Saturday, June 30, 2012

Sri Lanka to keep getting US, GSP trade benefits

June 30, 2012 (LBO) - Sri Lanka will continue to receive preferential trade concessions after 'noteworthy efforts' were made by the state to address worker rights issue, US Trade Representative Ron Kirk has said.

 Sri Lanka gets duty free export rights to 5,000 odd items including tires, activated carbon, rubber gloves, plastic products, and kitchenware valued at 135 million US dollar a year under a Generalized System of Preferences (GSP) to the US.

 The scheme came under review after trade unions petitioned the US saying there were shortcomings in Sri Lanka's recognition of labour rights. The review has been closed with no change to benefits given to Sri Lanka, the US embassy said.

"The closure of the GSP country practice review of Sri Lanka was based on the Sri Lankan government’s noteworthy efforts to address worker rights issues over the past few years," US Trade Representative Ron Kirk said in a statement.

"This welcome outcome to the review demonstrates that GSP remains an effective tool for engaging GSP beneficiary countries on worker rights."

Sri Lanka's export processing zones were established in the late 1970s and early 1980s without union rights which were available elsewhere in the island, undermining rule of law.

A US embassy statement trade union facilitation centres have been established in three of the largest export processing zones, progress has been made in probing and resolving unfair labour practices cases.

Sri Lanka and the US will continue to engage on worker rights issue throug a newly established 'labour affairs committee' of the US - Sri Lanka Trade and Investment Council, the statement said.

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Sri Lanka stocks close up 0.20 pct, rupee steady

June 29, 2012 (LBO) – Sri Lankan stocks closed up 0.2 percent on Friday, while the spot US dollar closed at around 133.70/90 in a day of quiet trading, dealers and brokers said.

 Colombo’s All Share Price Index gained 9.86 points to close at 4965.77, the Milanka index of more liquid stocks shed 2.61 points or 0.06 percent to 4,383.20.

 The new S&P Sri Lanka 20 index rose 0.21 percent or 5.83 points to closea t 2,817.35, according to Colombo Stock Exchange figures.

The spot dollar opened around 133.90/134.20 rupees and was later quoted at 133.90/134.00 and closed stronger dealer said.

In equity markets Thursday’s turnover was 218.80 million rupees, largely driven by 39,375 million rupees worth of transactions in Dialog, figures showed.

Dialog Axiata Plc, the country’s largest mobile phone operator, slipped 10 cents to 6.20 rupees on trades of 6,445 million shares.

The highest gainer of the day was SMB Leasing with 59.629 million rupees in turnover.

Index heavy John Keells Holdings, slipped 2.20 rupees to 182.10 rupees on trades of 20,631 shares posting a turnover of 3,784 million rupees.

Dockyard gained 1.00 rupee to close at 190.00 rupees up 0.5 percent on volumes of 71,485.
HNB closed flat at 147.00 rupees. Commercial Bank gained 10 cents to close at 98.80 rupees up 0.1 percent.

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Friday, June 29, 2012

Good start by PCH Holdings

Debutant PCH Holdings yesterday had good start with its share price peaking to Rs. 34 before closing at Rs. 14.70, up by 47% or Rs. 4.70 from its reference price.

It topped the list of percentagewise gainers while 5.14 million shares were transacted for Rs. 80.2 million via 1,404 trades.  Diversified PCHH also became the 284th listed entity.

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Thursday, June 28, 2012

Sri Lanka Dockyard launches platform supply vessel

June 28, 2012 (LBO) - Sri Lankan shipbuilder Colombo Dockyard has launched the hull of a new supply vessel it is building for a Singapore customer supplying the growing global offshore oil and gas industry.

 Greatship Rachna is the second of a series of three Multipurpose Platform Supply Vessels being built for Greatship Global Offshore Services of Singapore, Colombo Dockyard said.

 "The vessel will now proceed to the next step in the shipbuilding process which is outfitting, in the areas of deck, accommodation, machinery, piping, electrical and painting," a statement said.

Colombo Dockyard, in which Japan's Onomichi Dockyard Company has a majority stake, said the vessel will be delivered during the third quarter of 2012 after testing, commissioning and sea trials.

The main role of the vessel, which is designed to have accommodation for 50 people, is to support offshore oil and gas fields around the clock.

It will have an endurance of 35 days and a cruising range of about 9,200 nautical miles and is designed by Seatech Solutions International of Singapore for operation worldwide.

Greatship Global Offshore Services is a Singapore incorporated subsidiary of Greatship (India) Limited, part of the Great Eastern Shipping group which has a fleet of tugs and supply vessels working in offshore oil and gas fields.

 Demand for platform support vessels is growing with increasing oil and gas exploration and production in offshore deep waters.

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Sri Lanka SEC moots IPO grading, independent research

June 28, 2012 (LBO) - Sri Lanka's Securities and Exchange Commission has sought views on plans to grade initial public offers through a rating agency and fund independent research, following best practices in other markets.

 "The purpose of rating/grading equities is equities is to provide the potential retail or institutional investor with an independent view on the fundamentals and prospects of the company seeking a listing…," the SEC said in a consultation paper.

 "The IPO grade represents a relative assessment of the fundamentals of that issue in relation to other listed equities.

"It is generally assigned on a five-point scale with a higher score indicating fundamentals and vice versa."

IPO grade 01 would have poor fundamentals; IPO grade two would have below average fundaments, moving up to average fundamentals, above average fundamentals and at IPO grade 05, strong fundamentals.

Sri Lanka has a disclosure based regulatory framework and the regulators which approve issues for listing do not comment on the merits of companies.

The SEC said it was also mooting an independent equity research schemes aimed at providing "unbiased research reports, with in-depth analysis of the fundamentals and valuations of listed companies to encourage informed investment decision maiing."

 SEC said such schemes are usually paid for through the stock exchange or a market development funds and are found in India, Singapore, Malaysia, Indonesia, Australia and the United States.

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Sri Lanka stocks down 0.80 percent

June 28, 2012 (LBO) – Sri Lankan stocks slipped 0.80 percent on Thursday, though big ticket deals in Eden Hotel Lanka, John Keells Holdings PLC and PC House Holdings PLC helped swell turnover, brokers said.

 Colombo’s All Share Price Index dipped 39.78 points to 4,955.91, the liquid Milanka Price Index shed 48.15 points or 1.09 percent to 4,385.81 and the S&P Sri Lanka 20 indice dipped 0.89 percent or 25.36 points to end at 2,819.87, according to Colombo Stock Exchange figures.

 Thursday’s turnover was 797.24 million rupees, largely driven by 386.37 million rupees worth of transactions in Eden Hotel Lanka, figures showed. Brokers speculated that the LOLC Group may have transferred some of their Eden shares within the group.

A block of 12,877,306 Eden Hotel shares was sold a t 30.00 rupees each, brokers said. But the counter closed flat at 29.50 rupees on volumes of 12.88 million shares.

Market heavyweight John Keells Holdings, slipped 4.00 rupees to 186.00 rupees on trades of 873,554 shares. A parcel of 280,000 JKH shares sold at 185.00 rupees during the day, while another block of 400,000 JKH sold at 185.00 rupees.

 PCH Holdings, a computer peripheral company, saw a block 2.0 million shares trade at 15.00 rupees. The counter closed up 4.70 rupees to 14.00 rupees on volumes of 5.15 million shares.

Dialog Axiata PLC, the country’s largest mobile phone operator, slipped 10 cents to 6.10 rupees on trades of 5.04 million shares. A block of 5.0 million Dialog shares traded at 6.20 rupees.

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Foreign inflows at CSE top Rs. 23 b

The year to date net foreign inflow to Colombo Bourse has crossed the Rs. 23 billion mark, as opposed to outflows since 2009.

  Yesterday foreign investors were net buyers to the tune of Rs. 8.6 million bringing the total to Rs. 23.3 billion.

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S&P Sri Lanka 20 closes six points down

The newly launched S&P Sri Lanka 20 Index yesterday closed six points or 0.2% down at 2,845 points on the first after going live.

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Top blue chips out of MPI

Several top blue chips are out of the Milanka Price Index for the second half of this year.
 They are Aitken Spence, DFCC Bank, HNB, Distilleries, LOLC, Royal Ceramics and LB Finance.

Companies which have been included are Expolanka Holdings, Janashakthi Insurance, Browns Investments, PC House, Lanka Orix Finance, East West Properties and Nation Lanka Finance.

 MPI is the value-weighted price index, which incorporates only 25 selected stocks listed on the CSE.     
 These stocks represent the largest and the most liquid 25 stocks. The base date is December 31, 1998, and the base index value is 1000. The constituent stocks in the index are revised bi-annually.
 Year to date the negative return of MPI is over 15% whilst last year it was down by 26%.

 The composition of MPI for second half of 2012 comprises:

 Banks, Finance and Insurance: Central Finance, Commercial Bank, Janashakthi Insurance, Lanka Orix Finance, Nation Lanka Finance, Nations Trust Bank, Sampath Bank and Union Bank of Colombo

 Diversified: Browns Investments, Expolanka Holdings, Free Lanka Capital Holdings, John Keells Holdings, Richard Pieris and Company, Softlogic Holdings, The Colombo Fort Land and Buildings Company and Vallibel One

 Land and Property: Colombo Land and Development Company and East West Properties

 Manufacturing: Ceylon Grain Elevators and Piramal Glass Ceylon

 Power and Energy: Laugfs Gas

 Healthcare: Lanka Hospitals Corporation

 Investment Trusts: Environmental Resources Investment

 Trading: Brown and Company

 Information Technology: PC House

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Wednesday, June 27, 2012

Sri Lankan shares up 0.11 percent; large deals in John Keells

June 27, 2012 (LBO) – Sri Lankan share prices rise on Wednesday, driven by large trades in market heavyweight John Keells Holdings PLC and fabric maker, Textured Jersey Limited, brokers said.

