Friday, July 26, 2013

Today 6,051.77 3,427.87 Point Change + 13.61 + 4.39 % Change 0.23 % p 0.13 % 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

7.2% 11.1% 403.8 912.3 18.7 40.2 2,328.9 87.4 123.9 36.5 16.8

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]

Indices gain amidst sluggish turnover

CSE Diary for 26.07.2013

Indices gain: The benchmark index depicted a volatile path as it closed up 13 points at 6,051.77 points. The key positive contributors to the index were; CT Holdings (+6.4%), John Keells Holdings (+0.4%) and Nestle Lanka (+0.5%). The S&P SL20 closed with a lesser gain at 3,427.87 points as price dips in Ceylon Tobacco Company and banking players weighed on the index. Crossings in Asiri Hospital Holdings and Sampath Bank: Turnover remained in the low territory below annual average at LKR403 mn which was boosted by two crossings. Asiri Hospital Holdings saw renewed interest with active on-board and offboard participation. 5 mn shares were crossed off at LKR14.0 while a 300k share block was picked on-board at a similar price. Sampath Bank recorded an off-board block of 250k shares at LKR202.0. The counter closed with a gain of 1.1% at LKR202.1.

Upward momentum in TJL; BFI sector dominates adding 33% to turnover: Interest continued in Textured Jersey Lanka as it traded at a new 52week high price of LKR13.4 (6.3%) before closing at LKR13.1 (+3.9%). The counter still holds attractive valuations denoting PER of 7.2x and 5.8x for FY14E and FY15E net earnings respectively. Lanka IOC saw several large blocks which were dealt at LKR25.0 before it closed up 2.9%. BFI sector players added 33% to the turnover highlighting Sampath Bank and Hatton National Bank [Non-Voting]. Notable activity was seen in Access Engineering and Aitken Spence as both counters edged up the top turnover slot driven by a few large onboard trades. Retail activity in selected counters: Retail activity focused on a few selected counters; Textured Jersey Lanka, Chilaw Finance, Sanasa Development Bank and Vallibel One.

Statistical Look Up
Treasury Bill (%) 3 months 6 months 12 months AWPLR Excess Liquidity (LKR 'bn) Inflation (%) Jun-13 as at 25.07.2013 YoY Change Annual Avg Week ending 26.07.2013 8.63 10.56 11.79 4.91 6.8 8.6 9.66

6200 6150 6100 6050 6000 5950 5900 5850

Index

ASPI
3450

Turnover LKR ('mn)

3500

Index

3400

3350 3300
3250

1,400 1,200 1,000 800 600 400 200 0

80.0

Volume ('mn)

60.0 40.0 20.0 0.0

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 6,051.8 3,427.9 403.8 3.1 18.7 230 2,328.9 123.9 36.5 87.4 16.0 2.2 2.6 Today 13,217.2 18,706.6 2,848.5 1,983.5 657.2 3,293.0 591.5 3,089.1 746.0 159.7

Pre Day 6,038.2 3,423.5 289.8 2.2 13.6 245 2,323.7 36.0 13.8 22.2 16.0 2.1 2.6 Pre Day 13,175.0 18,743.9 2,820.9 1,973.1 655.5 3,291.8 592.5 3,069.1 739.7 159.7

Change % 0.23% p 0.13% p 39.35% 39.35% 37.28% -6.12% 0.23% 244.23% 164.19% 294.15% 0.23% 0.22% 0.00% % Change 0.32% -0.20% 0.98% 0.53% 0.25% 0.04% -0.16% 0.65% 0.85% 0.00% p q p p p p q p p p

Last Week 6,041.1 3,409.2 719.1 5.5 13.6 242 2,324.8 40.4 224.4 -184.0 16.1 2.2 2.6 Last Week 13,113.4 18,973.7 2,811.7 1,956.8 649.1 3,302.6 585.6 3,109.8 756.5 159.7

% WoW Change 0.18% 0.55% -43.84% -43.84% 37.22% -4.96% 0.18% 206.35% -83.73% -147.48% -0.39% -1.12% 0.00% % WoW Change 0.79% -1.41% 1.31% 1.36% 1.24% -0.29% 1.02% -0.66% -1.39% 0.00% 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% 7.9% 3.5% 4.4% 3.1% 4.0% 3.0% 3.0% 2.1% 2.2% 2.5% 1.2% 1.6% 1.5% 1.5% 1.3%

Volume 35,816 2,767 2,648 1,050 0 11,303 184 10,755 26,099 253,310 367 1,115 1,000 5,525 311,681 706

Turnover LKR ('000) 9,574.34 2,736.65 1,103.79 2,003.60 0.00 1,315.06 126.27 92.81 4,032.62 31,652.70 69.78 63.66 162.00 708.48 62,895.56 48.38

Turnover USD ('000) 72.81 20.81 8.39 15.24 0.00 10.00 0.96 0.71 30.67 240.70 0.53 0.48 1.23 5.39 478.29 0.37

