Saturday, July 31, 2010

Return From the Shares Listed in Colombo Stock Exchange Sri Lanka

(S.L.S.Picks) -We have selected following companies listed in the Colombo stock exchange which were represented top price gainers list for the past week (26/07/2010 to 30/07/2010) to give you a basic idea of the value of investing in shares at Colombo Stock Exchange, which was rated as Asia's best performing stock market & World's second best performing stock market in year 2009. Colombo Stock Exchange is the best performing stock exchange in Asia so far for year 2010.

SEE THE RETURN FROM BELOW MENTIONED SHARES. THIS IS WITHING A PERIOD OF ONE WEEK.


THINK & INVEST NOW IN COLOMBO STOCK EXCHANGE-SRI LANKA STILL YOU ARE NOT LATE.

Stock
   Opening Price   (Rs)
    Closing Price (Rs)
Week On Week Change
                   %                                    
WAPO
800.00
1199.00
49.88
GREG (W0002)
44.00
64.75
47.16
GREG (W0003)
42.00
60.25
43.45
DPL
58.25
83.25
42.92
GREG (W0006)
41.50
58.75
41.57
GREG (W0001)
76.75
108.50
41.37
ONAL
46.00
63.50
38.04
BLUE (N)
5.00
6.75
35.00
CTCE
222.50
300.00
34.83
MSL
223.00
300.00
34.53

POSITIVE ECONOMIC FACTORS
  • Central Bank of Sri Lanka has forecast a 6.5 % economic growth for the country in year 2010.
  • Stable government to adopt consistent economic policies in the country.
  • The Economic growth in future is expected to be well supported by the development activities in the Construction & the Agricultural sectors as well.
  • Holding the International Indian film festival in Sri Lanka gave a much needed boost for the country's tourism sector.
  • Expected improved earnings  by the listed companies in future.
  • Approval of the  IMF third tranche loan facility.
  • Sri Lanka heads powerful G15 summit,consists of 18 developing countries,which includes India, Brazil, Malaysia,Iran, Mexico,Argentina, Chile etc.
  • Sri Lanka will host the next G15 summit t in year 2012.
  • Increased demand for Government Treasury Bonds by the foreign funds.
  •  Colombo has been selected to host several international business forums during this year. (Eg- Hotel show 2010, Asia Micro Finance forum 2010,Colombo Stock Exchange (CSE) is to hold a high-profile Investor Forum in Sri Lanka early 2011)
  •  U.S. State Dept lifts travel warning on Sri Lanka, will be a great boost for the Country as a whole & for the tourism industry.
  • Expected boom in Tourism Industry - Tourist arrivals to the country have increased by 42.3%. Arrivals has risen for the 12th consecutive month since the end of the war as per the Reuters reports.Earnings from the tourism industry has also up by 68.8% to $ 174.9 for the first four months as per the central bank data.
  •  Low interest rates, Low inflation & Expected high consumer spending in future are the key factors to be considered when investing in the Colombo Stock Market.Recent reduction of policy rates will boost the capital market activities further.
  • Removal of the war risk insurance for Sri Lanka by the London Underwriters as a result of the end of 30 year old civil war in the Country.
  • Price-to-earnings ratio to be around 15 times by end of year 2010 as a result of the reported high earnings and growth by the listed companies. The 1st quarter corporate results reflects an improvement of over 175% over the same period in year 2009.
  • Sri Lanka expects 600,000 tourists arrivals in year 2010.
  • Granting of tax concessions for imports such as Electrical items, Motor vehicles etc.
  • Budget targeted the long term economic growth of the country.
  • Sri Lanka has a strong backing from the future power house of the world. The BRIC countries.(Brazil,Russia,India,China)
  • Sri Lanka to host 20 - 20 world cup in year 2012.
  • Expected credit growth due to reduction in lending rates.
  • The contribution of the northern province to the GDP improved slightly to 3.3 percent in 2009 compared to 3.2 percent in 2008.The eastern province's contribution to total GDP edged up to 5.8 percent in 2009 compared to 5.6 percent in 2008."This was a positive development that may be observed since the ending of the 30-year old conflict.
  • International insurers have removed Sri Lanka from their cargo war insurance list paving the way for reduced import costs, removal of surcharges and increasing business confidence.
  • The Central Bank has design a credit guarantee scheme to strengthen liquidity positions of registered finance companies and specialized leasing companies will boost the cash flows of the sick finance companies.
  • Tourist arrivals to Sri Lanka increased by 48.4% during the first half of 2010 (January-June), with a total of 278,652 arrivals to the country in comparison to 187,729 arrivals during the same period last year (2009).
  • The number of arrivals for the month of June 2010 was recorded as 44,730, which was an increase of 47.9%. In June 2009, the number was 30,234, according to the latest figures released by the Sri Lanka Tourism Development Authority.
  • The government is planning to reduce taxes imposed on banks, financial institution and companies in a bid to generate investments required to push Sri Lanka’s growth rate to 8 percent in the short term and to double digits in the medium term.
  • Operations of Hambantota Harbor to be commenced withing couple of months & the anticipated revenue generation  through this project will be at high end.
  • Several new broker firms have planned to commence business at the Colombo Stock Exchange withing a very short time. Approval has been granted to one Indian company (Infoline) to start a brokering house in Colombo Stock Exchange. 
  •  Foreigners already get the taste of Colombo Stock Market. Net foreign buying for the last three weeks tops Rs 3.0b.n mark. Net foreign buying for the period 26/07/2010 to 30/07/2010 (last week) was Rs 359m.n. This is the first occasion that we witnessed a continuous inflow of foreign funds to the Colombo Stock Market after the eradication of the 30 year old civil war from our country in late May 2009.
 data - www.cse.lk

Friday, July 30, 2010

Colombo Stocks Up by 0.89 %: " GREG" & Dankotuwa performs well.

