Sri Lanka Stock Picks

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Thursday, July 15, 2010

Colombo Stock Exchange was up by 0.84% : John Keels Holdings heavily traded

DAILY MARKET REVIEW

15/07/2010 (S.L.S.Picks) – Colombo Stock Exchange continues its upward movement for the fourth consecutive day so far for this week on back of Retail, High net worth individual, Institutional & Foreign buying on to selected stocks. This was predicted by us two days ago as the Colombo Stock Exchange is heading for record high levels in coming weeks.

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 372m.n & sold shares worth of Rs 176m.n reflecting a net foreign inflow of Rs 196m.n for the day. Net foreign buying was visible throughout the last week & the trend continues to this week as well. Foreigners were net buyers for the last four days of the week which results an inflow of Rs 1.1b.n foreign funds to the market. This was on top of Rs 900m.n net foreign inflow of funds reported for the last week.

All share price index was up by 38.41 points to close at 4638.71 & more liquid Milanka index was up by massive 51.11 points to close at 5114.01

As we predicted during last week there were buying interest for Blue chip counters as several blue chip shares were trading at attractive price levels. Retail interest was seen towards speculative stocks as well as low valued stocks.

Dankotuwa Porcelain, a speculative share was representing the Top gainers list, Top volumes traded list & Top trades list today together with Tess Agro Company. Buying interest was witnessed in Hotel sector companies,Banking counters, & Motor sector companies etc.

Turnover for the day was healthy Rs 2.1b.n which was supported by a single large parcel of Ceylon Hotels Corporation changed hands @ Rs 36.00 /share.

Motors sector index rose by 4.41% & was the leading sector among all sectors due to share price appreciation of Dimo & Company, followed by Investment Trust sector. The Foot Ware & Textiles sector was leading the negative performing sector list today.

There were 86 gainers as against 55 negative performing counters.

CLOSER LOOK

Dankotuwa Porcelain continues 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)

Foreigners were net buyers for the fourth consecutive day today. Net foreign buying for this week (Four days) so far is Rs 1.19b.n. This is a positive sign for the Colombo Market as investors are waiting to see continuous foreign buying in to the Colombo stocks.

Net foreign buying for the past week was Rs 900m.n. Foreign Purchases were at Rs 1.9b.n & Sales were Rs 1.0b.n during this period the market was down by more than 100 points & the local investor sentiment was at a negative territory.

Most of future growth stocks have come to attractive price levels. As we predicted there were buyers & bargain hunters to purchase shares of these companies at current price levels.

Buying for JKH at improved price levels always gives the signal of an upward market potential. JKH was closed at Rs 210.00. The share was up by Rs 4.00.

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 companies like The Finance Company, Nation Lanka Finance (Formerly Ceylinco Securities & Financials) etc.

We expect market may go for a new high level from today onwards as we witnessed there were fresh buying available for future growth stocks & Blue chip stocks in the market.

The crossings counter was filled with blue chip shares listed in the CSE.

Buying interest was visible in small valued shares as well. Shares such as Sierra Cables,Ceylon Glass,Seylan Merchant Bank, Tess Agro etc were in demand.

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.