Intraday High (LKR) 269.00 998.00 419.90 1,915.00 0.00 116.50 699.90 8.80 156.40 125.10 190.20 58.00 162.00 129.00 204.90 68.60

Intraday Low (LKR) 266.00 978.00 416.10 1,902.00 0.00 116.10 686.00 8.60 154.00 124.00 190.00 56.70 162.00 127.00 200.00 68.50

Close 268.00 980.10 419.90 1,912.70 40.30 116.10 686.30 8.60 154.00 124.90 190.20 57.90 162.00 128.90 202.10 68.50

Price Gainers
Company
S M B LEASING KAHAWATTE ACL PLASTICS PC HOUSE MULLER

Price Losers
Today 0.80 34.50 99.00 1.20 1.40 Change + 0.10 + 3.10 + 8.30 + 0.10 + 0.10 % Change Company 14.29% 9.87% 9.15% 9.09% 7.69%
S M B LEASING [X] TEA SMALLHOLDER ENVI. RESOURCES [W 0003] UNION ASSURANCE HAPUGASTENNE

Today 0.30 43.20 0.90 95.40 29.20

Change - 0.10 - 6.30 - 0.10 - 9.30 - 2.70

% Change -25.00% -12.73% -10.00% -8.88% -8.46%

Top 05 Performers for the Day

Company
ASIRI SAMPATH ACCESS ENG SL AITKEN SPENCE LANKA IOC

Today 14.00 202.10 21.0 124.90 25.20

Pre Day 13.90 200.00 20.50 125.10 24.50

% Change 0.72% 1.05% 2.44% -0.16% 2.86%

Volume (mn) 5.43 0.31 2.19 0.25 1.06

Contribution to Total T/O 3.3% 2.7% 2.0% 1.4% 1.1%

Turnover (LKR) 76,043,812 62,895,556 45,933,528 31,652,701 26,542,885

Most Active
Company
ASIRI ACCESS ENG SL TEXTURED JERSEY LANKA IOC S M B LEASING

Today 14.00 21.00 13.10 25.20 0.80

Pre Day 13.90 20.50 12.60 24.50 0.70

% Change 0.72% 2.44% 3.97% 2.86% 14.29%

Volume (mn) 5.43 2.19 1.64 1.06 0.90

Contribution to Total T/O 3.3% 2.0% 0.9% 1.1% 0.0%

Turnover (LKR) 76,043,812 45,933,528 21,453,991 26,542,885 716,649

Softlogic Equity Research

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Currency Board
Local - Indicative Rate against LKR
Currency Australia China EU India Japan UK USA Dollar Yuan Euro Rupee Yen Pound Dollar Indicative Rate 26.07.2013 121.91 21.44 174.69 2.23 1.33 202.51 131.50

CSE Announcements
Dividends
Company Kelani Tyres PLC 0 0 0 0
Company Description

DPS (LKR) 1.65 0.00 0.00 0.00 0.00

Proportion 0 0

XD Date 05-08-2013 0 0 00-Jan-00 00-Jan-00

XR Date

Payment Date 15-08-2013 1/0/1900 1/0/1900 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

New Listing
Company No New Listings 0 Type of Security Code 1/0/1900 1/0/1900 Board 1/0/1900 1/0/1900 Offer Price 1/0/1900 1/0/1900

Key Corporate Diclosures

No Corporate Disclosures.

Material Dealings by Related Parties of Listed Companies

Company NO MATERIAL DEALINGS. Name 0 0 Relationship 0 0 Transaction 0 0 Quantity 0 Price (LKR) 0.00 0 Date 0 0

Global Markets
Index AMERICA Dow Jones Industrial Average EUROPE EURO STOXX 50 Price EUR FTSE 100 Index ASIA Nikkei 225
* Time is as at ET

Value 15,555.6 2,746.0 6,576.9 14,130.0

Change 13.4 5.7 -11.1 -433.0

Change % 0.09% p 0.21% p -0.17% q -2.97% q

Time* 16:32 06:32 06:31 02:28

Source: www.bloomberg.com

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

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

Price 104.84 85.45 656.75 1,328.80 314.85

Change -0.65 -0.54 7.50 -0.70 -3.70

Change % -0.62% q -0.63% q 1.16% p -0.05% q -1.16% q

Time* 06:16 06:15 06:36 06:14 06:16 Page | 4.

