Monday, May 20, 2013

Today 6,466.67 3,649.35 Point Change + 85.97 + 60.09 % Change 1.35 % p 1.67 % 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

14.6% 18.3% 1,282.7 881.5 44.0 40.5 2,483.2 288.4 350.9 62.5 11.3

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]

Bourse further extended its gains nearing 6,500 points

CSE Diary for 20.05.2013

Indices extending its upward drive: The bourse sustained its rally today with notable buying pressure across the board. During the early morning session, ASPI rushed on the rally to reach 103 points. However it lost momentum during the mid-day to denote a market correction and eventually picked up in the latter session ending at 6,466.67 points (+86 points). Major contributors to the daily gains were John Keells Holdings (+4.3%), Nestle Lanka (10.2%) and Chevron Lubricants (11.3%). S&P SL20 too journeyed a similar path and ended with a gain of 60 points at 3,649.35 points. Commercial Bank on a rally with heavy volume: Commercial Bank spearheaded the daily-turnover with notable off-board interest where the counter denoted four crossings totaling c.1.3mn shares which were transacted at LKR122.0. Much interest was also seen on-board on Commercial bank with several large blocks, largest being 112k shares which was traded at LKR122.0. COMB witnessed a healthy price

rally today where it ended at a 52-week high of LKR122.1 with a 2.6% gain. The tile manufacturer Royal Ceramic Lanka too reported two crossings accumulating to 500k shares at LKR109.0. Investor eye on BFI sector; JKH continued its upward climb: John Keells Holdings further neared its next psychological level LKR300.0 with heavy volume, topping the on-board turnover list. The counter witnessed a single large on-board transaction of 44k shares at LKR295.0 and ended the day with a gain of 4.2% at LKR297.1. Counters on the BFI sector Sampath Bank, Nations Trust Bank and National Development Bank too attracted notable investor interest during the day.

Retail interest continued moderately: Retail interest surrounded Seylan Development, Overseas Reality and Colombo Fort Land & Building.

Statistical Look Up
Treasury Bill (%) 3 months 6 months 12 months AWPLR Excess Liquidity (LKR 'bn) Inflation (%) Apr-13 as at 20.05.2013 YoY Change Annual Avg Week ending 17.05.2013 8.75 9.91 10.84 13.12 -2.04 6.4 8.8

6600 6400 6200

Index

6000
5800 5600 5400

ASPI
3600

Turnover LKR ('mn)

3700 3500 3400 3300 3200 3100

5,000 4,000 3,000

150.0

Volume ('mn)

Index

100.0 50.0 0.0

2,000 1,000
0

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 6,466.7 3,649.4 1,282.7 10.2 44.0 254 2,483.2 350.9 62.5 288.4 17.6 2.4 2.1 Today 14,300.5 18,589.2 3,004.5 2,178.8 715.6 3,627.7 635.2 3,142.5 843.6 178.7

Pre Day 6,380.7 3,589.3 1,401.5 11.1 58.5 248 2,450.2 434.8 99.5 335.3 17.3 2.4 2.1 Pre Day 14,283.0 17,926.2 2,959.3 2,136.0 717.0 3,653.8 623.7 3,067.6 849.1 179.1

Change % 1.35% p 1.67% p -8.48% -8.48% -24.78% 2.42% 1.35% -19.30% -37.16% -14.00% 1.35% 1.35% 0.00% % Change 0.12% 3.70% 1.53% 2.00% -0.19% -0.71% 1.84% 2.44% -0.65% -0.22% p p p p q q p p q q

Last Week 6,239.0 3,518.9 535.0 4.2 24.6 246 2,391.3 176.9 23.9 153.0 16.9 2.3 2.1 Last Week 14,095.7 17,444.7 2,981.9 2,074.8 717.6 3,578.4 602.7 3,010.8 825.2 174.0

% WoW Change 3.65% 3.71% 139.73% 139.73% 78.72% 3.25% 3.84% 98.31% 161.12% 88.48% 4.09% 3.92% 0.00% % WoW Change 1.45% 6.56% 0.76% 5.01% -0.27% 1.38% 5.38% 4.37% 2.23% 2.67% 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 10.3% 6.7% 3.6% 4.5% 3.2% 3.9% 2.9% 3.2% 2.2% 2.2% 2.3% 1.2% 1.6% 1.6% 1.5% 1.3%

