HELA APPAREL HOLDINGS - HELA.N0000 (CSE/Colombo Stock Exchange)

6 may

Strategy

Expected recovery in Garment & Textiles Industry & HELA's 180-degree turnaround strategy implementation

- Cost Reductions
- Capacity optimization (maintaining demand base capacity)
- Benefits from acquiring of Focus Brands Limited

Historical Facts

* IPO Price - LKR 15.00
* IPO Debut price - LKR 22.00
* HELA got affected from garment industry crisis during CY 2023 (Supply Glut)
* 52 Week High/Low LKR 8.60/LKR 4.80

Technical Analysis (Chart Patterns)

* If HELA managed to cross LKR 6.20/6.30 range, if will make a Cup & Handle pattern breakout
* Interestingly from LKR 6.40 to LKR 8.00, there is a considerable VRPV Gap which can provide a volatile move
* 50/100 MA Golden Cross is about to happen

Potential Pattern Targets

* Previously broken multi week descending wedge target LKR 8.00
* About to break C&H pattern pointing towards LKR 8-8.20 range

Fundamentals & business outlook

* Sri Lanka's Garment Industry start recovering during Q4 2022/23
* In the month of March 2024 Sri Lanka's garment & textile exports recorded a YoY growth 6.66%, after > 12-month negative growth period
* HELA's GP margins improved by 8.4% during Q3 (during Dec Q)
* OP & NP margins improved 580 & 220 bps
* Notable cost controls are visible in managing distribution/administration expenses
* One-off value gain from FOCUS acquistion is expected to be recorded in the 4th Quarter results