TJL's March 2012 recurring profit came in at LKR 780mn 12% above CAL's LKR 699mn forecast on a higher than expected EBIT margin of 6.7% (vs CAL's 5.8%).
However, the full impact of the margin increase did not flow down to the bottom-line due to a higher than expected finance charge of LKR 167mn (vs CAL's LKR 88mn) consisting mainly of a non-recurrent currency translational loss.
We are encouraged by TJL's margin improvement and continued commitment to a minimum 33% dividend payout. CAL re-iterates a strong BUY on a potential combined return of c.42% based on a c.35% price upside and a c.7% dividend yield on the back of FY13E EPS of LKR 1.5.
source - CAL Research
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