(Turnover LKR Bn) ASPI ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Sri Lankan Equities hit a 2-year low 2Q 18 GDP growth rises to 3.7%. ASPI 2.10% S&P SL20 3.92% The Bourse ended the week Cont. P2 Foreign investors closed the week... Cont. P3 Sri Lankan Equities hit a 2-year. Cont. P4 Economic Snapshot P5 Indices vs. Turnover (17 th Sep 21 st Sep) 6,050 6,020 5,990 5,960 5,930 5,900 1.00 0.80 0.60 0.40 0.20 0.00 ASPI S&P SL20 17-Sep 18-Sep 19-Sep 20-Sep 21-Sep 17-Sep 18-Sep 19-Sep 20-Sep 21-Sep 3,400 3,320 3,240 3,160 3,080 3,000 S&P SL20 KEY STATISTICS Week ending 21-Sep 14-Sep +/- ASPI 5,904.90 6,031.26-2.10% S&P SL20 3,016.76 3,139.77-3.92% Banking & Finance 15,621.15 16,136.84-3.20% Food & Beverage 24,615.57 24,857.80-0.97% Diversified 1,466.50 1,496.86-2.03% Hotel & Travel 2,651.64 2,668.55-0.63% Plantations 740.70 734.33 0.87% Manufacturing 2,791.80 2,884.97-3.23% Turnover (LKR Bn) 3.50 4.40-20.33% Foreign Buying (LKR Mn) 1,445.56 1,004.14 43.96% Foreign Selling (LKR Mn) 2,188.62 1,568.44 39.54% Daily Average Turnover (LKR Bn) 0.70 0.88-20.33% Daily Average Foreign Buying (LKR Mn) 289.11 200.83 43.96% Daily Average Foreign Selling (LKR Mn) 437.72 313.69 39.54% TOP 10 GAINERS TOP 10 LOSERS Code Opening Closing WoW % Change ADAM CAPITAL PCHHN 0.4 0.5 25.0% BIMPUTH FINANCE BLI N 26.6 33.0 24.1% SWADESHI SWADN 12812.5 14991.1 17.0% BERUWALA RESORTS BERUN 0.6 0.7 16.7% CHEMANEX CHMXN 47.0 54.8 16.6% RENUKA FOODS COCON 13.1 14.9 13.7% LAKE HOUSE PRIN. LPRTN 130.0 147.0 13.1% SUNSHINE HOLDING SUN N 49.0 54.6 11.4% GESTETNER GESTN 99.0 110.0 11.1% PEOPLE'S MERCH PMB N 11.0 12.0 9.1% Code Opening Closing WoW % Change ADAM INVESTMENTS AINVN 0.2 0.1-50.0% TESS AGRO TESSN 0.6 0.4-33.3% BLUE DIAMONDS[NV] BLUEX 0.3 0.2-33.3% GOOD HOPE GOODN 1172.0 902.6-23.0% TESS AGRO[NV] TESSX 0.5 0.4-20.0% RENUKA HOTELS RCHN 50.0 41.0-18.0% MTD WALKERS KAPIN 11.2 9.6-14.3% LUCKY LANKA[NV] LLMPX 0.7 0.6-14.3% LANKA TILES TILEN 94.7 81.4-14.0% ALUFAB ALUFN 19.6 16.9-13.8% 1
ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review Indices The Bourse ended the week on a negative note as the ASPI increased by 126.36 points (or -2.10%) to close at 5,904.90 points, while the S&P SL20 Index also decreased by 123.01 points (or -3.92%) to close at 3,016.76 points. Turnover & Market Capitalization JKH was the highest contributor to the week s turnover value, contributing LKR 1.02Bn or 29.10% of total turnover value. Sampath Bank followed suit, accounting for 11.27% of turnover (value of LKR 0.39Bn) while Melstacorp contributed LKR 0.39Bn to account for 11.09% of the week s turnover. Total turnover value amounted to LKR 3.50Bn (cf. last week s value of LKR 4.40Bn), while daily average turnover value amounted to LKR 0.70Bn (-20.33% W-o-W) compared to last week s average of LKR 0.88Bn. Market capitalization meanwhile, decreased by 2.10% W-o-W (or LKR 59.34Bn) to LKR2,773.00Bn cf. LKR2,832.34Bn last week. Liquidity (in Value Terms) The Diversified sector was the highest contributor to the week s total turnover value, accounting for 41.90% (or LKR 1.47Bn) of market turnover. Sector turnover was driven primarily by JKH & Melstacorp which accounted for 95.93% of the sector s total turnover. The Banks, Finance & Insurance sector meanwhile accounted for 35.55% (or LKR 1.25Bn) of the total turnover value, with turnover driven primarily by Sampath Bank, Commercial Bank, Union