ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES

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1 (Turnover LKR Bn) ASPI ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Weekly Market Review 16 Mar 2018 ASPI Records Largest Weekly Loss Since Jan 18 Manufacturing & Service Activity Expands in Feb ASPI v 0.64% S&P SL20 v 0.50% The Bourse ended on a negative note Cont. P2 Indices vs. Turnover (12 th Mar 16 th Mar) 6,580 6,560 6,540 6,520 6,500 ASPI S&P SL20 3,700 3,680 3,660 3,640 3,620 S&P SL20 Foreign Investors Closed the Week in... Cont. P3 6, Mar13-Mar14-Mar15-Mar16-Mar 3,600 Equity markets were buffeted by both dampened Cont. P5 Economic Snapshot P Mar 13-Mar 14-Mar 15-Mar 16-Mar KEY STATISTICS Week ending 16-Mar 09-Mar +/- ASPI 6, , % S&P SL20 3, , % Banking & Finance 16, , % Food & Beverage 23, , % Diversified 1, , % Hotel & Travel 2, , % Plantations % Manufacturing 3, , % Turnover (LKR Bn) % Foreign Buying (LKR Mn) 2, , % Foreign Selling (LKR Mn) 1, , % Daily Average Turnover (LKR Bn) % Daily Average Foreign Buying (LKR Mn) % Daily Average Foreign Selling (LKR Mn) % TOP 10 GAINERS TOP 10 LOSERS Code Opening Closing WoW % Change PC PHARMA PCP N % MULLERS MULLN % S M B LEASING SEMBN % CDB CDB N % C T LAND CTLDN % AMANA TAKAFUL ATL N % CITRUS WASKADUWA CITWN % EDEN HOTEL LANKA EDENN % NAMUNUKULA NAMUN % A.SPEN.HOT.HOLD. AHUNN % Code Opening Closing WoW % Change CEYLON PRINTERS CPRTN % EAST WEST EASTN % HOTEL SIGIRIYA HSIGN % CEYLON BEVERAGE BREWN % RENUKA FOODS COCON % YORK ARCADE YORKN % AGALAWATTE AGALN % TALAWAKELLE TPL N % TESS AGRO TESSN % TESS AGRO[NV] TESSX % 1

2 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review Indices The Bourse ended on a negative note this week as the ASPI decreased by points (or -0.64%) to close at 6, points, while the S&P SL20 Index also decreased by points (or -0.50%) to close at points. Turnover & Market Capitalization HNB was the highest contributor to the week s turnover value, contributing LKR1.80Bn or 28.83% of total turnover value. JKH followed suit, accounting for 17.48% of turnover (value of LKR1.09Bn) while Commercial Bank contributed LKR0.40Bn to account for 6.46% of the week s turnover. Total turnover value amounted to LKR6.25Bn (cf. last week s value of LKR3.71Bn), while daily average turnover value amounted to LKR1.25Bn (+68.84% W-o-W) compared to last week s average of LKR 0.74Bn. Market capitalization meanwhile, decreased by 0.64% W-o-W (or LKR 9.99Bn) to LKR 3, Bn cf. LKR 3,058.78Bn last week. Liquidity (in Value Terms) The Banking, Finance & Insurance Sector was the highest contributor to the week s total turnover value, accounting for 45.77% (or LKR 2.86Bn) of market turnover. Sector turnover was driven primarily by HNB, Commercial Bank & Sampath Bank which accounted for 81.24% of the sector s total turnover. The Diversified Sector meanwhile accounted for 31.51% (or LKR 1.97Bn) of the total turnover value with turnover driven primarily by JKH, Melstacorp & Hemas Holdings which accounted for 86.70% of the sector turnover. The Beverage, Food & Tobacco Sector was also amongst the top sectorial contributors, contributing 6.91% (or LKR 0.43Bn) to the market driven by Lion Brewery & Nestle which accounted for 89.43% of the sector turnover. Liquidity (in Volume Terms) The Banks, Finance & Insurance sector dominated the market in terms of share volume, accounting for 62.88% (or Mn shares) of total volume, with a value contribution of LKR 2.86Bn. The Diversified Sector followed suit, adding 12.83% to total turnover volume as 33.68Mn shares were exchanged. The sector s volume accounted for LKR1.97Bn of total market turnover value. The Hotel & Travel Sector meanwhile, contributed 15.35Mn shares (or 5.85%), amounting to LKR0.10Bn. Top Gainers & Losers PC Pharma was the week s highest price gainer; increasing 100.0% W-o-W from LKR 0.20 to LKR Mullers gained 22.2% W-o-W to close at LKR1.10. SMB Leasing (+16.7% W-o-W) and CDB (+15.1% W-o-W) were also amongst the gainers. Ceylon Printers was the week s highest price loser, declining 18.3% W-o-W to close at LKR58.10 while East West (-16.2% W-o-W), Hotel Sigiriya (-12.8% W-o-W), Ceylon Beverage Holdings (-11.6% W-o-W) were also amongst the top losers over the week. TOP 10 TURNOVERS Code Opening Closing Value (Rs. Mn) HNB HNB N , JKH JKH N , COMMERCIAL BANK COMBN MELSTACORP MELSN HEMAS HOLDINGS HHL N EAST WEST EASTN LION BREWERY LIONN DIALOG DIALN NESTLE NESTN SAMPATH SAMPN

