Tuesday, March 05, 2013

Today 5,626.77 3,208.92 Point Change - 5.12 + 5.14 % Change -0.09 % q 0.16 % 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

-0.3% 4.0% 602.8 850.5 13.5 38.1 2,161.8 282.0 292.9 11.0 0.4

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 conclude on a flat note; Banks & large caps take the lead…

CSE Diary for 05.03.2013
A stagnating trend persisted in the Colombo bourse as both indices closed broadly flat for the day. Banking & Finance and diversified sectors encountered significant prominence contributing 83% to the turnover while 5 crossings in large caps breathed in 60%. The benchmark index which traded between 5645.01 (+13 points) and 5623.74 (-8 points) settled broadly flat at 5,626.77 weighting heavily on Commercial Leasing & Finance (-4.8%), LB Finance (-8.5%) and Commercial Bank (-1.0%). The S&P SL20 index closed flat in the green backed by gains in Bukit Darah (+2.9%), Ceylon Tobacco Company (+0.7%) and Distilleries (+1.2%). Colombo bourse is currently witnessing a phase of stagnation as a result of macroeconomic uncertainty and negative investor sentiment clouding the direction of indices. It is notable that recent trend etched around prominence in banking and finance sector and a few selected large caps in specific dominating the market. The YTD net foreign outflow reversing to a YTD net inflow of LKR0.2 bn yesterday, justifies the confidence foreigners have placed on the Colombo bourse thereby picking on the attractively priced companies with expected sustainable earnings growth potential. Local players in contrast are still bewildered by the downtrend with the echoing herd instinct. We reiterate pragmatic investors to step in at this point thus not missing out the possibility of healthy returns stemming from a recovery.

supported by four off-board blocks accumulating to 995k shares transacted at LKR234.5. The counter traded between LKR234.0 and LKR234.8 before settling with a gain of 0.3% at LKR234.5. With attractive dividend payout announced, Hatton National Bank followed closely with significant contribution from a crossing which carried c.930k shares at LKR148.8 while on board interest on the counter weighed more towards the buying side as it settled with a marginal gain at LKR150.0. Its Non-Voting share too sustained interest with a block of c.42k shares being drawn up in the market at LKR120.0. The Non-Voting shares of Commercial Bank and Seylan Bank were among the top turnover slot with the former touching LKR92.5 at its peak and the latter depicting strong buying interest between LKR35.7 and LKR36.0. The spearhead in Sri Lanka’s tile market; Royal Ceramics continued its stance with a block of 49k drawn on-board at LKR98.10. Renewed interest gathered in S&P caliber players; Asian Hotels and Properties and Distilleries. Two blocks totaling 125k shares in the former were seen transacted at LKR70.0 while the latter witnessed buying interest at its intra-day high of LKR180.0. Penny stocks; Tess Agro, Browns Investments and Free Lanka Capital Holdings dominated retail play for the day as retailers continued to be sidelined with the pattern of indices searching for direction.

John Keells Holdings emerged as the front runner for the day

Statistical Look Up
Treasury Bill (%) 3 months 6 months 12 months AWPLR Excess Liquidity (LKR 'bn) Inflation (%) Feb-13 as at 05.03.2013 YoY Change Annual Avg Week ending 01.03.2013 9.10 10.08 11.10 14.42 -38.76

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 5,626.8 3,208.9 602.8 4.7 13.5 235 2,161.8 292.9 11.0 282.0 15.2 2.1 2.4 Today 12,666.1 15,691.2 2,752.1 1,848.5 598.4 3,339.6 459.3 2,545.8 769.0 166.8

Pre Day 5,631.9 3,203.8 1,076.1 8.4 19.4 227 2,163.7 876.4 18.1 858.3 15.2 2.1 2.4 Pre Day 12,757.6 15,633.3 2,787.2 1,847.3 595.9 3,343.9 462.9 2,549.1 771.1 167.7

Change % -0.09% q 0.16% p -43.99% -43.99% -30.44% 3.52% -0.09% -66.57% -39.27% -67.15% -0.09% -0.09% 0.00% % Change -0.72% 0.37% -1.26% 0.06% 0.41% -0.13% -0.76% -0.13% -0.28% -0.54% q p q p p q q q q q

Last Week 5,669.5 3,202.2 714.0 5.6 28.2 238 2,178.1 470.1 109.1 361.0 15.3 2.1 2.3 Last Week 12,668.4 15,861.6 2,792.4 1,869.5 600.4 3,350.2 468.8 2,566.5 781.1 167.9

% WoW Change -0.75% 0.21% -15.58% -15.58% -52.14% -1.26% -0.75% -37.69% -89.92% -21.89% -0.75% -0.75% 4.35% % WoW Change -0.02% -1.07% -1.44% -1.12% -0.34% -0.32% -2.01% -0.80% -1.56% -0.66% 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 9.3% 6.5% 4.0% 4.1% 3.5% 3.9% 3.4% 3.4% 2.2% 2.3% 2.5% 1.2% 1.5% 1.5% 1.8% 1.4%