The broader All Share Price Index gained 5.70 points or 0.11 percent to close at 4,995.69, while the liquid Milanka Price Index slipped 1.59 percent or 0.04 points to end at 4,433.96, according to Colombo Stock Exchange figures.

 The new S&P (Standard & Poor’s) Sri Lanka 20 index, which tracks the top 20 most liquid stocks, closed down 2.90 points or 0.10 percent to 2,848.88, data showed.

Wednesday’s turnover was 972.5 million rupees, lower than 8.08 billion rupees posted on Tuesday, largely due to one-off deal in conglomerate Aitken Spence Holdings PLC.

Foreign buying accounted for 85.23 million rupees over sales of 77.65 million rupees.

John Keells Holdings, dominated trading with two large trades, brokers said. A quantity of 284,000 JKH shares was sold at 190.00 rupees while a block of 3,367,000 shares traded at 182.50 rupees.
 JKH closed down 1.00 rupee to 189.00 rupees on trades of 3.735 million shares.

Textured Jersey, which is partly owned by one of Sri Lanka’s biggest clothing manufacturers Brandix, saw a parcel of 4,246,400 shares sell at 7.70 rupees. The counter closed flat at 7.70 rupees on trades of 4.23 million shares.

Commercial Bank of Ceylon PLC, one of the island’s most profitable lenders, saw its non-voting stock close flat at 74.00 rupees on trades of 428,738 shares.

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Sri Lanka targets foreign investment with top 20 index

(Reuters) - Sri Lanka launched on Tuesday an index of 20 of its leading listed companies in what the market regulator said was a bid to attract more foreign investment in the island nation's bourse.

The S&P Sri Lanka 20 index included market heavyweight John Keells Holdings, top private lender Commercial Bank of Ceylon and Sri Lanka's No.1 mobile phone operator Dialog Axiata.

"It will ... be helpful to attract foreign investors," the chairman of Sri Lanka's Securities and Exchange Commission Thilak Karunaratne told Reuters.

The index, developed by the Colombo Stock Exchange and S&P Indices, includes Sri Lanka's largest 20 stocks by market capitalisation that also meet liquidity and viability thresholds.

Foreigners have been net sellers of Sri Lanklan stocks over the past three years, mainly due to low liquidity and reports of market manipulation.

But that trend has reversed with a foreign inflow of 23.32 billion rupees ($174.68 million) so far this year. That was helped by Malaysia's state investment arm Khazanah Nasional, buying 8.9 percent of John Keells Holdings for about $120 million.

The broader All Share Price Index has been one of Asia's worst performers so far this year wuth a 17.85 percent fall. (Reporting by Shihar Aneez; Editing by Andrew Heavens)

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Veiw - S & P Index - Press Release

S&P boost for Colombo Bourse

■  S&P Sri Lanka 20 index goes live joining a base of indices globally with an exposure of over $ 1.45 trillion

 ■ CSE Chief says credible, transparent index will have a positive impact

The battered Colombo stock market yesterday got a fresh boost with world renowned S&P launching a dedicated index in partnership with the CSE.

 The S&P Sri Lanka 20 index is designed to be representative of the Sri Lankan equity market, yet also be efficient to replicate, with possible application for index funds and Exchange Traded Funds (ETFs).

The Index includes the largest 20 stocks, by total market capitalization, listed on the CSE that meet minimum size, liquidity and financial viability thresholds. The constituents are weighted by float-adjusted market capitalization, subject to a single stock cap of 15%, which is employed to enhance portfolio diversification.“I am confident that a credible and transparent index will positively impact the market,” CSE Chairman Krishan Balendra told its launch yesterday with SEC Chairman Tilak Karunaratne and stock brokers in attendance.

 Balendra said the CSE has embarked on a focused transformation program targeting issuers, investors and intermediaries. In the sequencing of the initiative, launching a co-branded index with S&P Indices was ranked for implementation in Q2 of 2012.

 A credible and transparent index would positively impact the CSE by providing visibility and better pricing and serve it well in attracting the foreign investor.

 A credible index also forms the foundation for exploring the previously unchartered territory of index linked products as well as cross exchange alliances.

 Over $ 1.45 trillion is directly indexed to S&P indices, which includes the S&P 500, the world’s most followed stock market index.

“The S&P Sri Lanka 20 Index was created to help both local and international investors gauge the performance of the Sri Lankan equity market. In recent years, there has been increased interest in Sri Lankan equities from both domestic and international investors, which has spurred demand for a Sri Lankan equity benchmark capable of supporting index-linked financial products,” S&P Indices Vice President Global Equity and Strategy Indices Vice President Alka Banerjee said.

 Initially financial markets newswires Bloomberg and Reuters will have the S&P Sri Lanka 20 going live with two others including DirectFN coming onboard.

 S&PCNXNIFTI50 in India is widely used index by foreign investors and has had a positive impact for Indian equities market overall, Banerjee told the Daily FT.

 The S&P Sri Lanka 20 has been designed in accordance with international practices and standards. Al1 stocks are classified according to the Global Industry Classification Standard (GICS), which was co-developed by S&P Indices and MCSI and is widely used by market participants throughout the world.

 The Index employs a transparent, rules-based methodology, adjusts for available float and employs inclusion thresholds necessary to enhance tradability. To be eligible for inclusion, a stock must have a minimum float-adjusted market capitalization of 500 million Sri Lankan rupees (Rs), a six-month average daily value traded of Rs 1 million should have traded at least 10 days of each month for the three months prior to the rebalancing reference date, and a positive net income over the 12 months prior to the rebalancing reference date.

 S&P Indices, a leading brand of the McGraw-Hill Companies, maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $ 1.45 trillion is directly indexed to our indices, which includes the S&P 500, the world’s most followed stock market index, the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, the S&P Global BMI, an index with approximately 11,000 constituents, the S&P GSCI, the industry’s most closely watched commodities index, and the S&P National AMT-Free Municipal Bond Index, the premier investable index for U.S. municipal bonds.

 It is not possible to invest directly in an index. S&P Indices does not sponsor, endorse, sell, or promote any S&P index-based investment product. This document does not constitute an offer of services in jurisdictions where S&P Indices or its affiliates do not have the necessary licenses. S&P Indices receives compensation in connection with licensing its indices to third parties.

 The Colombo Stock Exchange (CSE) operates the only share market in Sri Lanka and is responsible for providing a transparent and regulated environment where companies and investors can come together. The CSE is a company that is limited by guarantee established under the Laws of Sri Lanka. The CSE is licensed by the Securities and Exchange Commission of Sri Lanka (SEC) and is a mutual exchange consisting of 15 Members and 14 Trading Members. Al1 Members and Trading Members are licensed by the SEC to operate as Stockbrokers.

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Distilleries transfers 16.3% Spence stake to Melstacorp for Rs. 7 b

Distilleries Company of Sri Lanka (DCSL) yesterday transferred 16.36% stake out of a total of 28% in Aitken Spence Plc to Melstacorp Ltd., for Rs. 7.08 billion.

The stake amounting to 66.42 million shares was done at Rs. 106.60 per share.

 As at 31 March 2012, Distilleries held 113.7 million shares in Spence amounting to 28.02% stake. Originally market feared the transaction was mysterious foreign shareholder Rubicond selling since it almost has an identical stake of 66 million shares or 16.25% stake.

 However, DCSL in a filing to the CSE said it sold 16% stake to Melstacorp as part of the internal group restructuring process.

 Prior to yesterday’s transfer, Melstacorp held 11.67% stake in Spence, much of the quantity collected via a mandatory offer at Rs. 115 per share. Melstacorp now holds 27.67% stake in Spence.
 Yesterday’s transfer comes a day after a similar transaction involving DCSL’s stakes in Madulsima and Balangoda Plantations and Browns Beach Hotel for Rs. 1.04 billion.

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IIFL gets big deal

Relatively newcomer IIFL Securities Ceylon (Pvt) Ltd., has managed to be the broker for the mega deal involving the transfer of DCSL’s 16% stake in Spence to Melstacorp.

IIFL which had given the best quote within the negotiated brokerage platform is among three select brokers with whom DCSL Group deals with of late in a market of 28 brokers.

With a value of Rs. 7.08 billion, it is one of the largest in post-war Bourse. The largest was Malaysian sovereign fund Khazana buying 8.8% stake of JKH for Rs. 14.5 billion in March.

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Tuesday, June 26, 2012

Sri Lankan stocks flat; high turnover driven by Aitken Spence, Lion Brewery

June 26, 2012 (LBO) – Sri Lankan share prices were virtually flat on Tuesday, despite big ticket deals in Aitken Spence PLC and Lion Brewery PLC which propelled the bourse to one of its highest turnovers in a single trading day, brokers said.

 The benchmark All Share Price Index was down 0.44 points or 4,989.99 while the liquid Milanka Price Index dipped 16.96 points or 0.38 percent to close at 4,435.55, according to Colombo Stock Exchange figures.

 Turnover was 8.08 billion rupees, which the second highest for the year since March 15, brokers said. Foreign buying accounted for 722.34 million rupees over foreign sales of 36.43 million rupees.

Conglomerate Aitken Spence, with investments ranging from leisure to logistics, dominated trading in terms of turnover on a one-off deal. The counter closed flat at 111.00 rupees on trades of 66.44 million shares.

Brokers speculated that the Distilleries group had sold a block of 66,420,425 shares for 106.60 rupees (down 4.40 rupees) to a relate party.

Lion Brewery, the island’s largest brewer, rose 15.00 rupees to 215.00 rupees on trades of 2.4 million shares. Brokers said three large parcels of Lion Brewery, in blocks of 235,025, 91,455 and 1,188,545 were sold at 215.00 rupees a piece.

