The June 2020 quarter recurring earnings followed suit of previous quarters by declining 58.0% Year-over-Year (YoY) for 267 companies, First Capital Research said.
On a recurring basis, June 2020 quarter earnings dipped by 58.0% YoY to Rs. 17.7 billion, primarily owing to sluggish performance in diversified financials (-97% YoY), capital goods (-471% YoY), consumer services (-108% YoY), and real estate (-84% YoY) sector earnings. However, negative performance of the above-mentioned sectors was negated by the earnings growth in transportation (+1043% YoY) and materials (+60% YoY) sectors.
“Total earnings for the quarter, without adjustments, registered a decline of 36.5% YoY as it included a one-off gain pertaining to LOLC. LOLC’s profitability spiked by 137% YoY as it included a one-off gain recognised from the sale of 70% of its stake in PRASAC. This transaction also resulted in diversified financials sector earnings boosting by 55%, although on a recurring basis, the sector recorded a profit decline of 97% YoY. Moreover, Browns Investments PLC’s (BIL) previous year corresponding quarter augmented a one-off gain which included a gain on bargain purchase of 67% stake in a company which holds sugar cane plantations and a factory in Sierra Leone,” First Capital said.
It added that diversified financials, capital goods, and consumer service sector counters shattered the quarterly earnings. On a recurring basis, the diversified financials sector earnings dipped by 97% YoY largely led by Central Finance Co. PLC (CFIN) (-79% YoY) and LOLC Finance PLC (LOFC) (-91% YoY). CFIN’s profits declined as a result of drop in net interest income (NII) and rise in impairments. LOFC’s bottom line fell as a result of the spike in impairment to Rs. 5.7 billion.
In the capital goods sector, John Keells Holdings (JKH) became the negative contributor incurring a loss of Rs 1.6 billion (-267% YoY) compared to Rs. 994.0 million profits in 1QFY20 mainly due to the significant loss in the leisure sector of Rs. 2.5 billion resulting from the hotel closure due to Covid-19. Moreover, Softlogic Holdings (SHL) made a loss of Rs. 2.4 billion (-230% YoY) compared to a loss of Rs. 753.0 million in 1QFY20 led by losses made in its retail and telecommunication, financial services, and leisure and property sectors.
Consumer services sector earnings dipped primarily led by significant losses in two key players, John Keells Hotels (KHL) amounting to Rs. -1.7 billion (-297% YoY) and Aitken Spence Hotel Holdings (AHUN) amounting to a similar loss of Rs. -1.7 billion (-292% YoY). Real estate sector earnings plunged owing to the profit dip in East West Properties (EAST) to Rs. 135.5 million (-95% YoY) amidst the significant reduction in finance income.
Transportation and materials sectors outperformed, with the transportation sector witnessing a profit surge of 1043% YoY to record Rs. 1.7 billion with Expolanka Holdings (EXPO) thriving in its freight-forwarding business with logistics solution for PPE skyrocketing in demand amidst the Covid-19 pandemic.
Materials sector earnings were supported by improved performance in dipped products (DIPD) (+501% YoY), Haycard PLC (HAYC) (+156% YoY), CIC Holdings (CIC) (+262% YoY) and Tokyo Cement (TKYO) (+26% YoY).
“Total earnings for the quarter, without adjustments, registered a decline of 36.5% YoY as it included a one-off gain pertaining to LOLC. LOLC’s profitability spiked by 137% YoY as it included a one-off gain recognised from the sale of 70% of its stake in PRASAC. This transaction also resulted in diversified financials sector earnings boosting by 55%, although on a recurring basis, the sector recorded a profit decline of 97% YoY. Moreover, Browns Investments PLC’s (BIL) previous year corresponding quarter augmented a one-off gain which included a gain on bargain purchase of 67% stake in a company which holds sugar cane plantations and a factory in Sierra Leone,” First Capital said.
It added that diversified financials, capital goods, and consumer service sector counters shattered the quarterly earnings. On a recurring basis, the diversified financials sector earnings dipped by 97% YoY largely led by Central Finance Co. PLC (CFIN) (-79% YoY) and LOLC Finance PLC (LOFC) (-91% YoY). CFIN’s profits declined as a result of drop in net interest income (NII) and rise in impairments. LOFC’s bottom line fell as a result of the spike in impairment to Rs. 5.7 billion.
In the capital goods sector, John Keells Holdings (JKH) became the negative contributor incurring a loss of Rs 1.6 billion (-267% YoY) compared to Rs. 994.0 million profits in 1QFY20 mainly due to the significant loss in the leisure sector of Rs. 2.5 billion resulting from the hotel closure due to Covid-19. Moreover, Softlogic Holdings (SHL) made a loss of Rs. 2.4 billion (-230% YoY) compared to a loss of Rs. 753.0 million in 1QFY20 led by losses made in its retail and telecommunication, financial services, and leisure and property sectors.
Consumer services sector earnings dipped primarily led by significant losses in two key players, John Keells Hotels (KHL) amounting to Rs. -1.7 billion (-297% YoY) and Aitken Spence Hotel Holdings (AHUN) amounting to a similar loss of Rs. -1.7 billion (-292% YoY). Real estate sector earnings plunged owing to the profit dip in East West Properties (EAST) to Rs. 135.5 million (-95% YoY) amidst the significant reduction in finance income.
Transportation and materials sectors outperformed, with the transportation sector witnessing a profit surge of 1043% YoY to record Rs. 1.7 billion with Expolanka Holdings (EXPO) thriving in its freight-forwarding business with logistics solution for PPE skyrocketing in demand amidst the Covid-19 pandemic.
Materials sector earnings were supported by improved performance in dipped products (DIPD) (+501% YoY), Haycard PLC (HAYC) (+156% YoY), CIC Holdings (CIC) (+262% YoY) and Tokyo Cement (TKYO) (+26% YoY).