Wednesday, May 15, 2013

Today 6,221.12 3,498.34 Point Change + 14.53 - 2.16 % Change 0.23 % p -0.06 % q

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

10.2% 13.4% 1,695.9 866.2 49.1 40.2 2,384.5 859.9 1,088.8 228.9 10.6

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]

Upward climb in ASPI amidst crossings adding 54% to turnover

CSE Diary for 15.05.2013

Bourse reverts back to the green: The benchmark index moved on a volatile note with renewed buying interest leading to a gain of 14 points at 6,221.12 points. BFI sector and Diversified sectors continued dominancy, adding 62% to the turnover. Gains denoted in heavy weights; Nestle Lanka (+1.8%), Carsons Cumberbatch (+1.4%), Hatton National Bank (+1.8%) and John Keells Holdings (+0.4%) supported the uptrend of the index while marginal dips in banking players in the S&P SL20 calibre led the index to close marginally down at 3,498.34 points. 15 crossings added 54% to the turnover spearheaded by John Keells Holdings: John Keells Holdings continued to lead the turnover supported by 7 offboard deals which carried 1.25 mn shares at LKR274.0 and LKR275.0. The counter touched a new 52-week high of LKR275.0 with majority of on-board interest weighing towards the selling side. BFI sector interest continued highlighting Sampath Bank (-1.5%), National Development Bank (-2.3%) and Commercial

Bank (-1.4%) creating further opportunity to accumulate. The former counters encountered one and four crossings each at LKR225.0 and LKR175.0. Motor sector witnessed renewed play with notable interest in Colonial Motors, Diesel and Motor Engineering and United Motors. The latter closed with a gain of 5.1% at LKR113.1 after an off-board block of 1 mn shares which was crossed off at LKR110.0 while the former counters secured gains of 8.3% and 1.6% respectively. Renewed interest in Cargills led two off market blocks amounting to 670k shares at LKR165.0. Strong on-board interest on Piramal Glass as it traded at a 52-week high: Piramal Glass was noted in the top turnover slot with several large blocks being picked at its new 52-week high of LKR6.9. The counter offers attractive dividend yields of 5.7% and 6.1% on FY14E and FY15E net earnings whilst trading below the manufacturing sector trailing PER of 11.6.

Retail activity saw a slowdown: Retail interest focused on Piramal Glass, PC House, Dialog Axiata, FLC Holdings and Blue Diamond [Non-Voting].

Statistical Look Up
Treasury Bill (%) 3 months 6 months 12 months AWPLR Excess Liquidity (LKR 'bn) Inflation (%) Apr-13 as at 15.05.2013 YoY Change Annual Avg Week ending 10.05.2013 9.18 10.20 11.29 13.48 4.94

6400 6200

Index

6000
5800 5600

6.4 8.8

ASPI
3550 3500 3450 3400 3350 3300 3250 3200

Turnover LKR ('mn)

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 6,221.1 3,498.3 1,695.9 13.4 49.1 253 2,384.5 1,088.8 228.9 859.9 16.8 2.3 2.1 Today 13,915.8 17,432.9 2,929.7 2,078.9 714.8 3,569.9 599.6 3,004.9 827.4 172.7

Pre Day 6,206.6 3,500.5 636.2 5.0 24.0 247 2,378.9 183.9 29.6 154.3 16.8 2.3 2.2 Pre Day 13,967.4 17,330.1 2,907.8 2,069.8 715.8 3,566.6 597.1 3,002.0 820.3 172.5

Change % 0.23% p -0.06% q 166.58% 166.58% 104.84% 2.43% 0.23% 491.93% 672.89% 457.21% 0.23% 0.24% -4.55% % Change -0.37% 0.59% 0.75% 0.44% -0.14% 0.09% 0.41% 0.09% 0.87% 0.12% q p p p q p p p p p

Last Week 6,210.1 3,521.3 1,465.3 11.6 50.9 253 2,380.3 308.4 400.5 -92.1 16.8 2.3 2.2 Last Week 14,068.9 17,337.6 2,944.1 2,065.7 702.2 3,580.8 596.4 3,006.3 802.7 174.9

