SMB SECURITIES (PVT) LTD
November 12, 2014
Colombo Stock Exchange
Mid-Week Watch
By SMB Securities Research
Average Weekly Figures
12th Nov
5th Nov
%
Change
ASPI as at
7,469.41
7,358.46
1.15
S&P SL20 Index as at
4,136.59
4,102.11
0.84
Daily Turnover (LKR Mn)
3,489.63
2,357.83
48.00
Domestic Purchases (LKR Mn)
1,412.52
1,480.29
-4.58
Domestic Sales (LKR Mn)
1,892.85
1,979.84
-4.39
Foreign purchases (LKR Mn)
468.49
877.55
-46.61
Foreign sales (LKR Mn)
288.17
377.99
-23.76
3,171.95
3,123.05
1.57
Market PER (X) as at
19.84
19.53
N/A
Market PBV (X) as at
2.26
2.22
N/A
Market Cap (LKR Bn) as at
MARKET ANALYSIS
Activities at the Colombo Stock Exchange drove into a positive
territory during the week. Counters which recorded strong quarterly
earnings attracted more investor interest and recorded substantial
price appreciations.
The All Share Price Index (ASPI) of the CSE recorded 110.95 points or
1.15% improvement and closed at 7,469.41. The S&P SL 20 took the
same direction and recorded 0.84% (34.48 points) improvement to
4,136.59. The average daily turnover for the week depicted 48%
increase compared to previous week and stood at LKR 3,489.63.
The week witnessed net foreign inflow of LKR 2,798.84 Mn.
Foreigners bought LKR 3,951.52 Mn worth of shares while foreign
selling amounted to LKR 1,152.68Mn.
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SMB SECURITIES (PVT) LTD
November 12, 2014
Contribution Made by Sectors During the week
Sector
Sector Index
Turnover
As at
As at
12th Nov.2014
05th Nov.2014
Banks Finance And Insurance
18,341.11
Beverage Food And Tobacco
% Change
Total Turnover
Contribution
%
18,119.17
1.22%
2,164,222,959
24.80%
22,244.90
21,906.35
1.55%
388,160,893
4.45%
Chemicals And Pharmaceuticals
7,785.88
7,615.00
2.24%
126,241,092
1.45%
Construction And Engineering
4,141.35
3,857.10
7.37%
510,908,927
5.85%
2,173.95
1,103.39
957.86
3,526.49
22,081.90
83.8
819.92
4,078.12
18,813.24
113,254.00
863.69
212.23
26,855.10
23,464.92
213.64
17,049.66
2,149.89
1,107.33
944.81
3,526.90
21,708.94
83.8
766.64
3,926.17
18,991.36
112,767.08
875.56
196.44
26,815.81
24,111.96
212.02
16,263.61
1.12%
-0.36%
1.38%
-0.01%
1.72%
0.00%
6.95%
3.87%
-0.94%
0.43%
-1.36%
8.04%
0.15%
-2.68%
0.76%
4.83%
1,786,591,008
33,421,623
125,152,551
96,843,862
181,357,454
5,246,929
312,261,325
1,777,292,236
7,260,078
10,018,019
31,508,510
766,743,099
14,097,002
1,879,397
336,431,038
48,432,511
20.47%
0.38%
1.43%
1.11%
2.08%
0.06%
3.58%
20.37%
0.08%
0.11%
0.36%
8.79%
0.16%
0.02%
3.86%
0.55%
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
IN THE WEEK AHEAD
Investors have respond positively towards the improvements in the September quarter results and market is now
showing sustainable improvement. The developments in the macroeconomic environment of the country further
strengthen the current positive momentum in the market. 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
DATE OF
DPS (RS.)
FIRST/FINAL/
INTERIM
John Keells Holdings PLC
1.00
Interim
14-11-2014
25-11-2014
Royal Ceramics Lanka PLC
1.00
Interim
18-11-2014
21-11-2014
Lanka Tiles PLC
2.00
Interim
18-11-2014
25-11-2014
Print care PLC
0.45
Interim
18-11-2014
26-11-2014
