Expolanka Holdings PLC delisting proposal receives EGM approval

• EGM votes: 80.84% in favour, 19.16% against

Expolanka Holdings PLC delisting proposal received approval at the Extraordinary General Meeting (EGM) held on March 27. The parent company, SG Holdings, spearheaded the initiative to delist Expolanka Holdings PLC from the Colombo Stock Exchange, offering an exit price of Rs. 185 per share.

The decision received substantial support, with resolution one securing 5,138 votes in favour (80.84 percent) and 1,218 votes against (19.16 percent) from a robust turnout of 6,356 votes comprising both proxies and shareholders. 

Similarly, the second resolution was met with widespread approval, with 5,129 votes (81.12 percent) in favour and 1,194 votes (18.88 percent) against, out of a total valid vote base of 6,323 from proxies and shareholders in attendance.

With the delisting process approved, Expolanka shares will cease trading on the Colombo Stock Exchange, removing the largest listed company out of the market.

This strategic move to delist Expolanka Holdings PLC comes against the backdrop of recent financial setbacks experienced by the company. With a forward-looking vision aimed at focusing on its core operations and expanding globally, the delisting decision is poised to yield substantial economic benefits.

Forecasts indicate a potential inflow exceeding US$ 200 million after the delisting proceeds, which is anticipated to boost the stock market. The delisting is set to inject liquidity into the domestic equity market as shareholders of Expolanka Holdings PLC receive an influx of capital presenting an opportunity to reinvest a part of the entirety of their proceeds in alternative equity options. This anticipated reinvestment could act as a catalyst for another market upswing as investors seek out promising stocks.

Despite its esteemed legacy in Sri Lanka’s freight forwarding industry, Expolanka has faced recent financial setbacks, including four consecutive quarters of losses. This downturn has led to a decrease in Net Asset Value Per Share (NAVPS) from Rs. 82 to Rs. 66, with further reductions anticipated in the next six months. At the offered price, the group’s trading multiple of 3x NAVPS appears relatively high compared to the CSE average PBV multiple of 1x.

One of the primary challenges confronting Expolanka is the reduced yield per kilogram due to the resurgence of passenger flights, which has restored belly capacity primarily designated for cargo transport. This shift in the aviation landscape has impacted revenue streams, particularly with the diminished importance of charter flights during the pandemic.

Additionally, Expolanka has experienced a surge in fixed overhead costs, exceeding reported revenues during the last quarter of 2023. Concerns have arisen regarding potential revenue reductions in LKR terms, coupled with currency translation risks due to the recent appreciation of the Sri Lankan Rupee against the US Dollar.
While disruptions in the ocean shipping industry, triggered by Houthi rebels in the Red Sea, have contributed to higher freight rates, these escalations are viewed as temporary.

Expolanka, a diversified conglomerate with interests spanning logistics, leisure, and ventures, maintains a global presence in 20 countries and over 50 cities. As of March 2024, it retains its position as the largest company by market capitalisation on the Colombo Stock Exchange.