Friday, March 01, 2013

Today 5,652.69 3,206.85 Point Change + 16.79 + 12.46 % Change 0.30 % p 0.39 % 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

0.2% 3.9% 673.9 849.5 16.5 38.2 2,171.7 -324.4 83.3 407.6 -0.7

Today's Turnover (LKR mn) Annual Average Daily Turnover (LKR mn) Volume (mn) Annual Average Daily Volume (mn) Market Capitalization (LKR bn)

BFI & manufacturing sector play dominates bourse

Net Foreign Inflow / (Outflow) [LKR mn] - Foreign Buying (LKR mn) - Foreign Selling (LKR mn) YTD Net Foreign Inflow / (Outflow) [LKR bn]

CSE Diary for 01.03.2013

Bourse ended a week of stagnation, concluding trading on a positive note with prominent interest in the banking and finance and manufacturing sectors. The benchmark index gained 27 points at its peak of 5,663.58 points reflecting considerable gains denoted in the S&P caliber; Ceylon Tobacco Company (+5.1%), John Keells Holdings (+0.5%) and Hayleys (+2.6%) before settling with a gain of 16 points at 5,652.69. Consequently the S&P SL20 index advanced 12 points at its close of 3,206.85 points. Crossings in BFI and manufacturing sector counters added 55% to the days turnover. Colombo bourse which witnessed a 82 point WoW dip during the week has continued to grab attention from value hunters with several growth counters trading at discount levels. The downtrend has mirrored the losses denoted in majority of the overvalued stocks which investors piled into whilst following herd instinct while fundamental counters have remained relatively resilient to the downtrend. With anticipated earnings growth in the banking sector being proven true with the earnings release of large banks during the week, we emphasize on accumulating growth picks during the current stagnation phase placing importance on the banking sector and a few selected picks from Non-Bank Financial Institutions. The key picks of the NBFI sector have been highlighted in our sector report released (see weekly plus: research chat page 9)

Investor hunt in Hatton National Bank continued with its earnings release depicting a 32% YoY growth. The counter emerged to spearhead the days turnover backed by two off-market transactions carrying c.2 mn shares at LKR149.0 while its Non-Voting share touched a 52-week high price of LKR121.9 during the day. Sampath Bank sustained interest with its dividend announcement of LKR6.0 per share today while encountering a 100k off-board parcel at LKR235.0 while its price touched LKR235.3 at its peak. Manufacturing sector interest was primarily driven by Royal Ceramics and Piramal Glass with both trading at attractive valuations. The former saw several large transactions executed at LKR98.0 and LKR99.0 while the latter witnessed two large blocks accumulating to c.1.5 mn shares at LKR6.2. Chevron Lubricants added another block to the crossings board amounting to 176k shares at LKR217.5 with insignificant on-board interest. Ceylon Tobacco Company edged up as a major positive contributor to the index with its announcement of the company not having to comply with the packaging regulations which were due to come into force on March 1st 2013. Its price touched LKR770.0 (+6.6%) at its peak before closing with a 5.1% gain at LKR759.2. Retailers continue to step on the sidelines however some interest was noted in SMB Leasing, Panasian Power and Free Lanka Capital.

Statistical Look Up
Treasury Bill (%) 3 months 6 months 12 months AWPLR Excess Liquidity (LKR 'bn) Inflation (%) Feb-13 as at 01.03.2013 YoY Change Annual Avg Week ending 01.03.2013 9.10 10.08 11.10 14.40 -35.84

5900 5800

Index

5700
5600 5500

9.8 8.6

ASPI
3300 3280 3260 3240 3220 3200 3180 3160 3140

Turnover LKR ('mn)

4,000 3,000 2,000 1,000 0

140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0

Volume ('mn)

Index

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 5,652.7 3,206.9 673.9 5.3 16.5 238 2,171.7 83.3 407.6 -324.4 15.3 2.1 2.4 Today 12,711.7 15,822.6 2,809.7 1,856.1 574.8 3,362.3 467.2 2,571.5 782.9 168.8