% WoW Change 0.18% -0.65% 15.74% 15.74% -3.53% 0.00% 0.18% 253.10% -42.85% -1033.35% 0.18% 0.18% -4.55% % WoW Change -1.09% 0.55% -0.49% 0.64% 1.80% -0.30% 0.54% -0.05% 3.08% -1.27% 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 9.9% 6.5% 3.7% 4.3% 3.2% 3.8% 3.1% 3.2% 2.2% 2.3% 2.3% 1.2% 1.5% 1.6% 1.6% 1.4%

Volume 1,616,799 2,197 420 9,779 11,300 379,860 204 4,313,672 168,925 422 19,647 1,601 671,997 8,473 151,539 1,506

Turnover LKR ('000) 443,394.39 1,823.72 187.31 18,362.31 483.63 43,613.39 145.84 40,978.88 28,223.02 56.89 3,600.59 95.60 110,873.30 1,251.59 34,058.47 109.68

Turnover USD ('000) 3,506.27 14.42 1.48 145.21 3.82 344.89 1.15 324.05 223.18 0.45 28.47 0.76 876.76 9.90 269.33 0.87

Intraday Intraday High (LKR) Low (LKR) 275.00 835.00 446.00 1,899.00 43.20 116.50 720.00 9.60 168.00 134.90 184.00 60.00 164.00 148.50 228.40 73.00 273.00 830.00 445.00 1,850.00 42.10 114.50 706.00 9.40 165.00 134.80 181.50 58.50 159.00 146.00 222.50 72.50

Close 274.20 830.00 446.00 1,887.50 42.70 115.00 715.00 9.50 168.00 134.90 183.60 59.40 159.80 147.10 223.50 73.00

Price Gainers
Company
SERENDIB ENG.GRP S M B LEASING [X] REGNIS PC HOUSE CHEMANEX

Price Losers
Today 178.00 0.50 77.70 3.80 91.80 Change + 37.00 + 0.10 + 9.90 + 0.40 + 8.00 % Change Company 26.24% 25.00% 14.60% 11.76% 9.55%
HUEJAY SIGIRIYA VILLAGE CARGO BOAT BOGALA GRAPHITE SATHOSA MOTORS

Today 64.10 68.10 95.00 22.40 240.00

Change - 14.70 - 9.80 - 12.40 - 2.90 - 24.50

% Change -18.65% -12.58% -11.55% -11.46% -9.26%

Top 05 Performers for the Day

Company
JKH NAT. DEV. BANK UNITED MOTORS CARGILLS PIRAMAL GLASS

Today 274.20 174.90 113.10 159.80 6.90

Pre Day 273.00 179.00 107.60 159.50 6.80

% Change 0.44% -2.29% 5.11% 0.19% 1.47%

Volume (mn) 1.62 2.17 1.12 0.67 11.97

Contribution to Total T/O 18.6% 15.9% 5.2% 4.6% 3.5%

Turnover (LKR) 443,394,395 379,396,179 123,774,251 110,873,304 82,555,013

Most Active
Company
PIRAMAL GLASS PC HOUSE DIALOG FREE LANKA NAT. DEV. BANK

Today 6.90 3.80 9.50 2.80 174.90

Pre Day 6.80 3.40 9.50 2.80 179.00

% Change 1.47% 11.76% 0.00% 0.00% -2.29%

Volume (mn) 11.97 6.44 4.31 2.41 2.17

Contribution to Total T/O 3.5% 1.0% 1.7% 0.3% 15.9%

Turnover (LKR) 82,555,013 23,844,085 40,978,875 6,736,976 379,396,179

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 15.05.2013 125.10 20.57 163.47 2.31 1.24 42.19 4.03 33.72 101.80 130.79 4.25 192.49 126.46

Announcements
Dividends
Company Balangoda Plantations PLC 0 0 0 0 0 0 0
Company Description

DPS (LKR) 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Proportion 0

XD Date 27-06-2013 0 0 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00

XR Date

Payment Date 04-07-2013 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 15,215.3 1,650.3 2,801.5 6,695.0 15,096.0 23,044.2

