ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES. Shares Recover From 4-Month Closing Low June Quarter Earnings Mixed. ASPI v 0.87% S&P SL20 v 0.

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1 (Turnover LKR Bn) ASPI ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Shares Recover From 4-Month Closing Low June Quarter Earnings Mixed ASPI v.87% S&P SL2 v.49% The Bourse ended in Cont. P2 Foreign Investors Closed the Week in... Cont. P3 Share markets fell for the 5 th consecutive Cont. P5 Economic Snapshot P6 Indices vs. Turnover (14 th Aug 18 th Aug) 6,5 6,48 6,46 6,44 6,42 6, ASPI S&P SL2 14-Aug15-Aug16-Aug17-Aug18-Aug 14-Aug 15-Aug 16-Aug 17-Aug 18-Aug 3,75 3,73 3,71 3,69 3,67 3,65 S&P SL2 KEY STATISTICS Week ending 18-Aug 11-Aug +/- ASPI 6, , % S&P SL2 3,76.2 3, % Banking & Finance 16, , % Food & Beverage 21, , % Diversified 1, , % Hotel & Travel 2, , % Plantations % Manufacturing 4, , % Turnover (LKR Bn) % Foreign Buying (LKR Mn) 1, % Foreign Selling (LKR Mn) % Daily Average Turnover (LKR Bn) % Daily Average Foreign Buying (LKR Mn) % Daily Average Foreign Selling (LKR Mn) % TOP 1 GAINERS TOP 1 LOSERS Code Opening Closing WoW % Change PC HOUSE PCH N % BERUWALA RESORTS BERUN % LANKEM DEV. LDEVN % KELSEY KDL N % ADAM CAPITAL PCHHN % LOLC LOLCN % DIMO DIMON % LUCKY LANKA LLMPN % CIFL CIFLN % AMANA LIFE ATLLN % Code Opening Closing WoW % Change CITRUS HIKKADUWA CITHN % TRADE FINANCE TFILN % ACL PLASTICS APLAN % PARAGON PARAN % SERENDIB ENG.GRP IDL N % KOTAGALA KOTAN % S M B LEASING SEMBN % MAHAWELI REACH MRH N % RAIGAM SALTERNS RWSLN % LANKEM CEYLON LCEYN % 1

2 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review Indices The Bourse continued to lose grounds as the ASPI decreased by points (or.87%) to close at 6, points, while the S&P SL2 Index also decreased by points (or.49%) to close at 3,76.2 points. Turnover & Market Capitalization HNB was the highest contributor to the week s turnover value, contributing LKR.79Bn or 26.4% of total turnover value. Sampath Bank followed suit, accounting for 21.8% of turnover (value of LKR.69Bn) while JKH contributed LKR.6Bn to account for 18.21% of the week s turnover. Total turnover value amounted to LKR 3.27Bn (cf. last week s value of LKR 1.8Bn), while daily average turnover value amounted to LKR.65Bn (45.42% W-o-W) compared to last week s average of LKR.45Bn. Market capitalization meanwhile, decreased by.9% W-o-W (or LKR 26.42Bn) to LKR 2,918.38Bn cf. LKR 2,944.8Bn last week. Liquidity (in Value Terms) The Banking, Finance & Insurance Sector was the highest contributor to the week s total turnover value, accounting for 6.84% (or LKR 1.99Bn) of market turnover. Sector turnover was driven primarily by HNB, Sampath Bank, LOLC, Commercial Bank, Com. Credit, NDB & HNB[X] which accounted for 93.13% of the sector s total turnover. The Diversified Sector meanwhile accounted for 24.35% (or LKR.8Bn) of the total turnover value with turnover driven primarily by JKH & Browns Capital which accounted for 83.% of the sector turnover. The Manufacturing Sector was also amongst the top sectorial contributors, contributing 5.24% (or LKR.17Bn) to the market driven by Chevron, Tokyo Cement, Tokyo Cement[NV] & Grain Elevators which accounted for 55.27% of the sector turnover. Liquidity (in Volume Terms) The Banking, Finance & Insurance Sector dominated the market in terms of share volume, accounting for 36.65% (or 41.95Mn shares) of total volume, with a value contribution of LKR 1.99Bn. The Diversified sector followed suit, adding 35.45% to total turnover volume as 4.58Mn shares were exchanged. The sector s volume accounted for LKR.8Bn of total market turnover value. The Manufacturing Sector meanwhile, contributed 5.78Mn shares (or 5.5%), amounting to LKR.17Bn. Top Gainers & Losers PC House was the week s highest price gainer; increasing 1.% W-o-W from LKR.1 to LKR.2. Beruwala Resorts gained 25.% W-o-W to close at LKR 1. while Lankem Developments gained 21.4% W-o-W to close at LKR 3.4. Kelsey Developments (+18.3% W- o-w) and Adam Capital (+12.5% W-o-W) were also amongst the gainers. Citrus Hikkaduwa was the week s highest price losers, declining 16.% W-o-W to close at LKR 12.6 while Trade Finance (13.8% Y-o-Y), ACL Plastics (-13.2% W-o- W) & Paragon (-13.2% W-o-W) were also amongst the top losers over the week. TOP 1 TURNOVER Code Opening Closing Value (Rs. Mn) HNB HNB N SAMPATH SAMPN JKH JKH N LOLC LOLCN COMMERCIAL BANK COMBN BROWNS CAPITAL FLCHN COM.CREDIT COCRN NAT. DEV. BANK NDB N HNB[NON-VOTING] HNB X NESTLE NESTN

