Aug 21, Colombo: Fitch Ratings has affirmed an 'AAA(lka)' rating of Sri Lanka's conglomerate John Keells Holdings (JKH) with a National Long-Term rating at a Stable Outlook.
JKH, a holding company with ownership of diverse operating assets in transport, leisure, consumer foods manufacturing and retail, financial services, and information technology, listed on the Colombo Stock Exchange in 1986 and has the highest market capitalization.
"The affirmation reflects the continued strong dividend income from JKH's core investments and its subsequent low financial leverage," Fitch Ratings said in a statement released Monday.
JKH continued to report strong earnings growth across its core subsidiaries this year, the global rating agency said.
The leisure and consumer foods (including retail) sectors improved by refurbishments of many of JKH hotels and resorts as well as capacity additions in both segments contributed to the most to increase in revenues.
The performance of the transport and leisure sectors in particular also benefited from the sharp depreciation in the local currency during the latter part of the fiscal year, Fitch said in its statement.
The revenue increase was also supported by a conducive domestic macroeconomic environment throughout most of the year.
However, Fitch expects JKH's group performance to moderate to an extent in FY13 compared with FY12, in part due to higher domestic inflationary pressures.
According to Fitch, the main risk among JKH's medium-term risks is the introduction of a new deep-water container terminal at the Port of Colombo which will increase the container handling capacity resulting in profit-margin pressures and the market share erosion of existing companies, including JKH's 42%-owned associate South Asia Gateway Terminals (SAGT).
Fitch Press Release