Volume 541,234 3,391 9,045 1,451 8,484 2,008,187 9,534 1,019,072 55,250 28,252 93,267 63,596 37,813 6,391 126,351 27,044

Turnover LKR ('000) 159,102.09 2,974.34 4,066.66 2,901.14 379.54 244,620.65 6,993.57 9,987.37 9,539.26 3,813.42 17,572.04 4,068.65 6,578.53 969.31 28,595.80 1,993.99

Turnover USD ('000) 1,260.88 23.57 32.23 22.99 3.01 1,938.61 55.42 79.15 75.60 30.22 139.26 32.24 52.13 7.68 226.62 15.80

Intraday Intraday High (LKR) Low (LKR) 298.50 885.00 459.00 2,099.00 45.00 122.50 755.00 9.90 173.00 136.00 190.00 64.20 174.10 152.50 228.00 79.00 285.00 870.00 448.00 1,951.00 44.00 119.00 715.00 9.70 171.10 134.50 185.00 63.20 172.50 149.50 226.00 71.20

Close 297.10 884.90 450.00 2,095.20 44.30 122.10 716.70 9.80 172.30 135.00 189.50 64.00 172.50 149.80 226.00 73.90

Price Gainers
Company
SERENDIB LAND CONVENIENCE FOOD CIT CHEVRON PEOPLE'S MERCH

Price Losers
Today 1,449.70 232.70 158.60 286.10 16.70 Change + 249.70 + 32.70 + 18.60 + 29.00 + 1.60 % Change Company 20.81% 16.35% 13.29% 11.28% 10.60%
S M B LEASING [X] CITRUS HIKKADUWA S M B LEASING PC HOUSE BLUE DIAMONDS [X]

Today 0.40 23.60 0.90 3.30 1.50

Change - 0.10 - 2.80 - 0.10 - 0.30 - 0.10

% Change -20.00% -10.61% -10.00% -8.33% -6.25%

Top 05 Performers for the Day

Company
COMMERCIAL BANK JKH ROYAL CERAMIC OVERSEAS REALTY SAMPATH

Today 122.10 297.10 108.70 18.90 226.00

Pre Day 119.00 284.90 109.40 17.90 228.10

% Change 2.61% 4.28% -0.64% 5.59% -0.92%

Volume (mn) 2.01 0.54 1.28 2.02 0.13

Contribution to Total T/O 9.9% 6.4% 5.6% 1.5% 1.2%

Turnover (LKR) 244,620,648 159,102,091 139,027,128 37,828,728 28,595,797

Most Active
Company
AMANA TAKAFUL OVERSEAS REALTY COMMERCIAL BANK EXPOLANKA ROYAL CERAMIC

Today 1.60 18.90 122.10 7.40 108.70

Pre Day 1.60 17.90 119.00 7.30 109.40

% Change 0.00% 5.59% 2.61% 1.37% -0.64%

Volume (mn) 8.60 2.02 2.01 1.54 1.28

Contribution to Total T/O 0.6% 1.5% 9.9% 0.5% 5.6%

Turnover (LKR) 14,614,959 37,828,728 244,620,648 11,378,393 139,027,128

Softlogic Equity Research

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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 20.05.2013 123.29 20.55 161.93 2.30 1.23 41.78 4.01 33.65 100.43 129.95 4.22 191.60 126.18

Announcements
Dividends
Company No Annoucements 0 0 0 0 0 0 0
Company Description

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

XD Date 0 0 0 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00

XR Date

Payment Date 00-Jan-00 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 15,354.4 1,667.5 2,817.8 6,715.2 15,360.8 23,493.0

Change 121.2 17.0 -0.2 -7.9 222.7 410.4

Change % 0.80% p 1.03% p -0.01% q -0.12% q 1.47% p 1.78% p

Time* 17-May 17-May 07:05 07:06 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 103.80 95.55 86.34 682.75 1,349.80 21.55 330.35

