Sri Lanka stock market weekly 012012

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Asia Wealth Research

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  • 1. Sri Lanka Focus 6th January 2012 ASIA RESEARCH TEAM 1 Focus Volume 38 Volume 01 706 October 2011 th January 2012 th Colombo Stock Exchange Weekly Review by Asia Wealth Management Research IN THIS ISSUE; ASI Daily Closing (ASI) (LKR mn) 2012 Kicks Off Red.. 6196 Focu The Colombo Bourse concluded its first trading week for the year 2012 with both indices shedding further, extending the long prevailed sluggish momentum driven by lack of confidence over the Colombo Stock Exch 6022 Volume 38 5848 955 market. Pg02 7 October 2011 5674 Analysis of Various Warrants Listed on the CSE 5500 19- 20- 21- 22- 23- 27- 28- 29- 30- 2-Jan3-Jan4-Jan5-Jan6-Jan 0 Comparison of the warrants trading price with its Dec Dec Dec Dec Dec Dec Dec Dec Dec intrinsic value (derived through the Black Scholes Call option Turnover (RHS) ASI closing (LHS) Pg 03 th valuation method). Market Statistics 06-Jan 30-Dec % Chg. Asia Wealths Billion Rupee Club Pg 04 All Share Index 5,930.52 W eekly R eview by Asia Wealth Mana Milanka Price Index 5,083.15 6,074.42 5,229.16 -2.4 -2.8 Banking & Finance 13,527.08 13,812.68 -2.1 Food & Beverage 11,806.77 12,112.42 -2.5 Focu Colombo Stock Exch Diversified 1,857.70 1,909.05 -2.7 Commodity Prices Hotels & Travels 3,783.55 3,929.20 -3.7 Pg 05Volume 38 Weekly overview of commodity trading Telecommunication 164.78 167.91 -1.9 Manufacturing 3,230.13 3,285.15 -1.7 7 October 2011 Market Capitalisation (LKR bn) 2,166.60 2,214.00 -2.1 (USD bn) 19.01 19.43 -2.2 2012 week 1: Market turnaround remains Turnover (LKR mn) (USD mn) 1,937.70 17.01 2,750.10 24.14 -29.5 -29.6 elusive Average Daily Turnover (LKR mn) 387.50 687.50 -43.6 Volume (mn shares) 93.00 124.20 -25.1 The market was off to a sluggish start to the year with a WoW loss Foreign Purchases (LKR mn) 308.70 93.10 231.6 of 2.4% recorded on the ASI with retailers in absentia. Pg 06 Foreign Sales (LKR mn) 463.10 1,352.90 -65.8 th Major Price Movements Large Trades Company Price +/-LKR +/- % Volume Company Volume Walk & Greig (Env. Resources) 32.00 (8.00) (20.00) 5,563,100 Seylan Merchant Bank (Non Voting) 14,100,000 Nation Lanka 12.90 (2.90) (18.35) 816,700 Weekly Review by Asia Wealth Manag Waskaduwa Beach Resort 6,894,400 Horana 33.00 (4.80) (12.70) 35,600 Walk & Greig 5,563,100 Sigiriya Village 83.00 (12.00) (12.63) 3,700 Free Lanka Capital Holdings 501/0020 Hayleys - Mgt 25.20 (3.30) (11.58) 73,600 Tess Agro 4,963,500 Colonial Motors Plc 414.90 14.90 3.73 18,500 Blue Diamonds (Non Voting) 4,017,100 Bogawantalawa Tea Estate 15.00 0.60 4.17 7,500 Seylan Merchant Bank 3,793,600 Morisons (Non Voting) 155.40 6.40 4.30 36,000 Walk & Greig (W.0002) 3,515,700 Colombo Stoc Connaissance (Amaya) 83.50 3.50 4.38 7,100 Amana Takaful Plc 2,783,500 York Arcade 27.50 2.40 9.56 897,800 Panasian Power 2,699,600 8 1
  • 2. Sri Lanka Focus 6th January 2012 ASIA RESEARCH TEAM 2The Week in FOCUS 2012 Kicks Off Red.. The Colombo Bourse concluded its first trading week for the year 2012 with both indices shedding further, extending the long prevailed sluggish momentum driven by lack of confidence over the market. The All Share Index dipped 144.0 points WoW to close at 5,930.5 points (-2.4%), whilst the Milanka Price Index also shedding by 146.0 points WoW to close at 5,083.1 points (-2.8%). Indices benefitted mainly on the back of losses made by Aitken Spence (-9.1% WoW), Dialog Axiata (-5.1% WoW), Cargills Ceylon (-5.7% WoW), Lanka Orix Leasing Company (-6.5% WoW), John Keells