First Capital Research SRI LANKA

Analyst: Vidushika Perera Initial Public Offer

JAT HOLDINGS LIMITED

IPO Price – LKR 27.00
Company Profile JAT Valuation IPO Details
JAT Holdings Limited (JAT) is a dominant player in the Sri Lankan wood P/E 31 March FY17 FY18 FY19 FY20 FY21 Issue Price : LKR 27.0
coating, decorative paints, chemicals & brushers and furnishing Earnigs (LKR 'Mn)
solutions market segments with presence of over 28 years. JAT has the Amount to be Raised : LKR 2.2Bn
Revenue 5,783 5,447 6,547 6,296 5,360
market leadership in wood coating industry in Sri Lanka and Bangladesh Gross Profit 2,072 1,607 1,932 1,739 1,644 Offer for Subscription : LKR 1,506,996,900
securing market share of over 50% and 28% respectively, supported by
EBIT 1,110 693 1,054 837 685
the company’s partnership with global renowned brand ‘Sayerlack” by Offer for Sale : LKR 731,433,942
Net Profit 900 637 885 712 599
Sherwin-Williams Company. Selling Shareholder : Emerald Sri Lanka
Basic EPS (LKR) 2.0 1.4 1.9 1.6 1.3
JAT is currently dispersed across 7 overseas markets and operating YoY % Growth 3% -29% 39% -19% -15% Fund I Limited (by NDB
through 5 local and overseas subsidiary companies along with a joint Valuations Zephyr Partners)
venture established in Sri Lanka. JAT wields a product portfolio consist
PER (x) 13.7 19.4 14.0 17.3 20.5 No. of Shares Offered : 55,814,700 Ordinary
of more than 17 brands which represent both own brands and exclusive
PBV (x) 3.7 3.2 2.7 2.5 2.3 (Offer for Subscription) Voting Shares
global brands.
DY (%) 2% 1% 3% 2% 2%
No. of Shares Offered : 27,090,146 Ordinary
Future Outlook
Peer Group Comparison (Offer for Sale) Voting Shares
JAT intends to extend its research and development capabilities
through buildout of a new state-of-the-art R&D lab to improve quality Share Price 4 Quarter NAVPS
P/E P/BV
Issue Open Date : July 20, 2021
06.07.21 Trailing EPS 31.03.2021
of the product portfolio and to achieve cost savings and production (x) (x)
(LKR) (LKR) (LKR) Purpose of the issue
efficiencies in order to lie ahead of the competition by securing more ALUM 13.0 1.40 4.97 9.3 2.6
demand from the existing and potential markets in midst of the revival ACL 39.4 4.97 51.06 7.9 0.8 • Investment in enhancing the existing R&D facility to
in economic activities, thereby improving GP margin. RCL 35.2 5.54 27.44 6.4 1.3 a fully fledged state-of-the-art facility (LKR 433.2Mn).
JAT is also in the process of automating its production functions via
LWL 60.9 10.84 53.37 5.6 1.1
• Setting up a manufacturing facility in Bangladesh
TKYO.N 65.0 13.53 54.82 4.8 1.2
investing in advanced machinery for its existing manufacturing plants 11.76
(LKR 515.4Mn).
JAT - Pre IPO 27.0 1.32 20.5 2.3
which also supports capacity enhancements. Further, JAT aims to build JAT - Post IPO 27.0 1.17 13.42 23.0 2.0 • Marketing and development initiatives for “White by
new manufacturing plants in Bangladesh and East Africa to Materials Sector 5.5 1.9 JAT” paint brand (LKR 256.9Mn).
accommodate for heightened demand expectations. Capital Goods Sector 17.2 1.0
• Setting up a manufacturing facility in East Africa (LKR
Market 10.5 1.1
With the establishment of its position in the furnishing solutions 301.5Mn).
segment by securing iconic real estate projects such as Altair, Luna Revenue Composition
Tower, Ritz Carlton, etc., JAT is expected to further dive into the Issue Allotment Structure
furnishing market to exploit the benefits of emerging real estate and Revenue FY20 FY21 YoY
construction projects induced by the shift in lifestyles and improved (LKR 'Mn) % % Applicant Category Allocation of IPO (%)
living standards coupled with the anticipated economic growth. Local Sales 3,528 56% 4,554 85% 29% Uni t Trus ts 10.0%
Export Sales 1,741 28% 618 12% -64%
JAT seeks to venture into untapped overseas markets in the South Asian Reta i l Indi vi dua l 40.0%
Project Sales 1,027 16% 187 3% -82%
region in the short term and expects to capture the Australian market Non-Reta i l 50.0%
6,296 5,360
while also thickening its presence in the existing local and overseas
100.0%
markets.
 SRI LANKA
First Capital Research Initial Public Offer
Analyst: Vidushika Perera

