Mid-Week Watch Colombo Stock Exchange By SMB Securities Research

SMB SECURITIES (PVT) LTD
October 15, 2014
Colombo Stock Exchange
Mid-Week Watch
By SMB Securities Research
%
Change
Average Weekly figures
15th Oct
7th Oct
ASPI as at
7,288.83
7,396.01
-1.45
S&P SL20 Index as at
4,064.84
4,150.64
-2.07
Daily Turnover (LKR Mn)
1,888.85
2,865.04
-34.07
Domestic Purchases (LKR Mn)
1,516.37
1,476.87
2.67
Domestic Sales (LKR Mn)
1,487.76
2,358.22
-36.91
Foreign purchases (LKR Mn)
372.48
1,388.17
-73.17
Foreign sales (LKR Mn)
401.10
506.82
-20.86
3,099.49
3,144.49
-1.43
19.94
20.23
N/A
2.32
2.36
N/A
Market Cap (LKR Bn) as at
Market PER (X) as at
Market PBV (X) as at
MARKET ANALYSIS
Activities at the Colombo Stock Exchange swung between gains and
losses during the week while All Share Price Index (ASPI) slumped
201.86 points during first three days of the week. However, on
Tuesday market was able to break the downward trend that was
prevailed during the early days of the week and closed in green.
The ASPI loosed 107.18 points( 1.45%) to close at 7,288.83 points in
comparison to previous week while S&P SL20 Index closed at
4,064.84 points with a 2.07% decrease (85.80 points) over last week.
Total turnover for the week was LKR 9,444.26 Mn while average
daily turnover for the week amounted to LKR 1,888.85 Mn. On
Friday market recorded turnover of LKR 2,814.44Mn which is the
highest turnover of the week.
The week witnessed net foreign outflow of LKR 143.08 Mn.
Foreigners bought LKR 1,862.40Mn worth of shares while foreign
selling amounted to LKR 2,005.48Mn.
.
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SMB SECURITIES (PVT) LTD
October 15, 2014
Contribution Made by Sectors During the week
Sector
Banks Finance And Insurance
Beverage Food And Tobacco
Chemicals And Pharmaceuticals
Construction And Engineering
Diversified Holdings
Footwear And Textiles
Health Care
Hotels and Travelling
Investment Trusts
Information Technology
Land And Property
Manufacturing
Motors
Oil Palms
Plantations
Power And Energy
Services
Stores And Supplies
Telecommunications
Trading
Sector Index
Turnover
As at
As at
15th Oct.2014
17,864.14
21,936.86
07th Oct.2014
18,238.61
22,254.96
7,567.28
3,712.87
2,128.75
1,065.24
913.24
3,542.43
21,126.76
84.92
765.05
3,825.77
18,803.56
112,645.20
860.59
171.66
26,496.70
23,967.23
214.14
16,809.01
% Change
Total Turnover
Contribution
%
-2.05%
-1.43%
3,272,566,931
226,683,477
34.65%
2.40%
7,803.05
-3.02%
25,306,059
0.27%
3,716.01
2,151.66
1,048.81
944.68
3,578.27
21,664.36
84.36
783.27
3,849.88
18,922.34
116,012.17
839.65
170.77
27,389.82
23,306.18
218.59
16,439.50
-0.08%
-1.06%
1.57%
-3.33%
-1.00%
-2.48%
0.66%
-2.33%
-0.63%
-0.63%
-2.90%
2.49%
0.52%
-3.26%
2.84%
-2.04%
2.25%
422,457,561
2,150,610,992
44,573,480
214,871,783
141,020,456
188,782,301
7,115,714
622,555,513
1,156,745,008
39,382,320
1,234,266
283,063,206
478,811,106
5,808,344
1,337,413
115,589,813
45,745,788
4.47%
22.77%
0.47%
2.28%
1.49%
2.00%
0.08%
6.59%
12.25%
0.42%
0.01%
3.00%
5.07%
0.06%
0.01%
1.22%
0.48%
IN THE WEEK AHEAD
Majority of the companies will release their corporate results for the September quarter during coming weeks and
we expect improved earnings. Therefore we advice investors to focus on the quarterly earnings released to the
market and select on counters which would create trading opportunity and to take advantage of investing in fundamentally sound counters in a medium to long term perspective.
XD In The Week Ahead
COMPANY NAME
Ceylon & Foreign Trades PLC
DPS (RS.)
FIRST/FINAL/
INTERIM
XD FROM
DATE OF
PAYMENT
0.05
Interim
20-10-2014
30-10-2014
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SMB SECURITIES (PVT) LTD
October 15, 2014
INVESTMENT Focus – key buys
LAUGFS GAS PLC (LGL.N0000)
LKR 38.50
POWER SECTOR
Laugfs Gas Plc with a considerable market share in LP gas
market in Sri Lanka has a state of the art gas plant and an
island wide distribution network. The rapid urbanization
and migration from rural areas to more compact urban
areas has increased the domestic LP gas consumption while
the expansion in ceramic and porcelain industry has
