SHL.N0000 (Softlogic Holdings PLC)

[yellow knifeTop contributor]

Softlogic is a relatively new entrant to Holding company category but could stand par with many centuries old companies. As pioneer and Chairman Ashok Pathirage states in annual report " a long term view is essential to sustainable growth". Company which started in 1991 and was into trading business. Well known branded electronic items like Nokia phones and Dell computers were genuinely sold by them. When duplicates and smuggled items were cheaply available of the same brand Softlogic insisted on genuine business and proved the success of being genuine.

Revenue-wise Softlogic remain up and above Aitken Spence which is a very old company. Aitken Spence remains flat and stable where SHL is up and maintain continuous momentum.

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[yellow knifeTop contributor]

However Profti-wise Aitken Spence shows more prudent than SHL

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[yellow knifeTop contributor]

Revenue was continoulsy growing and reached 40 Billion mark.

Annual report 2015 states " Consumer and investor confidence recovered in 2014 due to
1 low inflation and
2.interest rates and
3. the exchange rate remaining stable. "

Since the exchange rate is now unstable it may have a negative  impact on branded genuine product sellers.

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[yellow knifeTop contributor]

EPS is not consistent and is not attractive at current market price levels

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[yellow knifeTop contributor]

Since listing company always maintained a figure of higher market price than net asset position.

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If you compare above with Hayley's the elephant in Holdings, its Market value was often lesser than Net Asset Value

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[yellow knifeTop contributor]

Debt to Equity ratio was always kept high. Having good contacts with finance sector may be one reason. In addition to that aggressive acquisitions being a strategic move also cause this situation.

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[yellow knifeTop contributor]

Company consist of 6 different areas

1. Information & Communication Technology

The company takes competitive advantage by being authorized agent for best brands like Dell, Nokia, Samsung etc.

2. Retail

owns 93.39% of Odel, and opened stores in Liberty Plaza for Pepe Jeans, Giordano . Burgher King is added to restaurant line

3. Healthcare Services

Central Hospital, Asiri Surgical  Hospital  and another hospital in Kandy scheduled to open in 2018 .

4. Financial Services

Softlogic Finance, Assian Alliance Insurace and Softlogic Stockbrokers

5. Automobiles

The automobile range does not include attractive brands to SL market. King Long buses are newest addition. Ford models are not that much attractive in SL

6. Leisure

Centara Ceysand Resort started operations in 2014

[yellow knifeTop contributor]

When we comparing South Korea and Malaysia we found that all Malaysian leading businessmen are similar to SL business community.

Malaysian and Sri Lankan business community seek more easier means as business :  Plantation , Tourism and Trading commodities and Assets (real estate ). They have easy access to banks and finance. Yet export orientation and manufacturing is what lacks in these big giants of SL.

[yellow knifeTop contributor]

" Ode to My Father " is nice South Korean movie where you can ride a roller-coaster of emotions. Its about a young boy who run-away from North Korea and become a owner of a small sales outlet of his Aunt. He never give-up the trading business as his father has promised to meet him in the shop ( who must have died in North Korea).

His sons often argue

" Why don't you sell your stall as no one is interested in buying Japanese and American products ?"

This is the trend we are yet to see..

However our poor forex is now forcing us to get into export and manufacturing sooner..

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[BackstageTop contributor]

Consessions for branded goods were mentioned by FM, to make SL a shopping paradise. So....
What do we know about Ashok Pathirage ? Not much has been written about the man and his method.

BTW, observing the many comparative charts posted by you on many threads, I have noticed Hayles standing above the crowd. Albeit silently.

[yellow knifeTop contributor]

Back Stage

Even for me Hayleys is the most attractive and since the day I noticed and started buying its price started to drop.

If you read Hayl.N0000 thread today and a seperate thread by Nihal , it shows the most accurate investor Dammika is slowly by clearly buying Hayleys. He has increased his stake substantially since the last published report and now enjoy above 50%.

The graphs often easy to understand and just give us ideas.

[HAL9000Top contributor]

SOFTLOGIC HOLDINGS PLC
Company ID: - SHL
Date of Announcement: - 24.May.2016
Rate of Dividend: - Rs. 0.50 per share / Final Dividend
Financial Year: - 2015/2016
XD: - 02.Jun.2016
Payment: - 13.Jun.2016

Softlogic declares a generous dividend when compared to its EPS. In a company with huge debt this is not a good strategy I guess !

[yellow knifeTop contributor]

You have raised a very valuable question Hal..Why does a company with heavy debt pay dividends ?

