Hayleys completes Hunas Falls sale; share gains further

Tuesday, 15 January 2019 01:00 - - {{hitsCtrl.values.hits}}

Hayleys Group yesterday sold its controlling 66.2% stake in Hunas Falls Hotels PLC for Rs. 696.3 million to Serenity Lake Leisure Ltd.

The stakes were held by Carbotels Ltd., (50.22%) and Amaya Leisure PLC (15.98%).

The deal amounting to 3.7238 million shares was done at Rs. 187 per share. The deal price is at a premium as the net asset per share of Hunas is Rs. 60.39 (as at 30 September 2018) down from Rs. 63.67 a year ago.

Though market analysts perceived the deal price as high, company analysts maintained Hunas Falls, popular for weddings and honeymoons, has great potential and upside.

Retail investors were busy collecting Hunas Falls shares in the market ahead of the mandatory offer whilst others needing cash sold out. The share price peaked to an intra-day high of Rs. 182 and a low of Rs. 175 before closing at the Rs. 178, up by Rs. 17.90 or 11%.

Ahead of the impending deal Hunas Falls share price doubled. It gained to a record high of Rs. 160.10, up by Rs. 28.30 or 21.4% and touched an intra-week highest of Rs. 165. In the previous week it gained by Rs. 51.30 or 64% to close at Rs. 131.80 (highest of Rs. 137.40).

Last week saw 116,200 shares change hands via 803 trades for Rs. 18 million whilst in the previous week, 85,185 shares via 516 trades were reported for Rs. 10 million. In the FY19 second quarter, only 12,656 shares transacted via 93 trades for Rs. 1 million. Hunas’ previous 54-week highest was Rs. 104.

Hunas Falls has 28 Deluxe Rooms, one Cardamom Suite and two Theme Suites. The hotel was awarded the Most Romantic Hotel in Sri Lanka at the South Asian Travel Awards 2017.

Serenity Lake Leisure is linked to TAD Holdings Ltd., which operates as the local partner of a number of ventures incorporated with Japanese FDIs and handles the administration, management and operations of those businesses that function as sub-brands of one holding company. TAD’s brainchild are Toshiaki Tanaka, Atheeq Ansar and Dhanuka Samarasinghe. In partnership with their Japanese counterparts, they have forayed into a number of key industries in the country in highly profitable areas such as renewable energy, property and plantations. Apart from Japan, TAD has also expanded to Maldives, Myanmar, Uganda and Kenya.

In FY18, Hunas Falls turnover dipped by 13% to Rs. 126 million and suffered a post-tax loss of Rs. 13 million as against a profit of Rs. 3.2 million in FY17. Hotel’s ARR reducing from $ 133 in FY 2016/17 to $ 114 in 2017/18. Occupancy also fell from 46% to 42%.

In first half of the current FY19, revenue amounted to Rs. 68.7 million, up from Rs. 65.8 million a year ago whilst gross profit was unchanged at Rs. 50.7 million. Net loss however was reduced to Rs. 1.1 million from Rs. 3.4 million in first half of FY18. In recent years first half net profit had averaged between a low of Rs. 4.8 million (FY16) and a high of Rs. 8 million (FY15).