3 LKR. Mn LKR. Mn ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review (Cont d) Net Foreign Purchases (11 Aug-18 Aug) Net Foreign Sales (11 Aug-18 Aug) R I L PROPERTY DIALOG Volume Change ('s) RENUKA HOLDINGS MELSTACORP LOLC ACCESS ENG SL SAMPATH PIRAMAL GLASS COM.CREDIT RICHARD PIERIS ,2 1,36 1,7 Volume Change ('s) (1,2) (96) (72) (48) (24) - CHEVRON KEELLS HOTELS TOKYO CEMENT[X.] COMMERCIAL BANK BERUWALA RESORTS NAT. DEV. BANK RAIGAM SALTERNS BROWNS CAPITAL S M B LEASING[X.] JKH Foreign investors closed the week in a net buying position with total net inflows amounting to LKR.98Bn relative to last week s total net inflow of LKR.2Bn (+394.1% W-o-W). Total foreign purchases increased by 87.7% W-o-W to LKR 1.74Bn from last week s value of LKR.93Bn, while total foreign sales amounted to LKR.76Bn relative to LKR.73Bn recorded last week (+4.28% W-o-W). In terms of volume, Commercial Credit & Richard Pieris led foreign purchases while JKH & SMB Leasing[X] led foreign sales. In terms of value, Sampath Bank & LOLC led foreign purchases while JKH and NDB led foreign sales. Net Foreign Purchases (By Transaction Value) Foreign Holding (%) Value* Net Change 18/8/17 11/8/17 (LKR. Mn) SAMPATH 19.57% 19.3% 1,8, LOLC 34.39% 34.27% 547, COM.CREDIT 36.81% 36.47% 1,72, RICHARD PIERIS 72.92% 72.84% 1,643, COLD STORES 1.9% 1.7% 25, ACCESS ENG SL 8.71% 8.64% 699, CEYLON TOBACCO 97.43% 97.42% 11, MELSTACORP 25.5% 25.48% 142, PIRAMAL GLASS 64.11% 64.% 1,31, LB FINANCE 3.25% 3.24% 17, Net Foreign Sales (By Transaction Value) Foreign Holding (%) Value* Net Change 18/8/17 11/8/17 (LKR. Mn) JKH 56.73% 56.81% (1,19,49) (179.72) NAT. DEV. BANK 16.17% 16.36% (33,) (45.21) COMMERCIAL BANK 34.28% 34.31% (228,647) (31.32) TOKYO CEMENT[X.] 43.92% 44.6% (182,495) (11.5) CHEVRON 23.36% 23.4% (79,539) (1.74) BROWNS CAPITAL.42%.47% (82,5) (3.13) HAYLEYS 4.6% 4.7% (7,8) (2.18) RAIGAM SALTERNS 2.32% 2.57% (717,731) (1.87) SEYLAN BANK 1.64% 1.65% (15,) (1.43) KEELLS HOTELS.87%.87% (115,154) (1.15) Note: *Value based on closing price and not on actual traded price Please note that the foreign shares data displayed above include private transfers done outside of the market. 1, Foreign Purchases Vs. Sales Foreign Purchases Foreign Sales 1, Week Ending Net Position of Foreign Holdings Aug 15-Aug 16-Aug 17-Aug 18-Aug 28-Jul 4-Aug 11-Aug 18-Aug Source: Colombo Stock Exchange 3

