DNH Sri Lanka Weekly 10-14 Dec 2012

7/30/2019 DNH Sri Lanka Weekly 10-14 Dec 2012

1/9

Sri Lanka Weekly

14-Dec

Prime Lending Rate (Avg. Weighted) 14.3%

Deposit Rate (Avg. Weighted) 9.8%

Treasury Bill Rate (360 Days) 12.4%

Dollar Denominated Bond Rate 5.9%

LKR/US$ (Selling Rate) 130.0

LKR/EURO (Selling Rate) 170.8

14-Dec 7-Dec WoW%

Sri Lanka - ASPI 5,523 5,387 2.5

India - Sensex 19,317 19,424 -0.6

Pakistan - KSE 100 16,850 16,831 0.1

Taiwan Weighted 7,699 7,642 0.7

Singapore - Straits Times 3,168 3,107 2.0

Hong Kong - Hang Seng 22,606 22,191 1.9

ThisWeek

Prv.Week WoW%

ASPI 5,528 5,387 2.6

MPI 5,045 4,894 3.1

S&P SL 20 3,023 2,954 2.3

Turnover (bn) 2.74 2.69 1.7

Foreign Purchases (mn) 1381 1791 -22.9

Foreign Sales (mn) 1202 816 47.3

Traded Companies 273 270 1.1

Market PER (X) 14.6 14.3 2.4Market Cap (LKR bn) 2,120 2,069 2.5

Market Cap (US$ bn) 16.3 15.9 2.6

Dividend Yield (%) 2.4 2.4 -1.2

Price to Book (X) 2.0 1.9 4.2

D

NHM

ARK

ETW

ATCH

Market Indices

Reversing the lackadaisical movement

witnessed over the past few days, the

bourse gained 2.6% to close the week at

5528 on the back of a 25 bps cut in policy

rates by the Central Bank. Turnoverincreased to LKR2.7 bn during the week

with trading in John Keells Holdings,

Commercial Bank and Commercial Bank

accounting for 32% of the weeks total.

Gainers outpaced losers with Beruwela

Walk Inn, Property Development and

Tangerine Beach rising by 26.3%, 24.0%

and 20.3% offsetting losses in Hunters &

Company, SMB Leasing and ConvenienceFoods which declined by 10.9%, 10.0% and

9.1% respectively.

Global Markets

10-14 Dec 2012

Market Performance

Interest Rates & Currencies

26.3

24.0

20.3

18.8

-10.9

-10.0

-9.1

-8.9

Beruwela Walk Inn

PDL

Tangerine

CFI

Hunters

SMB Leasing

Convenience Food

Mackwoods Energy

Gainers & Losers (%)

In global news, expectations that the

Federal Reserve will announce a new

stimulus plan to help bring life to a

lethargic US economy boosted

international markets during the week.

DNH Financial (Pvt) Ltd.

www.dnhfinancial.com

+94-11-5700777


2/9

Page 2Sri Lanka Weekly 10-14 Dec 2012

Market Performance (Cont.)

During the week, the Central Bank cut key

policy rates by 25 bps while allowing the

ceiling on rupee credit extended by banks to

expire at end 2012. Accordingly, the

Repurchase rate and the Reverse Repurchase

rate of the Central Bank wasrevised down to

7.50% and 9.50% respectively. Consequently,

the downward revision prompted treasury bill

yields to fall across maturities with the 12

month yield declining as much as 41 bps to

12.45%, the 6 month yields falling by 32 bps to

11.78% while the 3 month yield fell by 35 bps

to 10.44%.

-12

-10

-8

-6

-4

-2

0

2006 2007 2008 2009 2010 2011Jan-Sep

2012

Budget Deficit as a % of GDP

Source - CBSL/ DNH Research

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

02.

12.2

011

06.

01.2

012

03.

02.2

012

24.

02.2

012

15.

03.2

012

03.

04.2

012

25.

04.2

012

18.

05.2

012

08.

06.2

012

27.

06.2

012

18.

07.2

012

10.

08.2

012

28.

08.2

012

19.

09.2

012

10.

10.2

012

09.

11.2

012

28.