increased the industrial usage. The other sectors in which
company is engaged, Hospitality and leisure, Property
development, Vehicle emission testing and Hydro power
generation are also emerging sectors.
DIALOG AXIATA PLC (DIAL.N0000)
LKR 12.20
TELECOMMUNICATION SECTOR
Dialog Axiata Plc maintains its market leading position in
the Mobile telecommunications sector in Sri Lanka with
market presence in Fixed telecommunications and Digital
television market. The telecommunication sector would
act as a pivotal driver in country’s economic development
with the expansions in ICT and Digital service sectors.
DIAL’s forward looking investments in these sectors would
make dividends in long term. We expect DIAL’s future
revenue growth to stem mainly from its core business of
mobile operations which includes mobile voice and data
operations.
RENUKA SHAW WALLACE PLC (COCO.N0000)
LKR 21.10
BEVERAGE FOOD & TOBACCO SECTOR
Initially Renuka Shaw Wallance PLC manufacturing and
marketing of agriculture products and expand their
business activities into investment trust. The product
portfolio of Renuka Shaw Wallance PLC involves Ceylon
Tea, Coconut and Organic Products ,Dairy and FMCG.
Company sells their products under brand names of
Captain, Cocomi Bio, Richlife ,Renute, Plaza, Mr.POP,
Sun-Gold and Rainers. COCO has spread their business
activities through growing market segments and company
has considerable market share in those segments.
Therefor we expect COCO will further stimulate its’
earnings growth potential.
3
SMB SECURITIES (PVT) LTD
October 15,2014
Economic Update
EXCHANGE RATES
Week ending 10th October
Week ending 03rd October
- Average rate
130.35
130.39
- Forward 1 month
130.82
131.00
- Forward 3 months
131.46
131.51
STG
210.19
210.29
EURO
165.53
164.93
JAPANESE YEN
1.21
1.20
INR
2.13
2.12
SDR
194.46
193.83
USD EXCHANGE RATE
Average Middle Rate of Other World Currencies
INTEREST RATES
Overnight
07 Days
01 Month
03 Months
06 Months
12 Months
6.08
6.33
6.45
6.60
6.79
7.06
T-Bill Rates (%)
N/A
N/A
N/A
-
-
6.00
AWPLR (%)
N/A
6.38
6.93
N/A
7.82
N/A
AWDR (%)
N/A
N/A
6.83
N/A
7.37
N/A
N/A
N/A
N/A
N/A
N/A
6.50
N/A
N/A
N/A
N/A
N/A
8.00
SLIBOR (%)
SDFR (%)
SLFR (%)
4
SMB SECURITIES (PVT) LTD
October 15, 2014
TOURIST ARRIVALS – SEPTEMBER 2014
Tourist Arrivals by Month
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total up to September
Tourist arrivals in September 2014
2013
2014
110,543
113,968
113,208
80,737
74,838
90,279
107,016
123,269
90,339
107,058
109,420
153,918
904,197
146,575
141,878
133,048
112,631
90,046
103,175
133,971
140,319
105,535
%
Change
32.6
24.5
17.5
39.5
20.3
14.3
25.2
13.8
16.8
Tourist arrivals to Sri Lanka continued its positive
momentum for the year 2014 and in September
2014 it recorded an increase of 16.8% YoY to
105,535 arrivals.
In September 2014, South Asian region became
the largest tourist generating market for the
country, which contributed 27.1% to the total
tourist arrivals. A total of 28,561 tourists came
1,107,178
22.4
from this region and it is an increase of 9.7%
compared to previous year. Arrivals from India
was the main contributor to this growth. As a
single country, India became the highest tourists
generating market and 19,244 tourists came for
the month.
Western European region accounted for 26.8% of
the total tourist arrivals to the country and
demonstrate a growth of 6.5% YoY. East Asian
region recorded a growth of 57.8% to 23,516
while contributing 22.3% of total tourist arrival to
the country. China was the main contributor to
this growth while tourist arrivals from China increasing 129.4% compared to previous year. For
the nine month ending September 2014, a total
of 94,994 tourists came from China and recorded
141.4% increase from the corresponding period
of 2013.China was the third largest contributor
for tourist arrival while India and UK achieved
first and second places respectively.
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SMB SECURITIES (PVT) LTD
October 15, 2014
INFLATION – SEPTEMBER 2014
Inflation Decreased in September 2014

Inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2006/07=100) decreased to 4.2% in
September 2014, on an annual average basis, from 4.5% in the previous month.

The year-on-year (YoY) inflation remained unchanged at 3.5% in September 2014, as recorded in the previous month.

The CCPI decreased 0.2% in September 2014 over the previous month, with the Index increasing in absolute terms to 181.9 in September from 182.3 in August 2014.

The decrease in prices of items in the food and non-alcoholic beverages sub category was the main contributor to the monthly decrease in the CCPI.

Within the Non-food category, prices of items in the sub groups of Housing, Water, Electricity, Gas and other Fuels; and Transport decreased due to the downward revision of fuel prices from 17 September 2014.

The Annual Average Core inflation moderated to 3.7% in September 2014 from 3.9% in August 2014. Meanwhile, annual average core inflation remained unchanged at 3.2%, as recorded in the previous month.
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SMB SECURITIES (PVT) LTD
October 15, 2014
GDP GROWTH RATES – 2Q2014
Growth Rates of Gross Domestic Product by Industrial
Origin – Second Quarter
The Gross Domestic Product (GDP) of the Sri Lanka was
LKR 840,653Mn in 2Q2014 and it was LKR 779,974 Mn
in 2Q2013 (At constant 2002 prices).
2014-2Q
Agriculture, Forestry and Fishing
Agriculture, Livestock and
Forestry
Fishing
2013-2Q
6.5
-1.1
5.9
-0.5
10.5
-5.3
The GDP grew 7.8% in 2Q2014 compared to 6.8%
growth in 2Q2013. The three main sectors of the GDP
recorded positive growth rates where agriculture, industry and services grew 6.5%, 12.2% and 5.8% respec-
Industry
12.2
10.1
9.3
12.6
10.3
5.3
3.2
16.2
construction sub sector recorded the second highest
19.7
17.8
growth rate of 19.7%
5.8
6.6
Wholesale and retail trade
5.9
6.0
Hotels and restaurants
Transport and communication
Banking, insurance and
real-estate etc.
20.5
21.1
7.6
9.5
6.1
6.3
Ownership of dwellings
1.7
2.1
Government services
1.2
3.9
tributor towards the GDP (22.3%)while manufacturing
Private services
6.4
7.8
sub sectors (16.9%) fall on second place.
Gross Domestic Product
7.8
6.8
Mining and Quarrying
Manufacturing
Electricity, gas and water
Construction
Services
tively. The Hotels & restaurants sub sector recorded the
highest growth rate for 2Q2014 which was 20.5%. The
The services sector is the highest contributor to the
country’s GDP (58%) while industry sector fell on second place. Contribution from agricultural sector has
increased to 12.2% from 10.1%in 2Q2013. The wholesale and retail trade sub sector became the highest con-
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SMB SECURITIES (PVT) LTD
October 15, 2014
EXTERNAL SECTOR PERFORMANCE - AUGUST 2014
IMPORTS
(USD Mn)
EXPORTS
(USD Mn)
January
1,654
898
(756)
February
1,345
841
(504)
March
1,672
1,070
(602)
April
1,445
762
(682)
May
1,276
882
(393)
June
1,439
986
(454)
July
1,845
955
(891)
August
1,725
991
(733)
MONTH
TRADE DEFICIT
(USD Mn)
External Sector Performance - August 2014