Change 0.12 -0.47 -0.07 -0.50 -14.90 -0.81 -1.95

Change % 0.12% p -0.49% q -0.08% q -0.07% q -1.09% q -3.61% q -0.59% q

Time* 15:02 06:54 07:10 07:15 06:56 06:56 06:56

Source: www.bloomberg.com

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CSE Announcements
Hatton National Bank [HNB: LKR172.3, HNB.X: LKR126.3] The CSE has approved in principle an Application for listing the debt securities of the Bank. The debt securities are to be listed on the Main Board of the CSE. Details of the above issue are as follows. 20,000,000 Unsecured, Subordinated, Redeemable Debentures at an issue price of LKR100.0 each (with an option to issue up to a further 20,000,000 Debentures in the event the initial 20,000,000 Debentures are oversubscribed). Date Of Opening Of The Subscription List is 6th June 2013. Singalanka Standard Chemicals [SING: LKR76.0]: The Court Cases which had been filed against the Company by M/s Penpals Ltd, a shareholder of the Company have been withdrawn by Penpals Ltd pursuant to the sale of Its entire shareholding in the Company. Penpals Ltd was seeking by these cases inter alia to challenge the Rights Issue of the company that was held in August 2011. Watawala Plantations [WATA: LKR13.1]: Mr. Sunil Gamini Wijesinha succeeds Mr. Govindasamy Sathasivam for the post of Chairman w.e.f 20th May 2013. Dealings by Directors
Company Cargills (Ceylon) [CARG: LKR172.5] Name Anthony A. Page Relationship Transaction Quantity Director Sale 670,796 Price (LKR) 165.0 Date 15.05.2013

Local News
LOLCs Green Paradise gets LKR100 mn facelift: LOLC Leisure [Subsidiary of Lanka Orix Leasing Company [LOLC: LKR64.0] ] plans to invest LKR100 mn to further develop the luxury Green Paradise Agro Eco Hotel, said Susantha Bandara, Resident Manager, Green Paradise Hotel. In an exclusive interview with Daily News Business, he said that under the LOLC management, the hotel could soon look to a bright future with many developments in store. LOLCs Browns Investments, recently acquired a 51% stake of the previously Italian owned luxury Green Paradise Hotel, situated in a strategic location close to the historic Kaludiya Pokuna, surrounded by the Kandalama tank, Sigiriya, Polonnaruwa and Anuradhapura. Bandara said the LOLC management had planned to further develop the hotel to international standards in a bid to bring the luxury hotel under the umbrella of a renowned international brand chain and convert it into a flagship Eco luxury hotel in the region. He said plans were afoot to accomplish the tasks within a period of six months. Under this development, the hotels landscape would receive a facelift and the villas and suites would be further upgraded. More agro eco features too would be added to the existing facility. [Source: www.dailynews.lk] PEOI: New Year uptick of optimism gone: The Perceived Economic Opportunity Index (PEOI) lost the welcome uptick in optimism in anticipation of the traditional New Year. The only positive change recorded for 2013 in March turned negative soon after the holidays. During the period of the survey there was some significant bad news on the economic front; an increase in electricity tariffs. It is very likely that this pending increase had an impact on the perceptions of the people. Whether the fall in optimism would turn around post the assurance of the President in his May Day message that the poorest consumers would be exempted for the hike or whether it would continue to fall will be seen next month. Indications, however, are that people are expecting cost of living to worsen. With the PEOI well below the midpoint of 2.0 and on a downward trend, it is time that policymakers take necessary steps to improve the confidence of the people, without which economic performance itself will suffer. [Source: www.ft.lk] Listed debt market heads for record year: Boosted by a specific 2013 Budget move, the countrys listed debt market is set for a record year in 2013, judging by value of issues already completed and those in the Softlogic Equity Research Page | 5
5