 Market heavyweight, conglomerate John Keells Holdings PLC slipped 30 cents to 190.00 rupees on 1.012 million shares.

Other notable trades came from Softlogic Holdings PLC, which has agencies for a range of electronic equipment including Panasonic and Nokia mobile phones, was flat at 10.10 rupees on trades of 5.72 million shares.

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Harry’s Melstacorp adds plantations, leisure to investment portfolio

Business tycoon Harry Jayawardena-controlled Distilleries Company of Sri Lanka (DCSL) subsidiary Melstacorp Ltd. has added plantations to its investment portfolio in addition to expanding interests in leisure.

Via transfers, Melstacorp acquired 31% stake in Madulsima Plantations Plc and 43% stake in Balangoda Plantations Plc from its parent DCSL as well as 41.7% stake in Browns Beach Hotels Plc in a total deal worth Rs. 1.04 billion.

 The stake in Balangoda amounted to 10.2 million shares done at Rs. 23.60 each (worth Rs. 240.7 million), and in Madulsima it amounted to nine million shares at Rs. 9.10 per share (Rs. 82 million). Browns Beach stake was 54.065 million shares at Rs. 13.30 (Rs. 719 million).

 Madulsima’s stock price closed unchanged at Rs. 9.50 and Balangoda in similar fashion at Rs. 23.50. Browns Beach closed 10 cents down to Rs. 13.90.

 For DCSL at cost Balangoda Plantations Plc stake was Rs. 430 million whilst that of Browns Beach was Rs. 1.2 billion and Madulsima stake was Rs. 90 million.

 Mesltacorp is being developed as the holding company of DCSL’s investments. It already owns Lanka Bell Ltd., and has investments in financial services via Melsta Regal Finance Ltd., Continental Insurance, whilst in manufacturing investment is in Texpro Industries. It also has a Logistics venture and deals in beverages via Periceyl Ltd.

 Top banker and former Commercial Bank MD Amitha Gooneratne is the Managing Director of Melstacorp Ltd, which also holds stakes in JKH and Aitken Spence among others.

 Board of Directors of Melstacorp Ltd., comprises D.H.S. Jayawardena (Chairman), Amitha Gooneratne (Managing Director), C.R. Jansz, Capt. K.J. Kahanda, R.K. Obeyesekere, C.F. Fernando, Dr. A.N. Balasuriya, Niranjan Deva Aditya

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Keells to double capacity with Rs. 700 m buy of D&W’s processed meat plant

Leader in processed meat Keells Food Products Plc is doubling its capacity with the purchase of production facility of D&W Foods Ltd., at Pannala for Rs. 700 million.

The Company also announced a Rights Issue to raise Rs. 1.02 billion. Both moves are subject to shareholder approval at an EGM.

 D&W Foods is located at Makundara Industrial Estate in Gonavila, Pannala. Set up in 2006, it is a Board of Investment approved venture involving Belgium and Sri Lanka partners.

 Specialising mainly in exports to Europe, India and Middle East in partnership with Belgium firm, a leading chicken meat marketer, D&W boasts of one of a kind factory in South Asia with ISO 22000:2005 which assures food safety. Its plant’s capacity is estimated at 20 tons of processed meat per day.

 KFP was scouting for an expansion as its 25-year old Ja-ela plant has reached peak capacity despite several augmentations over the last few years. The Company has done business with D&W as well.
 The acquisition and further improvements will be financed by Keells Products via a two for one rights issue at Rs. 60 each. Keells was trading at Rs. 103.50.

 The Rights will see issuance of 17 million ordinary shares. Keells Products current shares are 8.5 million with a stated capital of Rs. 274.8 million.

In FY12, KFP posted its best ever results. Revenue improved by 6% to Rs. 2.32 billion through a volume increase of 4% and selected price increases in some of the SKUs. The retail channel contributed 35% to overall volumes and grew by 7% whilst the catering channel contributed 30% and grew by 5%. Although the processed meat range and crumb range grewin volume there was a decline in the trading and canned range volumes during the year under review.

 Pre-tax profit rose by 89% to R. 180.6 million. After-tax profit was Rs. 129.6 million as against a loss of Rs. 55 million in FY11.

 This turnaround was owing to improvements in efficiency, prudent cost management and the Nation Building Tax reduction granted in the previous year’s Budget. Distribution cost at the Company increased to Rs. 248 million from Rs. 238 million in the previous year largely due to the strengthening of the sales and marketing team whilst maintaining advertising and promotional costs at the same level as in the previous year. Primary distribution

 costs were maintained at the same level as in the previous year despite increase in sales volumes and an increase in diesel costs.

 In the company’s FY12 Annual Report KFP Chairman Susantha Ratnayake said the erratic supply of chicken meat particularly during the second quarter of the year under review had an impact on the cost base as the Company was compelled to import chicken at a higher cost which was not passed on to the consumer.

 In addition to working with many of the established chicken farms, KPL has also inducted new players in to the supply chain with the goal of increasing the local chicken production to meet the Company’s raw material requirements.

 Ratnayake in his review also reiterated that a few long standing issues remain unaddressed. They included unbranded sausages sold in loose form in the general trade compromising the quality and hygiene standards. “The authorities should take serious concern of this development and enforce proper hygiene standards to protect the consumer,” KFP Chief said.

 However KFP remains optimistic. “With changing life styles in terms of the meal preparation time being reduced at homes, the convenience foods industry has excellent potential. The increase in the number of outdoor events and growth in tourism will continue to fuel growth in this industry. Our R&D and product development is receiving high priority to offer nutrition while mitigating the rising cost of raw materials and energy,” Ratnayake added in Chairman’s Review in the KFP’s Annual Report for the year ended 31 March 2012.

 Consumption of processed meats still remains comparatively low in Sri Lanka when compared to the fresh meats category, there is scope for growth.

 With the addition of the 3 products during the year, KPL offers the consumer a greater choice for their consumption occasions. In FY 12 based on research and consumer feedback the Company engaged a restructure of its brand and products portfolio through a new brand architecture which has now begun to roll out. This means the Elephant House meats which are currently manufactured and marketed under franchise, the Keells sausages, meatballs and slices and the Krest Chinese rolls and crumbed formed meats will be positioned targeting the different consumption occasions for the identified target groups. The fully compliant Halal brand, Krest witnessed a steady growth in volumes during the period under review. The Krest range includes Chinese rolls, nuggets, fish fingers, kievs. Krest french fries, which is primarily marketed to the catering industry.

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Gardiner collects 2% Kandy Hotels stake from foreign fund

Sanjeev Gardiner-controlled Hotel International Ltd. yesterday picked up a 2.3% stake in Kandy Hotels Company for Rs. 72 million.

 The seller was HSBC International Nominees Ltd-UBS Ag Singapore Branch. The parcel amounting to 13.2 million shares was done at 50 cents below Friday’s closing price.

Hotel International is a related company to Kandy Hotels Company (KHC).

 Ceylon Hotels Corporation, controlled by Sanjeev Gardiner, holds 76.54% stake in KHC along with Ceylon Hotels Holdings Ltd., (9.77%). Prior to yesterdays purchase Hotel International held 0.8% stake as at 31 March 2012.

 During FY12, KHC posted a net profit of Rs. 84.2 million, up by 74% over the previous year.

Revenue rose by 36% to Rs. 392 million whilst profit from operations improved by 130% to Rs. 97 million. KHC owns both Hotel Suisse as well as Queens in the hill capital.

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Monday, June 25, 2012

Sri Lankan rupee at near record low; stocks down

(Reuters) - The Sri Lankan rupee traded at a near record low on Monday in thin trade and many banks stopped quoting spot prices.

The rupee traded at 132.90 to the dollar, with a state bank selling dollars at that level, traders said. The rupee hit a record low of 133.60 on June 12.

Five dealers said there was no interbank spot quote by the end of the day and the highest spot-next trade was done above 134 per dollar.

"Effectively, there is no interbank spot trading. What is happening is dealers buy (dollars) from exporters and sell to importers," said a currency trader on condition of anonymity.

"There were some spot deals done at 132.90 in early trade. Many importers were desperate for dollars."

Four currency dealers told Reuters that some banks had stopped quoting spot rates after the central bank told the traders not to trade above 133.00.

Central Bank Governor Ajith Nivard Cabraal declined to comment. The Sri Lanka Forex Association (SLFA), a body which represents all the currency dealers, said quoting spot was an individual decision based on each dealer's position and risk appetite.

The Colombo Stock Exchange's main index closed down 0.97 percent at 4,990.43, its lowest since June 14.

Turnover was 1.52 billion rupees ($11.41 million) boosted by several block deals. This year's daily average turnover is 928.5 million rupees.

Foreign investors were net sellers of 57.8 million rupees worth of shares on Monday, but they are net buyers of 22.64 billion rupees worth shares so far this year. (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Nick Macfie)

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Sri Lanka stocks fall 0.96-pct

June 25, 2012 (LBO) – Sri Lankan share prices closed down Monday, despite large trades in Madulsima, Balangoda Plantations lifting turnover levels to over a billion rupees, brokers said.

 The key All Share Price Index fell 48.72 points or 0.96 percent to close at 4,990.43, while the liquid Milanka Price Index dipped 26.00 points or 0.58 percent to end at 4,452.51, according to Colombo Stock Exchange figures.

 Monday’s turnover of 1.5 billion rupees was largely driven on deals in plantation stocks Madulsima and Balangoda, as well as Commercial Bank of Ceylon and Browns Beach Hotel, brokers said.

Browns Beach Hotel, with a seafront property along the Negombo coastline, dominated turnover. The counter slipped 10 cents to 13.90 rupees on trades of 54.07 million shares. Brokers said a large parcel of 54,065,132 changed hands at 13.30 rupees.