In August 2014, earnings from exports recorded a YoY growth of 7.9% to USD 991Mn , while the expenditure on imports recorded a YoY growth of 16.9% to USD 1,725 Mn. The largest contribution to the export
earnings in August 2014 was from industrial exports which grew by 11.9% YoY. Textiles and garments and
transport equipment are the major categories contributed to growth in industrial exports. Textiles and garments contributed 85.6% for the growth and transport equipment contributed 36.5% to the growth. Agricultural exports recorded 3.1% decline mainly due to contraction in export earnings from tea and spices.
However, earnings from coconut products depicted a significant improvement led by the increase in kernel products.

Expenditure on imports increased by 16.9% to USD 1,725Mn in August 2014. The increase in import expenditure in August was mainly due to the imports of refined petroleum products for higher level of thermal power generation compared to the corresponding month of 2013. Consumer goods recorded a YoY
growth of 23.0% while intermediate goods recorded 21.1% increase and Investment goods recorded 1.1%
increase. Among the import categories classified under Intermediate goods that made a relatively high contribution to this growth was fuel. Expenditure on Import of fuel grew by 21.0% YoY in August 2014. With
regard to consumer goods the sub category of vehicles was the main contributor to this growth and recorded a 13.5% YoY growth.

As the growth of imports weighed on the export earnings, the trade deficit widened to USD 733Mn in August 2014, compared to USD 556Mn in August 2013. During the period from January to August 2014, the
BOP is estimated to have recorded a surplus of USD 2,150 Mn compared to the deficit of USD 66 Mn in the
corresponding period of 2013. By end August 2014, Sri Lanka’s gross official reserves amounted to USD 9.2
Bn.
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SMB SECURITIES (PVT) LTD
October 15, 2014
Research
Subhashi Jayasumana
Randula Harinda
Ayana Kapuruge
Tel: +94 11 4388136
Sales & Marketing
Tel: +94 11 4388122
Lalith Sepalage
Janak Dadallage
Sampath Indika
Nuwan Perera
Mob: +94 722 421003
Mob: +94 715 329612
Mob: +94 715 329605
Mob: +94 715 329609
Sisira Kannangara
Vino Ramasamy
Shalini Jayatunga
Mob: +94 777544580
Mob: +94 718 733725
Mob : +94714816297
Inoka Lasantha
Mob:+94773403571
Marlon Fernando
Sooriya Arachchi
Mob :+94775473875
Mob :+9477235445
DISCLAIMER:
The information contained in this document has been compiled from sources that we believe to be reliable; however
we do not hold ourselves responsible for its completeness or accuracy. All opinions and estimates included in this report constitute of our
judgment to this date and are subject to change without notice. Information contained in this document is not and should be construed as an
offer, or a solicitation of an offer, to buy or sell any security or other financial instruments, and cannot be relied upon as a representation for
any particular transaction. SMB Securities (Pvt) Ltd or its affiliates and / or its directors, officers and employees shall not be in any way be
responsible or liable for loss or damage which any person or party may sustain or incur by relying on the content of this document.
SMB Securities (Pvt) Ltd
No: 102/1, Dr.N.M.Perera Mawatha, Colombo 08, Sri Lanka [email protected]
www.smbsecurities.lk
Tel: 0114388136
9