Softlogic Holdings Limited’s [SHL: LKR29.0] origin lies in the Information & Communication Technologies (ICT) industry, where it started operations in 1991 as a small software development company by providing hardware and software solutions to varying segments of the Sri Lankan market. Softlogic Group has since expanded into six key sectors of the economy namely, ICT, Retail, Automobile, Finance, Travel & Leisure and Healthcare. The main contributors to Softlogic¡¦s revenue and PBT as at 31st December 2010 are Softlogic Communications (32%) and Uni Walkers Distributors (27%) respectively.
The proceeds from the IPO are to be utilized for debt retirement and to partially fund the cost of the issue. SHL, having had aggressive ambitious growth since initiation, can be expected to continue its success story further as the IPO would open up avenues of funds due to minimal gearing. With its robust internally generated funds and leveraging on the group balance sheet strength post IPO, Softlogic expects to commence the construction of the Movenpick hotel in June 2011 on the group owned 90 perch prime land located in Colombo 03.The infrastructure drive and telecommunication enhancement in the country also paves way for SHL to further grow in the North, East and Southern regions. Hence, the group is focusing on increasing its outlets from the current 75 stores, to 250 stores island wide by the end of 2012.
SHL’s effective holding at 51.69% on Asiri Hospitals Holdings PLC will strengthen the balance sheet by FY12.
Having this investment¡¦s glory in mind coupled with the curbing debt levels and consolidation of Asiri group results, we have forecast on a provisional basis that SHL would report LKR2, 252.0 mn FY12E and LKR 2,524.3 mn FY13E. Thus, the share would trade at a forward PER of 9.7X and 8.9X respectively.