                      DAILY MARKET REVIEW

30/07/2010 (S.L.S.Picks) – Colombo Stock Exchange closed for the week today by registering record gains in both indices at the end of the today’s trading session.

All Share Price index was up by massive 42.08 points to close at 5161.18 & the more liquid Milanka Price Index was up by substantial 49.33 points to close at 5854.73

Turnover for the day was a healthy Rs 5.3bn.

Two weeks back we have clearly predicted the possible upturn in the market purely on the grounds of future growth potential of the shares listed in the Colombo Stock Exchange. We have published a special article “All Share Price Index - History performances & way forward “on 13th July, predicting the upward movement of the market. This has become a reality now & our expectation was market to reach 5000 barrier level well before end of the year 2010.Howev er Colombo Stock Market has passed the 5000 barrier level comfortably during the current week.

There were heavy retail buying as well as buying from the other categories such as High net worth individuals, Institutional investors, & foreign investors, for blue chip companies in the name of  John Keels Holdings & for Retail flavored Environmental Resources Investment (both shares & warrants) company together with the shares of Touchwood Company, Dankotuwa porcelain ,& Ceylon leather products etc.

Foreign participation was at a high level today. Foreigners were net buyers for the day  & the net foreign in flow for the day was Rs 609m.n. Foreigners purchased Rs 979m.n. Worth of shares & sold shares worth of Rs 370m.n.for the day.

Dankotuwa Porcelain continued to dominate the market today as well, together with retail friendly Environmental Resources shares & warrants. There were 9.8m.n Dankotuwa shares changed hands today.The share closed at Rs 83.25 up by Rs 21.25 for the day. Heavy volumes of Environmental Resources Investment share & Warrants changed hands during today’s trading session. All the “GREG” warrants were representing the top 10 gainers list for the day. Blue X (28m.n) & Blue N (13.6m.n) shares were heading the large volumes traded list as per the Colombo Stock Exchange data.

Oil Palm sector has recorded 6.16% growth & was the leading sector among all other sectors today due to the price appreciation of Bukit Darah Company, followed by Foot Ware & Textiles sector. IT sector was leading the negative performing sector’s list today.

There were 86 positive contributors as against 78 negative contributors for the day.

































CLOSER LOOK  
  • The quarterly results of the listed companies in the Colombo Stock Exchange for the MARCH – JUNE Quarter 2010 will be released to the market within couple of weeks ahead. The results released for JAN – MARCH 2010 quarter showed improved performances for the period. Earnings for this period has risen more than 150% & we expect better results from the listed companies for this quarter as well.
  • Foreign participation was at a moderate level & they were net buyers for this week as well. The Net foreign buying for this week was Rs 359m.n & net foreign inflow for the last three weeks was Rs 3.0b.n.  This is a positive sign for the Colombo Market as investors are waiting to see continuous foreign buying in to the Colombo stocks in future.
  • Active Institutional participation was encouraging & they were buying in to strong future growth counters that helped to boost the market activities during past couple of days.
  • Dankotuwa Porcelain continued its upward journey in today's trading session as well. The company share has performed well during the past weeks after they received staggering Rs 433.5m.n fresh capital infusion from a consortium comprising Sri Lanka's premier investment holding company - Environmental Resources Investment PLC (ERI) and Ceylon Leather Products Ltd (CLP)
  • Buying for JKH  at improved price levels always gives the signal of an upward market potential. JKH was closed at Rs 248.75. The share was up by Rs 5.00 for the day.
  • The credit guarantee scheme approved by the Central Bank of Sri lanka to strengthen the liquidity position of the registered finance companies may give the confident to investors to invest in the companies like The Finance Company, Nation Lanka Finance (Formerly Ceylinco Securities & Financials) etc. Investors are expecting a reduction of Vat from Banks in future as well, & there for we expect Banks to perform well in the medium to long term.
  • Demand for hotel stocks were at high levels during today's trading sessions on back of improved Tourist arrivals to the country after the end of 30 year old civil war.
  • We can expect DIALOG Telecom to perform well during medium to long term future on back of exceptional performance reported by the company. This is one of few companies in the market where foreigners can purchase in large quantities due to the high liquidity of its shares. 

 STOCKS TO WATCH
  • Distilleries Company (DIST)

We have done a comparison chart for DIST against ASI ,MPI, the sector DIST is representing the BFT. This clearly shows us  how DIST has under perform to the market & to the sector performance over the past 18 months period.

The  cancellation of the ICSL deal may be the major reason for this performance & the profitability of the company also reduced by almost 50% to Rs 318m.n as at 31/03/2010 (Three months) which reflects an EPS of Rs 0.91for the period.


 However we believe that the Govt bonds held with DIST (pending maturity) may give them the much needed boost for their bottom line.

DIST has interests to the Plantations through Balangoda  & Madulsima Plantations, Telecom sector through Lanka bell , Beverage sector through its core business activities,Power sector through Newly established Hydro power plant at Madulsima ,Insurance sector through Continental Insurance. etc. They have interests in the area of tourism as well through its Associate company Aitken Spence PLC.