Source: www.bloomberg.com

Softlogic Equity Research

TOP STORIES
Local
Sri Lanka caps penalty rate on defaulted bank loans ri Lanka's central bank has capped the penalty interests on defaulted loans of banks to two percent a year and those from leasing and finance companies to three percent a year. The regulator said at the moment penalty rates on overdue advances range from 2 to 20 percent above the original loan rate in banks and 36 to 48 percent for above loan rate for loans in leasing and finance companies. The central bank said the current rates were "excessively high." [Source: www.lbo.lk] Sri Lanka Softlogic Rs 500mn debt given 'A-(lka)' rating: Fitch Sri Lankas Softlogic Holdings planned Rs.500 mn debt issue, which may be upsized to Rs. 1000 mn have been given an 'A(lka)' rating by Fitch. The final rating is at the same level as the expected rating assigned on 25 March 2013. Softlogic itself has been given an 'A-(lka)' rating. Fitch said the holding company is depended on dividends from subsidiaries and creditors are structurally subordinated to creditors of operating businesses. But the firm's healthcare business was strong, though the electronics business was cyclical and prices have been cut to compete with the grey market. [Source: www.lbo.lk] Public investments to come under pressure: Economist Sri Lanka will find it extremely difficult to maintain the public expenditure target of 6%of the GDP going forward amid revenue side pressures, inability to cut down recurrent expenditures due to political reasons and meeting the ambitious fiscal consolidation target, a leading economist in the country opined. The Central Bank projects gross investments of 33% of the GDP from the current level of 30% for the USD100 bn dollar economy by 2016, of which, only 6% will be invested by the government. At present, 85% of the government revenue is spent on interest payments, public sector salaries and [Source: www.lbo.lk] Banks US$ 1.5bn intl bond issues could add to already high public debt burden: Moodys National Savings Bank, DFCC and NDB, with varied degrees of state control, are expected to raise US$ 1.5 billion from international capital markets this year and although categorised as external commercial debt, they could still lead to higher government debt depending on how the funds are used, sovereign ratings agency Moodys said in a recent report. "After issuing five sovereign bonds over the last six years, we understand that the government has no intension of issuing bonds this year. However, several local commercial banks will tap the global market. [Source: www.lbo.lk]

Global
China Cuts Capacity in Some Industries to Reshape Economy China ordered more than 1,400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more-sustainable economic growth. Steel, ferroalloys, electrolytic aluminum, copper smelting, cement and paper are among areas affected, the Ministry of Industry and Information Technology said in a statement yesterday, in which it announced the first-batch target of this year to cut overcapacity. Excess capacity must be idled by September and eliminated by year-end, the ministry said, identifying the production lines to be shut within factories. [Source: www.bloomberg.com] IMF calls for further action to solve eurozone crisis The International Monetary Fund has called for more action to end the crisis in the eurozone. The IMF wants greater progress made on repairing the balance sheets of banks, so that lending can be kick-started. It also said that further cuts to interest rates by the European Central Bank may be necessary to boost growth. However, the IMF noted that despite the policy actions on many fronts, "growth remains elusive and high unemployment persists, especially among youth." It predicted that the eurozone's GDP will contract by 0.6% this year, before expanding by 0.9% in 2014. [Source: www.bbc.co.uk] Softlogic Equity Research Page | 5.

Softlogic Equity Research

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

Branches Softlogic Equity Sales

Dihan Dedigama dihan.dedigama@equity.softlogic.lk +94 11 7277010, +94 77 7689933 Eardley Kern Horana Madushanka Rathnayaka No. 212, 1st Floor, Panadura Road, Horana madushanka.rathnayaka@equity.softlogic.lk +94 34 7451000, +94 77 3566465 Negambo Krishan Williams No. 121, St. Joseph Street Negambo krishan.williams@equity.softlogic.lk +94 31 2224714-5, +94 77 3569827 Kurunegala Bandula Lansakara No.13, Rajapihilla Mawatha, Kurunegala bandula.lansakara@equity.softlogic.lk +94 37 2232875, +94 77 3615790 Matara Lalith Rajapaksha No.8A, 2nd Floor, FN Building, Station Road, Matara lalith.rajapaksha@equity.softlogic.lk +94 41 7451000, +94 77 3031159

l.kern@equity.softlogic.lk
+94 11 7277053, +94 77 7348018 Chandima Kariyawasam chandima.kariyawasam@equity.softlogic.lk +94 11 7277058, +94 77 7885778 Sonali Abayasekera sonali.abayasekera@equity.softlogic.lk +94 11 7277051, +94 77 7736059 Thanuja De Silva thanuja.desilva@equity.softlogic.lk +94 11 7277059, +94 77 3120018

The report has been prepared by Softlogic Stockbrokers (Pvt) Ltd. The information and opinions contained herein has been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified and no guaranty, representation or warranty, express or implied is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only, descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as, an offer, or solicitation of an offer, to buy or sell any securities or other financial instruments. Softlogic Stockbrokers (Pvt) Ltd may, to the extent permissible by applicable law or regulation, use the above material, conclusions, research or analysis in which they are based before the materialized disseminated to their customeLKRNot all customers will receive the material at the same time. Softlogic Stockbrokers, their respective directors, officers, representatives, employees, related persons and/or Softlogic Stockbrokers, may have a long or short position in any of the securities or other financial instruments mentioned or issuers described herein at any time and may make a purchase and/or sale, or offer to make a purchase and/or sale of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principal or agent. Softlogic Stockbrokers may make markets in securities or other financial instruments described in this publication, in securities of issuers described here in or in securities underlying or related to such securities. Softlogic Stockbrokers (Pvt) Ltd may have recently underwritten the securities of an issuer mentioned herein. This document may not be reproduced, distributed, or published for any purposes.

Softlogic Equity Research

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