Pre Day 5,635.9 3,194.4 1,430.6 11.2 27.8 242 2,165.2 1,068.0 1,088.8 -20.7 15.2 2.1 2.4 Pre Day 12,702.9 15,542.0 2,805.5 1,854.9 599.6 3,351.0 471.5 2,565.0 775.6 170.4

Change % 0.30% p 0.39% p -52.89% -52.89% -40.76% -1.65% 0.30% -92.20% -62.56% 1464.55% 0.30% 0.30% 0.00% % Change 0.07% 1.80% 0.15% 0.06% -4.14% 0.33% -0.91% 0.25% 0.95% -0.95% p p p p q p q p p q

Last Week 5,735.6 3,223.3 300.1 2.4 12.6 228 2,203.5 117.1 22.9 94.2 15.5 2.1 2.3 Last Week 12,772.0 16,175.6 2,794.7 1,883.9 604.1 3,404.9 476.5 2,607.9 791.0 172.7

% WoW Change -1.45% -0.51% 124.58% 124.58% 30.33% 4.39% -1.44% -28.86% 1682.59% -444.32% -1.44% -1.44% 4.35% % WoW Change -0.47% -2.18% 0.54% -1.47% -4.86% -1.25% -1.94% -1.39% -1.03% -2.28% Page | 2.

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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 9.2% 6.5% 4.0% 4.0% 3.6% 3.9% 3.3% 3.4% 2.2% 2.2% 2.5% 1.2% 1.5% 1.5% 1.8% 1.4%

Volume 11,917 20,799 104 1,063 2,304 100,234 122 122,007 2,426,112 7,069 205 5,290 814 6,520 233,846 6,170

Turnover LKR ('000) 2,813.77 15,760.08 45.76 1,726.62 99.07 10,926.31 86.06 1,098.08 361,494.83 848.28 36.50 301.44 118.68 782.08 54,950.34 428.87

Turnover USD ('000) 22.08 123.64 0.36 13.55 0.78 85.72 0.68 8.61 2,836.08 6.66 0.29 2.36 0.93 6.14 431.11 3.36

Intraday Intraday High (LKR) Low (LKR) 236.50 770.00 440.10 1,625.00 43.80 109.10 710.00 9.10 150.00 120.00 180.00 59.00 146.00 120.00 235.30 70.00 233.00 730.00 440.00 1,624.00 42.90 108.80 705.30 9.00 147.10 120.00 178.00 56.50 145.80 119.00 232.00 69.50

Close 235.20 759.20 440.00 1,625.00 43.00 109.00 705.30 9.00 149.00 120.00 180.00 56.70 145.80 120.00 235.10 70.00

Price Gainers
Company
S M B LEASING [X] HARISCHANDRA SWARNAMAHAL FIN UNION CHEMICALS HUNAS FALLS

Price Losers
Today 0.40 2,399.00 3.60 509.50 55.00 Change + 0.10 + 349.00 + 0.40 + 54.40 + 5.00 % Change Company 33.33% 17.02% 12.50% 11.95% 10.00%
ASIRI CENTRAL NATION LANKA [W 0021] EQUITY ENVI. RESOURCES [W 0003] RAMBODA FALLS