DIST has significant share holdings in the leading blue chip companies listed in CSE such as HNB ,COMB, JKH,  DFCC Bank, ASIRI hospitals together with BBH,& LMF etc.

We expect DIST to perform well in the post war Sri Lanka in medium to long term.

  • Sampath Bank
Has reported exceptional performance for the 1Q 2010 ended 31/03/2010 by registering a profit of Rs 598m.n as against 397m.n reported for the same period in year 2009.This reflects a profit growth of 50.6% YOY. Earnings per share (EPS) for the period was Rs 7.09 as at 311/03/2010 & it was Rs 5.24 for the same period in year 2009.

NAV of Sampath share as at 31/03/2010 was Rs 174.33. Sampath trailing PE ratio is below 12 & is one of lowest among listed banks.

Sampath Bank has a pending subdivision of 2 shares for every single shares held.

  • Sierra Cables (pending dividend of 0.20 cents)
  • Environmental Resources Investment
  • Colombo Land & Development Company
  • Ceylinco Securities & Financials
  • Dialog Telecom
  • National Development Bank
  • Tangerine Hotel
Amendments to the Stock Exchange Ruling  

 Under valued hotels in the market

 Market Trend

 data - www.cse.lk ,cdax.lk

Sri Lanka - Britain removes travel ban to former Sri Lanka battle zones

COLOMBO, July 30 (Xinhua) -- The British government has removed the restriction on travel imposed to its citizens touring Sri Lanka's Northern Province.

"This latest change means we no longer advise against travel to any part of Sri Lanka," the British Ambassador in Colombo Peter Hayes was quoted as saying in an embassy press release issued here Friday.

Most western nations have now relaxed travel advisories following the end to Sri Lanka's protracted battle between the government troops and Tamil Tiger rebels in May last year.

Travel restrictions to east came to be relaxed immediately after the government troops' victory over the rebels.

Travel to north has now been given the go-ahead in view of the rapid return to normalcy in the former war zones.

International insurance companies have also lifted risk insurance premiums for shipping purposes on Sri Lanka.

source - http://news.xinhuanet.com

Sri Lanka - Dialog Axiata heading for strong recovery

by Ajit Perera 

The recent reforms implemented by the telecoms regulator to ensure minimum tariffs and interconnection fees in particular and the ongoing recovery in the broader economy in general are expected to benefit Sri Lanka’s incumbent telecoms operator, Dialog Axiata PLC (Dialog) significantly, enabling the company to return to healthy financial profitability in 2010. In addition, Dialog has also implemented an aggressive cost rationalisation/rescaling programme, enabling its EBITDA (Earnings before Interest, Taxation, Depreciation and Ammortisation) margin to improve commencing the first quarter of 2009, lifting the group’s returns on capital and equity.

Quadruple bundle offering of telecommunications and infotainment services. Dialog is one of two telecoms operators in Sri Lanka that offer a quadruple bundle of telecommunications and infotainment services i.e. mobile telephony, fixed line telephony, broadband Internet and television media. The Dialog group now provides GSM (Global Standard for Mobile) mobile telephony, CDMA (Code Division Multiple Access) fixed wireless telephone services, HSPA (High Speed Packet Access) mobile broadband internet connectivity, Wi-Max (Worldwide Interoperability for Microwave Access) fixed wireless broadband internet access and satellite based pay television services. In addition, Dialog also operates one of the most sophisticated telecommunications infrastructure networks in the country, offering access to other telecoms operators as well.

The Dialog group now comprises the following business units.

Owned and managed by Axiata Group Berhad. Dialog is 83% owned by Axiata Group Berhad (formerly the Telekom Malaysia Group [TM]) through its international investment arm, Axiata Investments (Labuan) Limited (Formally TM International (L) Limited). Dialog was incorporated as MTN Networks (Pvt) Ltd. in 1993 as a joint venture between Axiata Investments and a Sri Lankan diversified group with commercial operations commencing in 1995. In November 1996, the local promoter divested its stake to Axiata Investments making Dialog a fully owned but indirect subsidiary of Axiata.

Axiata has transferred significant management expertise to Dialog, inclusive of secondment of highly experienced staff from Malaysia, provision of training facilities, skills development by way of posting Sri Lankan staff to its global business units etc. In addition, Dialog also benefits from Axiata’s technological expertise, lower costs of hardware, software and content purchases and access to international telecoms infrastructure etc.

First billion dollar company in Sri Lanka. In July 2005 Dialog was listed on the Colombo Stock Exchange (CSE) via an Initial Public Offering of 712.3 million shares. The IPO of LKR 8.6 billion (made up of an offer for sale by TM amounting to LKR 5.1 billion and offer for subscription by prospectus of LKR 3.5 billion) was over-subscribed by six and a half times and is to-date the largest on the CSE. Upon listing amidst significant investor interest, Dialog became the first company on the CSE to cross the elusive US dollars billion mark in market capitalisation.

Undisputed leader in telecommunications market. Dialog is Sri Lanka’s leading telecommunications services provider with a share of approximately 38% of the composite telephony market (which comprised of 871,248 fixed wire-line, 2,559,560 fixed wireless and 13,949,761 mobile connections at end 2009). In the mobile telephony segment, which accounts for 80% of total market size, Dialog is the undisputed leader with a share of 46% (based on the number of activated SIM cards). However, Dialog commands a higher 57% share of the revenues of the mobile telephony market as it is estimated that 30-35% of activated SIM cards are used by one and the same individual.

