Business
Ceylon Tobacco Company PLC: Fags ignite bottom-line boost
Gross Revenue of CTC is estimated to accelerate to achieve a CAGR of 6% during the period 2022E2024E mainly attributing to continuous price hikes and swift bounce back in the tourism sector which was significantly curbed since 2020. Gross Revenue of CTC is expected to enhance in 2022E amidst the current economic crisis on account of VAT rate hike by 4.0%, which consequently increased the price of a cigarette by LKR 5.00 reflecting a rise in price by 6.3%-7.1% in major brands of CTC. In line with the past trend, we anticipate an annual tax hike in cigarettes resulting in further price hikes which will be far greater than the tax increase as the pricing power the company holds as the Tobacco Monopolist allows to pass on such increases to the consumer. We estimate the Gross Revenue of CTC to set on a marginal growth of 1.2% to LKR 135.9Bn in 2022E compared to LKR 134.4Bn in 2021, with volumes reacting negatively to the unfavourable economic climate. However, growth in turnover would expedite in 2023E as turnover is expected to rise by 5.3% to LKR 143.3Bn and by 6.4% to LKR 152.5Bn in 2024E with easing economic conditions improving purchasing power of consumers and positive developments in the political front and expected financial assistance from external parties bringing in hope for revamp in tourism and recovery of volumes.
It is expected for CTC’s margins (Net Revenue/Gross Revenue) to increase narrowly to 25.1% for 2022E while reaching 26.5% for 2023E (+146bps) and 28.4% for 2024E (+186bps). Moreover, operating profit margin of CTC too is expected to increase marginally to 78.0% in 2022E compared to 77.7% in 2021 (+30bps). A possible shift in demand from domestic consumers to low margin products from high margin products and an overall decline in volumes coupled with a probable rise in demand for illicit beedi market as a result of depleting disposable income has a potential of hampering margins of CTC in the short term. However, the potential negative impact from this is offset by the escalation indemand for high margin products of CTC owing to the revival in the tourism sector in 2022 with tourist arrivals expected to rise beyond 800,000 by the end of 2022 while it has already crossed the 400,000 level for the period of January-June for the first time after 2019. Although, we expect volumes to decline by 12.0% in the current financial year, volumes would normalize by 2023E as the demand for cigarettes is expected to rebound due to its inelastic nature following the past trend of consumers adjusting to price hikes at a rapid pace. Thus, bottom line of CTC is expected to grow by 2.1% in 2022E and record at LKR 16.5Bn while it is expected to grow at 10.7% in 2023E recording an earnings of LKR 18.2Bn.
CTC is more likely to maintain its average payout of c.90.0% in order to repatriate profits to its parent company British American Tobacco which owns 84% of CTC while providing a dividend yield of 13.4% and 14.8% in 2022E and 2023E respectively.
In FY22E, we expect CTC to record a profit of LKR 16.5Bn (2%YoY) while FY23E net profit is expected to record at LKR 18.2Bn (11%YoY). For FY22E, CTC is expected to deliver a total return of 94.3% including a DY of 13.4% while for FY23E a total return of 103.8% is expected inclusive of 14.8% DY.
-First Capital Research
The Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka) proudly facilitated the first-ever Sri Lankan delegation’s participation at Drupa 2024, the world’s largest trade fair for the printing industry and technology. Held after an eight-year hiatus, Drupa 2024 was a landmark event, marking significant advancements and opportunities in the global printing industry.
AHK Sri Lanka played a pivotal role in organising and supporting the delegation, which comprised 17 members from the Sri Lanka Association for Printers (SLAP), representing eight companies from the commercial, newspaper, stationery printing, and packaging industries. This pioneering effort by AHK Sri Lanka not only showcased the diverse capabilities of Sri Lanka’s printing sector but also facilitated vital bilateral discussions with key stakeholders from the German printing industry.
Business
Unveiling Ayugiri: Browns Hotels & Resorts sets the stage for a new era in luxury Ayurveda Wellness
In a captivating reimagining of luxury wellness tourism, Browns Hotels & Resorts proudly unveiled the exquisite Ayugiri Ayurveda Wellness Resort Sigiriya. This momentous occasion, celebrated amidst a vibrant and serene grand opening on the 6th of June, heralds a new chapter in the Ayurveda wellness tourism landscape in Sri Lanka. Nestled amidst 54 acres of unspoiled natural splendour, Ayugiri features 22 exclusive suites and stands out as the only luxury Ayurveda wellness resort in the country offering plunge pools in every room, rendering it truly one-of-a-kind.
The grand opening of Ayugiri Ayurveda Wellness Resort was an enchanting event, where guests were captivated by the melodies of flutists and violinists resonating through Sigiriya’s lush landscapes. As traditional drummers and dancers infused the air with vibrant energy, Browns Hotels & Resorts’ CEO, Eksath Wijeratne, Kotaro Katsuki, Acting Ambassador for the Embassy of Japan and General Manager, Buwaneka Bandara, unveiled the resort’s new logo, marking a significant moment witnessed by distinguished guests from the French Embassy, Ayurveda and wellness enthusiasts along with officials from the Sigiriya area, LOLC Holdings and Browns Group.
“Our strategic expansion into wellness tourism with Ayugiri Ayurveda Wellness Resort Sigiriya symbolises a significant milestone for Browns Hotels & Resorts. Wellness tourism has consistently outperformed the overall tourism industry for over a decade, reflecting a growing global interest in travel that goes beyond leisure to offer rejuvenation and holistic well-being. By integrating the timeless wisdom of Ayurveda with modern luxury, we aim to set a new standard in luxury wellness tourism in Sri Lanka. Whether your goal is prevention, healing, or a deeper connection to inner harmony, Ayugiri offers a sanctuary for holistic well-being” stated Eksath Wijeratne.
Ayugiri encapsulates the essence of life, inspired by the lotus flower held by the graceful queens of the infamous Sigiriya frescoes. Just as the lotus emerges from the murky depths, untainted and serene,
Ayugiri invites guests on a journey of purity and rejuvenation, harmonised with a balance of mind, body and spirit, the essence of nature, echoes of culture and the wisdom of ancient Ayurvedic healing.
HNB General Insurance, one of Sri Lanka’s leading general insurance providers, has been honored as the Best General Bancassurance Provider in Sri Lanka 2024 by the prestigious Global Banking and Finance Review – UK.
The esteemed accolade underscores HNB General Insurance’s unwavering commitment to excellence and its outstanding performance in the field of bancassurance. Through dedication and hard work, the HNB General Insurance team has continuously endeavored to deliver innovative insurance solutions, cultivate strong relationships with banking partners, and provide unparalleled service to customers nationwide. This recognition is a testament to the team’s dedication and relentless pursuit of excellence in the bancassurance business.
“We are honored to receive this prestigious award, which reflects our team’s tireless efforts and dedication to delivering value-added insurance solutions and exceptional service through our bancassurance partnerships,” said Sithumina Jayasundara, CEO of HNB General Insurance. “This recognition reaffirms our position as a trusted insurance provider in Sri Lanka and motivates us to continue striving for excellence in serving our customers and communities.”
US sports envoys to Lanka to champion youth development
Rahuman questions sudden cancellation of leave of CEB employees