11.2

012

Rates on Government Securities (T-Bills)

91 Days 182 Days 364 Days

Source - CBSL/ DNH Research

In economic news, tax revenues grew by

6.6%YoY to LKR 629.5 bn during the first 9

months of 2012 while non-tax revenues grew

by 16.2% to LKR81.8 bn during the period with

grants rising by 48.5% to LKR14.4 bn. This inturn has resulted in total revenues and grants

reaching LKR725.7 bn during the first 9

months, up 8.16% from a year earlier.

Meanwhile, total expenditure rose by

14.9%YoY to LKR1208.7 bn during the first 9

months of 2012 with recurrent expenditure

growing by 9.1% to LKR851.8 bn while capital

expenditure increased by 31.84% to LKR356.9

bn. The budget deficit consequently rose by26.9% to LKR483 bn during January to

September 2012 resulting in the budget deficit

as a percentage of GDP reaching 6.4%, as

against 5.81% a year earlier.

LKR BnJan -

Sep2011

Jan-Sep

2012Change

Non-tax revenue 70.4 81.8 16%

Tax revenue 590.8 629.5 7%

Grants 9.7 14.4 48%

Total Revenue &Grants

670.9 725.7 8%

Recurrent Expenditure 780.9 851.8 9%

Net capital expenditure 270.7 356.9 32%

Total Expenditure 1051.6 1208.7 15%

Deficit 380.7 483.0 27%

Deficit as a % of GDP 5.8% 6.4%


3/9


Market Trajectory

Even though investors appear to be in a

holiday mood, we expect the bourse to edge

upwards (albeit moderately) as we approach

the year end. We recommend investors totake advantage of the current market

opportunity to clean their portfolios, maintain

a selective approach and focus on stocks that

are likely to benefit fully from the 2013

economic growth. Consequently, we advise

investors to focus more closely on

fundamentals and sectors such as banking,

construction, diversified and hotels, which are

expected to benefit fully from the macro-

economic upswing next year.

Market Performance (Cont.) month in long-dated Treasury securitiesbeginning in January.

Eurozone

The Christmas rally seems to have taken a

brief pause and understandably so after US

stocks suffered from profit taking. However,the Eurostoxx 50 rose by 1.3% to close at 2631

at the end of the week with a rise in a German

investor sentiment index boosting confidence.

In economic news, Greece will begin to receive

34 billion in bailout aid through the

European Financial Stability Facility in the

coming days. Eurozone finance ministers

approved the release of long-awaited aidpayments after Greece came close to its target

in buying back 31.9 billion in bonds.

Meanwhile, euro zone manufacturing PMI

data missed market expectations, while the

services PMI surprised to the upside. In the

banking sector, Spanish banks cut their

reliance on ECB funding for the 3rd straight

month, a similar trend has been seen with

Italian banks.

Asia

Asian equities rose for the week on the back of

improved economic data released from China

which showed new signs of a possible

economic rebound. The MSCI Asia Pacific

Index rose by 1.1% led by gains in Nikkei,

Straits Times and Hang Seng. After a positivereport on industrial output growth of 10.1%

from a year earlier and rising electricity

production, the preliminary

manufacturingpurchasing managers index

from HSBC rose to 50.9 indicating a second

straight month ofgrowth in manufacturing

activity. Meanwhile, Japan has officially

entered a recession in thethird quarter, as its

economy shrank for a second straight quarter.An initial report that

Global Outlook

US

US equities recorded a modest decline with

the Nasdaq, S&P 500 and Dow Jones

shedding 0.2%, 0.3% and 0.2% to close at

2971, 1414 and 13135 at the end of the week.

Initial jobless claims fell 29,000 to a

seasonally adjusted 343,000 for the week

ended 8 December. Meanwhile, the US

inflation rate stayed within the Feds target

zone; November data from the US Labor

Department showed a 0.3% drop in overall

consumer prices in November and a 0.1%

increase in core prices (excluding food and

energy). Overall, annual consumer prices

rose 1.8% as of November, with core prices

up 1.9%. The Fed has stated that interest rates

would remain low as long as the

unemployment rate stays above 6.5% and the

one to twoyear outlook for inflation remains

below 2.5%. The US Fed has further

announced it would buy $45 billion per


4/9


Global Outlook Cont..

