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According to half-year results of AHUN (the holding company of hotel interests of Aitken Spence), turnover has increased by 14% to Rs. 933.34 million while the company made a net profit of Rs. 4.5 million as against a loss of Rs. 33.3 million.

This is due to increased contribution from its Maldivian operations and decrease in finance cost. Among its Maldivian operations, Club Rannalhi recorded excellent occupancy levels while the other two resorts too recorded satisfactory levels of occupancy. Its Sri Lankan operations have also bounced back with most of its local hotels already passing the budgeted occupancy levels for 2002/03 as a result of the ongoing peace process.

Meanwhile, AHUN's finance cost has declined by 30% to Rs. 60.9 million as a considerable part of its loans have been repaid. Major part of the loans yet to be repaid are dollars loans taken for Meedhupparu. With the beginning of the tourist season in November AHUN earnings are expected to shoot up recording healthy gains for the FY 2002/2003.

Hayleys records marginal increase in profits

Hayleys released its results for the six months ended September 30, with a 13% increase in turnover to Rs. 6.0 billion. A decline in gross margins and an increase in distribution cost by 13% led the company record a 2% decline in operating profit to Rs. 691.96 million. However, increased contributions from its associates and a drop in minority interest resulted in marginal 3% increase in company's net profit to Rs. 240.2 million.

Annualised EPS of the share is Rs.13.07 while the NAPS is Rs. 131.44. The stock currently trades at PE multiples of 11.7 times.

Mixed performance by HAYL's subsidiaries

Haycarb records moderate growth in profits: Turnover increased by 20% to Rs. 963.0 million. However, a 18% increase in administrative cost, increase in finance cost due to increase in its long-term borrowings and a 87% drop in contribution from its associates contained the profit to Rs. 94.36 million, an increase of 8% over the same period last year.

Dipped Products records drop in earnings

For the six months ended September 30, of DIPD, turnover increased by 5% to Rs. 1.5 billion while net profit declined by 11% to Rs. 95.23 million due to increase in finance cost.

At present DIPD is the fourth largest manufacturer of non-medical gloves in the world with a market share of 5%. The total production of DIPD is currently being exported while 90% of its exports are to the US and Western Europe. Thus the slower recovery in this part of the world would have an adverse impact on the company's bottom line.

Meanwhile, DIPD's 71% owned plantation, Kelani Valley too released results for the nine months ended September 30 with a 5% increase in turnover to Rs. 987.0 million while lower cost of production led to a 20% increase in gross profit to Rs. 108.6 million. However, decline in interest income owing to lower interest regime resulted in net profit remaining static at Rs. 34.0 million compared with the same period last year.

Point of View

The market which, spent weeks of hibernation is showing signs of slowly returning to life even with the distraction of the IPO fever subsiding to some extent. The market has edged up during the latter part to pass the psychologically important 800 level barrier.

However, the turnover levels that accompanied this move do not look convincing enough. Although this upward movement cannot be treated as a market rebound, it definitely eased the continued downward trend. Investors should assess the velocity of climb seen on Friday to see whether it is sustainable and can push the index beyond the previous resistance levels at 820 - 830. We feel that the market would fluctuate within a narrow range in the coming weeks until the excess funds are returned on the non-allotted shares. Nevertheless we feel that the market would stabilise in the medium-term after the closure of all IPOs.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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