Oct 082013
Korean builders bag JKH’s integrated resort contract
John Keells Holdings (JKH) is reported to have selected a consortium led by South Korea’s Hyundai Engineering and Construction, for a contract worth US $ 522 million to build its integrated resort in Colombo, South Korean media reports said.

According to South Korea’s Yonhap News Agency, Hyundai Engineering and its partner Keangnam Enterprises, who already has a presence in Sri Lanka, are set to complete JKH’s integrated resort by 2017.

The news report further said, Hyundai Engineering holds a 65 percent stake in the project, or US $ 339 million, while Keangnam Enterprises has 25 percent, or $130 million, and the balance by Sri Lanka’s Nawaloka Construction.

The integrated resort is built by Waterfront Properties, a subsidiary company of John Keells.

The shareholders of John Keells recently permitted the company at an Extraordinary General Meeting (EGM) to raise money for the project through a mega Rs.40 billion rights issue combined with warrants.

During the EGM, John Keells Chairman Susantha Ratnayake reportedly had said the company would hire a foreign operator to run the gaming operations that will be available in the resort, since John Keells has no experience in that area.

John Keells is believed to be negotiating a deal to acquire a casino license from business figure Dhammika Perera, who owns a few casinos in Colombo.

Meanwhile the government has given approval to another integrated resort in Colombo by Australian gaming mogul James Packer.

Sri Lankan government had stated that it will not issue new gaming licenses but anybody who wants to set up a gaming operation can join up with an existing license holder.

Jul 162013
“Short-term pain, long-term gain” scenario for JKH: Report
John Keells Holdings PLC’s (JKH) proposed US $ 850 million integrated resort project in Glennie Street would be a significant hit to the company’s bottom line in the short-term, though the project is expected to be a long-term boon, an equities report stated. “Additional borrowing will be required for the project resulting in a significant jump in the borrowing costs,” Softlogic Stockbrokers said referring to the JKH indication to the Board of Investment (BoI) that the firm would increase its investment by another US $ 200 million.

“We assume the project is likely to be initiated early FY15E affecting FY15E and FY16E profitability of the company,” the report noted.

The report however expects FY17E earnings to benefit through this project as the sale of the residential apartments generate strong cash flows.

Despite the above project being a landmark for the JKH Group, the funding side of the project still remains unclear.

Further the report stated that the group currently holds cash reserves of Rs.30 billion. Through the existing cash reserves the company currently generates net finance income of Rs.3.7 billion contributing 27 percent to the bottom line.

According to BoI Chairman, Dr. Lakshman Jayaweera, JKH’s subsidiary Waterfront Properties (Pvt) Ltd. would raise between US $ 300-350 million from foreign sources through a rights issue, before the end of this year.

However JKH in a stock market disclosure on Monday (15) refuted claims by Dr. Jayaweera and said the company had not made any decision to raise US $ 300 million through such a rights issue.

Speculation is now rife that JKH might opt for a private placement of shares to raise required funds.The integrated resort will consist of 500 hotel rooms, apartment complex, restaurants, commercial and office space. The project is expected to generate as much as 3,000 direct employment opportunities.

Jun 192013
JKH to sign US $ 640mn hotel deal next week
Sri Lanka’s top conglomerate, John Keells Holdings (JKH), will sign a US $ 640 million deal to establish an integrated hotel complex in the capital of Colombo, three sources told Reuters yesterday.

JKH, the heavyweight of the US $ 18.5 billion Colombo Stock Exchange with a US $ 1.77 billion market cap, will sign the deal with a company from outside the country, the sources who have the direct knowledge on the deal told Reuters.

“This will be the biggest deal by a local company.

John Keells will bring US $ 640 million as foreign direct investment. The deal will be signed next week,” one source said.

Investment Promotion Minister Lakshman Yapa Abeywardena, without naming the company, said the government will sign a US $ 640 million agreement next week with a local company for a 500-room hotel complex with apartments, supermarkets and restaurants.

John Keells Holdings Deputy Chairman Ajith Gunawardena told Reuters that the project is in progress but declined to comment on the size of the project and if the company would sign the deal next week.


Jun 052013
Shares fall to near 3-week closing low
Sri Lankan shares fell for a third straight session yesterday to their lowest close in nearly three weeks, as investors booked profits in blue-chip companies like John Keells Holdings and Commercial Bank of Ceylon in an overbought market.

However, foreign investors bought shares on a net basis for a 19th straight session.

The bourse saw a net foreign inflow of Rs.314 million, extending year-to-date inflows to Rs.14.76 billion.

The main stock index fell 0.42 percent, or 26.82 points, to 6,422.84, the lowest close since May 17. Foreign investors accounted for around 52.8 percent of the day’s turnover of Rs.818.3 million ($6.47 million), less than this year’s daily average of Rs.1.04 billion.

“Consolidation is continuing and the market is taking time for the next run. We expect the market to be at these levels before gaining,” said a stockbroker asking not to be named.

He expects the market to rise with more foreign buying after a road show, which is being held in Dubai with the participation of top market and regulatory officials to attract foreign inflows into the bourse.

Shares in conglomerate John Keells Holdings fell 0.82 percent to Rs.279.40, while Commercial Bank of Ceylon lost 0.56 percent to Rs.123.30.

The market’s 14-day Relative Strength Index (RSI) was still in overbought territory, at 72.992 on Wednesday and has been above the upper neutral level of 70 since April 16, Thomson Reuters data showed.

The rupee ended firmer at 126.43/45 per dollar from Tuesday’s close of 126.50/52 on thin volume of inflows from remittances and stocks-related transactions, dealers said.


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