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Sri Lankan shares hit highest close in over six weeks on foreign buying

FIRST CAPITAL’S SENIOR RESEARCH ANALYST, ATCHUTHAN SRIRANGAN, SPEAKS TO REUTERS

Tue Apr 4, 2017

Sri Lankan shares hit their highest closing in more than six weeks on Tuesday, as foreign buying boosted sentiment while block deals lifted the day’s turnover, stockbrokers said.

The Colombo stock index ended 1.1 percent firmer at 6,146.69, its highest close since Feb. 17. The index rose 1.1 percent last week, posting its first weekly gain in six.

“Foreign buying and foreign interest on blue chips pushing the market up and we hope the trend will continue,” said Atchuthan Srirangan, senior research analyst, First Capital Equities (Pvt) Ltd.

Foreign investors net bought shares worth 140.8 million rupees ($928,148) on Tuesday, raising the year-to-date net foreign inflow to 5.84 billion rupees in equities.

Turnover stood at 1.4 billion rupees, well above this year’s daily average of 749.4 million rupees.

Shares of conglomerate John Keells Holdings Plc gained 2.14 percent, while Ceylon Cold Store Plc jumped 4.77 percent.

Ceylon Tobacco Company Plc climbed 1.73 percent, Hemas Holding Plc rose 3.18 percent and the biggest-listed lender Commercial Bank of Ceylon Plc gained 1.98 percent.

($1 = 151.7000 Sri Lankan rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

SRI LANKA FINANCE SECTOR

“In tough conditions Bigger the Better”

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 Content –

FC Research expects finance sector to face moderately tough conditions to operate with thinning margins and new LTV regulations leading to slower and previous but moderate credit growth. Despite slow economic conditions rise in NPLs are likely to be slow amidst price appreciation in vehicle prices as bulk of the lending is attached to vehicles. We believe the larger finance companies have an advantage with lower cost of funding and large conversion levels from leases to loans which improves re-pricing abilities at times of rising interest rates. Sector Recommendation: HOLD

 

Margins to dip but Credit Growth to remain moderate: With rising interest rates and bulk of the lending attached to leases finance sector is likely to experience a dip in margins while credit growth is expected to remain moderate around 16-18% despite deceleration from 2016. New LTV regulations also likely support the slower credit in 2017E.

Upbeat second-hand market vehicle prices to support Lower NPL provisions: Despite rise interest rates and slower economic conditions FC Research expects NPL provisions of finance companies to continue to stay on the back significant price appreciations in the second hand vehicle market. Higher vehicle prices are likely to deter related borrowers from default while even if defaulted higher vehicles prices ensures finance companies of eliminating losses and recovering bad debts.

Selected larger finance companies to perform: Finance companies with better rating and larger asset base tend to have a lower cost of funding while some finance companies have already converted significant portions from loans to leases enabling them to re-price part of the assets in line with interest rates. These two conditions being satisfied enables selected finance companies specifically identified as PLC, CFIN, LFIN, COCR and LOFC to perform better in tough environment. We expect the selected companies to provide an average total return on equal weightage of c.51% during a 12 month period.

 

*Disclosure:

First Capital Group and its affiliates does not hold any shares in PLC, CFIN, LFIN, COCR, and LOFC.  Neither First Capital Group nor its affiliates have traded in the shares of PLC, CFIN, LFIN, COCR, and LOFC in the three trading days prior to this document, and will not trade in the shares of PLC, CFIN, LFIN, COCR, and LOFC for three trading days following the issue of this document

 

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This Review is prepared and issued by First Capital Equities (Pvt) Ltd. and is based on information available in the public domain, internally developed and other sources believed to be correct. Although all reasonable care has been taken to ensure that the contents of this document are accurate, First Capital Equities (Pvt) Ltd and its Directors and employees, are not responsible for its accuracy, usefulness and reliability and disclaim liability for any loss suffered by the use of information contained herein.

First Capital Equities (Pvt) Ltd may act as a Broker in the investments which are the subject of this document or any related investments and may have acted on or have used the information contained in this document, or the research or analysis on which it is based, before its publication.

Sri Lankan shares rise for 3rd session on foreign buying, window dressing

FIRST CAPITAL’S HEAD OF RESEARCH, DIMANTHA MATHEW, SPEAKS TO REUTERS

Thu Mar 30, 2017

Sri Lankan shares rose for a third straight session on Thursday, closing at their highest in more than one week, helped by foreign investor buying and quarter-end window dressing, stockbrokers said.

The Colombo stock index closed 0.31 percent firmer at 6,040.18, its highest close since March 21.

On Monday, it had closed at its lowest since March 15, 2016 after the central bank tightened its monetary policy on Friday by 25 basis points to contain high inflationary expectations.

Stockbrokers said rising interest rates have kept most investors on the sidelines. Yields on treasury bills rose 6-16 basis points at a weekly auction on Wednesday.

“Local buying demand is increasing and the market is moving up on blue chips. Buying interest from the retail side is slowly improving,” said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

“Local buying interest has now started to improve but the foreign side is still dominating.”

Foreign investors net bought shares worth 200 million rupees ($1.32 million) on Thursday, raising the year-to-date net foreign inflow to 4.58 billion rupees in equities.

Turnover stood at 1.18 billion rupees, well above this year’s daily average of 718.3 million rupees.

