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Friday, May 03, 2013

Today 6,013.18 3,405.99 Point Change + 40.81 + 24.61 % Change 0.68 % p 0.73 % p

ASPI S&P SL 20 Index YTD Performance ASPI S&P SL 20 Index


Level 23, East Tower, World Trade Centre, Colombo 01 Tel: +94 11 727 7000, Fax: +94 11 727 7099 Email: research@equity.softlogic.lk

6.6% 10.4% 881.5 825.8 31.3 39.4 2,304.8 48.4 224.1 175.7 8.8

Today's Turnover (LKR mn) Annual Average Daily Turnover (LKR mn) Volume (mn) Annual Average Daily Volume (mn) Market Capitalization (LKR bn) Net Foreign Inflow / (Outflow) [LKR mn] - Foreign Buying (LKR mn) - Foreign Selling (LKR mn) YTD Net Foreign Inflow / (Outflow) [LKR bn]

ASPI closes above 6,000 for the first time in 16 months

CSE Diary for 03.05.2013


Big caps carry index above 6,000: The bourse stagnated during most part of the 1st half of trading with only marginal gains to record a sudden surge amidst buying interest in the heavyweight counters. Strong buying and gains in Ceylon Tobacco, John Keells Holdings, Dialog, Hatton National Bank and Distilleries resulting in the index surging by 40 points to close passing the 6,000 mark at 6,013 after 16 months since 03.01.2012. The S&P SL20 also witnessed a similar trajectory as blue chips controlled the uptrend to record 25 point gain. John Keells Holdings dominates proceedings : John Keells Holdings, the premier conglomerate dominated trading activity to be the top performer for the day supported by 2 crossings accounting for 381k shares at LKR252.0. In onboard trading the counter renewed its 52-week high to LKR253.0 while it managed to close on the high side at LKR252.8 denoting the strength of the buying. Banking sector counters Commercial Bank and National

Development Bank registered considerable investor interest with former recording number of large blocks of 135k, 200k and 312k at prices LKR115, LKR116 and LKR118 respectively. The former gained 1.4% to LKR116.6 while the latter gained 0.7% to LKR171.1 at close.

Retail Play heavy on Colombo Land and Touchwood: Colombo Land saw heavy retail participation with 1.4mn shares trading during the day between LKR50.5 and LKR53.8 while closing at 53.6 with a gain of 5.1%. Touchwood Investments which witnessed heavy selling pressure yesterday recovered marginally to LKR6.0 (+5.3%) amidst heavy volume of 4.5mn shares.
Retail activity is on the rise: With the market on an upward rally retail participation has considerably improved. Though retail participation is mostly linked to speculative counters it is clearly evident that fundamental counters such as Textured Jersey and Piramal Glass also have recorded reasonable retail participation.

Statistical Look Up
Treasury Bill (%) 3 months 6 months 12 months AWPLR Excess Liquidity (LKR 'bn) Inflation (%) Apr-13 as at 03.05.2013 YoY Change Annual Avg Week ending 03.05.2013 9.20 10.22 11.33 13.45 -1.21 6.4 8.8

6100 6000 5900

Index

5800
5700 5600 5500

ASPI
3400

Turnover LKR ('mn)

3450

2,000 1,500 1,000 500 0

150.0

Volume ('mn)

Index

3350

100.0 50.0 0.0

3300 3250
3200

S&P SL20

Turnover

Volume

Today All Share Price Index S&P SL20 Index Turnover (LKR mn) Turnover (USD mn) Volume (mn shares) Traded Entities Market Capitalization (LKR bn) Foreign Purchases (LKR mn) Foreign Sales (LKR mn) Net Foreign Inflow (LKR mn) Market PER (X) Market PBV (X) Market Dividend Yield SECTOR INDICES Banks, Finance & Insurance Beverage, Food & Tobacco Construction & Engineering Diversified Healthcare Hotels & Travels Land & Property Manufacturing Plantation Telecom 6,013.2 3,406.0 881.5 7.0 31.3 244 2,304.8 224.1 175.7 48.4 16.3 2.2 2.2 Today 13,654.1 16,925.1 2,787.3 1,960.0 695.6 3,461.9 578.8 2,840.0 813.0 172.3