Balangoda Plantations, which is largely owned by the Distilleries Group, closed flat at 24.20 rupees on trades of 10.22 million shares.

Brokers said a parcel of 10,200,000 Balangoda shares crossed at 23.60 rupees and speculated that the Distilleries group may have sold their 43 percent stake to a friendly party.

Central Finance PLC, one of the country’s largest finance companies, closed flat at 129.00 rupees on trades of 666,678 shares. Brokers said a large parcel of 665,763 shares crossed at 129.00 rupees.

 Madulsima Plantations, also owned by the Distilleries Group, closed flat at 9.10 rupees on trades of 90 million shares. The entire trade took place in one block, and broker speculated that the 31 percent stock may have been sold by Distilleries to a friendly party.

Kandy Hotels, closed down 50 cents to 5.60 rupees on trades of 13.3 million shares. Brokers said a parcel of 13,221,929 shares crossed at 5.50 rupees.

Commercial Bank’s voting stock fell 50 cents to 100.20 rupees on trades of 571,237 shares.

A parcel of 400,000 shares earlier crossed at 100.00 rupees.

Commercial Bank’s non-voting stock fell 1.00 rupee to 73.90 rupees on trades of 427,406 shares.

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Weekly foreign holding update - 22 06 2012

source - CAL research

Swarnamahal Financial Services’ profit up 124% to Rs. 141 m

Swarnamahal Financial Services Plc (SFS), has reported a strong performance during the financial year 2011/12 with overall income growing by 49% to reach Rs. 1.06 billion, compared to the income of Rs. 713 million a year earlier.

 During FY12 SFS reported a before tax profit growth of 125%, with profits before tax reaching Rs. 218.9 million, up from Rs. 96.9 million during the previous financial year. The Company’s profit after tax more than doubled to Rs. 140.7 million in the 2011/12 financial year, from Rs. 62.7 in the previous year. Total asset base grew from Rs. 4 billion to Rs. 5.3 billion, an increase of Rs. 1.3 billion.

The company listed on Diri Savi Board of the Colombo Stock Exchange, is mainly engaged in deposit taking, pawning services, vehicle leasing, hire purchase and providing loans and other credit facilities, through its network of 17 branch offices and gold loan service centres spread across the country. It styles itself as one of Sri Lanka’s most trusted licensed finance companies.

“As one of the most secure and stable financial services providers in the country, with nearly 65% of our total asset base backed by gold, we are happy to announce that the company has continued to show commendable growth during the last financial year,” SFS Director and CEO Sameera Ganagoda said.

 SFS, that has established an island wide reputation for trust and security in the Sri Lankan market, particularly for pawning services, said gold continued to be a golden investment for the company. During the 2011/12 financial year its pawning services expand by 30%, from Rs. 2.4 billion to Rs 3.1 billion in the 2010/11 financial year.

“Our gold loan services in particular, showed strong growth during the year due to consumer trust in our company. We also have a highly trained and experienced staff to deliver this specialised service. In addition, because our asset base is heavily backed by gold and gold advances, we are able to provide extremely secure investments for Sri Lankan consumers,” Ganegoda added.

 SFS also reported further improvements to its Non Performing Loan ratio that was already contained at a minimum, compared to industry standards.

  “We are happy to announce that our (NPL) ratio too, saw a reduction during the year, to 0.3% from 0.4% previously, due to our ongoing efforts to streamline collections,” Ganegoda said.

 With rising interest rates, demand for fixed deposit services too, increased and fixed deposits at SFS increased from Rs. 3.4 billion to Rs. 4.3 billion in the financial year 2011/12.

 The company also added two new branches to its network during the year, in Aluthgama and Batticaloa in the East. The company says it hope to establish five more new braches during the new financial year, mainly to improve accessibility to its services in the North and East. The North and East showed exceptional growth during the financial year with strong demand from existing branches in Vavunia, Jaffna, Batticaloa and Trincomalee.

  “Already the North and the East accounts for nearly one third of our total assets, due to very strong demand. So we plan on increasing access to our services to more consumers in these areas,’ Ganegoda said.

 SFS also offers a range of savings products designed for corporate and individual customers, and also children. The SFS Saver account has been specially designed for large saver that deposit larger amounts of funds. The Kumara Kumari children’s accounts are designed for children with attractive interest rate to encourage the savings habit among children.

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JKH buys more land for mega project

■Adds 60 perches to its 10 acre land base at Glennie Street at a cost of Rs. 300 m

 ■Analysts links move as a precursor to premier blue chip’s plans to undertake country’s biggest private sector mixed development project costing $ 500 m

Premier blue chip John Keells Holdings (JKH) has recently acquired 60 perches of land adjoining its head office in Glennie Street in Colombo 2 at a cost of Rs. 5 million per perch in a deal worth Rs. 300 million.

The price paid for the latest acquisition to further expand its land base of around 10 acres is in line with the FY12 valuation of Ceylon Cold Stores land in Colombo 2. The value in the previous year was Rs. 3.5 million per perch.

 JKH holds the estimated 10 acre land base mostly free-hold and a few on lease within the Glennie Street Head office complex. This block of 60 perches is behind Cold Stores premises and next to cleared area which houses a temporary visitor car park.

 Analysts viewed the acquisition as a precursor to plans by JKH to launch what is billed as the biggest ever private sector mixed development project costing at least $ 500 m.

 To date JKH has been tight lipped about the details of the much speculated venture which according to some would include a new hotel, apartment complex, office complex, convention centre, shopping mall etc.,  a smaller version of an integrated resort similar to those successful ones in Singapore.

 In JKH’s 2011/12 Annual Report Chairman Susantha Ratnayake only disclosed: “The Property group has initiated plans to embark on the development of multiple commercial and residential properties to capitalise on the growth opportunities in the property business.”

Several stock brokers have hinted some details though none have been confirmed by JKH. For example CT Smith said JKH has plans to enter into a mixed development project comprising two star-class hotels, two apartment complexes and a shopping mall within Colombo, on unutilised group land.

 TKS Securities said the proposed mega mixed development project of 1,000 hotel rooms, a shopping complex, a commercial complex and a serviced apartment complex in the current head office premises. Capital Alliance noted plans for an integrated city/project.

 JKH identifies itself as owning a significant land bank in prime areas of Colombo and the Property industry group is one of the largest private sector proprietors of real estate in Colombo.

 In the 201/12 Annual Report JKH said despite the short term pressure on account of the currency depreciation and interest rate hikes, the Property group is positive about the future and is working towards the successful completion of the projects in the pipeline.

“Property is continuously striving towards identifying and executing projects which yield superior returns and also taking necessary steps towards realising a ‘first mover’ advantage, a critical component in acquiring lands with strategic development potential,” JKH said.

 Property will also develop and expand opportunities in the retail shopping space in the growing suburbs of Colombo, making use of the favourable shifts in socio-cultural behaviours of the fast growing urban population. The cornerstone of these developments will be the continuous focus on driving efficiencies and managing costs.

 Considering the growth in the rental market, population growth, changing lifestyles and affordability, the housing market is shifting towards a rapid growth phase. Therefore, the Property Development sector will continue to work on revenue maximisation by way of optimising space utilisation and effective pricing to capitalise on these market dynamics.

 At present the JKH Property Development sector concentrates primarily on development and sale of residential apartments such as the ongoing ‘OnThree20’ project. This sector includes Asian Hotels and Properties PLC – the developers of ‘The Crescat Residencies’, ‘The Monarch’, the newly completed 35-story luxury apartment complex ‘The Emperor’ and the up-market shopping mall ‘The Crescat Boulevard’.

In 2012/12 the Property Development sector also commenced the development of a 140,000 square foot retail mall in Ja-ela, a densely populated suburb of Colombo. For this it bought a 6 acre land in Ja-Ela for Rs. 522 million.

 JKH’s property industry group witnessed significant growth during the year with revenues growing by 52% to Rs. 3.79 billion [2010/11: Rs. 2.49 billion], primarily due to the revenue recognition of both ‘The Emperor’ and ‘OnThree20’ projects. EBIT increased by 19% to Rs. 1.01 billion [2010/11: Rs. 851 million] due to the revenue recognition cycles.

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Saturday, June 23, 2012

Sri Lanka tourism receipts up 25-pct to May

June 23, 2012 (LBO) - Sri Lanka has earned 399.3 million US dollars from tourism in the first five months of 2012, up 25.5 percent from the 318.1 million US dollars earned a year earlier, official data showed.

 Tourist arrivals rose 18.2 percent to 387.622 in the same period. Sri Lanka's tourist sector has been booming since the end of a 30-year war in 2009.

 The rupee value of tourist receipts rose 39.8 percent to 49.14 billion rupees, data released by the Central Bank showed. Sri Lanka's currency fell steeply in the first quarter.

Tourist receipts (exports of tourism services) increase the spending power of domestic economic players and help generate a trade deficit along with remittances that come from exports of labour.

However it is does not expand what economists define as the current account of the balance of payments, as tourism is also current receipt.

Terms such as the 'merchandise trade account' and 'current account' are arbitrary sections definitions carved out of parts of the overall balance of payments, which is always in balance if the Central Bank does not sterilize its foreign exchange operations.

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Bourse closes active week on slightly negative note

Turnover up but indices edge down

 The Colombo bourse yesterday closed what brokers described as ``an active week after a long period of slumber’’ on a turnover of Rs.674 million, up from the previous day’s Rs.529.5 million. with both indices down – the All Share by a marginal 2.92 points (0.06%) and the Milanka by a sharper 28.79 points (0.64%) with losers outpacing gainers two to one by 129 to 62.

Activity picked up sharply towards close of trading with block trades in Seylan Bank, JKH and Central Finance.