3 LKR. Mn LKR. Mn ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review (Cont d) ELPITIYA COM.CREDIT SWARNAMAHAL FIN LAUGFS GAS LANKEM DEV. HEMAS HOLDINGS MALWATTE[X.0000] NAT. DEV. BANK Net Foreign Purchases (09 Mar-16 Mar) HNB* JKH* Volume Change ('000s) Net Foreign Sales (09 Mar-16 Mar) Volume Change ('000s) (650) (520) (390) (260) (130) - TOKYO CEMENT[X.0000] ROYAL CERAMIC MARAWILA RESORTS ACCESS ENG SL EAST WEST CEYLON TEA BRKRS BROWNS INVSTMNTS TEEJAY LANKA COMMERCIAL BANK* DIALOG* *Volume change of JKH (5.5Mn shares),hnb(2.7mn shares),dialog Axiata(13.5Mn shares) & Commercial Bank(2.0Mn shares) from 9 th Mar - 16 th Mar not displayed. Foreign investors closed the week in a net buying position with total net inflows amounting to LKR 1.01Bn relative to last week s total net inflow of LKR 0.19Bn ( % W-o-W). Total foreign purchases increased by 86.27% W-o-W to LKR 2.95Bn from last week s value of LKR 1.58Bn, while total foreign sales amounted to LKR 1.93Bn relative to LKR 1.39Bn recorded last week (+39.18% W-o-W). In terms of volume JKH & HNB led foreign purchases while Dialog & Commercial Bank Finance led foreign sales. In terms of value JKH & HNB led foreign purchases while Commercial Bank & Dialog led foreign sales. Net Foreign Purchases (By Transaction Value) Foreign Holding (%) Net Change Value* 16/03/18 09/03/18 (LKR. Mn) JKH 58.73% 58.34% 5,485, HNB 35.38% 34.68% 2,748, NAT. DEV. BANK 14.56% 14.56% 872, HEMAS HOLDINGS 31.66% 31.62% 207, LAUGFS GAS 0.24% 0.20% 113, HNB[X.0000] 46.54% 46.52% 21, CDB 0.20% 0.10% 45, COM.CREDIT 38.10% 38.07% 77, MALWATTE[X.0000] 5.17% 3.55% 326, COMMERCIAL BANK[X.0000] 25.87% 25.84% 20, Net Foreign Sales (By Transaction Value) Foreign Holding (%) Value* Net Change 16/03/18 09/03/18 (LKR. Mn) COMMERCIAL BANK 34.78% 35.00% (2,049,813) (278.36) DIALOG 94.36% 94.53% (13,549,914) (182.92) NESTLE 95.61% 95.64% (17,481) (30.24) TEEJAY LANKA 46.36% 46.45% (627,951) (20.41) SAMPATH 21.74% 21.77% (48,811) (14.84) ROYAL CERAMIC 11.32% 11.43% (123,587) (13.97) HAYLEYS 3.99% 4.04% (37,535) (7.52) TOKYO CEMENT[X.0000] 43.60% 43.68% (111,552) (5.25) EAST WEST 16.35% 16.52% (229,930) (4.51) CHEVRON 21.61% 21.63% (40,301) (4.43) 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. 1,500 Foreign Purchases Vs. Sales Foreign Purchases Foreign Sales 1,100 Week Ending Net Position of Foreign Holdings 1, Mar 13-Mar 14-Mar 15-Mar 16-Mar Feb 02-Mar 09-Mar 16-Mar Source: Colombo Stock Exchange 3