Today 215.40 1.10 25.60 1.80 14.50

Change - 59.50 - 0.30 - 4.40 - 0.20 - 1.30

% Change -21.64% -21.43% -14.67% -10.00% -8.23%

Top 05 Performers for the Day

Company
HNB SAMPATH CHEVRON ROYAL CERAMIC CEYLON TOBACCO

Today 149.00 235.10 217.50 99.00 759.20

Pre Day 147.70 234.00 216.90 97.00 722.50

% Change 0.88% 0.47% 0.28% 2.06% 5.08%

Volume (mn) 2.43 0.23 0.18 0.30 0.02

Contribution to Total T/O 16.6% 2.5% 1.8% 1.4% 0.7%

Turnover (LKR) 361,494,833 54,950,345 39,641,816 29,820,148 15,760,080

Most Active
Company
HNB PIRAMAL GLASS S M B LEASING[NON VOTING] PANASIAN POWER FREE LANKA

Today 149.00 6.20 0.40 2.70 2.40

Pre Day 147.70 6.20 0.30 2.70 2.30

% Change 0.88% 0.00% 33.33% 0.00% 4.35%

Volume (mn) 2.43 1.97 1.47 1.04 0.72

Contribution to Total T/O 16.6% 0.6% 0.0% 0.1% 0.1%

Turnover (LKR) 361,494,833 12,227,780 539,413 2,818,787 1,725,253

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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 01.03.2013 130.39 20.48 166.66 2.35 1.38 41.20 4.16 33.99 103.02 136.13 4.29 193.40 127.46

Announcements
Dividends
Company Regnis (Lanka) PLC Singer (Sri Lanka) PLC Singer Industries (Ceylon) PLC Nestle Lanka PLC Sampath Bank PLC (Amended) Lanka Walltiles PLC 0 0
Company Description

DPS (LKR) 2.50 6.00 1.50 30.00 6.00 1.00 0.00 0.00
Proportion

XD Date 11-03-2013 11-03-2013 11-03-2013 11-03-2013 05-04-2013 12-03-2013 00-Jan-00 00-Jan-00

XR Date

Payment Date 20-03-2013 20-03-2013 20-03-2013 20-03-2013 16-04-2013 21-03-2013 00-Jan-00 00-Jan-00
Renunciation

Rights Issues / Scrip Dividend / Sub division / Capitalization

Sampath Bank PLC (Amended) 0 0 0
Voting 01 for 33.124649262134/4/2013

0 0

1/0/1900 1/0/1900

05-04-2013 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 14,054.5 1,514.7 2,604.8 6,337.9 11,606.4 22,880.2

Change -20.9 -1.3 -24.7 -19.3 47.0 -140.1

Change % -0.15% q -0.09% q -1.12% q -0.36% q 0.41% p -0.61% q

Time* 0-Jan 0-Jan 06:11 06:10 01:28 03:01

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 110.52 91.13 84.78 713.50 1,567.20 28.03 348.55

Change -0.76 -0.52 -0.75 -11.00 -

Change % -0.75% q -1.00% q -0.60% q -0.14% q -0.68% q -1.40% q -1.76% q

Time* 06:22 06:22 06:22 06:21 06:22 06:22 06:21

Source: www.bloomberg.com

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CSE Announcements
Hydro Power Free Lanka [HPFL: LKR5.9]: This is to inform the existing name of the company Hydro Power Free Lanka will be changed to FLC Hydro power Plc. Free Lanka Capital Holdings [FLCH: LKR2.4]: This is to inform the exsisting name of the company Free Lanka Capital Holdings will be changed to FLC Holdings Plc.

Peoples Leasing and Finance [PLC: LKR13.4]: The company informs that Mr.Gamini Sedara Senerath has been appointed as the Non-Executive Non-Independent Chairmen of the board of the company . Brown and Company [BRWN: LKR111.0]: The company informs that Mrs Rohoni Lettitia Nanayakkara relinquished her services as Chairperson/Non-Executive director Mr. Ishara Chinthaka Nanayakkara will be appointed as the Executive Chairman/Executive Director of the company.