Pre Day 5,972.4 3,381.4 634.6 5.0 44.2 234 2,288.1 122.6 23.7 99.0 16.1 2.2 2.2 Pre Day 13,560.0 16,731.5 2,768.1 1,948.2 686.1 3,482.8 561.8 2,795.9 805.2 171.3

Change % 0.68% p 0.73% p 38.91% 38.91% -29.26% 4.27% 0.73% 82.74% 642.72% -51.11% 0.73% 0.73% 0.00% % Change 0.69% 1.16% 0.69% 0.61% 1.38% -0.60% 3.02% 1.57% 0.97% 0.59% p p p p p q p p p p

Last Week 5,962.2 3,359.4 1,344.4 10.6 105.5 251 2,284.2 391.8 64.2 327.6 16.1 2.2 2.3 Last Week 13,640.2 16,614.9 2,740.3 1,942.1 691.3 3,485.5 570.0 2,762.8 810.1 171.5

% WoW Change 0.86% 1.39% -34.43% -34.43% -70.35% -2.79% 0.90% -42.81% 173.52% -85.23% 0.90% 0.90% -4.35% % WoW Change 0.10% 1.87% 1.72% 0.92% 0.61% -0.68% 1.54% 2.79% 0.35% 0.47% Page | 2.

Softlogic Equity Research

High Index Calibre USD350 Mn


Company
JOHN KEELLS HOLDINGS CEYLON TOBACCO CARSON CUMBERBATCH NESTLE LANKA SRI LANKA TELECOM COMMERCIAL BANK [V] BUKIT DARAH DIALOG AXIATA HNB [V] AITKEN SPENCE DISTILLERIES LOLC CARGILLS DFCC BANK SAMPATH BANK ASIAN HOTELS & PROPERTIES

% of Mkt Cap 9.4% 6.7% 3.8% 4.3% 3.3% 4.0% 3.1% 3.4% 2.3% 2.2% 2.2% 1.2% 1.5% 1.6% 1.6% 1.3%

Volume 958,642 3,513 13,499 2,004 36,300 988,853 10,075 237,226 39,367 6,630 9,796 18,931 110 30,563 75,696 14,723

Turnover LKR ('000) 241,661.05 2,878.47 6,074.47 3,640.31 1,559.01 115,179.87 7,153.26 2,250.08 6,629.52 824.98 1,681.87 1,090.61 16.72 4,394.24 16,349.49 1,031.72

Turnover USD ('000) 1,910.05 22.75 48.01 28.77 12.32 910.36 56.54 17.78 52.40 6.52 13.29 8.62 0.13 34.73 129.22 8.15

Intraday Intraday High (LKR) Low (LKR) 253.00 824.00 455.00 1,825.00 43.30 118.00 720.00 9.60 170.00 125.00 175.00 58.00 152.00 145.00 216.50 71.40 250.50 805.00 445.50 1,810.00 42.50 115.00 710.00 9.30 165.00 123.20 170.00 56.20 152.00 141.00 215.50 69.00

Close 252.80 820.00 445.50 1,824.00 42.50 116.60 710.00 9.50 169.40 125.00 172.60 57.90 152.00 142.70 216.00 70.00

Price Gainers
Company
S M B LEASING [X] SAMSON INTERNAT. BIMPUTH FINANCE EQUITY TWO PLC PRINTCARE PLC

Price Losers
Today 0.50 97.90 18.20 28.30 30.00 Change + 0.10 + 11.90 + 2.20 + 2.40 + 2.50 % Change Company 25.00% 13.84% 13.75% 9.27% 9.09%
OFFICE EQUIPMENT TRANS ASIA ORIENT FINANCE COMMERCIAL DEV. COMM LEASE & FIN

Today 2,610.00 77.10 14.30 63.70 4.60

Change - 226.40 - 6.60 - 1.00 - 4.30 - 0.30

% Change -7.98% -7.89% -6.54% -6.32% -6.12%

Top 05 Performers for the Day


Company
JKH COMMERCIAL BANK COLOMBO LAND TOUCHWOOD NAT. DEV. BANK

Today 252.80 116.60 53.60 6.00 171.10

Pre Day 250.00 115.00 51.00 5.70 170.00

% Change 1.12% 1.39% 5.10% 5.26% 0.65%

Volume (mn) 0.96 0.99 1.47 4.54 0.16

Contribution to Total T/O 10.5% 5.0% 3.4% 1.2% 1.2%

Turnover (LKR) 241,661,049 115,179,874 77,485,358 26,934,443 26,901,550

Most Active
Company
TOUCHWOOD EXPOLANKA COLOMBO LAND CITRUS KALPITIYA BLUE DIAMONDS[NON VOTING]