Japans economy had grown 0.3% in the

second quarter was revised to a 0.1%

contraction. Japans current-account surplus

fell in October from a year earlier as the

countrys trade deficit grew. Japans export-

driven economy is being hurt by the territorial

battle with China over unpopulated islands in

the East China Sea as well as the global

downturn. In commodity news, gold plunged

the most for the week dropping $14 to just

below the $1700 per ounce, while crude oil

dropped 62 cents to $86.10/barrel.


5/9


CompanyCSECODE

SharePrice

Net Profit (LKR mn)

(LKR) 2009 2010 2011

Sri Lanka Telecom SLTL 42.70 778 3,943 4,781

Lanka ORIX Leasing LOLC 52.50 2,385 7,023 8,937

AHOT Properties AHPL 76.00 689 2148 2,507

Dialog Axiata DIAL 8.10 -12208 5047 5,354

Softlogic Holdings SHL 10.10 155 971 1022

Colombo Fort Land & Buildings CFLB 32.90 50 2139 2087

Aitken Spence SPEN 117.50 2987 3428 4711

John Keells Holdings JKH 218.00 5552 9063 11069

Commercial Bank COMB 102.00 4304 5524 8048

Hemas Holdings HHL 27.00 935 1355 1315

Hayleys HAYL 285.00 2581 1128 3845

Hatton National Bank HNB 142.00 4352 4464 5570

Distilleries DIST 160.00 2136 8308 6138

Richard Pieris RICH 7.80 712 2141 2561

Eden Hotel Lanka EDEN 34.50 498 101 146

Nawaloka Hospitals NHL 3.00 97 1071 271

Kotagala Plantations KOTA 66.40 323 668 439

Asiri Hospitals ASIR 11.00 318 262 842

DIMO DIMO 601.10 278 2122 2697

Kegalle Plantations KGAL 100.30 376 883 682

Royal Ceramics RCL 93.80 711 1374 1970

Lanka WallTile LWL 61.00 766 990 1135

Ceylon Glass GLAS 6.00 -61 579 686.4Laugfs Gas LGL 24.10 528 853 930

VallibelOne VONE 18.00 N/A N/A 3645

National Development Bank NDB 135.50 2085 2176 2941

DFCC Bank DFCC 112.00 1713 7137 2973

Sampath Bank SAMP 200.00 2098 3520 4173

Ceylon Leather CLPL 79.00 36 107 44

Ceylon Grain Elevators GRAN 54.30 134 475 455

Expolanka Holdings EXPO 6.90 518 1768 1230

DNH TOP 30 Valuation Guide

DNH To 30 stock list does not indicate BUY recommendation


6/9


EPS EPS Growth (%) PE (X)Price toGrowth

(X)

DividendYield (%)

Sharesin

issue(mn)

MarketCap

(LKRbn)