Local News
Cabinet approves USD10 mn Govt. borrowing from HNB: The Cabinet has approved a credit agreement with Hatton National Bank [HNB: LKR149] to finance the construction of 210 steel bridges in Sri Lanka. proposal made by President Mahinda Rajapaksa in his capacity as the Minister of Finance and Planning, the Government will enter into a loan agreement with the HNB to borrow US dollars equivalent to GBP6,779,243 for the project. [Source: www.ft.lk] 21 Acts to be revamped for Budget boost: Cabinet approval was given yesterday to revamp a slew of Acts to pave way for 2013 Budget proposals to be implemented. Accordingly, a total of 21 new bills will be presented to Parliament in the coming weeks. These include amendments to the Value Added Tax Act, Inland Revenue Act, Nation Building Tax, Ports and Airports, Economic Service Charge, Finance Act, Tax Appeals commission and Customs Ordinance. Interestingly, the Betting and Gaming (Amendment) Bill will also be presented to Parliament along with Strategic Development Projects (Amendment) Bill and Excise Ordinance (Amendment) Bill. [Source: www.ft.lk] Tea auctions brew fresh all time record prices: Three all-time record prices, established on 13 and 19 February 2013, were improved by the same factories at this weeks sale. These all-time record prices were established in Ex-Estate and High and Medium catalogues of Forbes & Walker Tea Brokers Ltd. Court Lodge Estate Pekoe 1 grade established a new all-time record price of LKR1,500 per kilogram, improving on the LKR1,300 per kilogram established by them on 19 February 2013 for the same grade in the Nuwara Eliya category. Pedro Estate established a new all-time record price of LKR1,350 per kilogram, for a OP Grade, improving on the LKR1,000 per kilogram established by the same estate on 13 February 2013 for the same grade in the Nuwara Eliya category. Craighead Estate FBOP Grade established a New all Time Record price of LKR740 per kilogram, improving on the LKR720 per kilogram established by them on 19 February 2013 for the same grade in the Western Medium category. [Source: www.ft.lk] Sri Lanka's 'B+' rating confirmed by S & P, amid warnings: Standard and Poor's Ratings Services has confirmed a 'B+' sovereign rating for Sri Lanka with a 'stable' outlook but warned of a bloated state sector and institutions that lack transparency and independence. "We affirmed the ratings to reflect our view of Sri Lanka's weak external liquidity, a moderately high and increasing net external liability position," S & P said in a statement. Additional rating constraints include the country's fundamental fiscal weaknesses, and the attendant high government debt and interest burdens. Ratings were supported by strong growth prospects and limiting inflation to single digits, the agency said. Inflation may moderate as the rupee stabilizes. [Source: www.lbo.lk] Softlogic Equity Research Page | 5
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Global News
Chinas Manufacturing Expands at Below-Forecast Pace: Two Chinese manufacturing indexes showed a slower-than-estimated pace of expansion, a signal the nations economic recovery may be losing steam. The official Purchasing Managers Index was 50.1 in February, the weakest in five months and down from 50.4 in January, a report from the National Bureau of Statistics and China Federation of Logistics and Purchasing showed today in Beijing. A separate gauge from HSBC Holdings Plc and Markit Economics dropped to a fourmonth low of 50.4 from 52.3. Readings above 50 indicate expansion. Contractions at small and mid-sized manufacturers in the official survey underscore the headwinds Chinas new government will face when it takes power this month after the annual session of parliament. Li Keqiang, set to become premier, faces the task of sustaining a rebound in growth without triggering a resurgence in inflation and banks bad debts. [Source: www.bloomberg.com] German Retail Sales Post Biggest Monthly Jump in Six Years: German retail sales rose the most in more than six years in January as falling unemployment bolstered consumer confidence. Sales, adjusted for inflation and seasonal swings, jumped 3.1% from December, when they dropped 2.1%, the Federal Statistics Office in Wiesbaden said today. Thats the biggest increase since December 2006, the office said. Economists forecast a 0.9% gain, according to the median of 20 estimates in a Bloomberg News survey. From a year earlier, sales rose 2.4%. The German economy, Europes largest, is recovering from its fourth-quarter slump. Factory orders, industrial production and exports rose in December and sentiment has improved among entrepreneurs, investors and consumers. With unemployment near a two-decade low and a shortage of skilled labor, German workers won wage deals of as much as 6.5% last year. [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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Branches
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