Sri Lanka Stock Picks

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Friday, July 23, 2010

Colombo Stocks bounce back: Shares of CIC company on demand

DAILY MARKET REVIEW

23/07/2010 (S.L.S.Picks) – Colombo Stock Market closed for the week today by registering record gains in both indices during the day.

All Share Price index was up by massive 46.34 points to close at 4895.51 & the more liquid Milanka Price Index was up by substantial 44.86 points to close at 5545.13

Turnover for the day was healthy Rs 2.0bn.

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 & we expect market to reach 5000 barrier level well before end of the year 2010.

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 such as John Keels Holdings & Retail flavored Environmental Resources Investment (both shares & warrants) company."GREG" share was up by Rs 3.50 to closed at Rs 107.00 for the day & nearly 2.2m.n shares changed hands today. All the others members of "GREG" family moved up today & were representing the large volumes traded counter for today.

Foreign participation was at low levels today. Foreigners were net buyers for the fourth consecutive day during this week & the net foreign in flow for the day was Rs 102m.n. Foreigners purchased Rs 374m.n. Worth of shares & sold shares worth of Rs 272m.n.for the day.

Chemicals & Pharmaceuticals sector has recorded 4.25 % growth & was the leading sector among all other sectors today due to the price appreciation of CIC both Voting & Nonvoting shares, followed by Investment Trust sector. Stores & Suppliers sector was leading the negative performing sector’s list.

CLOSER LOOK

The quartely 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 high level during last two weeks & for this week as well.They were net buyers during this week's trading sessions. The Net foreign buying for the current week was Rs 901m.n & net foreign inflow for the last weeks topped Rs 2.1b.n This is a positive sign for the Colombo Market as investors are waiting to see continuous foreign buying in to the Colombo stocks.

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.

Buying for JKH at improved price levels always gives the signal of an upward market potential. JKH was closed at Rs 230.00. The share was up by Rs 1.75 for the day.

There were renewed buying interests for the companies in the Banking & Finance sector as well as Plantation sector. Sampath Bank,Ceylon Guardian ,Ceylon Investment & CIC shares both Voting & Nonvoting traded in large quantities & at improved price levels.Investors expect the Kegalle Plantations & Kotagala Plantations together with Balangoda Plantations to report above average profits for the June quarter.

Cargills Ceylon Company will offer a great return to the investors who invest in the company at current market prices in the medium to long term period. The company share slipped only up to Rs 125(On large quantities) during the down turn period prevailed in the market two weeks back.

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.