pipeline. The year so far has seen four firms raising LKR10.5 bn, whilst issues worth a further near LKR15 bn are in the offing. The best year for the listed corporate debt market was in 2010 with LKR15 bn raised and if most of the planned ones come through, 2013 will be a record high. As per value of issues done and slated, the figure stands at LKR25 bn. Analysts linked the resurgence in listed debt market to the Governments 2013 Budget exempting income tax on the interest income of corporate debt securities. This was to fasttrack the development of the corporate debt market. In the first quarter four issuers raised LKR10.5 bn, with Peoples Leasing and Finance coming with a mega issue of LKR6 bn. Others were Seylan Bank and Merchant Bank of Sri Lanka (LKR2 bn each) and Commercial Credit and Finance (LKR500 mn). [Source: www.ft.lk] IMF calls for second generation tax reforms: With the first generation of tax reforms failing to generate intended revenues, International Monetary Fund has urged authorities to bring about second generation of tax reforms focused on broadening the tax base through improved administration. Revenue growth has not responded as envisaged to a first round of tax reforms, undermining capital investment plans; despite recent appropriate price adjustments, state-owned enterprises remain prone to large losses; and the current account deficit remains elevated and financed mainly through debt-creating flows, IMF staff report noted. Comprehensive tax reforms were introduced in 2010 and 2011 to simplify the tax structure and broad base the tax system, under which corporate income tax was brought down from 35% to 28%; the VAT rate was unified at 12%; and certain other taxes were abolished. However, the pace and quality of fiscal adjustment fell short of ambitious plans, and tax rate reductions generally took precedence over base broadening, while costrecovery pricing at state-owned energy companies has yet to emerge, IMF staff report remarked. [Source: www.dailynews.lk] Nepal billionaire plans to set up USD75mn cement plant in Jaffna: Nepal's first Forbes billionaire, Binod Chaudhary has submitted a proposal worth of USD75 mn to the Sri Lankan government to set up a state-ofthe-art cement plant in Jaffna Peninsula, a statement issued by Chaudhary's office said. In Sri Lanka, Chaudhary has an estimated USD 200 mn investments, including projects underway and proposed. [Source: www.dailymirror.lk] Tourism to earn USD3 bn by 2016 : Four years after the 30-year anti-terrorist war tourism has become one of Sri Lankas biggest foreign exchange-earners with average annual revenue of USD1 bn at present. The number of tourist arrivals last year was 1,005,605 while in January this year 97,411 tourists visited the country. The country is expected to earn an annual income of USD3 bn by 2016. The government has set a target of attracting 2.5 mn high spending tourists by that year. Sri Lanka Tourism Chairman Bhashwara Gunarathna explained the rationale behind launching Get Sri Lankened campaign in India and how Sri Lanka Tourism plans to achieve maximum influx of Indian tourists from Indian market. He said Sri Lankas target is to attract 400,000 Indian tourists by year 2016 thus helping to reach the goal of 2.5 mn arrivals by year 2016. [Source: www.ft.lk]

Global News
China, India to be worlds two biggest investors by 2030: World Bank: The percentage of global investment that goes to developing countries should triple in the next two decades as emerging economies catch up to richer nations and become more integrated into financial markets, the World Bank predicted in a report last week. These nations and their comparatively younger and bigger populations are also set to become the largest sources of capital, with China and India turning into the worlds two biggest investors by 2030, the global development lender said. The shifting landscape of saving and investment has profound implications for everything from which currencies will dominate global markets to the rise of new financial centres, patterns of capital flows and investment priorities. But policymakers are still woefully unprepared for the changes, fixating instead on what will happen in the next three to six months, Kaushik Basu, the World Banks Chief Economist, said. Standard & Poors earlier this week predicted that Chinese non-financial companies will overtake US companies in their borrowing needs over the next two years. By 2030, for every dollar invested in the world, 60 cents will flow into developing countries, a dramatic change from 20 cents to Softlogic Equity Research Page | 6
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the dollar in 2000. China will make up 30% of all investment activity, while the United States will have 11% and India, 7%. The numbers assume the world will grow on average 2.6% to 3% a year in the next two decades, while emerging economies will grow 4.8 to 5.6% a year. [Source: www.ft.lk]

China Home-Price Gains Signal Growth Challenge for Li: Chinas new-home prices rose last month in 68 of 70 cities tracked by the government, indicating Premier Li Keqiang will need to maintain efforts to cool the property market even as economic growth slows. Chinas policy makers are trying to avoid property bubbles and make homes more affordable while bolstering an economy that lost steam in the first quarter. Expanding a campaign against housing speculation could choke off real-estate development that is helping counter a slowdown in manufacturing investment and supporting demand for steel, cement and household goods. The government faces a dilemma, said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. They have to make a choice between property prices and economic growth. [Source: www.bloomberg.com]

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