Today 6.00 7.20 53.60 8.00 1.70

Pre Day 5.70 7.00 51.00 7.70 1.60

% Change 5.26% 2.86% 5.10% 3.90% 6.25%

Volume (mn) 4.54 2.01 1.47 1.09 1.05

Contribution to Total T/O 1.2% 0.6% 3.4% 0.4% 0.1%

Turnover (LKR) 26,934,443 14,491,010 77,485,358 8,627,761 1,771,669

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Currency Board
Local - Indicative Rate against LKR
Currency Australia China EU India Japan Malaysia Russia Saudi Arabia Singapore Switzerland Thailand UK USA Dollar Yuan Euro Rupee Yen Ringgit Rouble Riyal Dollar Franc Baht Pound Dollar Indicative Rate 03.05.2013 129.91 20.55 165.43 2.35 1.29 41.52 4.06 33.74 102.45 135.42 4.28 196.54 126.52

Announcements
Dividends
Company DFCC Bank 0 0 0 0 0 0 0
Company Description

DPS (LKR) 5.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Proportion 0

XD Date 01-07-2013 0 0 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00


XR Date

Payment Date 09-07-2013 1/0/1900 1/0/1900 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00
Renunciation

Rights Issues / Scrip Dividend / Sub division / Capitalization


No Announcements 0 0 0 0 0 1/0/1900 1/0/1900 1/0/1900 1/0/1900 1/0/1900 1/0/1900

Source: www.cbsl.gov.lk

Global Markets
Index AMERICA Dow Jones Industrial Average S&P 500 Index EUROPE EURO STOXX 50 Price EUR FTSE 100 Index ASIA Nikkei 225 Hong Kong Hang Seng Index
* Time is as at ET

Value 14,831.6 1,597.6 2,718.7 6,473.5 13,694.0 22,690.0

Change 130.6 14.9 -0.2 12.8 -105.3 21.7

Change % 0.89% p 0.94% p -0.01% q 0.20% p -0.76% q 0.10% p

Time* 0-Jan 0-Jan 06:40 06:40 02:28 04:01

Source: www.bloomberg.com

Commodity Markets
Commodity ENERGY Crude Oil (Brent) Crude Oil (WTI) AGRICULTURE ICE Cotton #2 CBOT Wheat METALS COMEX Gold COMEX Silver COMEX Copper
* Time is as at ET

Units USD/bbl. USD/bbl. USd/lb. USd/bu. USD/t oz. USD/t oz. USd/lb.

Price 103.37 94.47 86.48 731.25 1,485.90 24.30 322.90

Change 0.52 0.48 0.80 2.75 18.30 0.47 12.45

Change % 0.51% p 0.51% p 0.93% p 0.38% p 1.25% p 1.97% p 4.01% p

Time* 06:32 06:38 06:30 06:52 06:33 06:33 06:32

Source: www.bloomberg.com

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CSE Announcements
Sunshine Holdings [SUN: LKR31.0] The Board of Directors of disclosed that they have been maintaining a constant and regular review of the progress of the business carried by Sunshine Travels & Tours Limited, a 100% held subsidiary of the Company. The business includes travel and ticketing and management and operation of several bungalows under the brand name "Mandira. Consequent to the said review the board was of the view that the return from such business was not significant enough to continue such business on its present form. The board decided to restructure the business in order to progress to a leading position in trade and to improve returns. Specialized expert in the trade is to be brought into the business to manage and operate the same at a higher level which require additional capital infusion. In order to achieve this objective one of the conditions is to have 68.2% of shares in Sunshine Travel & Tours Ltd. The company hence transferred 250k shares held by Sunshine Travels & Tours Ltd on the 2nd of May 2013 and issued 500k shares to them. SUN will transfer 77,007 shares equivalent to 7% of the capital of Sunshine Travel & Tours Ltd to selected senior employees of the company. The proposals relating to such development does not include the management and operation of Mandira Bunglows as they will be made available for operation to another after obtaining necessary approval.