Change 123.6 16.6 5.9 9.0 337.6 114.0

Change % 0.82% p 1.01% p 0.21% p 0.13% p 2.29% p 0.50% p

Time* 0-Jan 0-Jan 07:31 07:32 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 102.28 93.15 86.17 706.25 1,410.40 22.94 323.85

Change -0.32 -1.06 -0.75 -4.50 -14.10 -0.44 -4.95

Change % -0.31% q -1.13% q -0.86% q -0.63% q -0.99% q -1.88% q -1.51% q

Time* 07:22 07:23 07:20 07:43 07:24 07:23 07:24

Source: www.bloomberg.com

Softlogic Equity Research

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CSE Announcements
E-Channelling [ECL: LKR7.1]: Mr E-Channelling has entered into an agreement with Laugfs Pay & Go (Pvt) Ltd which would facilitate customers the appointments to channel doctors through Laugfs retail network. Singer Finance [SFIN: LKR14.40]: Dr. Saman Kelegama has been appointed as the Chairman of the Company to fill the vacancy created by the resignation of Mr. H.D.S Amarasuriya with effect from, 30th April 2013 Dealing by Directors:
Company Name Relationship Director Transaction Sale Quantity Price (LKR) 9,384,638 6.00-7.30 Date 02.05.13

Touchwood Investments [TWOD:LKR6.0] Mrs. S.G Jamburegoda

Local News
Sri Lanka's Treasuries yields plunge: Sri Lanka's Treasuries yields plunged as much as 45 basis points at the first bill auction following a 50 basis point rate cut last week, data from the state debt office showed. The 3month yield fell 43 basis points to 8.75%, the 6-month yield fell 29 basis points to 9.91% and the 12-month yield fell 45 basis points to 10.84%. The debt office which is a unit of the Central Bank said offered LKR15.0 bn of bills for auction and accepted LKR19.1 bn rupees in bids selling LKR1.0 bn in 3-month, LKR2.9 bn in 6month and LKR15.1 billion worth 12-month bills. [Source: www.lbo.lk] Australia's Crown applies to invest in Sri Lanka: minister: Melbourne based Crown group has submitted an investment application to Sri Lanka which is pending approval, investment promotion minister Lakshman Abeywardena said. Crown, an entertainment and gaming group has been planning a USD350 mn mixed development in Sri Lanka's capital Colombo, according to reports. Sri Lanka has also proposed changes to the country's gaming laws. Sri Lanka already has about a dozen casinos. Sri Lanka is targeting foreign customers mainly from the Indian subcontinent for its gaming industry. The country's tourism industry has been growing rapidly since the end of a 30-year war. [Source: www.lbo.lk] Krrish payments to be completed in May: Investment Promotion Minister Lakshman Yapa Abeywardena yesterday assured that payments on the controversial Krrish project would be completed by the end of May. Dealing with the knotty issue, Abeywardena said that 81% of the LKR4,995 mn project has been paid up, which is a value of LKR4,049 mn admitted that the total should have been completed by the end of March 2013 but stressed that the oversight was on the part of the Sri Lankan Government, which had to sort out a discrepancy with the Urban Development Auditory (UDA). Since the land for the Krrish project was given by the UDA, it was necessary for the Government to transfer two other acres to it. This had to be done by us so there were a few delays. He expressed confidence that the full amount would be paid according to the new timeline. [Source: www.lbo.lk] Lankas insurance market fast growing: Central Bank Governor Ajith Nivard Cabraal said the segregation of composite insurance companies into life and non- life would enhance the focus and capacity of players in the industry to reach untapped areas of the economy and support the opportunities which would be generated with the five hubs concept as enumerated in Mahinda Chinthana. Cabraal expressed these views addressing a seminar on The Future of Insurance in Sri Lanka organized by Asian Alliance Insurance PLC (AAI), along with their new shareholders, Messrs. Financierings-Maatschappij voor Ontwikkelingslanden N.V. Netherlands(FMO) and Deutsche Investitions-und Entwicklungsgessellschaft MBH of Germany (DEG). The 3% of total asset of financial sector in Sri Lanka is in the insurance sector, this perhaps tell us there is Softlogic Equity Research Page | 5
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tremendous scope for us to improve. However, Sri Lankan insurance industry is lagging far behind compared to Asian countries in general. In Sri Lanka, premiums as a percentage of GDP is 1.2% versus a regional average of 5.8%, whilst long term life insurance business accounts for 0.5% of GDP, Cabraal said. In Sri Lanka, out of 22 insurance companies, six are exclusively in general business, three in long term insurance business. Out of 22 insurance companies, only seven companies are listed. Sri Lanka has one of the fastest growing insurance markets in the world with low level penetration. This scenario would create space for us to grow at least 5-6 times what we are in toady. Today, we are opening up many new vistas for the country to progress. We are on a steady path to reach USD4000 per capita income target, perhaps before 2016. We have reached almost USD3,000 within a very short of time and there are enough areas for us to show that Sri Lanka is well within the reach to achieve USD4,000 per capita income level target, Cabraal said. [Source: www.dailynews.lk] Fitch publishes Sri Lanka Insurance Corporation at IFS BB-/Stable: Fitch Ratings Lanka has published Sri Lanka Insurance Corporation Limiteds (SLIC) Insurer Financial Strength rating (IFS) at BB- with a Stable Outlook. The agency has also affirmed the National Insurer Financial Strength Rating and National Long-Term rating at AA(lka) with a Stable Outlook. The ratings reflect SLICs strong franchise and capitalisation, supported by sustained profitability and high capital retention. Regulatory solvency at end-2012 was 11x (2011:11.6x) in life and 3.4x (2011: 2.2x) in non-life and compare well with peers. Fitch expects support from the Government of Sri Lanka, if required, due to its 99.9% ownership and SLICs strategic importance as the largest state-owned insurer. Offsetting the strengths are significant investments in non-core subsidiaries, which are made in line with government policy and a high equity exposure which weakens risk-based capital. [Source: www.ft.lk]

