Bright Horizons: Navigating Tourism's Growth Revival
SERENDIB HOTELS PLC
SHOT.N0000
Current Price: LKR 14.10
Fair Value: LKR 20.00 (FY25E)
BUY
Manifold destinations to offer
Serendib Hotels PLC is one of the leading hotel groups in Sri Lanka which encompasses its
offerings in key attractions of the country such as beach, jungle and lagoon. Avani Bentota resort,
Club Hotel Dolphin and Hotel Sigiriya are other prominent hotels owned by SHOT. SHOT also
owns a line of boutique hotels such as Lantern boutique hotel, Ubuntu beach villa and Reveal
beach house. Revenue of SHOT is predominantly based on accommodation, food & beverage
charges and other hotel operations. The hotel currently consists of 361 rooms offered in the
range of standard, villas, suite, deluxe rooms and superior rooms. SHOT is a subsidiary of Eden
Hotel Lanka PLC, which owns 60.5% of stake as at 31st Mar 2023.
Bottomline on a recovering phase
SHOT experienced a massive 100.0% YoY growth in the bottom-line recording LKR 4.3Mn during
1QFY24 registering a positive outlook mainly aided by the growth in the top line which was
recorded at LKR 438.4Mn recording a 41.2% YoY growth compared to 1QFY23. Despite the upturn
in the topline Gross Profit margin experienced a marginal degrowth to 65.3% compared to 71.4%
in 1QFY23. Net finance cost brought in a positive impact on the earnings recording a net finance
income of LKR 75.7Mn compared to the net finance expense of LKR 182.8Mn in 1QFY23 creating
a favourable impact.
Diverse destination offerings to unlock growth
We expect earnings to recover in the future as tourist arrivals improve resulting in higher
occupancy levels and diverse locations to play a major role in uplifting earnings. Hence, we expect
occupancy levels to improve to nearly 65% in FY25E. Hence, we estimate the loss to reverse in
FY24E and FY25E and record an earnings of LKR 186.0Mn and LKR 342.0Mn respectively. BUY
EBIT
P/E 31 March
Estimates (LKR 'Mn)
Revenue
FY19
FY20
FY21
FY22
FY23
FY24E
FY25E
FY26E
2,039
1,589
587
636
1,442
2,597
3,209
4,082
215
29
-412
-233
-133
571
770
939
Net Profit
Adjusted EPS (LKR)
YoY Growth (%)
Valuations
39
-138
-456
-560
-452
276
489
666
0.1
(0.3)
(1.0)
(1.3)
(1.0)
0.6
1.1
1.5
-457%
-230%
-23%
19%
161%
77%
36%
162.4x
N/A
N/A
N/A
N/A
22.8x
12.9x
9.4x
2.5x
2.7x
2.9x
2.3x
1.5x
1.4x
1.3x
1.1x
DY (%)
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Dividend Payout
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1.5%
-5.9% -20.8%
-20.3%
-11.1%
6.3%
10.1%
12.1%
PER (x)
PBV (x)
DPS
ROE
PER based Valuation
Earnings (LKR 'Mn)
No. of Shares ('Mn)
FY24E
FY25E
276
489
446
446
EPS
0.6
1.1
Expected Average PER
Target Price
20.0x
18.0x
12
20
First Capital
A Janashakthi Group Company
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