‘Inclusive’ approach to market. Dialog’s industry leadership has been achieved by transforming mobile telecommunications from its ‘exclusive’ positioning in 1995 to that of ‘inclusivity’ i.e. making mobile telephony services an affordable commodity, accessible to all sections of society. This ‘inclusive’ approach, backed by innovative pricing, product/service offerings (characterized by minimum entry costs and usage commitments) and technological innovation, spearheaded by very savvy marketing have enabled Dialog to activate and dominate previously untapped market segments. This so called ‘Blue Ocean Strategy’ of Dialog enabled Sri Lanka’s telecom industry to grow rapidly over the past decade, forcing other telecommunications service providers to upgrade product/service quality/offerings to stay in business.

Technological innovator/leader par excellence. Dialog has also been a trailblazer in the entire South Asian region being the first to introduce the latest mobile telephony and broadband internet technology to the market, be it GSM telephony, GPRS (General Packet Radio Service) internet access for mobile telephones, Wi-Max broadband internet services, 3G (Third Generation) and 3.5G mobile communications and HSPA/HSPA+ (High Speed Packet Access) mobile broadband internet services (HSPA+ supports downlink speeds of up to 28.8 Mbps [Mega bits per second]). Thanks to Dialog, Sri Lanka now boasts of one of the most sophisticated telecommunications industries in the region, perhaps on par with many developed nations.

‘Dialog’ brand is household name. It would not be an understatement that Dialog almost single handedly transformed the telecommunications industry in Sri Lanka, by its ‘inclusive’ approach to the market making the mobile telephone an easily accessible/affordable communication device – and in doing so improved the quality of life of the vast majority of the population, especially at the bottom of the income pyramid. The ‘Dialog’ brand is now one of the most widely recognised in the country and is a household name even in distant rural villages. Well established brands are a significant asset in Sri Lanka’s consumer market place as customer loyalty once earned is not easily swayed by competitors.

First mover in Value Added Services introduction. Dialog has a strong track record of being the first to introduce a multitude of voice and non-voice Value Added Services (VAS) to the mobile telephony market. In fact, the early adoption of the GSM technology platform with its ability to provide VAS, back in 1995, was a crucial milestone that enabled Dialog to leapfrog from being the last entrant in the mobile telecoms industry to market leadership by 2000. The company was the first to introduce call conferencing, video conferencing, SMS (Short Messaging Services), MMS (Multimedia Messaging Services), Automatic International Roaming (covering 211 destinations encompassing 530 networks), mobile telephony internet (using GPRS, EDGE [Enhanced Data Rates for GSM Evolution], HSPA and HSPA+ technology), mobile telephony e-mail services, Blackberry services, M (mobile) Commerce applications, video calling services, mobile streaming television, in-flight calling services (in partnership with Aero Mobile), ocean cruise liner calling services (on vessels operated by 24 cruise liner operators) etc. Further to providing additional revenue streams, the continuous introduction of innovative VAS has enabled Dialog to maintain and grow its market dominance, especially in the post-paid/high ARPU (Average Revenue Per User) segment.

Extensive network coverage and infrastructure. Underpinning Dialog’s market dominance is its vast base station/infrastructure network, which provides mobile telephony service coverage of approximately 80% of the land mass of the country and 90% of the populated areas. Dialog currently has 3330 base stations (of which 2600 are 2G and 730 are 3G) on 1700 sites. The company has always led the industry in geographical service coverage, venturing boldly into new territories where rival operators have been reluctant to go. In fact, following the end of the armed conflict in the northern and eastern provinces in May 2009, Dialog was the first telco to expand operations in the region, doing so within 90 days. The company now has 159 sites (with 300 base stations) in the northern and eastern provinces – having invested USD 10 million in 2009 – and is likely to expand its footprint further.

In 2009, Dialog modernised its core mobile telephony infrastructure by migrating to an IP (Internet Protocol) based 100% Next Generation Network (NGN) from its legacy Time Division Multiplex (TDM) architecture. In addition to lowering operating costs, the NGN will enable Dialog to expand subscriber capacity and also offer advanced features/services and capture convergence opportunities.
 
Dialog’s telecoms service coverage areas

Vast distribution network. Dialog has also assembled one of Sri Lanka’s largest distribution/dealer networks operated primarily by 10 exclusive business partners. Dialog’s dealer network has established points of presence for its products and service in all major towns and cities in the country, inclusive of the newly accessible northern and eastern provinces. Dialog’s distribution network now comprises of over 42,000 retail outlets, 22 company managed state-of-the-art service centres and over 100 franchised customer service points. This unrivalled distribution network has also made Dialog ubiquitous in even distant rural areas.

Strong Service orientation. One of Dialog’s key strengths is its sharp focus on customer service/care, which is probably accepted as a benchmark in Sri Lanka’s corporate sector. In fact, from its inception, Dialog developed a corporate culture strongly focused on delivering high quality service/care to all its customers, whether it be low ARPU prepaid subscribers or high end post paid customers and corporates. The company provides 24X7 support to all its services to its customers via person-to-person interaction, web based Chat, e-mail and SMS. Dialog’s service front-end is manned by an 800 strong team capable of providing customer support in all three national languages.

Dialog’s strong service orientation has contributed in no small measure to the company gaining market leadership and staving off competition, in addition to building customer loyalty, enhancing brand image and establishing a strong market presence and ‘presence of mind’ amongst customers.

