Sri Lanka Stock Picks

Sri Lanka stock picks site has been developed to give first hand information with regard to share trading opportunities available for investors who do not like go through lengthy research reports, calculations,etc but to have a clear idea about stocks that have future up side potential.Our service is just not for day traders but for the investors who wish to see their money growing in the long run.Our main objective is to provide information relating to trading under one roof.

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.