FY23
FY24E
FY25E
FY26E
1,644
1,226
362
777
1,532
2,391
2,789
3,427
EBIT
408
-114
-583
-623
-445
586
683
994
Net Profit
300
-266
-790
-898
-824
316
481
749
5.6
(1.6)
(6.7)
(7.7)
(7.6)
2.9
4.5
6.9
-128% -329%
-14%
0%
138%
52%
56%
4.6x
N/A
N/A
N/A
N/A
8.7x
5.8x
3.7x
0.7x
0.8x
1.0x
1.3x
2.0x
1.7x
1.4x
1.1x
1.8
0.4
1.3
2.1
DY (%)
Dividend Payout
ROE
6.8%
0.0%
0.0%
0.0%
0.0%
1.7%
5.2%
8.1%
31.5%
0.0%
0.0%
0.0%
0.0% 15.0% 30.0%
30.0%
16.2%
-4.8% -25.2%
-37.6% -60.2% 19.3% 24.3%
30.0%
PER (x)
PBV (x)
DPS
PER based Valuation
Earnings (LKR 'Mn)
No. of Shares ('Mn)
EPS
FY24E
FY25E
316
481
108
108
2.9
4.5
Expected Average PER
11.0x
9.0x
32
40
Target Price
First Capital
A Janashakthi Group Company
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