4 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Announcements for the Week Dividend Announcements DPS (Rs.) Type XD Date TOKYO CEMENT(V & NV) 1.25 Interim SANASA DEVELOPMENT 2.50 Final To be notified DIESEL & MOTOR ENGINEERING Interim SIGIRIYA VILLAGE 4.00 Interim WATAWALA PLANTATIONS 0.75 Interim SINGER FINANCE 0.97 Interim HATTON PLANTATIONS 0.50 Interim MULLER AND PHIPPS 0.05 Interim MALWATTE VALLEY 0.12 Interim ALUMEX PLC 0.55 Interim VIDULLANKA PLC 0.10 Interim KEGALLE PLANTATIONS 7.50 Interim NAMUNUKULA PLANTATIONS 14.0 Interim ROYAL CERAMICS 5.00 Interim LAXAPANA BATTERIES 0.77 Interim SINGER SRI LANKA PLC 2.20 Interim Proportion Type XD Date SANASA DEVELOPMENT 1:35 Scrip To be notified 4

5 ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Point of View Equity markets were buffeted by both dampened sentiment following last week s communal tensions and global geo-political headwinds, causing the broad-share ASPI to pare down ~42 points W-o-W, to record its largest weekly loss since mid-jan. Retail investors opted to remain on the sidelines yet again this week, as the state of emergency declared last week failed to be lifted after the original 10-day lapse and amid discussions to extend it further. Global financial market volatility meanwhile heightened over the week due to rising concerns over trade tensions following the US s tariffs on Steel & Aluminum imports, the worsening diplomatic tension between Britain and Russia and ongoing turmoil within the US political landscape. Despite the 0.64% W-o-W decline on the main share Index, daily average turnover levels on the Colombo Bourse rose 69% W-o-W to average Rs.1.25Bn as Local Institutional and HNI remained active in the market (59% of crossings cf. 43% last week) and foreign investor appetite for domestic equities made a strong rebound. Local Institutional and HNI investors made a stronger comeback in March relative to Feb when average participation levels fell to 24% cf. the 61% in Jan and 59% so far in March. Interest in blue-chips dominated crossings turnover with HNB accounting for 47% of total crossings for the week, while JKH accounted for 22% of crossings. Meanwhile, relative to last week when Foreign investors recorded the lowest net buying for this year (Rs. 193Mn), Foreigners pumped in Rs 1.0Bn to domestic equities this week amid strong buying interest in counters such as JKH and HNB. Markets in the week ahead are likely to look for directional cues from both domestic political developments and the US Fed s interest rate decision next week. Manufacturing & Service Activity Expands in Feb A leading indicator of economic activity in the Manufacturing and Services Sectors, the SL Purchasing Managers Index in February indicated expansion in both Manufacturing and Service activities with a reading over the neutral 50 index point level. Manufacturing Sector PMI rose to 55.6 index points (cf in Jan 18) as Manufacturing activities expanded at a higher rate in Feb compared to Jan following a seasonal slowdown. While there was a notable expansion in the New Orders & Production sub-indices, all sub-indices of the PMI recorded values above the neutral 50 threshold signaling an overall expansion in manufacturing activities. Moreover, the expectation for activities indicates an improvement for the next three months. Services sector activities also gathered momentum over Feb (58.4 vs index points in Jan), supported by New Businesses, Business Activity, Employment and Expectations for Activity. Business activity in Financial Services, IT programming, and Transportation of Goods & Warehousing rose notably over the month while employment increased in Feb cf. to the decline observed in Jan. Meanwhile, in a reversal of the dominant trend over the last 2 months, Backlogs of Work declined in Feb 18 while optimism on the three-month business outlook strengthened modestly. In its latest Mission statement meanwhile, the IMF noted that Sri Lanka s economic recovery is set to continue with the economy gradually normalizing post the weather-related shocks in The IMF noted that GDP growth is estimated to rise to 4.4% in 2018 while Inflation is projected to revert to around 5% by end-2018, as food prices stabilize. 5

6 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 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Interest Rates Prime Lending Rate Ave. Wtd. Deposit Rates Ave. Wtd. Fixed Dep. Rates CCPI Inflation Y-o-Y % (Base 2013) GDP Growth (Base 2010) 9.1% 3.4% 4.9% 4.8% 4.4% Source Central Bank Exchange Rate, Rs. vs. US$ Inflation (CCPI-N) YoY% Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 6 Month T-Bill Yield Tea s Feb-15 Nov-15 Aug-16 May-17 Feb Mar-15 Dec-15 Sep-16 Jun-17 Mar-18 Source: Sri Lanka Tea Board Export & Trade Balance Trends in Tourist Arrivals Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Exports (LHS) Imports (LHS) Trade Balance (RHS) Trade Balance (USD Mn) 210, , ,000 84,000 42,000 80% 64% 48% 32% 16% 0% 0-16% Jan-15 Oct-15 Jul-16 Apr-17 Jan-18 Source: Sri Lanka Tourism Development Authority Y-o-Y Growth 6

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