Ricky Mendis buys 8% of Serendib Hotels for Rs. 142 m

Reflecting his bullishness on post-war rebound in tourism, former Delmege Chairman Ricky Mendis yesterday bought an 8% stake in Serendib Hotels Plc for around Rs. 142 million from Royal Ceramics Plc and its high net worth investor Managing Director Nimal Perera.

In total 6.7 million shares of Serendib Hotels transacted via 312 trades for Rs. 154.6 million. Of that two large blocks of 2.4 million and 3.78 million shares were done at Rs. 23 each. After hitting a peak of Rs. 24.70, the stock closed at Rs, 24.20, up Rs. 1.10 from its previous close. Deals on Serendib accounted for over 7% of yesterday’s turnover.   

As at June 2012 Royal Ceramics Plc held 3.92 million shares and Nimal Perera held 2.85 million shares bringing the total to near 9%.

Serendib Hotels is a joint venture between Leisure Asia Investments (28.14%) and Hemas Holdings Plc (22%). Lodging Investment (Labuan) Ltd. holds a 20% stake as well. Ordinary voting shares public float is only 27%.

Analysts said Mendis, who is high net worth but low profile investor, was seeing great upside in Serendib Hotels in tandem with strong post-war rebound in the leisure sector.

Net asset per share at Group level was Rs. 13.71 as at June 2012 whilst at Company level it was Rs. 9.

In the quarter ended June 2012, Serendib’s highest traded price was Rs. 26.50 whilst in the FY12 it was Rs. 37.90. It finished the FY12 at Rs. 24.80 and the June 2012 quarter at Rs. 20.50.Its earnings per share in FY12 was Rs. 0.28 though slipped to a loss of 4 cents by June 2012.

The Serendib Hotels Group recorded a revenue of Rs. 243 million for the first quarter 2012/13, a growth of 32% over the corresponding period. However, it must be noted that its flagship hotel, Avani Bentota Resort and Spa was closed for refurbishment in May 2011. The Group’s pre-tax profits for the first quarter also improved recording Rs. 9.4 million in comparison to a loss of Rs. 7.3 million in the previous year.

This result would have been even better at Rs. 19.2 million if not for the adjustment in respect of unrealised losses on revaluation of foreign currency loans. Overall, the financial performance of the Group was bolstered by the results (pre-tax profits) achieved by its subsidiaries; Club Hotel Dolphin (Rs. 23.6 million) and Hotel Sigiriya (Rs. 8.9 million), which off-set the losses of the parent.

With regard to the future outlook Serendib Hotels Managing Director Ranil de Silva in comments accompanying June interim results said: “We expect the 2nd Quarter of 2012/13 to out-perform the previous year. However, this growth may be tempered than anticipated as the crisis in the EU will continue to bear on travel out of our traditional markets. Avani Bentota will also be brochured with the main tour operators after its recent renovation and repositioning from the forthcoming Winter season which no doubt will improve occupancy at our flagship property.”