4 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Announcements for the Week Dividend Announcements DPS (Rs.) Type XD Date ARPICO FINANCE COMPANY PLC 5.28 Interim Dividend XD: 29.Aug.217 RAIGAM WAYAMBA SALTERNS PLC.15 Final Dividend XD: 29.Sep.217 TANGERINE BEACH HOTELS PLC. 5 First & Final Dividend XD: 29.Aug.217 DILMAH CEYLON TEA COMPANY PLC 15. First & Final Dividend XD: 26.Sep.217 ELPITIYA PLANTATIONS PLC 1. First & Final Dividend XD: 25.Sep.217 ABANS FINANCE PLC.2 Final Dividend XD: 28.Sep.217 RENUKA HOLDINGS PLC.35 Final Dividend XD: 18.Sep.217 RENUKA FOODS PLC.35 Final Dividend XD: 18.Sep.217 BROWNS CAPITAL PLC.4 Interim Dividend XD: 24.Aug.217 ROYAL PALMS BEACH HOTELS PLC.8 First & Final Dividend XD: 24.Aug.217 CEYLON TOBACCO COMPANY PLC 16. Second Interim Dividend XD: 23.Aug.217 LEE HEDGES PLC 1. Final Dividend XD: 27.Sep.217 ABANS ELECTRICALS PLC 3. Final Dividend XD: 18.Sep.217 Point of View Share markets fell for the 5 th consecutive week, losing ~56 points W-o-W to close at points amid low retail participation and mixed Q2 17 corporate results. Markets which lost ~85 points during the start of the week, closed at a 4-month low on Thursday, but reversed its losing streak on Friday to add ~28 points which helped wipe-off some of the week s early losses. Nevertheless, the negative sentiment that has pre-dominated markets over the past five weeks continued to dampen actitivty, resulting in the Benchmark ASPI losing ~33 points over this 5-week period and dragging the Y-T-D returns on the Index to 3.3% (cf. 8.6% recorded five weeks ago). Average turnover levels for the week however amounted to LKR.65Bn, ~45% higher than last week s average of LKR.45Bn amid greater Institutional, HNI & Foreign participation. Crossings for the week consequently accounted to 49% of total market turnover, with large parcels traded in HNB (44% of crossings), Sampath (32% of crossings) and JKH (16% of crossings). Net foreign flows too improved to LKR.98Bn, 394% higher than last week as foreigners continued to support equity markets for the 29 th consecutive week. Markets in the week ahead are likely to look for cues from the Inland Revenue Bill which is expected to be passed by Parliament next Friday (Aug 25 th ). June Quarter Earnings Mixed Corporate earnings over the June 17 quarter have been mixed, with ~54% of the 214 companies that have reported thus far recording Y-o- Y gains. Earnings of the approx. 75% of corporates who have reported so far has totaled LKR 36Bn compared to the LKR 5Bn reported by all corporates in June 16 and relative to LKR76Bn reported (by total market) in the March 17 quarter. Compared to last year (June 16) when ~76% of the market reported total earnings of LKR4Bn, the June 17 results of the 75% of corporates who have reported so far has fallen marginally to LKR36Bn reflecting the pressures on the economy from the drought and flood impact earlier this year. Sri Lanka s new Inland Revenue bill meanwhile is to be presented next week and is expected to be passed by end-week 1, with the Finance Ministry adding that many of the concerns raised by both the private sector and all the concerns raised by the Supreme court having been addressed. The Finance Ministry also announced the removal of the 1% telecom data levy, while revising import levies on vehicles such as motorcycles, single cabs and mini trucks, adding that these measures along with several credit schemes targeting SMEs and exporters were aimed at promoting job growth and entrepreneurship 2. Notes: 1. Source- LBO; 2. Source: Daily FT, LBO 4

5 Exports /Imports (USD Mn) Total Arrivals T- Bill (6M ) Rate (%) Rs. Per kilo(unweighted) Rs /USD CCPI ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Economic Snapshot Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Interest Rates Prime Lending Rate Ave. Wtd. Deposit Rates Ave. Wtd. Fixed Dep. Rates CCPI Inflation Y-o-Y % (Base 213) GDP Growth (Base 21) 9.1% 3.4% 4.9% 4.8% 4.4% Source Central Bank Exchange Rate, Rs. vs. US$ Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Inflation (CCPI-N) YoY% May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 6 Month T-Bill Yield Tea s Jul-13 Jul-14 Jul-15 Jul-16 Jul Jul-14 Apr-15 Jan-16 Oct-16 Jul-17 Source: Sri Lanka Tea Board Export & Trade Balance Trends in Tourist Arrivals Mar-13Nov-13 Jul-14 Mar-15Nov-15 Jul-16 Mar Exports (LHS) Imports (LHS) Trade Balance (RHS) Trade Balance (USD Mn) 21, 168, 126, 84, 42, 8.% 64.% 48.% 32.% 16.%.% -16.% Jun-14 Mar-15 Dec-15 Sep-16 Jun-17 Source: Sri Lanka Tourism Development Authority Y-o-Y Growth 6

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