Holdings (-1.8% WoW), Environmental Resources Investments (-20.0% WoW) & Vallibel One Limited (-7.9% WoW). Activities in the market were relatively low with thin volumes and turnover levels driven by a mix of institutional, high net worth and retail interest. The average daily turnover for the week had been LKR387.5 mn with an average weekly volume of 19 mn. Further, the week saw a decline of circa 2.1% in overall market capitalization together with a Year to date return of negative 2.4%. The top traded counter for the week is John Keells Holdings, contributing a bulk of 17% to the weekly total turnover, indicating that institutional and high net worth investors are accumulating the stock at prevailing discounted prices in the light of future growth prospects. Secondly, it was evident that heavy speculative trading was on Environmental Resources Investments closing the share with a price dip of 20% WoW, giving a high impact on the indices with a loss of LKR2.5 bn in market capitalization. Heavy foreign selling pressure on Commercial Bank of Ceylon has also added on to increase the weekly turnover. Meanwhile, heavy interest was seen on the new entrant to the bourse, Waskaduwa Beach Resort. During the week Kalpitiya Beach Resort and Waskaduwa Beach Resort got listed on the Diri Savi Board under the Hotels and Travel sector. Kalpitiya Beach Resort issue opened at LKR19.00 to close at LKR17.00 at the initial day of trading. At the same time Waskaduwa Beach Resort opened at LKR13.50 to close at LKR14.00. Apart from the above, in the midst of booming tourism sector, LOLC Leisure Limited made a strategic move to acquire Dikwella Resort Limited for a consideration of LKR1, 014 mn. In the economic context the call market rates stabilised in the face on Central Banks open market interventions. Furthermore, Seylan Merchant Bank (Non Voting), Waskaduwa Beach Resort, Environmental Resources Investments and Free Lanka Capital Holdings topped the list in terms of volume during the week. The week saw a net foreign outflow of LKR154.4 mn where foreign purchases amounted to LKR 308.7mn whilst foreign sales amounted to LKR463.1 mn. Market capitalization stood at LKR2, 166.6 bn, nevertheless the YTD performance closed at -2.4%.
  • 3. Sri Lanka Focus 6th January 2012 ASIA RESEARCH TEAM 3FeaturesAnalysis of Various Warrants Listed on the CSEThe below table depicts a comparison of the warrants trading price with its intrinsic value (derived through the BlackScholes Call option valuation method). The 6th column to the right depicts the difference between the intrinsic valueand the traded price. Hence, the positive figures would explain the potential for the respective warrant to furtherappreciate. Thus, the negative value would denote that the warrant is overvalued at the current price (assuming theunderlying stock price to be constant). However, it is noted that the intrinsic value is derived based on the currentvalue of the underlying stock price, its volatility, period to maturity and the risk free rate. Hence, any adversemovement of the mentioned assumptions would have an adverse impact on the warrant value, and any favourablemovement would positively impact the warrant value (E.g.: if in case the asset price appreciates from the existing, itwould invariably increase the value of the warrant. Warrants Valuation Price According to Black Exercise Share Price Warrant Price Undervalued/ Expiry Date Scholes model (Intrinsic price (2012/01/06) (2012/01/06) (Overvalued) value) CLPL-W-0013 118.00 101.00 25-Aug-14 17.80 6.08 (11.72) CLPL-W-0014 142.00 101.00 25-Aug-15 18.00 1.15 (16.85) GREG-W-0002 33.00...