2009 2010 2011 2009 2010 2011 2009 2010 2011 2011

SLTL 0.43 2.18 2.65 -89% 407% 21% 99.1 19.5 16.1 0.76 2.0% 1,805 77.1

LOLC 8.32 8.08 13.17 275% -3% 63% 6.3 6.5 4.0 0.06 N/A 475 24.9

AHPL 9.71 8.02 9.71 305% -17% 21% 7.8 9.5 7.8 0.37 1.3% 221 16.8

DIAL -1.50 0.62 0.64 324% -141% 3% N/A 13.1 12.7 4.14 3.1% 8,144 66.0

SHL 0.20 1.06 0.62 124% 438% -42% 51.1 9.5 16.3 -0.39 1.3% 779 7.9

CFLB 0.36 6.37 7.15 82% 1653% 12% 90.5 5.2 4.6 0.38 0.9% 180 5.9

SPEN 5.07 8.44 9.14 1% 66% 8% 23.2 13.9 12.9 1.57 1.2% 406 47.7

JKH 6.19 9.81 11.63 5% 59% 19% 35.2 22.2 18.7 1.01 1.4% 840 183.2

COMB 5.48 7.20 10.58 2% 31% 47% 18.6 14.2 9.6 0.21 2.6% 765 78.0

HHL 1.75 2.35 2.35 16% 34% -0.1% 15.4 11.5 11.5 -126.48 1.9% 515 13.9

HAYL 23.08 9.03 33.60 457% -61% 272% 12.3 31.6 8.5 0.03 1.4% 75 21.4

HNB 12.17 12.49 15.58 35% 3% 24.8% 11.7 11.4 9.1 0.37 5.3% 358 50.8

DIST 7.12 27.08 18.92 -37% 280% -30% 22.5 5.9 8.5 -0.28 1.9% 300 48.0

RICH 0.30 0.87 1.21 -276% 190% 39.2% 26.0 9.0 6.5 0.16 10.3% 1,937 15.1

EDEN 0.06 1.92 2.76 -108% 3261% 44% 603.5 18.0 12.5 0.28 N/A 53 1.8

NHL 0.07 0.76 0.19 -189% 1004% -74.7% 43.6 3.9 15.6 -0.21 1.7% 1,410 4.2

KOTA 10.09 20.88 13.71 89% 107% -34% 6.6 3.2 4.8 -0.14 3.0% 32 2.1

ASIR 0.21 0.21 0.67 137% 3% 214.6% 53.0 51.3 16.3 0.08 2.3% 889 9.8

DIMO 31.32 239.06 303.87 170% 663% 27% 19.2 2.5 2.0 0.07 6.7% 9 5.3

KGAL 15.04 35.32 27.28 112% 135% -22.8% 6.7 2.8 3.7 -0.16 7.5% 25 2.5

RCL 6.42 12.40 17.78 245% 93% 43% 14.6 7.6 5.3 0.12 4.3% 111 10.4

LWL 5.12 8.87 13.77 -23% 73% 55% 11.9 6.9 4.4 0.08 1.6% 55 3.3

GLAS -0.06 0.61 0.72 -77% -1049% 19% N/A 9.8 8.3 0.45 6.0% 950 5.7

LGL 1.36 2.20 2.40 131% 61% 9% 17.7 10.9 10.0 1.10 6.2% 387 9.3

VONE N/A N/A 3.35 N/A N/A N/A N/A N/A 5.4 N/A 1.7% 1,087 19.6

NDB 12.70 12.81 16.48 74% 1% 29% 10.7 10.6 8.2 0.29 2.6% 164 22.2

DFCC 9.73 19.20 10.94 19% 97% -43% 11.5 5.8 10.2 -0.24 8.9% 265 29.7

SAMP 13.21 22.21 26.46 39% 68% 19% 15.1 9.0 7.6 0.40 4.5% 157 31.4

CLPL 1.05 3.12 2.68 -250% 197% -14% 75.1 25.3 29.4 -2.09 N/A 34 2.7

GRAN 2.23 7.92 6.46 355% 255% -18% 24.3 6.9 8.4 -0.46 N/A 60 3.3

EXPO 0.26 0.79 0.54 N/A 199% -32% 26.0 9 12.8 -0.40 1.7% 1,955 13.5

DNH TOP 30 Valuation Guide

DNH To 30 stock list does not indicate BUY recommendation


7/9


2004 2005 2006 2007 2008 2009 2010 2011

Nominal GDP (LKR bn) 2,091 2,453 2,939 3,579 4,411 4,835 5,602 6,543

% YoY 15 17 20 22 23 10 16 17

Nominal GDP (US$ bn) 21 24 28 32 41 42 50 59

% YoY 9 18 16 14 26 3 18 18

Real GDP Growth (%) 5.4 6.2 7.7 6.8 6 3.5 8 8.3

GDP per Capita (US$) 1,062 1,241 1,421 1,617 2,014 2,057 2,399 2,836

% YoY 8 17 15 14 25 2 17 18

Population (mn) 19.5 19.7 19.9 20 20.2 20.5 20.7 20.9

% YoY 1 1 1 1 1 1 1 1

Inflation (%) 9 11 10 15.8 22.6 3.4 5.9 6.7

M2 (LKR bn) 688 823 993 1,148 1,282 1,537 1,813 2,193

% YoY 18 20 21 16 12 20 18 21

Average Oil Prices (US$ / barrel) 36.1 50.6 61.1 69.1 94.5 61.1 77.5 109

% YoY 28 40 21 13 37 -35 27 41

Exports (US$ bn) 5.8 6.3 6.9 7.6 8.1 7.1 8.6 10.6

% YoY 14 9 10 10 7 -12 17 23

Imports (US$ bn) 8 8.9 10.2 11.3 14.1 10.2 13.5 20.3

% YoY 19 11 15 11 25 -28 32 50

Trade Balance (US$ bn) -2.2 -2.5 -3.4 -3.7 -6 -3.1 -4.8 -9.7

% YoY 47 14 36 9 62 -48 67 -102

Current Account Balance (US$ bn) -0.6 -0.7 -1.5 -1.4 -3.9 -0.2 -1.1 -4.6