Marketing mastery. Dialog’s swift ascendancy to the position of market leadership is also largely attributed to its very savvy marketing skills. The company’s marketing team is acknowledged as one of the finest in the corporate sector in Sri Lanka with strong capability in developing new market segments, creating well targeted/carefully differentiated products and services, delivering same with high sales impact and achieving (and in most cases well exceeding) predetermined sales/revenue targets. The strong market presence/acceptance of the ‘Dialog’ brand is also a manifestation of the company’s unrivalled marketing skills. Further, in recognition of its marketing skills, Dialog has won numerous accolades from independent rating institutions.

Fixed wireless telecommunications compliments mobile telephony. In 2007, Dialog launched fixed wireless telephony services based on CDMA technology and fixed wireless broadband internet access based on Wi-Max technology. These two services are offered through subsidiary Dialog Broadband Networks (Private) Limited DBN and is primarily deployed for enterprise customers as a combined solution. The combined service has also been extended to the household market. At end 2009, DBN had 177,000 active CDMA fixed wireless telephony customers and some 7,000 Wi-Max Broadband Internet subscribers.

Television/media has strong potential. In December 2006, Dialog acquired Communiq Broadband Networks Limited (CBN), a satellite based telecaster, through subsidiary Asset Media (Private) Limited, which was later renamed Dialog Television (Private) Limited (DTV). DTV holds licences for Television Broadcasting and provision of Pay Television Services. DTV telecasts over 70 local as well as international/regional television channels such as CNN, BBC, Bloomberg, HBO, AXN, ESPN, Discovery, MTV (Music Television) etc. via satellite direct to home, covering the entire country. At end 2009, DTV had a subscriber base of 149,449, which accounted for a share of some 80% of the Pay TV market. Although subscriber numbers are still low, growth should accelerate as household disposable incomes rise.

Unrivalled historical financial performance. Dialog’s almost single-handed development of the mobile telephony market in Sri Lanka enabled the company to record unparalleled levels of profitability over the past decade. From only LKR 0.54 billion in 2000, Dialog’s net income rose by a compound annual rate of 63% to reach a phenomenal LKR 10.1 billion in 2006, probably the highest level recorded by a Sri Lankan corporate.

Dialog’s ‘per minute’ formula. Dialog’s financial success is attributed to its very early adoption of ‘per minute’ performance measures, recognising that the voice mobile telephony service is as much a utility as the legacy fixed wire-line business. Thus, by treating available airtime capacity of the already built network infrastructure as a commodity to be sold, the company maximised profit by maximising revenue. This focus on ‘Revenue per Minute’ (RPM), ‘Cost per Minute’ (CPM) and ‘Profit per Minute’ (PPM) metrics as opposed to its rivals’ concentration on increasing ARPU enabled Dialog to reach out to the lower levels of the income pyramid, thus, growing its market, market share, revenue and profit significantly.

Super profits attract super competition. In 2007, net income reached LKR 8.9 billion but with a blind tariff war unleashed by rivals in pursuit of new subscribers and eager to replicate Dialog’s financial success, the company recorded a net loss of LKR 2.9 billion in 2008, as prices had to be cut to preserve the subscriber base. In 2009, the full impact of the global credit crisis and a heightened level of conflict in the Northern Province (in the first half of the year) caused a slowdown in economic/business activity in general and impacted Dialog’s sales volumes and acquisition of new subscribers. These, combined with higher operating costs due to inflationary pressure, an increased staff cadre and capacity building, caused the company to record a net loss of LKR 12.2 billion in 2009.

However, half of this loss, amounting to LKR 6 billion, is attributed to a one-off write-off of the legacy high cost core TDM network infrastructure following upgrade to a highly efficient IP based NGN  while a further LKR 3.2 billion was due to alignment of capital inventory/capital work-in-progress and depreciation accounting policies with international best practices.
 
Dialog’s Annual Group Net Income/(Loss)

2009 a year of housekeeping and rationalising/rescaling costs. Dialog used the economic hiatus in the second half of 2008 and 2009 to put its house in order and to rationalise/rescale costs aggressively in response to the tariff war that left the entire telecommunications industry with considerable losses. Among the key initiatives undertaken by Dialog were;

Upgrading of core mobile telephony infrastructure to a more efficient and lower cost IP based 100% NGN.
Right-sizing of the staff cadre with a Voluntary Retirement Scheme (VRS).
 
Rationalisation of group organisation structure and more effective utilisation of personnel.

Switch to less costly SIM cards, recharge cards, starter packs, phone accessories, bill printing etc.
Relocation of offices to cheaper premises.
Renegotiation of insurance and office maintenance contracts.
 
More focused advertising and promotion and ensuring sales impact.

Redirection of capital expenditure to areas with high growth potential such as mobile broadband internet and monetising the current investments to maximise yield.

These measures have already begun to show results with EBITDA and Net income and thus the respective margins improving throughout 2009 and into the first quarter of 2010.
 
Dialog’s improving quarterly financial performance

Dialog strongly placed to capture emerging growth opportunities. Relentless focus on technology and innovation, an ‘inclusive’ approach to the market, multiple marketing strategies aimed at capturing all segments of the market/income pyramid, extensive network coverage, top notch customer care and service delivery, comprehensive Value Added Services, unrivalled brand equity and marketing communication strategies and a strong management/human resources team have all contributed to Dialog’s success during the past decade and combined with the recent group-wide reorganisation of operations, processes and cost structures, are likely to provide significant competitive advantages to the group in the future.