Appendix 1 Appendix 2
Summarised Audited Statements of Financial Position Summarised Audited Income Statement
Statement of Financial Position FY17 FY18 FY19 FY20 FY21 Income Statement FY17 FY18 FY19 FY20 FY21
Year ended 31st March (LKR 'Mn) Year ended 31st March (LKR 'Mn)
ASSETS Revenue 5,783 5,447 6,547 6,296 5,360
Non-Current Assets Cost of Sales (3,711) (3,840) (4,616) (4,557) (3,715)
Property, Plant and Equipment 1,085 1,316 1,487 1,435 1,531 Gross Profit 2,072 1,607 1,932 1,739 1,644
Intangible Assets 81 20 24 24 22 Other Income 57 39 19 75 53
Selling and Distribution Expenses (684) (582) (591) (667) (711)
Right of Use Asset - - - 44 26
Administrative Expenses (334) (371) (306) (311) (301)
Investment Property - - 135 137 142
Operating Profit 1,110 693 1,054 837 685
Other Investment 15 15 20 2 3
Finance Income 15 12 17 47 43
Deferred Tax Asset 26 6 - - -
Finance Cost (99) (118) (129) (133) (83)
Consumable Biological Assets 16 26 34 49 58
Gain / (Loss) on Disposal of Subsidiary 4 (1) - - -
1,222 1,384 1,700 1,693 1,782
Profit before Tax 1,032 587 942 751 644
Current Assets Income Tax Reversal / (Expenses) (129) 48 (60) (44) (44)
Inventories 1,423 1,631 1,434 1,782 1,563
Profit for the Period 902 635 881 707 600
Income Tax Recoverable - 70 69 51 11
Non-Controlling Interest (2) 2 3 5 (2)
Trade and Other Receivables 2,483 2,650 3,062 2,989 2,836 Profit Attributable to Equity Holders 900 637 885 712 599
Advances and Prepayments 245 81 365 84 86
Amount Due from Related Parties 70 54 47 60 71 Appendix 3
p
Short Term Financial Assets - - - - 214
Structure of JAT Group
Cash and Cash Equivalents 251 366 317 497 494
4,471 4,852 5,293 5,464 5,276 Brush Master (Private) Limited - 55%
Total Assets 5,693 6,236 6,993 7,157 7,058
Manufactures paint related brushes under the Brush Master brand.

EQUITY
Worldwide Rasins & Chemicals (Private) Limited - 100%
Stated Capital 919 919 919 919 919
Retained Earnings 2,455 2,939 3,674 4,073 4,451 Provides raw materials to the paint industry.

JAT HOLDIINGS LIMITED

Reserves 4 (27) (24) (24) (25)
Shareholders' Equity 3,378 3,831 4,569 4,968 5,345 JAT Exports (Private) Limited - 100%
p1
Non-Controlling Interest 3 (0) (1) (6) (4)
Export of locally manufactured wood coatings and related products to Bangladesh market.
3,381 3,831 4,568 4,962 5,341
LIABILITIES
Non-Current Liabilities JAT Exports DMCC - 100%
Interest Bearing Loans and Borrowings 231 232 62 37 39
Deferred Tax Liability - - 19 19 - Incorporated in UAE. Carries on offshore trading of wood coatings to Bangladesh,
Retirement Benefit Obligation 24 34 36 46 57 Maldives, East Africa, etc.
255 266 117 102 97
Current Liabilities JAT Global (Private) Limited - 98.37%
Trade and Other Payables 1,275 1,373 962 1,206 1,127
1
Importing, trading and distributing JAT and Sherwin Williams products to the Indian retail,
Amount Due to Related Parties 18 20 1 0 0
industrial market and distributors.
Interest Bearing Loans and Borrowings 716 745 1,345 886 493
Income Tax Payables 48 - - - -
2,057 2,139 2,308 2,093 1,621 JAT-Sino Agri (Private) Limited - 50%
Total Equity & Liabilities 5,693 6,236 6,993 7,157 7,058 A Joint Venture, engage in agriculture and agriculture related activities.
 First Capital Holdings PLC SRI LANKA
First Capital Research No. 02, Deal Place, General: +94 11 2639 898 Initial Public Offer
Analyst: Vidushika Perera
Colombo 03. Fax: +94 11 5736 264

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