% YoY 813 0 130 -6 177 -94 563 318

Balance of Payments (US$ bn) -0.2 0.5 0.2 0.5 -1.4 2.7 0.9 -1.1

% YoY -140 -350 -60 150 -380 -293 -67 -222

Budget Deficit (US$ bn) -1.5 -1.7 -2 -2.2 -2.9 -4.1 -3.9 -4.1

% YoY 12 11 15 12 29 45 -5 -4

Budget Deficit as % of GDP -7.5 -7.0 -7.0 -6.9 -7.0 -9.9 -8.0 -6.9Exchange Rate (LKR/US$) 101.2 100.5 104 110.6 108.3 114.9 113.1 110.6

Ke Economic Indicators


8/9


0

2,000

4,000

6,000

8,000

2004 2005 2006 2007 2008 2009 2010 2011

Nominal GDP

Nominal GDP Real GDP0

5001000

1500

2000

2500

3000

2004 2005 2006 2007 2008 2009 2010 2011

GDP per Capita

GDP Per Capita

0

2

4

6

8

10

2004 2005 2006 2007 2008 2009 2010 2011

GDP Growth

GDP Growth

18.5

19

19.5

20

20.5

21

21.5

2004 2005 2006 2007 2008 2009 2010 2011

Population (mn)

Population

4

5

6

7

8

9

10

11

2004 2005 2006 2007 2008 2009 2010 2011

Exports (US$ bn)

Exports (US$ bn)

4

9

14

19

24

2004 2005 2006 2007 2008 2009 2010 2011

Imports (US$ bn)

Imports (US$ bn)

-2

-1

0

1

2

3

2004 2005 2006 2007 2008 2009 2010 2011

BOP(US$ bn)

Balance of payment

90

95

100

105

110

115

120

2004 2005 2006 2007 2008 2009 2010 2011

Exchange Rate (LKR/USD)

LKR/US$

Ke Economic Charts


9/9


Disclaimer

This Review is prepared and issued by DNH Financial (Pvt.) Ltd. (DNH) based on information in thepublic domain, internally developed and other sources, believed to be correct. Although all reasonable carehas been taken to ensure the contents of the Review are accurate, DNH and/or its Directors,employees, are not responsible for the correctness, usefulness, reliability of same. DNH may act as aBroker in the investments which are the subject of this document or related investments and may haveacted on or used the information contained in this document, or the research or analysis on which it isbased, before its publication. DNH and/or its principal, their respective Directors, or Employees may alsohave a position or be otherwise interested in the investments referred to in this document. This is not anoffer to sell or buy the investments referred to in this document. This Review may contain data which areinaccurate and unreliable. You hereby waive irrevocably any rights or remedies in law or equity you have

or may have against DNH with respect to the Review and agree to indemnify and hold DNH and/or itsprincipal, their respective directors and employees harmless to the fullest extent allowed by law regardingall matters related to your use of this Review. No part of this document may be reproduced, distributed orpublished in whole or in part by any means to any other person for any purpose without priorpermission.DNH Financial (Pvt) Ltd is a fully owned subsidiary of Environmental Resources InvestmentPLC (ERI).

Contacts

Sales Desk: +94115700707, +94115732222, +94115700777

Branch Sales: Negombo- +94 31-5676451, Jaffna-+94212224929

Research:+94115700726

Website: www.dnhfinancial.com

E- mail: [email protected]

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Level 16, West Tower,

World Trade Centre,Colombo-01, Sri Lanka.

No.72, Palaly Road,

Iluppaiyadi Junction,

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Documents

DNH Sri Lanka Weekly 10-14 Dec 2012