Volume 1,066,445 12,195 774 1,852 429 24,565 18,789 72,113 978,335 21,835 33,613 2,010 4,000 2,624 18,647 157,802

Turnover LKR ('000) 250,077.42 9,152.15 341.07 3,010.39 18.34 2,682.31 13,527.03 647.30 145,626.66 2,619.80 6,050.29 114.01 584.00 313.68 4,369.73 11,046.54

Turnover USD ('000) 1,961.94 71.80 2.68 23.62 0.14 21.04 106.12 5.08 1,142.49 20.55 47.47 0.89 4.58 2.46 34.28 86.66

Intraday Intraday High (LKR) Low (LKR) 234.80 755.00 444.00 1,640.00 43.00 109.90 730.00 9.10 150.00 120.30 180.00 57.00 147.00 120.00 237.00 71.50 234.00 750.00 440.00 1,620.00 42.30 108.50 705.40 8.90 149.00 119.90 179.50 56.50 145.00 119.50 233.00 70.00

Close 234.50 751.30 440.00 1,631.40 42.50 108.80 726.20 8.90 150.00 120.00 180.00 56.70 146.10 119.50 233.00 70.00

Price Gainers
Company
CEYLON PRINTERS NUWARA ELIYA ENTRUST SEC CEYLON LEATHER CEYLINCO INS. [X]

Price Losers
Today 1,440.20 1,399.30 19.40 65.50 299.80 Change + 155.20 + 149.30 + 1.90 + 5.50 + 21.60 % Change Company 12.08% 11.94% 10.86% 9.17% 7.76%
AGALAWATTE RENUKA SHAW [X] PC PHARMA PCH HOLDINGS RADIANT GEMS

Today 26.60 13.70 8.80 6.70 40.60

Change - 6.60 - 2.10 - 1.20 - 0.90 - 4.70

% Change -19.88% -13.29% -12.00% -11.84% -10.38%

Top 05 Performers for the Day
Company
JKH HNB HNB[NON VOTING] COMMERCIAL BANK[NON VOTING] SEYLAN BANK[NON VOTING]

Today 234.50 150.00 120.00 92.10 36.00

Pre Day 233.90 149.10 119.90 91.80 35.70

% Change 0.26% 0.60% 0.08% 0.33% 0.84%

Volume (mn) 1.07 0.98 0.18 0.23 0.52

Contribution to Total T/O 11.6% 6.7% 1.0% 1.0% 0.9%

Turnover (LKR) 250,077,425 145,626,659 21,349,247 20,963,098 18,730,892

Most Active
Company
TESS AGRO JKH HNB BROWNS INVSTMNTS FREE LANKA

Today 2.00 234.50 150.00 3.50 2.40

Pre Day 2.20 233.90 149.10 3.50 2.50

% Change -9.09% 0.26% 0.60% 0.00% -4.00%

Volume (mn) 1.44 1.07 0.98 0.80 0.76

Contribution to Total T/O 0.1% 11.6% 6.7% 0.1% 0.1%

Turnover (LKR) 2,935,877 250,077,425 145,626,659 2,784,337 1,821,943

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 05.03.2013 130.05 20.48 166.06 2.32 1.37 41.11 4.15 33.99 102.41 135.47 4.28 192.75 127.46

Announcements
Dividends
Company DPS (LKR) XD Date 01-04-2013 13-03-2013 01-04-2013 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00
Proportion XR Date

Payment Date 09-04-2013 22-03-2013 09-04-2013 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00
Renunciation

0.25 Seylan Developments PLC The Nuwara Eliya Hotels Company PLC10.00 2.00 Commercial Bank of Ceylon PLC 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0
Company Description

Rights Issues / Scrip Dividend / Sub division / Capitalization
Commercial Bank of Ceylon PLC Scrip Dividend V-01 for 59.72222 Commercial Bank of CeylonScrip Dividend PLC NV-01 for 50 0 0 0 28-03-2013 28-03-2013 1/0/1900 01-04-2013 01-04-2013 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 14,127.8 1,525.2 2,655.1 6,388.9 11,683.5 22,560.5

Change 38.2 7.0 36.0 43.3 31.2 22.7

Change % 0.27% p 0.46% p 1.37% p 0.68% p 0.27% p 0.10% p

Time* 0-Jan 0-Jan 06:29 06:28 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 110.51 90.30 86.64 704.25 1,583.60 28.95 352.40

Change 0.42 0.25 0.40 1.75 9.90 0.44 2.40

Change % 0.39% p 0.19% p 0.46% p 0.25% p 0.69% p 1.58% p 0.64% p

Time* 06:39 06:39 06:38 06:36 06:39 06:39 06:39

Source: www.bloomberg.com

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CSE Announcements
 Commercial Credit and Finance (COCR:LKR12.2): Debenture issue of LKR500mn will be listed on 6th March 2013 on the debt securities – second board of the CSE .  Lankem Development (LDEV:LKR5.7): The company informs that Mr. A Rajaratnam has resigned from the office of Chairman and M.R S.D.R Arudpragasam has been elected as the new chairman of the company with effect from 1st March 2013.