1. The owner of SHL Ashoka Pathirage owns 41.64% or 324,358,030 shares and 50 cents mean Rs. 162,179,015.

2. Yet the problem is something economists are really interested and do research.

Hal if you are really keen on further studying the dividend and debt refer page 290 of "Against the God "..

Let me just add a paragraph of that...

Why corporations pay dividends has puzzled economists for a long period. Why do they pay their assets do stockholders, especially when they themselves are borrowing money at the same time ?

From 1959 to 1994 non financial corporations in US borrowed more than $ 2 trillion while paying out dividends of $ 1.8 Trillion.

They could have avoided nearly 90% of the increase in their indebtedness if they had paid no dividends at all.

************************************

So  you are not the first one to raise this question and SHL.N0000 is not the only company that do so...

[HAL9000Top contributor]

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Revenue increased significantly, despite higher interest expenses, SHL showed decent bottom line growth

[Danidu]

Corporate Research Report of "Softlogic Holdings PLC" by Asha Phillip Securities.


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[smallvilleTop contributor]

A counter to watch..

[HAL9000Top contributor]

Slowly passing 14

[HAL9000Top contributor]

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Audited financial report is availble. SHL managed to improve its revenue massively. Now it is staggering 56 billion. In last month Echelon magazine interview, Ashok Pathirage mentioned that the SHL revenue target for the next year is 70 billion. According to the trend this is not impossible. It might reach the JKH revenue sooner. If debt burden eased in next few years, SHL could report massive bottom line growth considering their lucrative business sectors. According to Pathirage he is comfortable with the current debt position. He believes in case of a crisis, he can sell off one single entity like ODEL, one ASIR hospital or movenpick hotel etc and get rid of all debt. SHL has been a disappointment for investors over past 4 years post IPO, but future could be different. if we get in right time, SHL could be a  possible multibagger in coming years.

[HAL9000Top contributor]

Reached 15.00

[Future123Active Member]

A very good call HAL.

SHL has great potential. If they can reduce their debts, then this will have a big run.

Reached 15.00

[yaka]

I was keenly watching this.. but I see they rally and every time again fall to 13 level. so I did several trade with small margins.
and in their statement revenue increased basically for other operating income. is that their other subsidiaries? or what?

[Ethical TraderTop contributor]

Just an observation.

Latest financial report of SHL shows an improvement in its EPS. This is a good news for those who bought at higher prices.

It is very strange that the price of this share started a run one week prior to the release of the financial statement.

?Was there a leak or some one is using inside info to profit. Raj Rajarathnam, a Sri Lankan domiciled in USA, did this but in jail right now for that offense.

[EBHRAHIMCANADA]

Well come all the members in this sentiment and thanks for all who posted in this head
may I just post my current view on SHL ?
It looks fundamentally sound group and had massive run towards 27rs from 12rs mainly triggered by PP & RI @ 17rs
(I also got subscribed for RI and still holding)
on friday we saw good interest and traded more than 2 million
So I expect to see run in from CMP ( 21.40rs) to test 25 level in coming weeks
it is compulsory to do your own Analysis before whatever buying or selling
Good Luck Guys
Thank you
Warmly well come forum members views

[EBHRAHIMCANADA]

Continued foreign buying @ top of the list

[ruwan326]

Macroeconomic crisis in Oct-Dec. quarter triggers Rs. 327 m loss at Softlogic
Feb 20, 2019
​​​​​​​
A macroeconomic crisis-filled third quarter October to December 2018 has triggered a Rs. 327 million loss at Softlogic Holdings PLC, as against a profit of Rs. 953 million a year earlier, whilst for the first nine months the Group post-tax profit managed a 29% gain to cross Rs. 2 billion mark.

Softlogic Chairman Ashok Pathirage said the Group’s operating environment in the third quarter of FY19 was assailed by the sudden and steep depreciation of the rupee, particularly, affecting the retail imports and the leisure sector which has dollar-denominated borrowings. Furthermore, the 100% cash margin imposition, which affected the retail imports, and 200% margin for motor vehicles and motorbikes, disrupted cashflow timings leading to increased working capital requirements. 

“This coupled with increasing interest rates triggered by poor market liquidity and rising Fed rates impacted cost of financing for the Group which dampened the quarter’s performance,” he said.

More- http://www.ft.lk/front-page/Macroeconomic-crisis-in-Oct-Dec--quarter-triggers-Rs--327-m-loss-at-Softlogic/44-673155