Shares of Nestle Lanka Plc jumped 4.46 percent, Ceylon Theatres Plc rose 10.30 percent, Ceylon Cold Stores Plc gained 0.82 percent, and Commercial Bank of Ceylon Plc, the country’s biggest listed lender, ended up 0.93 percent.

($1 = 151.8500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

Sri Lankan shares hit near 3-wk closing high; post 1st weekly gain in 6

FIRST CAPITAL’S HEAD OF RESEARCH, DIMANTHA MATHEW, SPEAKS TO REUTERS

Fri Mar 31, 2017

Sri Lankan shares closed at their highest in nearly three weeks on Friday, rising for a fourth straight session on purchases by foreign investors and on quarter-end window dressing, stockbrokers said.

The Colombo stock index ended 0.36 percent firmer at 6,061.94, its highest close since March 13. The index rose 1.1 percent on week, posting its first weekly gain in six.

“We are seeing some significant improvement in investor confidence. Local institutions have started to come in to the market. They may be feeling that this is the right time as the market has bottomed out,” said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

“Retail investors are still on wait and see, but the bigger players are getting in with heavy foreign participation.”

Foreign investors net bought shares worth 1.06 billion rupees ($6.99 million) on Friday, the highest net foreign purchases since Dec. 8, raising the year-to-date net foreign inflow to 5.64 billion rupees in equities.

Turnover stood at 1.74 billion rupees, well above this year’s daily average of 734.8 million rupees.

Shares of biggest listed lender Commercial Bank of Ceylon Plc climbed 1.57 percent, while Ceylinco Insurance Plc jumped 6.46 percent and conglomerate John Keells Holdings Plc rose 0.66 percent.

($1 = 151.7500 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

MARKET UPDATE ON ADA DERANA ENGLISH NEWS – 2017.04.03

InvestmentBanksInSriLanka

First Capital Research Analyst Amanda Lokugamage with the market update – between 15.05  mins to 15.36 mins

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory. 

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

Quarterly Results Review

Quarterly Results Review / Sector Summary / Results update for All Companies – December 2016 Quarter prepared by First Capital Research

Content

Quarterly Reports –

Banking Sector and Capital Goods Sector drive earnings

Dec Quarter earnings up by 5%YoY for 278 Companies: December quarter earnings grew 10%YoY to LKR62.2Bn and 3%QoQ for the 278 companies reported but considering all companies of the previous year earnings growth is 5.3% YoY. Dec 2016 Quarter earnings were dominated by healthy performance in Banking Sector (+20%YoY) with higher margins while Capital Goods Sector (+14%YoY) was positively affected by earnings from diversified conglomerates. However, the earnings growth was partially offset by Energy Sector (-94%YoY). Utilities Sector (-102% YoY) also saw deteriorated performance due to adverse weather conditions. Food, Beverage and Tobacco Sector (-7% YoY, adjusted) was affected by lower volumes in tea and rubber plantations despite increased prices, having adjusted for one-off losses from DIST and non-operating gains from CARS Group.

Private sector credit growth boosted banking earnings: Banks Sector continued to remain as largest contributor to earnings by achieving a profit of LKR 15.2Bn (+20%YoY) primarily driven by stronger Net Interest Margins and higher than expected private sector credit growth despite the increased taxes (VAT). Big Banks led by COMB (+26%YoY), HNB (+14%YoY) and SAMP (+67%YoY), jointly represented 72% of the sector earnings. JKH (+32% YoY) and DOCK (+93% YoY) contributed to improved performance in the Capital Goods Sector which posted a net profit of LKR 12.7Bn (+14% YoY). JKH saw strong retail segment and higher finance income with rising interest rates while DOCK experienced better margins via ship repair activities.

Energy and Utilities adversely affect earnings: Market earnings were negatively affected by Energy Sector that recorded a net profit of LKR 72Mn (-94% YoY) driven by LIOC (-71% YoY) & LGL (-170% YoY) which saw a steep dip in margins due to increased oil gas prices in the global market. Utilities Sector posted a net loss of LKR 14Mn (-102% YoY) due to lack of rainfall affecting many hydro power plants including VLL (-111% YoY) and VPEL (-70% YoY).

One off events affect 4Q16 earnings: Market earnings were significantly affected by the losses of LKR 74Bn attributable to DIST during the quarter following share swap arrangement with MELS. In addition, 5 companies of the CARS Group (+377% YoY) – BUKI (+509% YoY), SHAL (+20,060% YoY), INDO (+21,649% YoY), SELI (-826%) and GOOD (+52,245% YoY) together recorded a total gain of LKR 12.6Bn attributable to disposal of plantation assets. After adjusting for these gains and losses the sector resulted in a profit of LKR 9.1Bn (-7% YoY, adjusted).

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Quarter: December 2016

This Review is prepared and issued by First Capital Equities (Pvt) Ltd. and is based on information available in the public domain, internally developed and other sources believed to be correct. Although all reasonable care has been taken to ensure that the contents of this document are accurate, First Capital Equities (Pvt) Ltd and its Directors and employees, are not responsible for its accuracy, usefulness and reliability and disclaim liability for any loss suffered by the use of information contained herein.

First Capital Equities (Pvt) Ltd may act as a Broker in the investments which are the subject of this document or any related investments and may have acted on or have used the information contained in this document, or the research or analysis on which it is based, before its publication.