Financial Times

CT Smith: JKH shares may rebound
 

After shares of John Keells Holdings (JKH) slipped on Tuesday along with some other companies, bringing the market down, a report by CT Smith Stockbrokers (Pvt) Ltd says it expects the share price to rebound in the medium term, given expectations that JKH management will take appropriate measure to provide reassurance to investors after the LMSL Supreme Court ruling. At Tuesday's close, JKH recovered to close at Rs.85.

The CT Smith report stated that the share has traditionally traded at a higher premium but given the negative investor sentiment following the Supreme Court ruling, the company's share price has fallen 24% in the past three months, underperforming the broader All Share Price Index (ASPI) which has fallen 4 % during the same period. The report further stated that LMSL vacated the land by September 12, and as per an announcement by the company, it will continue operations using a combination of floating storage and the shared Common User Facility at the Colombo Port. LMSL has also engaged a tanker on a long term charter for procurement and storage of bunker fuel. LMSL would continue to provide bonded storage and delivery services of marine lubricants on behalf of the lubricant manufacturers represented by LMSL.

The report also mentioned that further to its July 21, the Supreme Court directed on September 8, that LMSL deposit Rs.153 million (as calculated by the Commissioner of Labour), into a separate bank account, in respect of the current employees who have made application for terminal benefits to the Commissioner. The deposit is to meet any ultimate order that will be made by the Commissioner of Labour in this regard and LMSL has made the deposit as required.

CT Smith expects LMSL to post a lower than previously estimated profit in FY09E, estimated to be Rs.200 million, given lower margins in off-shore bunkering, the additional expenditure incurred due to engaging a tanker on a long term charter and more competition with all bunkering license holders to use the Common User Facility.

The Department of Inland Revenue (IRD) has intimated an assessment of the tax liability of Rs.750 million, based on applying a normal tax rate of 35%. LMSL's view, however, is that the supply of bunkers to foreign vessels is an export and therefore income is liable for tax at 15%, and at this rate, the additional tax liability is Rs.384 million against the IRD intimation. A further Rs.137 million of income tax at 15% is due for FY08.

 

Top to the page  |  E-mail  |  views[1]
 
Other Financial Times Articles
US crisis: Lanka spared
Harry dominates DCSL annual meeting
SLIC gets top AAA rating
Hunter’s director resigns - Correction
CCC meeting on JKH on Sept. 25
Mobile tariff war hots up
PBJ continues at SriLankan Airlines
PBJ finally steps down- Comment
Food and oil hikes to continue in Asia this year-ADB
Solving office problems through Management Theatre
Kandy’s Sinhaputhra Finance to list in the CSE
Consumer says rights violated over supermarkets charging for bags
Tilak gets long service award from AMW
LMSL to appeal Rs.375 million in taxes
CT Smith: JKH shares may rebound
LMSL vacates sans Rs20 mln worth of oil
JKH sharply down 50% year-on-year to Sept. 15
Business Ethics – my foot! - Letter
Ronnie-Deva’s intimidating presence at recent CCC adjudication - Letter
Extending age of public sector retirement, welcome development

 

 
Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2008 | Wijeya Newspapers Ltd.Colombo, Sri Lanka. All Rights Reserved.