Local News
Sri Lanka SOE losses hurt investment and jobs: IMF: Massive losses at Sri Lanka's state enterprises have a negative impact on people's lives that are beyond accounting losses in the balance sheet, which hurts investment and jobs an IMF official said. Last year state-run Ceylon Petroleum Corporation and Ceylon Electricity Board lost more than LKR150 bn. "It is not because we have some kind of undue concern for financial results," IMF resident representative Koshy Mathai said. "Those losses are a real drag on the economy." The losses were now hidden in the balance sheets Bank of Ceylon and People's Bank, but they ate up savings in the banking system taking away investible resources eventually costing jobs. "It is easy to put those losses aside because don't see them in the central government budget," Mathai said. "They are hidden somewhere on the balance sheets of Bank of Ceylon and People's Bank. When those banks are forced to lend such huge amounts there is correspondingly less money that has to be lent to the rest of the economy. And interest rates for the whole economy go very high as businesses are seeing now. When those interest rates are high, growth goes down and jobs are lost. So this is not a choice between having a nice looking balance sheet for state enterprises and having price increases that difficult for the ordinary person." [Source: www.lbo.lk] Sri Lanka electricity rate change to cut revenues by LKR8.0 bn: A change made to an electricity tariff hike from April 2013 will reduce expected revenues by LKR8.0 bn a year, a media report said. Sri Lanka's privately run The Island newspaper quoted power ministry secretary M M C Ferdinando as saying that reversing the increase to users up to 60 units and cutting a fuel surcharge from 40% to 30% for users up to 160 units would cost LKR45 bn. The Ceylon Electricity Board expected to get LKR45 bn from the tariff hike. For 2013 the CEB estimated expenditures of LKR256 bn and the Public Utilities Commission the power regulator allowed it LKR228 bn of costs which was to have been covered by the approved tariff increase. The CEB said at a public hearing on called by the regulator that the first proposed tariff would bring it LKR223 bn in revenues, compared to LKR178 bn it would have got if no increase was made. Even with the additional revenue would have the CEB was to have been left with a loss of LKR33 bn by year end. The reduction of revenues by LKR8.0 bn would increase the loss. [Source: www.lbo.lk] IMF advocates to hold policy rates: he International Monetary Fund (IMF) on Thursday warned against easing monetary policy this year, in order to prevent further inflationary pressure. We recommend holding policy rates at current levels, at least until inflation eases. It is difficult to say how long a tight monetary Softlogic Equity Research Page | 5
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policy should be maintained. So, the Central Bank will have to respond as the situation develops but we expect policy rates to remain as it is for the rest of the year. Sri Lankas economic growth has been positive when taken in the global context. However it is clearly not where we want it to be. We dont see high growth figures as being achievable with current policy packages, IMF Resident Representative, Koshy Mathai said. Mathais comments on Thursday led the IMF into direct conflict with the position adopted by Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal who expressed confidence in the possibility of easing monetary policy in order to spur economic growth. We know that the demand-driven pressures are very clearly addressed, so we are quite confident that the time has now come to ease rather than tighten monetary policy. Over next few months we will be able to see inflation in the mid-single digit numbers towards the end of this year, the greater focus would have to be for growth. Cabraal had told Bloomberg wire. [Source: www.dailymirror.lk] Colombo Port to add 7.5 mn TEUs: The Sri Lanka Ports Authority will contribute USD10 bn for the national investment strategy as the Government has planned to attract approximately 3% -4% of the countrys GDP annually as foreign direct investments, said Sri Lanka Ports Authority Chairman Priyath B Wickrama said. Sri Lankas close proximity to the Indian subcontinent will give us a distinctive advantage to exploit our strong maritime heritage and global logistics demand and we are well aware of the potentiality of developing Sri Lanka with the maritime sector development in the world as well as in the region Existing port facilities will be developed to increase the productivity of port activities and to attract additional volumes. Measures have been taken to set up an industrial Zone with facilities for tourism including whale watching within the land owned by the Sri Lanka Ports Authority under the development program of the port of Trincomalee. Construction work of the first berth of the South Terminal with 400 meter length is nearing completion and will be operational