Singapore based investment manager Calamander Capital believes the Colombo bourse is overvalued.
Mafaz Ishak, Director Calamander Capital Singapore (Pvt) Ltd, Colombo Office, made this observation at a seminar on ‘2011 and Beyond: Trade and Investment Prospects in Asia and Implications for Sri Lanka organised by the Institute of Policy Studies on Monday, September 12, 2011.
He said portfolio investors were looking for sound investments in the country’s capital markets.
"The most sought after share for this type of investor has been a country proxy such John Keells Holdings. The oft told barometer of the stock markets performance since the end of the war though has stumbled of recent, couple this with a trailing market price to earnings ratio of 19 down from 29.5 in February this year and price to book of 2.4 and dividend yield of 1.5% and the Colombo Stock Exchange looks relatively expensive compared with Singapore, Kuala Lumpur or Bangkok at 10-14. In fact the CSE is more in line with the much deeper and more liquid Bombay Stock Exchange at 18.5 PE, price to book of 3.39 and a similar dividend yield of 1.5%," he said.
" Those of us here for a defined time horizon for our investments – in our case 5 to 7 years or longer are on the lookout for what may be relatively cheap or at least priced at a reasonable market valuation are finding it increasingly hard to find good deals given the frothiness of the stock market. The number of opportunities is increasing but so is the relative valuation – 3 years ago I would be talking to very well run tea factory owners about a valuation of 4-5 times earnings, recently one was offered to us at 12 times earnings, an IT company that is barely profitable wanted 3 times revenue as a valuation."
source - www.island.lk
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