 Dealing by Directors:
Company Royal Ceramic Lanka [RCL:LKR98.1] Tokyo Cement [TKYO:LKR24.0] Tokyo Cement [TKYO:LKR24.0] John Keells Holdings [JKH:LKR234.5] Name Mrs. A.M Weerasinghe South Asian Investment (Pvt) Ltd Nippon Coke & Engineering Company MR. A.D Gunewardene Relationship Transaction Chairman Sale Common Directors Purchase JV Collaborator Sale Director Sale Quantity 114,442 1,113,750 1,113,750 320,000 Price (LKR) 99.0 24.1 24.1 234.5 Date 01.03.13 28.02.13 28.02.13 05.03.13

Local News
 Performance-based wages for plantation workers: As the current two-year collective agreement lapses this month, negotiations for another wage increase in the plantation sector are expected to begin soon. Profitability and productivity of an industry always become key issues whenever worker wages are discussed, inflation takes a back seat and the plantation industry is no exception. It appears that at the last collective agreement, workers' wages were increased by 30%, resulting in a monthly take home pay for example of a tea plucker becoming LKR 13,390. Both tea and rubber are enjoying a buoyant market now although production is an issue. Tea and rubber prices are at attractive levels and profits up by 45% to 50% in rubber. In this background, it may be useful to re-examine the concept of ‘Performance-linked wages’, as numerous debates are likely to emerge around this concept when the wage issue is discussed. However, this concept was discussed two years ago when the last wage increase negotiations were on. [Source: www.dailymirror.lk]  Three more capital market road shows in the pipeline: Following the conclusion of the capital market road show in Mumbai in February which drew over 150 foreign fund managers, the Colombo Stock Exchange (CSE) is currently planning three more road shows in major commercial hubs in the Asian region. According to CSE Chairman, Krishan Balendra, the three destinations earmarked are Hong Kong, Singapore and Middle East. When asked of the possible time frames of each of those major events, he said that the road show in Hong Kong will take place in June-July. “This will be followed by the road shows in Singapore which is expected to be held by October and in Middle East around November,” he said. [Source: www.dailymirror.lk]  Dialog’s parent arm Axiata keen to buy Airtel Lanka: Malaysian based Axiata, the firm which owns Sri Lanka’s Dialog Axiata [DIAL: LKR8.9], is trying to buy Airtel Lanka, a media report said. According to the report, the firm has approached Bharati Airtel, the parent arm of the Airtel Lanka to express its interest. The report says, Axiata’s Sri Lankan unit Dialog accounts for 40% share of the local market, while Airtel Lanka owns a market share of around 8% to 9% in the Island. Airtel Lanka has its services spread across the Island and offers 3.5G services and is armed with a distribution network of 42,000 retail traders across the country. [Source: www.news360.lk]  Blocked Sri Lanka tea pouring in to Iraq: trade ministry: Shipments of Sri Lanka tea detained at the Iraqi border have been allowed into the country from March 04, two weeks after a meeting between ministers of the two countries, the commerce ministry said. Sri Lanka's commerce ministry said more than 100 Softlogic Equity Research Page | 5
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containers of tea had been detained at the Iraq-Kuwaiti border, Aqaba Free Trade Zone of Jordan and Umm Qasr port of Iraq from February 19 due to a change in testing parameters. Iraq had bought 83 million Us dollars of tea from Sri Lanka becoming the fifth largest buyer after Russia, Iran, Syria and Turkey. In 2012, 60% of tea imports to Iraq were from Sri Lanka and 91% in 2011, the commerce ministry said. [Source: www.lbo.lk]

Global News
 Euro-Area Services Output Contracts Less Than Estimated: Euro-area services output shrank less than initially estimated in February, adding to signs the currency bloc’s economy may be beginning to emerge from a recession. An index based on a survey of purchasing managers in the euro-area services industry fell to 47.9 from 48.6 in January, London-based Markit Economics said in a report today. That’s above an initial estimate of 47.3 published on Feb. 21. A reading below 50 indicates contraction. Euro-area retail sales rose the most in three years in January, separate data showed. The currency bloc’s recession deepened in the fourth quarter, as the economy recorded its worst performance in almost four years with a contraction of 0.6 percent. Gross domestic product will decline again in the first three months of this year before returning to growth in the second quarter, according to the median of 21 economists’ estimates in a Bloomberg survey. [Source: www.bloomberg.com]  U.K. February Retail Sales Rise Most Since 2009, BRC Says: U.K. retail sales rose at the fastest pace in more than three years in February as demand for clothes and home furnishings increased, the British Retail Consortium said. Sales at stores open at least 12 months, measured by value, increased 2.7%YoY, the London-based trade group said in an e-mailed report today. Excluding distortions caused by the timing of the Easter holidays, that’s the biggest increase since December 2009. The report follows a survey by GfK last week that showed U.K. consumer confidence held steady in February as optimism about personal finances rose to the highest in almost two years. While the Bank of England has forecast a “slow but sustained” recovery for the economy, consumer-spending growth may be restrained by rising energy bills and accelerating inflation . [Source: www.bloomberg.com]

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Branches
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