within next few months. Other two berths of the south terminal will be operational by 2014. The second terminal, East terminal is also being developed and the first berth of the terminal will be operational by end of 2013. The port will add 7.5 mn TEUs to the existing capacity of the Colombo Port once all three terminals, South East and West under the Port development Project were completed. [Source: www.dailynews.lk] Sri Lanka's China Merchant terminal expects strong interest: Colombo International Container Terminal Plc, (CICT) a unit of China Merchant Holdings (International) will begin discussions with potential customers shortly with the first berth due to open in July, an official said. "The port of Colombo can accommodate mega vessels," CICT chief executive Yunshu Liu said on the sidelines of ports and logistics conference organized by Seatrade a consultancy, and state-run Sri Lanka Ports Authority. "There is strong interest from shipping lines in this deep water terminal because the trend is mega vessels with capacity of more than 10,000 TEUs (twenty foot equivalent units). CICT is a deep water terminal with an 18 meter depth and the outreach of a crane is 17 meters." The first 400 meter berth will open for ship traffic on July 01 and the full terminal of three berths is expected to be completed by April 2014. It will have the capacity to handle 2.4 mn containers (twenty foot equivalent units) a year. "Our tariffs will be finalized by next week," Liu said. "Then we will discuss with potential customers." CICT is the first terminal to open in Colombo's South Harbor expansion project. CICT is 85% owned by Hong Kong listed CMHI, a Chinese state run firm and 15% by Sri Lanka Ports Authority. [Source: www.lbo.lk] Japan ready to continue support for Sri Lanka: Japan will continue to support Sri Lanka if peace is maintained and with the economy also on a growth path, visiting Japanese deputy prime minister and finance minister Taro Aso said. "Considering that the Sri Lankan economy keeps on the current growth trajectory and given that peace and security would be maintained in this country, then Japan is a position to support Sri Lanka," Aso told reporters in Colombo speaking through an interpreter. "The current government under Abenomics (Prime minister Shinzo Abe's expansionary economic strategy) is placing emphasis on providing yen loans to Sri Lanka." In March when President Mahinda Rajapaksa visited Japan involving 41 billion yen (LKR53 bn) Yen loan package was signed. Since 1978 LKR1.1 trillion worth aid has been given to Sri Lanka. [Source: www.lbo.lk] Softlogic Equity Research Page | 6
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Global News
India Says Inflation, Trade Gap Constrain Policy Scope: The Reserve Bank of India said the space for monetary policy to support economic growth remains constrained by elevated consumer-price inflation and a record current-account deficit. Monetary policy would need to be calibrated recognizing the very limited policy space available to ease further, the Reserve Bank said yesterday in an economic review before todays rate decision in Mumbai. It cited significant risks including a high current-account gap and inflation above the threshold over which it becomes inimical to growth sustainability. Indias economy expanded at the weakest pace in a decade last fiscal year, and wholesale-price inflation slowed in March to a more than three-year low even as consumer inflation held above 10%. Governor Duvvuri Subbarao will cut the repurchase rate for a third straight meeting to 7.25% from 7.50%, 33 of 40 analysts said in a Bloomberg survey. [Source: www.bloomberg.com] Euro Weakens as Draghi Open to Negative Deposit Rate: The euro fell for the first time in five days against the dollar after European Central Bank President Mario Draghi said policy makers may take the unprecedented step of charging banks to hold excess reserves. The single currency dropped against all except one of its 16 most-traded peers as the ECB cut its main refinancing rate and Draghi said policy makers had an open mind on a negative deposit rate. The dollar rose the most in almost two weeks versus the yen after number of Americans filing claims for jobless benefits unexpectedly dropped to a five-year low. Swedens krona slid as manufacturing in the nation shrank. A deposit rate below zero would be a potential game- changer for the ECB, Joe Manimbo, a market analyst at Western Union Business Solutions, a unit of Western Union Co., said in a phone interview from Washington. It would compel banks to flood the financial system over there with euros, which would inherently put downward pressure on the single currency. [Source: www.bloomberg.com]

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Dimantha Mathew dimantha.mathew@equity.softlogic.lk +94 11 7277030 Kavindu Ranasinghe kavindu.ranasinghe@equity.softlogic.lk +94 11 7277031 Imalka Hettiarachchi imalka.hettiarachchi@equity.softlogic.lk +94 11 7277032

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