Seylan saw 2.5 million shares crossed at Rs.60 in a deal worth Rs.150 million, JKH 471,088 shares at Rs.194 contributing Rs.93.4 million to turnover and Central Finance 575,000 shares at Rs.135 generating Rs.77.6 million.

Brokers said that the market was very slow during early trading and both indices down much more sharply than at close when activity picked up.

On the trading floor, JKH was the top turnover generator closing Rs.4 down at Rs.192 with nearly 0.3 million shares traded between Rs.192 and Rs.197.

Dialog, where considerable interest was seen this week, closed flat at Rs.6.20 on over 8.1 million shares traded between Rs.6.20 and Rs.6.40 contributing Rs.51.1 million to turnover while Commercial Bank closed 40 cents down at Rs.100.50 on over 0.3 million shares done between Rs.100 and Rs.100.50.

Brokers said that retailers continued to be active in stocks like HVA, down 10 cents to Rs.13.20 on nearly 1.2 million shares, Expolanka, down 20 cents to Rs.6.10 on nearly 2.3 million shares and Nation Lanka, closing at Rs.9 on over a million shares done between Rs.8.70 and Rs.9.20.

Among blue chips that showed volume were Carsons up 50 cents to Rs.466.40 on 39,512 shares, HNB down a rupee to Rs.146 on 73,878 shares and CTC down a rupee to Rs.657 on 11,374 shares. Bukit Darah gained Rs.17.60 to close at Rs.780 on 10,029 shares.

Ceylon Tea Services announced a final dividend of Rs.10 per share for 2011/12 following shareholder approval at a July 18 AGM. The share will trade XD from July 19 with payment on July 27.

Alliance Finance announced a final dividend of Rs.20 per share following shareholder approval at a July 31 AGM with the counter trading XD from Aug. 2 with payment on Aug. 10.

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Sri Lankan stocks down 0.05 percent

June 22, 2012 (LBO) – Sri Lankan stocks dipped 0.05 percent on Friday, despite big ticket deals in John Keells Holdings, Commercial Bank, Seylan Bank and Central Finance, brokers said.

 The broader All Share Price Index slipped 2.92 points to 5,039.15, while the liquid Milanka Price Index slipped 0.63 percent or 28.79 points to close at 4,478.51, according to Colombo Stock Exchange figures.

 Friday’s turnover was 674.04 million rupees, of which foreign buying amounted to 304.53 million rupees over sales of 227.25 million rupees.

Seylan Bank PLC, dominated trading in terms of turnover on 2.6 million shares. The counter rose 3.50 rupees to close at 59.90 rupees. A parcel of 2.5 million Seylan shares changed hands at 60.00 rupees during the day.

JKH, with interest in leisure, food, transport and financial services, fell 2.10 rupees to 192.00 rupees on trades of 749,708 shares. A block of 471,088 JKH shares changed hands at 194.00 rupees.

Central Finance PLC, one of the country’s oldest finance companies, fell 80 cents to 135.00 rupees on trades of 592,959 shares. A large parcel of 575,000 Central Finance shares was sold at 135.00 rupees, minutes before trading closed.

 Commercial Bank of Ceylon PLC, one of the island’s most profitable banks, fell 40 cents to 100.50 rupees on 323,946 shares. Brokers said a block of 299,405 Commercial Bank shares changed at 100.50 rupees.

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Friday, June 22, 2012

Market snapshot -22 06 2012

source - CAL Research

Mahinda minds stock market woes

The lingering woes of the Colombo stock market, which until last month had lost Rs. 400 billion in value, have drawn the concern of the country’s Chief Executive, the Daily FT learns.

Prior to taking off to Cuba and Brazil, the current situation of the Colombo Bourse, the world’s best performer not so long ago but reeling with continuous negative return since 2010, had been discussed at a top level meeting. This discussion included the Securities and Exchange Commission (SEC) Chairman Tilak Karunaratne, Treasury Secretary Dr. P.B. Jayasundera, Central Bank Governor Nivard Cabraal and former Attorney General Mohan Peiris.

 Some officials refused to divulge specifics saying it was a private meeting where many issues were discussed. Others said stock market figured very much during the discussion.

source -

Thursday, June 21, 2012

DIAL-Data Driven-21June2012 - BUY

DIAL-Data Driven-21 June 2012 –BUY
CAL’s 2013E price target is LKR 9.6 based on a 34% recurrent 2012-14E EPS CAGR and a 8.2x PER (+54%)
·  CAL’s 2012E fair value for DIAL is LKR 8.6 (+41%) based on a DCF valuation

·  DIAL: A one-stop shop in Sri Lanka…

· …a market primed for mobile broadband uptake

· Ideally positioning it to benefit from Sri Lanka data growth (fixed 4% + mobile 55% 2012-14E CAGR)…

· …off the back of its large mobile subscriber base (c.7.4mn in 1Q2012)

· DIAL’s telecom SBU continues to be the backbone for growth (c.84% of revenues in 2014E)

·Foreign currency earnings offset potential impact from further LKR depreciation
source - CAL Research

Banks drag down Sri Lankan bourse after S&P report

* Bourse down, snaps 6-straight session gains

* S&P ranks local banks at 'very high risk'

* Rupee weaker on importer dollar demand

COLOMBO, June 21 (Reuters) - Sri Lankan shares fell on Thursday after Standard & Poor's ranked the island nation's banks at "very high risk" in an assessment the central bank said was incorrect and contradictory.

The Colombo Stock Exchange's main index lost 0.71 percent, or 35.99 points, to 5,042.07, slipping from its highest since May 22. It had gained 5.6 percent in the six sessions through Wednesday.

The finance sector index fell 1.75 percent to a one-week low with top lender Commercial Bank of Ceylon and second largest lender Hatton National Bank losing 0.4 percent and 2 percent respectively.
"The fall in the banking shares was totally due to the S&P report," said an analyst on condition of anonymity.

The central bank hit back at S&P and said the facts used for the analysis were illogically analysed, incorrect and highly contradictory. [IDS:nL3E8HK5IH]

Turnover was 529.5 million rupees ($3.99 million), below the daily average of around 925 million rupees this year.

The rupee fell for a fourth straight session, edging down to 132.80/90 against the dollar from Wednesday's close of 132.70/80 on importer dollar demand amid intervention by a state bank, dealers said. It hit a record low of 133.60 on June 12.

Last week, Treasury Secretary P.B. Jayasundera told Reuters the rupee had hit its low and would stabilise around 125 per dollar in the medium term.

($1 = 132.7000 Sri Lanka rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Nick Macfie)

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UPDATE 2-Sri Lanka plans to issue sovereign bond for up to $1 bln

* Lead managers selected for 5th offshore bond

* Proceeding will be used to refloat debt bond

* Bond pricing will be guided by previous bond yields-cbank

* Bond inflow may help stabilise rupee currency-economist

By Ranga Sirilal and Shihar Aneez

COLOMBO, June 21 (Reuters) - Sri Lanka plans to sell sovereign eurodollar bonds worth up to $1 billion to add to its dollar reserves and give the central bank more room to defend the weakening rupee currency.

The central bank has selected four global investment banks as joint lead managers, bookrunners and underwriters for the proposed issue, it said on Thursday.

The issue will be Sri Lanka's fifth sovereign bond since it first sold a $500 million 5-year euro bond in October 2007.

Central Bank Governor Ajith Nivard Cabraal said the monetary authority will be guided by the joint lead managers on timing of the issuance.

"Our previous bonds are trading at lower than the price they were sold. So we will be naturally guided by them," he said when asked about the yield the central bank expects for the coming bond issue.

The announcement comes as the rupee traded near its record low of 133.60 against the dollar, and traders said the proceeds may be used to stabilise the currency, which has slumped around 17 percent since November.

Amal Sanderatne, an economist and chief executive at Colombo-based Frontier Research, said the bond inflow, together with a falling trade deficit "should help the currency to stabilise."

The central bank and finance ministry have said in the past the proceeds of the bond will be used for the redemption of its debut euro bond, which matures in October this year.

Sri Lanka has been using the bond proceeds to finance a raft of infrastructure projects long neglected due to its protracted civil war and to retire some expensive short-term foreign debt.

The central bank also said it will sell $150 million worth of 3-year Sri Lanka Development bonds to retire maturing securities used for development financing.

Bank of America Merrill Lynch, Barclays Capital , Citibank NA, Hongkong and Shanghai Banking Corporation Limited are the four banks selected by the central bank for the latest global issue.

Since the war ended in 2009, there has been a resurgence in foreign investor interest in the island.
Colombo sold a $1 billion, 10-year euro bond in July 2011 priced at 6.25 percent with an oversubscription of 7.5 times.

The 6.25 percent 2021 bond, which is the most liquid among Sri Lanka's sovereign bonds in the secondary market, was trading at 101.25/102.25 cents on Thursday, which translates to a yield of 6.2 to 6 percent.

The planned new sovereign bond is probably looking at a potential 6.5 percent coupon.

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Sri Lanka stocks close down 0.7-pct

June 21, 2012 (LBO) – Sri Lanka stocks fell 0.7 percent Thursday ending losing some of the gains made earlier in the week, while the rupee was steady against the US dollar, brokers said.

 The main All Share Price Index fell 0.71 percent (35.99) to 5,042.07, while the more liquid Milanka index closed flat at 4,507.30 Turnover was a low 529 million rupees. Turnover was dominated by index heavyweight John Keells Holdings with 56 million rupees while Distilleries and Dialog recorded 53 and 39 million rupees in turn over today. John Keells Holdings closed 2.00 rupees higher at 196 with 287,846 shares traded. A total of 242,743 Aitken Spence shares changed hands Thursday at 110.60 rupees. Brokers said 400,000 shares of Distilleries was sold in an off-market deal at 130.00 rupees.