Dialog has used the economic hiatus in the second half of 2008 and in 2009 to re-focus on its core business of mobile telephony, reorganise non-core operations, restructure/rescale costs, regroup its human resources and fine-tune marketing programmes. The group has emerged much leaner and also hungrier to capture growth opportunities that are emerging in the post conflict era of peace in Sri Lanka that is yet to be charted, most obviously by the likes of Dialog Axiata.

source - http://www.proactiveinvestors.com

SLTPB nominated for TTG Travel Awards

The Sri Lanka Tourism Promotion Bureau has been shortlisted for the 'Tourist Board of the Year' award of the TTG Travel Awards, regarded as a universal benchmark of quality within the travel industry.

The awards ceremony is organised by the industry's leading trade newspaper, Travel Trade Gazette, UK. TTG Travel Awards ceremony is considered as the Oscars in the travel industry.

Tourism Australia, Barbados Tourism Authority, Dubai Tourism, Jamaica Tourist Board, Tourism Queensland, Kenya Tourist Board and South Africa Tourism are among the nominees for the Tourist Board of the Year award.

This year's winners will be announced at a spectacular ceremony at London's Grosvenor House Hotel on 23 September.

A team of judges made up of senior executives from across the travel trade will decide who will go forward to collect the ultimate industry accolades.

TTG Editor Daniel Pearce said: "I'd like to congratulate every company and individual that has made it through.

As a TTG Travel Awards 'virgin' I have been hugely impressed by the standard of entries for the awards, and the sheer breadth of innovation and excitement across the travel trade that every single one of them represents."

source - www.dailymirror.lk

"GREG" The star of the day: Colombo Stocks down due to profit taking

                 DAILY MARKET REVIEW

29 /07/2010 (S.L.S.Picks) – Shares listed in Colombo Stock Exchange moved down during today’s trading session due to profit taking by the retail investors.

Environmental Resources Investment share together with warrants perform well in today's trading session. The share & the warrants representing  today's top 10 gainers list,most active trades list & large volumes traded list. 


Foreigners continue to buy Sri Lankan equities, since Colombo Stocks still have the capacity to offer attractive returns in medium to long run. Foreigners purchased shares worth of Rs 271m.n & sold shares worth of Rs 245m.n reflecting a net foreign inflow of Rs 26m.n for the day. Net foreign buying was visible throughout the last three weeks. However foreigners were in the selling side so far for this week by Rs
278m.n. 

All share price index down up by 19.83 points to close at 5119.10 & more liquid Milanka index down up by 23.33points to close at 5805.40

Turnover for the day was healthy Rs 3.2b.n which was supported by the Retail, High net worth individuals, Foreign & Institutional buying in to selected stocks.

Investment Trust sector index was up by massive 6.77% & was the leading sector among all other sectors due to share price appreciation of Environmental Resources Investment Company, followed by the Motors sector. The Health care sector was leading the negative performing sector list today.

There were 70 gainers as against 92 negative performing counters.

 ANNOUNCEMENTS 
  • Alliance Finance Company - First & Final Dividend of Rs 3.50 /share





CLOSER LOOK
  • The quarterly results of the listed companies in the Colombo Stock Exchange for the MARCH – JUNE Quarter 2010 will be released to the market within couple of week’s time. The results released for JAN – MARCH 2010 quarter showed improved performances & earnings for this period has risen more than 150%. We expect better results from the listed companies for the JUNE 2010 quarter as well.
  • Foreigners were net buyers during today's trading session & the foreign buying tops Rs 3.0b.n during the last three weeks. This is a positive sign for the Colombo Market as local investors are waiting to see continuous foreign buying in CSE in future.
  • The credit guarantee scheme approved by the Central Bank of Sri lanka to strengthen the liquidity position of the registered finance companies may give the confident to investors to invest in the companies like The Finance Company, Nation Lanka Finance (Formerly Ceylinco Securities & Financials) etc. Investors are expecting a reduction of Vat from Banks in future as well, & there for we expect Banks to perform well in the medium to long term.
  • Demand for hotel stocks were at high levels during today's trading sessions on back of improved Tourist arrivals to the country after the end of 30 year old civil war.
  • We can expect DIALOG Telecom to perform well during medium to long term future on back of exceptional performance reported by the company. This is one of few companies in the market where foreigners can purchase in large quantities due to the high liquidity of its shares.  

 STOCKS TO WATCH
  • Environmental Resources Investment

COMPARISON - GREG Warrants Vs GREG (N)

Our simple effort is to give an idea about the Greg warrants & its conversion prices to convert a warrant to a normal share.

Colombo Stock Market offers different types of legal investment instruments for the investors. These are as follows.
  • Ordinary Shares (N)
  • Non Voting Shares (X)
  • Preference Shares (P)
  • Debentures
  • Warrants (W)  - Certificate given by the company for the investors, the right of buying a company share at a stipulated price at a future date.


Trading Price
As at 29/07/10

(Rs)
Warrants conversion year to a normal share
Exercise price to convert  for  a normal share 
(Rs)
The total cost of the conversion for a normal share (Rs)
GREG (W0001)
112.25
2011
24.00
136.25
GREG (W0002)
50.00
2012
33.00
83.00
GREG (W0003)
46.25
2013
36.00
82.25
GREG (W0006)
46.25
2015
39.00
85.25
GREG (N)
126.25
N/A
N/A
N/A

 According to this table the Warrant 0001 is over priced when compared with the trading price of the normal (N) share. However when compared the other three warrants (W0002,W0003,W0006) each other it is clear that the Warrant 0002 is massively under valued to the trading price of the normal (N) share as at end of today's trading session.

