Millennium Housing Developers Limited

Initial Public Offering LKR6.0

Company Outlook
Turnaround Story

YEAR END 31ST MARCH Revenue (LKR mn) Net Profit (LKR mn) Pre-IPO EPS Adjusted EPS (LKR) YoY % Growth PER (x) PBV (x) Div Yield (%) NAVPS Adjusted DPS (LKR) Div Payout

FY10 151 -65 -0.5 -0.4 17% N/A 2.7 2.2 0.0 0%

FY11 218 15 0.1 0.1 -123% 61.0 2.9 2.1 0.0 0%

FY12 320 31 0.3 0.2 110% 29.0 2.5 2% 2.4 0.1 48%

FY13 561 97 0.8 0.6 212% 9.3 2.0 2% 3.0 0.1 20%

FY14E 662 99 0.7 2% 9.1 1.8 4% 3.4 0.2 33%

KEY DATA
Issue Price (LKR)
Issued Share Capital (Shares) - Pre-IPO Post IPO - Post IPO - 1st tranche - Post IPO - 1st & 2nd tranche Public Issue - Post IPO - 1st tranche - Post IPO - 1st & 2nd tranche

6.00

118,681,320 134,681,320 150,681,320 11.88% 21.24%

January 2014
Analyst: Dimantha Mathew

Millennium Housing Developers Limited (MHDL) is a 77% owned subsidiary of Nation Lanka Finance PLC. The company which was incorporated in 1998 was formally known as Ceylinco Developers Limited. MHDL pioneers in Mega Township Development projects with the emphasis to target the needs of the low and medium income earners. The mega township projects run under the companys flagship brand Millennium City.

Pre-IPO Shareholding Nation Lanka Finance Anilana Hotels & Properties Arrow International WBBCJ Fernando Public - Existing Post-IPO Shareholding Nation Lanka Finance Anilana Hotels & Properties Arrow International WBBCJ Fernando Public - Existing Public - IPO

77.31% 10.05% 5.06% 0.00% 7.58% 60.89% 7.92% 3.98% 0.00% 5.97% 21.24%

Millenium Housing Developers Limited

100% Millenium Housing Limited 100% Ceylinco Housing Corporation Limited 100% Ceylinco Construction Company Limited 100% Millenium Villa Housing Development Limited

Millennium Housing Limited: Currently operates in Ja-Ela and Piliyandala properties and is responsible for constructing Heartland category of houses. Millennium Villa Housing Development Limited: Company is responsible for Villa branded houses that were introduced in the Ja-Ela property. Ceylinco Housing Corporation Limited: No commercial operations and commenced liquidation process in 2012. Ceylinco Construction Company Limited: The Company is in the process of being re-activated as the construction arm of the group.

Projects

Completed at Present

Housing - Athurugiriya Housing - Ja-Ela Terrace - Athurugiriya Housing - Homagama Villas - Wattala

Subsequent to Utilization of Year of the Proposed IPO Funds Completion Increase No. of Units LKR 'Mn 1,598 1,602 2014 186 222 50.00 2017 17 44 2017 60 52.00 2018 180 2018 1,801 2,108 368 25 393 418 34 51 503 192 2,803 2015 2015 2016

Millennium Housing - Ja-Ela Millennium Housing - Piliyandala Millennium Housing - Seeduwa

45.00

Millennium Villas - Ja-Ela Total

42 2,236

37.16 184.16

2017

Year
Paradis Olympus

House Type
Tulip Heartland Villa

Total 58 18 25 44 92 237 3 4 10 4 7 28 80 32 45 62 118 337

FY09 FY10 FY11 FY12 FY13

4 5 2 6 4 21

9 2 6 4 10 31

6 3 2 4 5 20

Ncreasing Housing Units Sold

140 120 100

YEAR END 31ST MARCH Revenue (LKR mn) Net Profit (LKR mn) Pre-IPO EPS Adjusted EPS (LKR) YoY % Growth PER (x) PBV (x) Div Yield (%) NAVPS Adjusted DPS (LKR) Div Payout

FY10 151 -65 -0.5 -0.4 17% N/A 2.7 2.2 0.0 0%

FY11 218 15 0.1 0.1 123% 61.0 2.9 2.1 0.0 0%

FY12 320 31 0.3 0.2 110% 29.0 2.5 2% 2.4 0.1 48%

FY13 561 97 0.8 0.6 212% 9.3 2.0 2% 3.0 0.1 20%

FY14E 662 99 0.7 2% 9.1 1.8 4% 3.4 0.2 33%

80
60 40 20 0 FY09 FY10 FY11 FY12 FY13 Source : Company Prospectus

Following the downturn in FY10 the MHDL Groups growth has been on an upward trend backed by increasing number of housing units sold each year recording a CAGR of 5.4% FY10-13. We expect a further 6% growth in housing units in FY14E. However with competition in the industry we expect NP margins to be around the 15% mark compared to 17% in FY13.
We expect Millennium Housing Developers to record earnings of LKR99mn for FY14E. Inclusive of the new shares in issue at LKR6.0, the company would be trading at 9.1x FY14E earnings.