 Tangerine Beach Hotels Plc was the top gainer rising 30.83 to close at 93 rupees up 48.45 percent.

Newly listed Ramboda Falls slipped -8.10 to close at 23.00 rupees down -25.63 percent.

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Bourse stays on the up; rupee weaker

Reuters: Sri Lankan shares edged up on Wednesday led by retail investor buying into market heavyweight John Keels Holdings, while the rupee fell on importer demand for dollars, traders said.

The Colombo Stock Exchange’s main index edge up 0.37 percent or 18.77 points to 5,078.06, its highest since May 22. It has gained 5.6 percent in the last six sessions.

“The market is on a bit of a retail run today. We saw retail participation and very little foreign activities,” said a stockbroker on condition of anonymity.

 The market heavyweight and top conglomerate John Keells Holdings gained 1.73 percent to 194.00 rupees, pushing up the overall index. Another favorite for retail investors, HVA Foods, jumped 8. 5 9 percent to 13.90 rupees a share, which some analysts attributed due to speculative buying.

 But trading was thin as institutional investors stayed out of the market because of concerns over sluggish economic growth, rising interest rates, and a volatile rupee currency.

 The day’s turnover was 616.6 million rupees ($4.65 million), below the daily average of 929.1 million rupees this year.

 On Wednesday, both 182- and 364-day T-bill yields rose to two-year high of 12.47 percent and 12.78 percent respectively at a weekly auction.

 The rupee fell for a third straight session to 132.70/80 against the dollar from Tuesday’s close of 132.50/70 on importer dollar demand, dealers said. It hit a record low of 133.60 on June 12.

 Last week, Treasury Secretary P.B. Jayasundera told Reuters the rupee had hit its low and would stabilise around 125 per dollar in the medium term.

source -

The Lighthouse Hotel goes for Rs. 430 m expansion

Ahead of its Annual General Meeting next week, The Lighthouse Hotel has finalised plans for a Rs. 430 million expansion that will see the addition of 23 deluxe rooms and two suites. The upgrade will also include a new restaurant and a bar with an extension to the spa in addition to the refurbishment of the existing 63 rooms.

The latest revamp is in order for The Lighthouse Hotel to keep up with the demands of discerning travellers.

 The hotel is soon to complete its 15th year in operation and has distinguished itself as being truly a part of modern-day Galle. The influence of Bawa design and ambience remains a major factor in attracting visitors from around the globe and it is recognised as a landmark of the south.

 In FY2012, the company reported a net profit of Rs. 109.5 million, up from Rs. 60.4 million in the previous year. Turnover amounted to Rs. 533.8 million, up from Rs. 421 million in FY11.

 The Lighthouse Hotel Plc will hold its AGM on 28 June at 10 a.m. at the Mihilaka Medura of the Bandaranaike Memorial International Conference Hall (BMICH), Bauddhaloka Mawatha, Colombo 7.

 Jetwing Hotels Management Services owns a 36% stake in The Lighthouse Hotel Plc in addition to controlling a further 8.3%. Other major shareholders are Mercantile Investments (16.6%), EPF (11%) and Bank of Ceylon (10%).

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Retailers keep bourse buoyant

Indices up, turnover Rs. 616.7 mn

The Colombo bourse yesterday sustained its upward momentum for the fifth day running with the Milanka up 40.92 points (0.91%) and the All Share gaining 18.77 points (0.37%) on a turnover of Rs.616.7 million, up from the previous day’s Rs.533.6 million, with gainers outpacing losers by a comfortable 149 to 76.

Brokers said that considerable retail play was evident in the market with stocks like HVA, PC House, Citrus Leisure, Nation Lanka Finance (both the share and the warrants -W0021), Tess and Citrus warrants (W0019) seeing heavy volumes.

Among the blue chips, Cargills was No.2 on the most traded list and Cheveron saw some activity.

Yesterday’s most traded stock was HVA which closed Rs.1.20 up at Rs.14 on nearly 5.8 million shares traded between Rs.13.20 and Rs.14.50 generating a turnover of Rs.8.2 million.

Cargills followed although the blue chip closed Rs.8 down at Rs.150 with slightly over 0.5 million shares done between Rs.150 and Rs.154.

PC House was up 30 cents to close at Rs.7.30 on 4 million shares done between Rs.7.20 and Rs.7.80 while Citrus Leisure closed Rs.1.10 up at Rs.34 on over 0.6 million shares done between Rs.33.50 and Rs.39.50.

Nation Lanka Finance closed a rupee up at Rs.9.30 with nearly 1.9 million shares done between Rs.8.10 and Rs.9.60 while Ramboda Falls closed Rs.3.30 down at Rs.31.60 on nearly 0.5 million shares done between Rs.29 and Rs.35.50.

The Nation Lanka warrants closed 80 cents up at Rs.3.10 on nearly 5.2 million, Tess was up 30 cents to close at Rs.2.70 on over 5.5 million shares and Chevron gained Rs.5 to close at Rs.170 on 84,269 shares.

Brokers said that with the end of the first quarter approaching on June 30 there was an element of "end of quarter push’’ to keep share prices buoyant.

Colonial Motors announced a first and final dividend of Rs.4 per share for 2011/12 following shareholder approval at a July 27 AGM. The share will trade XD from July 30 and payment will be on August 8.

Lighthouse Hotels announced that plans for its expansion adding 23 deluxe rooms and two suites at a budgeted cost of Rs. 430 million have been finalized.

The CSE announced that it has approved in principle an application from Beruwela Resorts Limited to list 600 million ordinary voting shares on the Diri Savi board by way of an introduction.

The announcement said that copies of the introductory document will be made available shortly to all member firms of the Exchange and trading members.

source -

Market snapshot -20 06 2012

source - CAL Research

Wednesday, June 20, 2012

Sri Lanka stocks up 0.3-pct

June 20, 2012 (LBO) - Sri Lanka's stocks extended gains closing up 0.3 percent Wednesday building up from a 1.2 percent recovery a day earlier, brokers said.

 The benchmark Colombo All Share Index rose 18 points to close at 5,078.06 points. The Milanka Index of more liquid stocks rose 40 points to close at 4,546.08 points up 0.9 percent.

 Turnover was 616 million rupees.

SMB Leasing was the top gainer, rising 10 cents to close at 40 cents rupees up 33.33 percent.

HVA Foods accounted for the biggest turnover with 80 million rupees while Cargills and PC House recorded 76 and 29 million rupees in turnover today.

Newly listed Ramboda falls slipped -1.20 to close at 29.50 rupees down -3.7 percent.

John Keells Holdings, a diversified group gained 3.30 rupees to close at 194.00 rupees up 1.7 percent.

In the banking sector, Hatton National bank closed up at 150.00 rupees, Sampath at 157.00 rupees and Commerical Bank at 100.80 rupees.

 Dialog Axiata Sri Lanka closed flat at 6.00 rupees. Aitken Spence rose 0.10 to close at 66.00 rupees.

Distilleries rose 3.00 to close at 133.50 up 2.3 percent while Dockyard rose 2.10 to close at 187.10 rupees.

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Bourse rebounds on fresh buying spree

■  Market’s value up Rs. 23 b, ASI back again in 5,000-points level

The Colombo stock market produced a confident rebound yesterday driven by high net worth investors as well as institutions picking up low valued opportunities.

 The market’s value rose by Rs. 23 billion, slightly lower than Friday’s gain of Rs. 26 billion. The rise of 1.2% by the benchmark ASI was good enough for it reach a four-week high. The ASI managed to surpass the 5,000 point level after gaining 61 points.  

Yesterday also marked the fifth straight session of gain, with analysts linking it to investors seeing greater value after the Bourse had slipped by 17% until Monday and Price Earnings Ratio having dipped to 13 times, almost half from what it was a year ago. Turnover crossed the half a billion mark, up from Rs. 295 million on Monday.

 NDB Stockbrokers said market continued its upbeat as interest continued across the board.
“High net worth and institutional activity was witnessed in Hayleys while further accumulation was seen in fundamentally sound counters such as Commercial Bank (Voting, Carson and John Keells Holdings,” NDBS said.

 Daily FT learns buyer of 98,600 Hayleys shares was Arc Capital with Ajith Devasurendra as the seller.

 Softlogic Stockbrokers (formerly Arrenga Capital) said release of the healthy economic growth numbers for 1Q2012, assisted to uplift the investor confidence as the overall participatory levels showed considerable improvement.

“Reactivation of retailers in specific added to the improvement in the Bourse’s activity levels,” it said adding nearly four shares gained for each one that dropped.

 Index heavy; Cargills (Ceylon) (+5.3%), Hatton National Bank (+1.9), Ceylon Tobacco (+0.8%), Access Engineering (+5.5%) & Asian Hotels & Properties (+2.8%) were the biggest positive contributors to the index gains.

 Strong renewed retail and high net worth play in speculative favourite, HVA Foods, saw the counter to lead the day’s turnover list with around 9.5% (Rs. 50.6 million) contribution. The counter touched a high of Rs. 13.4, before closing at Rs. 12.8 with a gain of 18.6%.

 Similar interest was evident in PC House and its related entity, PC Pharma, as both the counters witnessed several large trades on board. PC House closed with a notable 14.5% gain at Rs. 7.

 The day’s only crossing was recorded in conglomerate, Hayleys, as the counter saw a block of 98,600 shares done at Rs. 330 each. Furthermore, accumulation was observed in Commercial Bank of Ceylon, John Keells Holdings, Aitken Spence and Vallibel One.