Global News
Euro-Area Recession Deepens as Slowdown Exceeds Estimates: The euro-area economy shrank more than economists forecast in the three months through March, extending a recession to a record sixth quarter and increasing pressure on the currency blocs leaders to spur growth. Gross domestic product in the 17-nation euro zone fell 0.2% after a 0.6% decline in the previous quarter, the European Unions statistics office in Luxembourg said today. The median of 39 estimates in a Bloomberg News survey was for a 0.1% contraction. From a year earlier, the economy shrank 1%. The slowdown has spread to the euro core. The German economy, Europes largest, expanded less than forecast in the first quarter. France slipped into a recession and Italys contraction exceeded estimates. The European Central Bank cut its benchmark interest rate to a record low of 0.5% this month and President Mario Draghi said the ECB is ready to act again if needed. The first-quarter contraction reinforces pressure on the ECB to come up with further measures to try and support euro-zone growth, said Howard Archer, an economist at IHS Global Insight in London. An interest rate cut to 0.25% looks ever more possible, while the ECB will also continue to look into the case for a negative deposit rate and ways of getting more credit through to smaller companies. [Source: www.bloomberg.com] U.K. ILO Unemployment Rises in Sign of Slowing Labor Market: U.K. unemployment rose in the first quarter and the number of people in work fell the most in 1 1/2 years as the pressure on wages intensified, adding to signs that the labor market is slowing. Joblessness as measured by International Labour Organisation methods rose 15,000 in the three months through March to 2.52 mn, a rate of 7.8%, the Office for National Statistics said today in London. Employment fell by 43,000. Average earnings grew 0.4%, the least since 2009. While the economy returned to growth in the first quarter, the recovery may be restrained by the governments fiscal squeeze and weak demand in the euro area. The labor market, which proved resilient during the financial crisis, may be slow to pick up as companies meet demand from existing workers. The Bank of England is due to publish new growth forecasts today. What you are seeing is a slight deterioration in the employment data, saidRoss Walker, chief U.K. economist at Royal Bank of Scotland Group Plc in London. Its not collapsing, but the underlying picture is weak. [Source: www.bloomberg.com]

Softlogic Equity Research

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