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Dec 11, 2007 (LBO) – Fitch Sri Lanka has confirmed John Keells Holdings (JKH) national ‘AAA (lka)’ rating with a stable outlook, but expressed concern that most of its cash is generated by bunkering and container operations. “JKH’s ratings reflect its strong cash flow generation and increasing earnings diversity,” Fitch said.

But the rating agency said it is “concerned” that most of its operating cash came from bunkering and its container terminal handling operations at the port of Colombo.

Despite this, Fitch expects JKH’s property development business and its resorts in Maldives to make higher contributions to JKH’s cash flow generation from 2008.

“The deteriorated security situation in Sri Lanka has affected the earnings of JKH’s Sri Lankan resorts, including the security threat to the port of Colombo, as a sizeable proportion of the company’s earnings flow out of port-related activities,” Fitch said.

Fitch says there is a potential for margin from its marine fuel sales to thin as increased competition is expected.

Sales growth at its container terminal handling operations, South Asia Gateway Terminals, which is 33.75 percent owned by JKH, was also expected to slow as the terminal reaches capac