 Despite being attractively priced, selling pressure extended in manufacturing sector player, Royal Ceramics, as the counter continued to trade on its 52-week low of Rs. 90. Nevertheless, some buying interest in the counter during final hours of trading pushed the share to close with a 4.3% gain at Rs. 92.60, still trading at a deep discount. Interest persisted in Carsons Cumberbatch.

 Softlogic Capital said Sri Lankan equity, currently being Asia’s worst performer, now ranks fourth in terms of the world’s least performing stock markets being, just ahead of Greece with an YTD dip of -16.7%.

“With the positive news flowing from the macroeconomic arena coupled with the long prevailed bearish run which dragged the indices to a highly competitive valuation platform amongst other emerging markets, we believe that the Colombo Bourse is all ready for a strong recovery provided interest and exchange rates also gradually ease. We continue to remind the value hunters to stick to the steady lot as we expect them to outrun the market in a recovery,” the Softlogic Equity Research team said.

 Reuters too confirmed that market rose as investors picked up battered blue chip stocks. Government data on Monday showed improved economic growth in the first quarter year-on-year, but brokers said investors were still cautious amid uncertainty over interest rates and the volatile rupee exchange rate.

 Data showed that the $59 billion economy grew at a faster than expected annual rate of 7.9 per cent in the first quarter of 2012, slowing from eight per cent in the same quarter last year.

 The market fell 10.8 per cent in May, due mainly to economic and political worries. It has recovered 4.7 per cent so far in June.

 Foreign investors were net sellers of Rs. 16.9 million worth of shares on Tuesday, but so far this year, they have been net buyers of Rs. 22.59 billion.

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Retail play on punting stock helps sustains upturn

Both indices up, turnover Rs. 533 mn:

 The Colombo bourse yesterday continued its upward movement for the fourth day running with the All Share Price Index gaining a hefty 61.19 points (1.22%) while the Milanka was up 43.11 points (0.97%) on a turnover of Rs.533.6 million, up from the previous day’s Rs.295.4 million, with 185 gainers strongly outpacing 47 losers.

Brokers said that many speculative stocks like HVA Foods, PC House and PC Pharma as well as Ramboda Falls which opened trading a few days ago saw heavy play with retailers active.

Some high net worth traders were also active, they said.

The All Share Price Index has now cleared the sensitive 5,000 point barrier through which it plunged as the market plummeted.

Some of the blue chips like Carsons, Commercial Bank, Aitken Spence and JKH that were among the day’s most traded did not see sharp price movement, either edging up or down slightly or closing flat, brokers said.

The day’s biggest business generator was HVA with nearly 4.9 million shares traded between Rs.11.40 and Rs.13.40 closing Rs.2.10 up at Rs.12.80 and generating the day’s top turnover of Rs.50.7 million.

PC House saw over 3.2 million shares traded gaining 90 cents to close at Rs.7.10 on a trading range of Rs.6.10 to Rs.7.20 contributing Rs.21.8 million to turnover while PC Pharma closed flat at Rs.15 on nearly 1.4 million shares done between Rs.14.40 and Rs.15.40 generating Rs.20.7 million business volume.

There was one block crossing of 98,600 Hayleys at Rs. 330 in a deal worth Rs. 32.5 million.

Carsons edged down 10 cents to close at Rs.466.80 on 50,021 shares done between Rs.466 and Rs.467 generating a turnover of Rs.23.4 million.

Ramboda Falls, introduced with a reference price of Rs.10 which began trading at Rs.15, gained Rs.8.80 to close at Rs.32.90 on 0.5 million shares traded between Rs.24.90 and Rs.34.10 generating a turnover of Rs.15.5 million.

Among the blue chips, Commercial Bank closed flat at Rs.101 on nearly 0.1 million shares done between Rs.100.80 and Rs.101.90, JKH was up 20 cents to close at Rs.190 on 74,000 shares traded between Rs.189 and Rs.191.90 and Aitken Spence down 40 cents to close at Rs.109.90 on over 0.1 million shares traded between Rs.109 and Rs.111.50.

Keells Hotels was up 20 cents to close at Rs.12.20 on over a million shares and Kahawatte up Rs.1.90 to close at Rs.31.90 on nearly 0.4 million shares.

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Ramboda Falls’ splash persists

Debutant Ramboda Falls Ltd. (RFL) continued to gain for the second consecutive day, closing yesterday up 228% from its opening reference price.

 On its maiden trading on Monday, RFL rose to a high of Rs. 35 before closing at Rs. 24.10 with 0.7 million shares changing hands. Yesterday half a million shares traded between a high of Rs. 34.10 and a low of Rs. 24.90, before closing at Rs. 32.80, up by Rs. 8.70.

The company runs a 20-deluxe room resort scenically located next to the cascading Ramboda Falls in the Nuwara Eliya District.

 RFL was the 284th company to be listed on the CSE and is among the final batch of companies taking the listing via introduction route. It was also the third from the hotels and travel sector to list since the end of the war in May 2009, with the other two being Citrus Kalpitiya and Citrus Waskaduwa.

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Tuesday, June 19, 2012

Market snapshot - 19 06 2012

source - CAL Research

Sri Lanka stocks up 1.2-pct

June 19, 2012 (LBO) - Sri Lanka's stocks closed up 1.2 percent Tuesday recovering lost ground with sharp gains in with hotel firms Citrus Leisure and Kalpitiya Beach showing the most gains, brokers said.

 The Colombo All Share Index rose 61 points to close at 5,059.29 points with the Milanka Index of liquid stocks gaining 43 points to close at 4,505.16 points.

 Turnover was 533 million rupees.

Citrus Leisure, gained 7.70 to close at 32.90 rupees up 30.56 percent and its warrants rose 2.20 to close at 6.70 up 48.8 percent. Kalpitiya Beach Resorts rose 1.80 to close at 8.10 up 28.5 percent HVA Foods rose 1.50 to close at 12.80 up 13.27 percent.

City Housing and Real Estate rose 2.20 to close at 12.20 up 22 percent and Colombo Land rose 2.40 to close at 35.00 rupees up 7.36 percent.

Free Lanka Capital Holdings rose 20 cents to close at 1.90 up 11.7 percent and Associate Motor Finance rose 45 rupees to close at 350.00 up 14.7 percent.

Ceylon Beverage Holdings rose 33.60 rupees to close at 299.99 up 12.66 percent.

John Keells Holdings rose 90 cents to close at 190.70 rupees, Commercial Bank was flat at 101.00, Hatton National Bank rose 2.90 to cost at 149.00 rupees

 Finlays Colombo Plc fell 40 rupees to close at 215.00 and Chevron Lubricants fell 5.0 rupees to 165.00.

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Stocks falls sharply, but closes positive

The Colombo bourse closed in positive territory for the eight consecutive day after falling sharply in morning trades on Monday (18).

 The All Share Price Index closed at 4,998.10 points, 0.14 percent higher from the previous close, up 6.89 points. The index touched above the 5,000 mark in the morning before falling sharply to less than 4,950 points before the gradual recovery.

The Milanka Price Index of more liquid stocks closed 0.27 percent higher, up 12.07 points at 4,462.05.

Turnover reached Rs. 295.47 million on a volume of little over 23.3 million shares with losers out numbering gainers 110 to 86.

"Markets opened on an optimistic note but erased its gains and were trading in the red by the afternoon as profit booking dragged the indices lower, however the indices recovered during the end of the session," said Bartleet Religare Securities’ Technical Analyst Gaurav Kumar Sharma.

"The markets seesawed within a range of 5,009 and 4,938 during the day amid low volumes. Markets have seen a rally for the last seven trading days and Monday seemed to be a profit booking day. It seems that the short term trend for the markets has turned bullish although there will be corrections in the markets and any dips around 4,850 – 4,900 levels can be used as buying opportunity," he said.

The bourse saw a net foreign inflow amounting to Rs. 6.96 million.

"Fourteen counters of the 25 in the Milanka Calibre gained for the day with DFCC Bank and Hatton National Bankbeing the main contributors to divert the MPI to move up. Investor play continued in the index heavy Carsons Cumberbatch leading it to spearhead the day’s turnover with a 6.3% contribution. The counter dipped -0.02% closing at LKR466.90. Friday’s speculative play continued in HVA Foods, Lanka Hospitals, Panasian Power and Environmental Resource Investments.Poultry players emerged on the top of the trading screen as retailers sought on Grain Elevators and Three Acre Farms. Following Thursdays on board trades on Asian Hotels and Properties, many more such trades were visible as a total of c181k shares were taken up on 4 trades at LKR71.50," Arrenga Capital Research said.

"Renewed investor hunt was visible in Richard Peiris and Company as many large scale on board transactions took place in the counter. A total of 5 trades gathered c947k shares at LKR6.50.

Similarly Free Lanka Capital Holdings too registered off market deals totalling c1.116 mn shares at LKR1.60 and LKR1.70 during the early trading hours," it said.

"Royal Ceramics amongst Arrenga’s hot stock list renewed its 52 week low at LKR90.00 elevating it to an ever more attractive valuation platform at 3.97 FY13E.Commercial Bank (Voting and Non-Voting) still on attractive valuations continued to witness significant buying interest as the counter recorded a 50k parcel changing hands at LKR100.90 on board.

Ramboda Falls which commenced trading via introduction touched a high of LKR 35.00 (250%) before it closed with a 141% gain at LKR24.10."

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PCH Holdings to list via introduction

The Colombo Stock Exchange (CSE) said yesterday it has approved, in principal an application by PCH Holdings Ltd., to list 252 million ordinary voting shares on the Diri Savi Board by way of an Introduction.

PC House Plc., a related party to PCH Holdings, is already listed on the CSE following its successful IPO in late 2010.

Young business leader Chairman S.H.M. Rishan owns 56% stake in PC House Plc., whilst PCH Holdings., is the controlling shareholder in two other listed entities Orient Garments Plc  (51%) and PC Pharma (62.5% and via Chairman Rishan a further 16%).