Ceylon Tobacco Company PLC
11.10
Third Interim
18-11-2014
26-11-2014
Lanka Walltiles PLC
2.00
Interim
18-11-2014
27-11-2014
COMPANY NAME
XD FROM
PAYMENT
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SMB SECURITIES (PVT) LTD
November 12, 2014
INVESTMENT Focus – key buys
LAUGFS GAS PLC (LGL.N0000)
LKR 43.70
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 12.50
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.
JOHN KEELLS HOTELS PLC (KHL.N000)
LKR 17.80
HOTELS AND TRAVELS
John Keells Hotels Plc(KHL) is a subsidiary of Sri Lanka’s
largest listed company, John Keells Holdings Plc (JKH).
JKL manages a portfolio of holdings consisting of hoteliering business and it owns the Sri Lankan and Maldivian
resort hotels of JKH. KHL has gradually increased its
earnings from both Sri Lanakan and Madivian sectors.
We expect KHL to benefit from rapid increase in tourist
arrivals to Sri Lanka as well as to Maldives. Company’s
initiatives to increase the room capacity would further
strengthen the expected positive outlook.
3
SMB SECURITIES (PVT) LTD
November 12,2014
Economic Update
EXCHANGE RATES
Week ending 07th November
Week ending 31st October
‐ Average rate
130.94
130.94
‐ Forward 1 month
131.36
131.29
‐ Forward 3 months
132.33
131.95
STG
207.37
209.37
EURO
162.04
164.90
JAPANESE YEN
1.14
1.20
INR
2.13
2.13
SDR
192.28
193.76
USD EXCHANGE RATE
Average Middle Rate of Other World Currencies
INTEREST RATES
Overnight
07 Days
01 Month
03 Months
06 Months
12 Months
6.04
6.23
6.43
6.66
6.89
7.13
T-Bill Rates (%)
N/A
N/A
N/A
-
5.84
6.00
AWPLR (%)
N/A
6.53
6.44
N/A
7.45
N/A
AWDR (%)
N/A
N/A
6.72
N/A
7.15
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
November 12, 2014
TOURIST ARRIVALS – OCTOBER 2014
Tourist Arrivals by Month
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total up to October
Tourist arrivals in October 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
1,011,255
146,575
141,878
133,048
112,631
90,046
103,175
133,971
140,319
105,535
121,576
%
Change
32.6
24.5
17.5
39.5
20.3
14.3
25.2
13.8
16.8
13.6
Tourist arrivals to Sri Lanka continued its positive
momentum for the year 2014 and in October
2014 it recorded an increase of 13.6% YoY to
121,576 arrivals.
In October 2014, South Asian region became the
largest tourist generating market for the country,
which contributed 29.4% to the total tourist
arrivals. A total of 35,718 tourists came from this
1,228,754
21.5
region and it is an increase of 10.7%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 26,148 tourists came for the month.
Western European region accounted for 26.4% of
the total tourist arrivals to the country and
demonstrate a growth of 10.1% YoY. East Asian
region recorded a growth of 54.4% to 22,656
while contributing 18.6% of total tourist arrival to
the country. China was the main contributor to
this growth while tourist arrivals from China
increasing 120.7% compared to previous year.
For the nine month ending October 2014, a total
of 106,888 tourists came from China and
recorded
138.9%
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.
5
SMB SECURITIES (PVT) LTD
November 12, 2014
INFLATION – OCTOBER 2014
Inflation Decreased in October 2014

Inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2006/07=100) decreased to 1.6% in
October 2014, on an annual average basis, from 3.5% in the previous month, which is lowest since
November 2009.

The year-on-year (YoY) inflation decreased to 1.6% in October 2014 from 3.5% in September 2014.

The CCPI decreased 1.6% in October 2014 over the previous month, with the Index decreasing in absolute
terms to 179.0 in October from 181.9 in September 2014.

The decrease in prices of items in non food category was the main contributor to the monthly decrease in
the CCPI. This was mainly supported by the downward revision of electricity tariff, and price reduction in LP
gas and fuel.

Prices in the Food and Non Alcoholic Beverages sub category increased marginally during the month, mainly
due to the increase in average prices of some rice varieties, many vegetable varieties, dhal, eggs and
coconuts.

Core inflation declined from 3.7% in September 2014 to 3.6 % in October 2014 on a year on year basis.
Annual average inflation during October 2014 was 3.3 %, compared to 3.2 % recorded in September 2014.
6
SMB SECURITIES (PVT) LTD
November 12, 2014
GDP GROWTH RATES – 2Q 2014
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%
Industry
12.2
10.1
9.3
12.6
10.3
5.3
3.2
16.2
20.5%. The construction sub sector recorded the second
19.7
17.8
highest 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
highest contributor towards the GDP (22.3%)while
Private services
6.4
7.8
manufacturing 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
respectively. The Hotels & restaurants sub sector
recorded the highest growth rate for 2Q2014 which was
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 2Q 2013.
The
wholesale and retail trade sub sector became the
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SMB SECURITIES (PVT) LTD
November 12, 2014
EXTERNAL SECTOR PERFORMANCE - SEPTEMBER 2014
MONTH
IMPORTS
(USD Mn)
EXPORTS
(USD Mn)
TRADE DEFICIT
(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)
September
1,667
903
(764)
External Sector Performance - September 2014

In September 2014, earnings from exports recorded a YoY growth of 0.5% to USD 903Mn , while the
expenditure on imports recorded a YoY growth of 12.2% to USD 1,667 Mn. The largest contribution to the
export earnings in September 2014 was from industrial exports which grew by 3.4% YoY. Textiles and
garments is the major category contributed to
growth in industrial exports. Textiles and garments
contributed 4.4% for the growth supported by a substantial improvement in exports of outerwear.
Agricultural exports recorded 2.9% 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 12.2% to USD 1,667Mn in September 2014.The increase in import
expenditure in September 2014 was mainly due to the significant increase in imports of transport
equipment particularly a dredger vessel followed by imports of vehicles such as motor cycles and motor
cars for personal use. Consumer goods recorded a YoY growth of 56.9% while intermediate goods
recorded 5.1% decline and Investment goods recorded 27.9% increase. Rice imports increased significantly
during the month as a result of a shortfall in domestic rice production during the year. The expenditure on
fuel imports declined significantly during the month due to a sharp reduction in crude oil imports.
Expenditure on imports of fuel declined by 24.1% YoY in September 2014.

As the growth of imports weighed on the export earnings, the trade deficit widened to USD 764Mn in
September 2014, compared to USD 587Mn in September 2013. During the period from January to
September 2014, the BOP is estimated to have recorded a surplus of USD 1,996Mn during the first nine
months of 2014 compared to a surplus of US dollars 585Mn in the corresponding period of 2013. By end of
September 2014, Sri Lanka’s gross official reserves amounted to USD 8.8 Bn.
8
SMB SECURITIES (PVT) LTD
November 12, 2014
Research
Subhashi Jayasumana
Randula Harinda
Ayana Kapuruge
Tel: +94 11 4388136
Sales & Marketing
Lalith Sepalage
Janak Dadallage
Sampath Indika
Nuwan Perera
Mob: +94 722 421003
Mob: +94 715 329612
Mob: +94 715 329605
Mob: +94 715 329609
Shalini Jayatunga
Inoka Lasantha
Sooriya Arachchi
Marlon Fernando
Mob : +94 714 816297
Mob:+94 773 403571
Mob :+94 777 235445
Mob :+94 775 473875
SAAP Weerasinghe
Aruni Attanayaka
Kalhari Madushi
Mob : +94 716 591651
Mob : +94 778 133833
Mob : +94 773 690413
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