ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES. Markets Hit ~4 Month Low IMF Estimates Gradual Recovery in 2017 GDP. ASPI v 1.14% S&P SL20 v 1.

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1 (Turnover LKR Bn) ASPI ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Markets Hit ~4 Month Low IMF Estimates Gradual Recovery in 217 GDP Indices vs. Turnover (8 th Aug 11 th Aug) ASPI v 1.14% S&P SL2 v 1.59% The Bourse continued to lose Cont. P2 Foreign Investors Closed the Week in... Cont. P3 Negative sentiment continued Cont. P5 Economic Snapshot P6 KEY STATISTICS 6,55 6,53 6,51 6,49 6,47 6, ASPI S&P SL2 8-Aug 9-Aug 1-Aug 11-Aug 8-Aug 9-Aug 1-Aug 11-Aug 3,8 3,78 3,76 3,74 3,72 3,7 S&P SL2 Week ending 11-Aug 4-Aug +/- ASPI 6, , % S&P SL2 3, , % Banking & Finance 16, , % Food & Beverage 22, , % Diversified 1, , % Hotel & Travel 2, , % Plantations % Manufacturing 4, , % Turnover (LKR Bn) % Foreign Buying (LKR Mn) , % 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 LANKA CERAMIC CERAN % MADULSIMA MADUN % BALANGODA BALAN % UDAPUSSELLAWA UDPL % S M B LEASING SEMBN % MALWATTE MAL N % RADIANT GEMS RGEM % KOTAGALA KOTAN % TANGERINE TANGN % LANKEM CEYLON LCEYN % Code Opening Closing WoW % Change PC HOUSE PCH N % PC PHARMA PCP N % ADAM CAPITAL PCHHN % ADAM INVESTMENTS AINVN % BLUE DIAMONDS[NV] BLUEX % BERUWALA RESORTS BERUN % AMANA TAKAFUL ATL N % ROYAL PALMS RPBHN % ABANS FINANCIAL AFSLN % CENTRAL IND. CINDN % 1

2 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review Indices The Bourse continued to lose grounds further as the ASPI decreased by points (or 1.14%) to close at 6, points, while the S&P SL2 Index decreased by 6.3 points (or 1.59%) to close at 3, points. Turnover & Market Capitalization JKH was the highest contributor to the week s turnover value, contributing LKR.73Bn or 4.54% of total turnover value. Chevron Lubricants followed suit, accounting for 9.85% of turnover (value of LKR.18Bn) while Tokyo Cement contributed LKR.12Bn to account for 6.52% of the week s turnover. Total turnover value amounted to LKR 1.8Bn (cf. last week s value of LKR 3.49Bn), while daily average turnover value amounted to LKR.45Bn (-35.59% W-o-W) compared to last week s average of LKR.7Bn. Market capitalization meanwhile, decreased by 1.14% W-o-W (or LKR 33.9Bn) to LKR 2,944.8Bn cf. LKR 2,978.7Bn last week. Liquidity (in Value Terms) The Diversified Sector was the highest contributor to the week s total turnover value, accounting for 45.14% (or LKR.81Bn) of market turnover. Sector turnover was driven primarily by JKH & Hemas Holdings which accounted for 93.76% of the sector s total turnover. The Manufacturing Sector meanwhile accounted for 26.47% (or LKR.48Bn) of the total turnover value with turnover driven primarily by Chevron, Tokyo Cement & Piramal Glass which accounted for 77.81% of the sector turnover. The Banking, Finance & Insurance Sector was also amongst the top sectorial contributors, contributing 15.% (or LKR.27Bn) to the market driven by Sampath Bank, Commercial Bank & HNB which accounted for 49.28% of the sector turnover. Liquidity (in Volume Terms) The Manufacturing Sector dominated the market in terms of share volume, accounting for 28.58% (or 18.Mn shares) of total volume, with a value contribution of LKR.48Bn. The Diversified sector followed suit, adding 19.52% to total turnover volume as 12.29Mn shares were exchanged. The sector s volume accounted for LKR.81Bn of total market turnover value. The Banking, Finance & Insurance Sector meanwhile, contributed 1.7Mn shares (or 16.99%), amounting to LKR.27Bn. Top Gainers & Losers Lanka Ceramic was the week s highest price gainer; increasing 3.6% W-o-W from LKR to LKR Madulsima gained 21.6% W-o-W to close at LKR 8.8 while Balangoda Plantations gained 2.% W-o-W to close at LKR Udapussellawa (+16.1% W-o-W) and SMB Leasing (+14.3% W-o-W) were also amongst the gainers. PC House and PC Pharma were week s highest price losers, declining 5.% W-o-W to close at LKR.2 each. Adam Capital (-2.% W-o-W) & Adam Investments (-2.% W-o-W) were also amongst the top losers over the week. TOP 1 TURNOVERS Code Opening Closing Value (Rs. Mn) JKH JKH N CHEVRON LLUBN TOKYO CEMENT TKYON PIRAMAL GLASS GLASN SAMPATH SAMPN COMMERCIAL BANK COMBN HEMAS HOLDINGS HHL N NESTLE NESTN HNB HNB N COLD STORES CCS N