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Market snapshot - 18 06 2012

source - CAL Research

Monday, June 18, 2012

Sri Lankan stx recover from early losses; rupee down

* Retail profit taking pulls market down before recovery

* Sluggish economic growth worries remain

* Rupee slips on importer dlr demand

COLOMBO, June 18 (Reuters) - Sri Lankan shares ended a tad firmer on Monday in thin trade as late buying in blue chips helped to offset short term profit taking by retail investors earlier in the day, brokers said.

The Colombo Stock Exchange's main index fell 1.1 p ercent in early trade, but recouped its losses and closed 0.14 percent or 6.89 points firmer at 4,998.10, its highest since May 25.

"There was profit taking from retailers, who may be uncertain about the long term outlook, but later investors bought attractive blue chips," said an analyst on condition of anonymity.

Brokers said that investors were still cautious, looking for clear directions on economic growth, interest rates, and the volatile rupee exchange rate.

On Friday, the IMF revised down its forecast for Sri Lanka's economic growth to 6.75 percent this year, from an earlier estimate of 7.5 percent, citing tighter credit and a weaker currency.

After the market closed, government data showed that the $59 billion economy grew at a faster than expected annual rate of 7.9 percent in the first quarter of 2012, slowing from 8.0 percent in the same quarter last year.

The market fell 10.8 percent in May due to economic and political worries. It has recovered 3.4 percent so far in June.
Market heavyweight and the top conglomerate John Keells Holdings gained 0.80 percent to 189.80 rupees.

The day's turnover was 295.4 million rupees ($2.25 million), well below the daily average of 935.5 million rupees this year.

Foreign investors were net sellers of 7 million rupees worth of shares on Monday, but so far this year foreign investors were net buyers of 22.62 billion rupees.

The rupee edged down to 132.10/20 against the dollar from Friday's close of 131.70/80 on importer dollar demand in light trade, dealers said. It hit an all time low of 133.60 on Tuesday on importer dollar demand.

On Thursday, Treasury Secretary P.B. Jayasundera told Reuters the rupee had hit its low and would stabilise around 125 per dollar in the medium term.

The currency has depreciated 16.4 percent since Nov. 21, when the government allowed a 3 percent devaluation. ($1 = 131.5100 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Jeremy Laurence)

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Sri Lanka shares up 0.13 percent

June 18, 2012 (LBO) – Sri Lankan share prices nudged up 6.89 points, after falling some 51 points during intra-day trade, despite buying interest in selected stocks, brokers said.

 The broader All Share Price Index added 0.13 percent to 4,998.10, while the liquid Milanka Price Index gained 12.07 points or 0.27 percent on Monday, according to Colombo Stock Exchange figures.

 Total turnover was 295.47 million rupees of which foreign buying accounted for 20.35 million rupees over sales of 27.31 million rupees.

Carsons Cumberbatch PLC was the toast of the day accounting for 18.69 million rupees of the turnover. The counter dipped 10 cents to close at 466.90 on trades of 40,030 shares.

New entrant, Ramboda Falls, rose 14.10 rupees to 24.10 rupees on trades of 706,888 shares, on speculative buying interest, brokers said.

 Lanka Hospitals, gained 1.10 rupees to 32.10 rupees on trades of 485,326 shares.

P C H Holdings Limited, the parent company of the listed IT peripheral’s firm PC House, is to list 252,000,242 ordinary shares on the Diri Savi board by way of an introduction, the Colombo Stock Exchange announced on Monday.

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Change in Foreign Shareholding (14 - 15 June 12)

source - acuity stock brokers

Bulls back at Bourse?

Positive macro news and rumoured overhauling of SEC among other State entities trigger buying spree; some analysts insist rebound is due to attractive pricing

The Colombo Bourse on Friday shot up by over 100 points before losing some momentum, with the earlier development being linked by some analysts to positive macro news and a rumoured overhauling of the Securities and Exchange Commission (SEC), but others simply pinned it to investors seeing attractive value.

 If rumours are discounted, then the latter reason has been the case for several weeks, though investors have maintained a ‘wait-and-see’ attitude, with liquidity being a lingering issue as well.

The 100 points rise by mid-day on Friday with the All Share Index surpassing the 5,000-point level lifted weary hearts of investors and brokers and a degree of profit taking set in, which saw the ASI close slightly below the psychological level. Yet market's value rose by Rs. 26 billion on Friday.

 There has been consensus that the market lacks confidence, whilst the SEC itself has emphasised that the market must earn investor confidence by itself. The blame game continues with equal propensity and valid arguments from both sides.

Year-to-date the Bourse has dipped by 18%, lower in comparison to over 20% a few weeks ago and some investors and brokers pin it to overregulation. The SEC however is insistent regulation is key. The rumoured overhauling of SEC nevertheless comes amidst looming changes in the overall public sector.

 From a macro perspective, analysts said there appears some light at the end of the tunnel. They point to the IMF’s medium term optimism as well as the likelihood of the release of the final tranche of over $ 400 million. Another is monetary and fiscal measures showing signs of delivering desired results with imports declining though the exports dip remains an overhang.

The announcement of BOI signing its biggest FDI deal worth $ 4 billion was another boost which investors got on Friday, along with Sri Lanka winning the bid to host the third Asian Youth Games, though the latter drew criticism from some saying it would have serious repercussions irrespective of the fact that the country’s economy may be stronger come 2017.

 Fundamentally, market is attractive with Price Earning Ratio (PER) now at 13 times, as against 24 times a year ago.

 Friday’s rebound in the Bourse didn’t appear staged as big funds such as EPF and ETF were less active. This prompted brokers to emphasise that retail and institutional investors who boosted turnover to the recent week’s high of Rs. 758 million were back in the market.

On Friday Ceylon Guardian Investment bought 200,000 Commercial Bank shares for Rs. 20 million with seller being Swiss Lloyd Ltd. MAS Capital was on the buying side of Dialog, picking up 4.5 million shares for Rs. 27 million from a foreign fund. JB Cocoshell Ltd. collected 3.75 million Textured Jersey shares for Rs. 31 million with the seller being People’s Bank.

 On the foreign side, Franklin Templeton Investment Funds picked up 940,994 Commercial Bank Non Voting shares for Rs. 69.6 million from Sohli Captain. EPF was active on Bukit and Carson with Thurston Investment on the selling side of the latter. ETF picked up some quantities of Aitken Spence.

 Acuity Stockbrokers said positive sentiment appeared to return to markets with both indices moving up to end the week in the green. The ASPI gained 4.01% (192.51 points) to close at 4991.21 points while the MPI closed at 4449.98 points, up 4.79% (203.22 points).

It noted that on Friday the market edged up towards the key 5,000 level as selected buying in fundamental counters early in the week encouraged retailers into speculative shares. Volumes, though thin, increased over the week, with Friday’s volumes hitting a two-week high. “Markets are likely to retain this positive momentum in the week ahead,” it added.

 Arrenga Capital (now Softlogic Stockbrokers) said the Bourse witnessed strong buying interest returning to the market after a long lapse as the indices rocketed to gain over 100 points by mid-day, surpassing the all-important 5,000 mark. However, selling pressure crept in stealing almost 60% of the gains within an hour before buyers returned to the market, absorbing most of the selling pressure as the benchmark index closed marginally below 5,000.

“Turnover and activity saw a sudden recovery with the positive sentiment while being supported by four crossings, though only accounted for 19% of the total turnover,” it added.

 NDB Stockbrokers said: “With improving, some retail favourite counters saw some appreciation while decent volumes were also traded in blue chips with some gains witnessed.”

Going forward DNH Financial emphasised stock selection as key. “In balancing what we consider the compelling opportunities provided by the Bourse, we see particular value in domestically-focused companies, which should experience less earnings volatility against an uncertain global backdrop,” it said.

 Among domestically-oriented stocks, DNH said focus must be counters in the consumer, industrial, diversified, banking and hotel sectors, which it believes are likely to attract investors who will appreciate their potential upside.

“We believe that the Bourse at current levels is reasonably valued (and undervalued in the case of selected stocks), especially considering its expected earnings growth which we estimate to be superior to both developed and most emerging markets. We further believe that bottom-up equity selection within the current macroeconomic backdrop will generate a winning strategy for medium to longer investors,” DNH said.

 Its key market takeaways are:

  • Solid macro-economic backdrop (notwithstanding the rupee depreciation which could adversely affect domestic inflation levels)

•High interest rates although supporting deposit mobilisation for banks, unlikely to shift investible funds away from domestic equities. We advise investors however to concentrate on stocks which have a relatively low gearing and are cash generative.

•Balance sheets appear generally healthy and individual company prospects should help drive returns, hence an alpha focused bottom up stock selection strategy advised

 During the week turnover value too recorded a week-on-week gain with daily average turnover value increasing 11.31% to Rs. 373.37 million, relative to last week’s daily average of Rs. 335.43 million.

Commercial Bank was the largest contributor to the week’s turnover value, adding Rs. 166.29 million (or 8.91% of total market turnover value) to the market.

JKH and Commercial Bank [NV] followed closely with contributions of 6.45% and 5.81%, respectively. Market capitalisation improved to Rs. 1901.22 b, compared to the previous week’s value of Rs. 1827.89 b, representing a week-on-week gain of 4.01%.

 Foreign investors closed the week in a net buying position of Rs. 8.72 million, compared to last week’s net selling position of Rs. 5.62 million. Commercial Bank [NV] and Overseas Realty led foreign purchases in terms of volume, while Dialog Axiata and Malwatte Plantations led the foreign sales. In terms of value, Central Finance and Commercial Bank [NV] led foreign purchases, while Carsons Cumberbatch and JKH led foreign sales.

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