Harry J walks into JKH

Thursday, 8 September 2011 00:38 - - {{hitsCtrl.values.hits}}

Business leader Harry Jayawardena yesterday moved the market when he bought a 2% stake in premier blue chip John Keells Holdings (JKH) for Rs. 3.4 billion.

The block amounting to 16 million shares was bought at Rs. 215 per share via Harry’s cash-rich Distilleries Company.

It is learnt Distilleries had around 2 million shares in JKH previously and with yesterday’s purchase the holding had increased to 2.2%.

Overall JKH, which is the most valuable stock on the Colombo Bourse, saw 17.3 million of its shares traded for Rs. 3.7 billion between a low of Rs. 216 and a high of Rs. 219, before closing at Rs. 218.50, up by Rs. 2.50. Deals on JKH accounted for 64% of the turnover yesterday at Colombo stock market, which finished the day on the up.

Harry bought it from Arisag India Fund Ltd., which as at 30 June, had 19.24 million shares or 2.3% stake. Arisag was once a top shareholder with a 10% stake in Aitken Spence, a company controlled by Distilleries.

Some were surprised with Harry J’s buy at Rs. 3.4 billion whilst others viewed it more for future capital gains than strategic.

“Distilleries could be looking for value appreciation in the short to medium term in JKH stock to sell it off to foreign investors later on,” opined one. Another said Harry J perhaps was sensing more in JKH than just value appreciation.

JKH boasts of a Price to Earnings Ratio of 16.52 times on forecast earnings for the current FY13. Its PER on FY12 earnings was 19.82 times. Price to book value is 3 times.

As at 30 June, 2011, Distilleries at company level had Rs. 4.5 billion in short term deposits whilst it assets amounted to Rs. 33.4 billion. It has Rs. 8.25 billion worth of investments in equity accounted investees apart from Rs. 7.7 billion in subsidiaries.

Distilleries in the first quarter of FY2012 saw net profit attributable to equity holders’ increase by 49% to Rs. 1.23 billion.

Group assets as at 30 June, 2011 were Rs. 52.45 billion, up from Rs. 52.1 billion as at end FY10 and Rs. 35.5 billion as at June 2010.

Revenue reserves were Rs. 26.5 billion at Group level and Rs. 23.1 billion at company level.