3 LKR. Mn LKR. Mn ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review (Cont d) Net Foreign Purchases (4 Aug-11 Aug) Net Foreign Sales (4 Aug-11 Aug) SIERRA CABL FIRST CAPITAL HEMAS HOLDINGS TEEJAY LANKA ACCESS ENG SL RICHARD PIERIS Volume Change ('s) Volume Change ('s) KEELLS HOTELS ODEL PLC ELPITIYA PEOPLES LEASING ALUMEX PLC JANASHAKTHI INS. R I L PROPERTY MARAWILA RESORTS JKH TOKYO CEMENT PIRAMAL GLASS NAWALOKA CHEVRON BERUWALA RESORTS - 5 1, 1,5 2, (1,4) (1,5) (7) (35) - Foreign investors closed the week in a net buying position with total net inflows amounting to LKR.2Bn relative to last week s total net inflow of LKR.88Bn (-77.35% W-o-W). Total foreign purchases decreased by 52.95% W-o-W to LKR.93Bn from last week s value of LKR 1.97Bn, while total foreign sales amounted to LKR.73Bn relative to LKR 1.1Bn recorded last week (-33.46% W-o-W). In terms of volume, Piramal Glass & Tokyo Cement led foreign purchases while Beruwala Resorts & Chevron led foreign sales. In terms of value, JKH and Tokyo Cement led foreign purchases while Chevron and Nestle led foreign sales. Net Foreign Purchases (By Transaction Value) Foreign Holding (%) Value* Net Change 11/8/17 4/8/17 (LKR. Mn) JKH 56.81% 56.76% 753, TOKYO CEMENT 24.79% 24.34% 1,26, COLD STORES 1.7% 1.4% 26, HEMAS HOLDINGS 31.7% 31.68% 134, COMMERCIAL BANK 34.31% 34.3% 92, PIRAMAL GLASS 64.% 63.8% 1,98, ROYAL CERAMIC 11.84% 11.76% 9, HNB 28.5% 28.4% 3,5 7.5 CEYLON TOBACCO 97.42% 97.42% 7, SAMPATH 19.3% 19.1% 22, Net Foreign Sales (By Transaction Value) Foreign Holding (%) Value* Net Change 11/8/17 4/8/17 (LKR. Mn) CHEVRON 23.4% 23.71% (75,732) (1.67) NESTLE 95.94% 95.96% (11,66) (21.) ALUMEX PLC.5%.54% (113,776) (2.56) JANASHAKTHI INS. 1.5% 1.8% (13,) (2.4) ELPITIYA 5.2% 5.28% (63,571) (1.87) SWISSTEK 4.71% 4.81% (27,) (1.85) NAWALOKA.25%.27% (348,2) (1.6) PEOPLES LEASING 6.92% 6.93% (81,83) (1.4) BERUWALA RESORTS 1.25% 1.48% (1,338,496) (1.7) ODEL PLC.9%.11% (4,3) (.99) 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. 6 Foreign Purchases Vs. Sales Foreign Purchases Foreign Sales 1,5 Week Ending Net Position of Foreign Holdings 48 1, Aug 9-Aug 1-Aug 11-Aug 21-Jul 28-Jul 4-Aug 11-Aug Source: Colombo Stock Exchange 3

4 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Announcements for the Week Dividend Announcements DPS (Rs.) Type XD Date SOFTLOGIC FINANCE PLC Rs Interim Dividend 17.Aug.217 KELSEY DEVELOPMENTS PLC Rs. 1. Final Dividend 8.Sep.217 RENUKA AGRI FOODS PLC Rs..12 Final Dividend 18.Sep.217 SERENDIB LAND PLC Rs. 25. First & Final Dividend 27.Sep.217 C M HOLDINGS PLC Rs. 6. First & Final Dividend 21.Sep.217 DILMAH CEYLON TEA COMPANY PLC Rs. 15. First & Final Dividend 15.Sep.217 Point of View Negative sentiment continued to cloud domestic equities, with equity markets losing steam for the 4 th consecutive week as the benchmark ASPI lost ~74 points WoW (cf. ~98 point decline the previous week and the ~3 point loss the week prior). Institutional, HNI and Foreign interest which had been supporting Index gains over Q2 17 also waned this week, with crossings in three stocks (JKH, GLAS & NEST) accounting for just 3% of total market turnover. Heavy trading in JKH (crossings in JKH accounted for ~82% of total crossings and 25% of total market turnover) failed to stimulate markets and average turnover levels for the week consequently fell to LKR.45Bn, ~36% lower than last week s average of LKR.7Bn. Foreign inflows to the Bourse also slowed this week, with net foreign flows falling ~77% over the week to record a paltry LKR198Mn. Compared to the 11.3% gain on the Index in Q2 17, markets have fallen ~3.8% in the first half of Q3 17, halving the YTD gain on the Index to 4.8% cf. the gain of 8.9% in the H1 17. Markets in the week ahead are likely to continue to take cues from the incoming corporate earnings releases while some pressure from profit taking is also likely. IMF Estimates Gradual Recovery in 217 GDP In its Country report released on Thursday, the IMF forecasted a gradual recovery in 217 GDP (to 4.7%) citing continued momentum (since H2 16) in the Construction and Service sectors. The Group noted that headline inflation levels are likely to remain over 5% while the current account deficit is expected to widen slightly to 2.5% (cf. 2.4% in 216) amid drought-driven increases in oil and food imports, and higher capital goods imports 1. The IMF noted though, that medium term growth is likely to reach 5.2%, in line with the country s potential GDP. The IMF highlighted however, that significant external and domestic downside risks exist, with further delays in revenue mobilization and SOE reforms, as well as pressures from the GoSL s large gross financing needs remaining the main domestic risks 1. The possible resumption of capital outflows due to further strengthening of the USD, higher rates or a weaker external position meanwhile pose significant external downside risks. The Group further noted that risks to public debt sustainability continue to remain high with public debt expected to rise marginally to 85% of GDP in 217 due to the continued large fiscal deficit and exchange rate depreciation. Source: IMF 1. IMF Country Report No. 17/253 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$ Inflation (CCPI-N) YoY% Jul-13 Jul-14 Jul-15 Jul-16 Jul Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 6 Month T-Bill Yield Tea s Jun-13 Jan-14 Aug-14 Mar-15 Oct-15 Jul-16 Feb 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 5

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