  • Sampath Bank
Has reported exceptional performance for the 1Q 2010 ended 31/03/2010 by registering a profit of Rs 598m.n as against 397m.n reported for the same period in year 2009.This reflects a profit growth of 50.6% YOY. Earnings per share (EPS) for the period was Rs 7.09 as at 311/03/2010 & it was Rs 5.24 for the same period in year 2009.

NAV of Sampath share as at 31/03/2010 was Rs 174.33. Sampath trailing PE ratio is below 12 & is one of lowest among listed banks.

Sampath Bank has a pending subdivision of 2 shares for every single shares held.

  • Sierra Cables (pending dividend of 0.20 cents)
  • Environmental Resources Investment
  • Colombo Land & Development Company
  • Ceylinco Securities & Financials
  • Dialog Telecom
  • National Development Bank
  • Tangerine Hotel
Amendments to the Stock Exchange Ruling  

 Under valued hotels in the market

 Market Trend

 data - www.cse.lk

Thursday, July 29, 2010

Sri Lanka John Keells net up 55-pct

July 29, 2010 (LBO) - Sri Lanka's John Keells group said net profits for the June 2010 quarter rose 55 percent to 1,010 million rupees, while revenues grew 28 percent to 12.9 billion rupees.
Chairman Susantha Ratnayake said pretax profit from the group's transport division which includes a container terminal was up 52 percent to 802 million rupees.

Its leisure unit lost 14 million rupees, down from a loss of 47 million rupees a year earlier with several hotels being refurbished.

JKH's property division earned 145 million rupees in the June quarter, up from 34 million rupees a year earlier.

Consumer foods and retail earned 169 million rupees before tax, up from 41 million rupees last year.

"The soft drinks and ice cream businesses and the Keells Food Products business saw substantial volume growth during the quarter," Ratnayake said.

Financial services, which includes commercial banking, insurance and stock brokering, earned 377 million rupees before tax, up 74 percent.

Information technology barely broke even with 0.8 million rupees with the help of office automation products.

source - www.lbo.lk

CSE broker fee changes from August 1

Charumini DE SILVA

The changes of the market microstructure of the CSE including transaction costs will be active from August 1.

The crossing threshold will be increased from Rs 10 million to Rs 20 million. The tick size on transactions will be reduced to 10 cents across the board. The threshold for negotiable brokerage will be reduced from Rs 100 million to Rs 50 million. The minimum brokerage floor will be 0.20 percent.

The biggest beneficiaries of this reduction will be investors transacting less than Rs one million.

Speaking to the Daily News Business Capital Trust Securities, Director Sarath Rajapaksa said this initiative was long overdue.

The revised transaction costs will stimulate trading in the capital market.

The tick size on transactions being reduced to 10 cents across the board will encourage frequent trading. There will be more trading after August. This will also enable large increase in commissions and improve stockbroker’s income, he said. Lanka Securities Chief Operating Officer Kosala Gamage said this regulatory reform was very meaningful as the capital market is performing outstandingly and the country’s economy is stabilizing fast.

“The Government and the regulatory bodies should address to increase the liquidity levels of the market,” he said.

The trading will increase rapidly as frequent tradings will take place after the reforms in the CSE. The foreign investors are pleased with the political and economic stability where the foreign investor confidence has shown a positive trend in the trading.

This will increase the number of foreign and local investor participation in the CSE. These developments in the capital market will affect the country’s economy favourably, he said. Asha Philip Securities Ltd Director/CEO Dimuthu Abeysekera said the revised transaction costs will bring down the stockbroker’s revenue significantly. The stock broking companies started recovering themselves only after the restoration of peace. It would have been better if the regulators give more time to stabilize.


ASPI crosses 5,000 level


The All Share Price Index (ASPI) of the Colombo Stock Exchange (CSE) closed above the 5,000 level for the first time in history yesterday.

The ASPI closed the day at the 5,138.9 gaining 139.8 points (2.8 percent).

The Milanka Price Index (MPI) gained 159.5 points (2.8 percent) to close the day at 5.828.7 also recording the highest level in history. The total turnover recorded during the day was Rs 3.2 billion.

The market capitalization at the end of   trading was Rs 1.68 trillion is the highest market capitalization recorded in the history of the CSE.

source - www.dailynews.lk

Wednesday, July 28, 2010

DIST on Demand : Colombo Stocks Up by 2.8% for the day

                   DAILY MARKET REVIEW

28 /07/2010 (S.L.S.Picks) – Colombo Stock Exchange closed with record gains today up for the third consecutive day for this week.  The All share price index was closed at 5138.93 level, up by massive 139.88 points. This is the first time in the history of Colombo Stock Exchange that the All share price index has passed the all important 5000 barrier level as at end of a trading day.  The more liquid Millanka price index was up by substantial 159.54 for the day to close at 5828.63

We have clearly predicted the possible upturn in the market purely on the grounds of future growth potential of the shares listed in the Colombo Stock Exchange. We have published a special article “All Share Price Index - History performances & way forward “on 13th July, predicting the upward movement of the market. This has become a reality now & our expectation was the market to reach 5000 barrier level well before end of the year 2010. However ASI has achived its target well before the stipulated time frame.

Renewed buying interest was visible for selected stocks / Blue chip stocks as investors are expecting better results for the June quarter 2010 from these companies.

There were 114 positive contributors as against 47 negative contributors for the day.

Turnover for the day was a healthy Rs3.1b.n. 

Foreign participation was at lower levels in today’s trading session. They were net sellers for the day by marginal Rs 18m.n. foreign purchases were at Rs 345m.n. & foreign sales were at Rs 363m.n

Renewed buying interest was visible in Hotels sector shares due to the increased tourist arrivals to the country & the Banking sector companies as well. Banking sector, Hotels sector & Construction sector has been identified as leading growth sectors in post war Sri lanka.

Palm Oil sector was heading the sector’s list due to share price appreciation of Bukit Darah Company, followed by Construction & Engineering sector. Stores & Supplies sector was heading the negative performers list for the day.

ANNOUNCEMENTS
  • Trans Asia – Each Ordinary share to be subdivided in to two.
  • Lanka Tiles - Capitalization of reserves of 01 ordinary share for every 04 shares held @ Rs 45 /share.
  • Lanka Ventures – Final Dividend of Rs 1.50 / share.

 



 CLOSER LOOK
  • The quarterly results of the listed companies in the Colombo Stock Exchange for the MARCH – JUNE Quarter 2010 will be released to the market within couple of weeks time. The results released for JAN – MARCH 2010 quarter showed improved performances & earnings for this period has risen more than 150%. We expect better results from the listed companies for the JUNE 2010 quarter as well. 
  •  Foreign participation was at  high levels during the last three weeks & the Net foreign buying for the same period tops Rs 3.0b.n.This is a positive sign for the Colombo Market as investors are waiting to see continuous foreign buying in CSE.
  • Buying for JKH the at improved price levels always gives the signal of an upward market potential. JKH was closed at Rs 249.50 today & the share was up by Rs 9.50 for the day. JKH share has continuous buying interest during the last two weeks onward at higher price levels.
  • The credit guarantee scheme approved by the Central Bank of Sri lanka to strengthen the liquidity position of the registered finance companies may give the confident to investors to invest in the companies like The Finance Company, Nation Lanka Finance (Formerly Ceylinco Securities & Financials) etc. Investors are expecting a reduction of Vat from Banks in future as well, & there for we expect Banks to perform well in the medium to long term.
  • Demand for hotel stocks were at high levels during today's trading sessions on back of improved Tourist arrivals to the country after the end of 30 year old civil war. Hotel stocks such as KHL, MARA,HSIG, HUNA, SIGV,TANG etc... were collected by the investors expecting further upward movement of these companies.
  • We can expect DIALOG Telecom to perform well during medium to long term future on back of exceptional performance reported by the company. This is one of few companies in the market where foreigners can purchase in large quantities due to the high liquidity of its shares. 

STOCKS TO WATCH


  • Sampath Bank
Has reported exceptional performance for the 1Q 2010 ended 31/03/2010 by registering a profit of Rs 598m.n as against 397m.n reported for the same period in year 2009.This reflects a profit growth of 50.6% YOY. Earnings per share (EPS) for the period was Rs 7.09 as at 311/03/2010 & it was Rs 5.24 for the same period in year 2009.

NAV of Sampath share as at 31/03/2010 was Rs 174.33. Sampath trailing PE ratio is below 12 & is one of lowest among listed banks.

Sampath Bank has a pending subdivision of 2 shares for every single shares held.

  • Hotel Marawila(MARA)
The comparison of Hotel Marawila together with Hotel index,ASI, & MPI  of the Colombo Stock Exchange clearly reflects the performance of the MARA for the past 18 months period. The graph shows us that the MARA has clearly under perform to the all three indexes for the last couple of months & crosses the ASI & MPI very recently.

MARA is the only hotel listed in the Colombo Stock Exchange that trades below Rs 20 levels as at end of today's trading session.( A 10 Rupee company) The REEF is originally reported as a One rupee company.

MARA has reported improved profits as at 31/03/2010 & the  reported  profit was Rs 22.0m.n, against Rs 13m.n reported for the same period in year 2009. NAV per share stands at Rs 3.98 as at 31/03/2010.

MARA is a Lankem Ceylon PLC owned company.

We expect MARA to deliver over 80% return for the investors who invest in the company shares at current price level ( Rs 12.75) over medium to long term period purely on back of increased tourist arrivals to the country.


  • Distilleries Company (DIST)


We have done a comparison chart for DIST against ASI ,MPI, the sector DIST is representing the BFT. This clearly shows us  how DIST has under perform to the market & to the sector performance over the past 18 months period.

The  cancellation of the ICSL deal may be the major reason for this performance & the profitability of the company also reduced by almost 50% to Rs 318m.n as at 31/03/2010 (Three months) which reflects an EPS of Rs 0.91for the period.





 However we believe that the Govt bonds held with DIST (pending maturity) may give them the much needed boost for their bottom line.

DIST has interests to the Plantations through Balangoda  & Madulsima Plantations, Telecom sector through Lanka bell , Beverage sector through its core business activities,Power sector through Newly established Hydro power plant at Madulsima ,Insurance sector through Continental Insurance. etc. They have interests in the area of tourism as well through its Associate company Aitken Spence PLC.

DIST has significant share holdings in the leading blue chip companies listed in CSE such as HNB ,COMB, JKH,  DFCC Bank, ASIRI hospitals together with BBH,& LMF etc.

We expect DIST to perform well in the post war Sri Lanka in medium to long term.

  • Sierra Cables (pending dividend of 0.20 cents)
  • Environmental Resources Investment
  • Colombo Land & Development Company
  • Kotagala Plantation
  • Dialog Telecom
  • National Development Bank
  • Overseas Reality
Amendments to the Stock Exchange Ruling  

 Under valued hotels in the market

 Market Trend

data - www.cse.lk ,cdax