Assurance & Seylan Bank which accounted for 80.46% of the sector turnover. The Manufacturing sector was also amongst the top sectorial contributors, contributing 10.81% (or LKR 0.38Bn) to the market driven by Chevron Lubricants which accounted for 86.44% of the sector turnover. Liquidity (in Volume Terms) The Banks,Finance & Insurance sector dominated the market in terms of share volume, accounting for 44.78% (or 45.85Mn shares) of total volume, with a value contribution of LKR 1.25Bn. The Diversified sector followed suit, adding 21.92% to total turnover volume as 22.44Mn shares were exchanged. The sector s volume accounted for LKR 1.47Bn of total market turnover value. The Manufacturing sector meanwhile, contributed 9.39Mn shares (or 9.17%), amounting to LKR 0.38Bn. Top Gainers & Losers Adam Capital was the week s highest price gainer; increasing 25.0% W-o-W from LKR0.40 to LKR0.50 while Bimputh Finance(+24.1% W-o-W), Swadeshi(+17.0% W-o-W) and Beruwala Resorts (+16.7% W-o-W) were also amongst the top gainers. Adam Investments was the week s highest price loser; declining 50.0% W-o-W to close at LKR0.10 while Tess Agro (-33.3% W-o-W), Blue Diamonds[NV] (-33.3% W-o-W) and Good Hope(-23.0% W-o-W) were also amongst the top losers over the week. TOP 10 TURNOVERS Code Opening Closing Value (Rs. Mn) JKH JKH N 133.7 129.5 1,019.68 SAMPATH SAMPN 265.0 238.6 394.91 MELSTACORP MELSN 50.0 50.0 388.69 CHEVRON LLUBN 71.7 68.0 327.50 COMMERCIAL BANK COMBN 119.8 114.1 287.73 HNB HNB N 222.4 214.0 126.56 UNION ASSURANCE UAL N 321.0 320.0 112.61 SEYLAN BANK SEYBN 71.0 67.8 80.55 LION BREWERY LIONN 645.0 639.0 65.65 DISTILLERIES DISTN 17.9 16.6 57.46 2
LKR. Mn LKR. Mn ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Market Review (Cont d) EXPOLANKA JANASHAKTHI INS. Net Foreign Purchases (14 Sep-21 Sep) Volume Change ('000s) ELPITIYA LION BREWERY HNB[X.0000] NATIONS TRUST UNION ASSURANCE LANKEM DEV. RICHARD PIERIS CHEVRON* - 70 140 210 280 350 Net Foreign Sales (14 Sep-21 Sep) Volume Change ('000s) VALLIBEL HEMAS HOLDINGS HNB SIERRA CABL SAMPATH BERUWALA RESORTS COMMERCIAL BANK DIALOG DISTILLERIES JKH (5,500) (4,400) (3,300) (2,200) (1,100) - *Volume change of Chevron Lubricants(2.58Mn shares)from 14 th Sep 21 st Sep not displayed. Foreign investors closed the week in a net selling position with total net outflow amounting to LKR 0.74Bn relative to last week s total net outflow of LKR 0.56Bn (-31.7% W-o-W). Total foreign purchases increased by 43.96% W-o-W to LKR 1.45Bn from last week s value of LKR 1.00Bn, while total foreign sales amounted to LKR 2.19Bn relative to LKR 1.57Bn recorded last week (+39.5% W-o-W). In terms of volume, Chevron & Richard Pieris led foreign purchases while JKH & Distilleries led foreign sales. In terms of value, Chevron & Union Assurance led foreign purchases while JKH & Commercial Bank led foreign sales. Net Foreign Purchases (By Transaction Value) Foreign Holding (%) Value* Net Change 21/09/18 14/09/18 (LKR. Mn) CHEVRON 22.08% 21.01% 2,581,315 175.53 UNION ASSURANCE 0.74% 0.31% 254,719 81.51 LION BREWERY 37.52% 37.40% 93,997 60.06 HNB[X.0000] 47.12% 46.99% 124,490 20.40 NATIONS TRUST 24.49% 24.44% 129,902 11.44 RICHARD PIERIS 73.92% 73.90% 321,560 3.31 COMMERCIAL BANK[X.0000] 24.31% 24.27% 24,046 2.21 HAYCARB 6.00% 5.94% 17,254 2.07 ELPITIYA 1.48% 1.36% 86,775 1.65 NAT. DEV. BANK 14.16% 14.15% 15,517 1.62 Net Foreign Sales (By Transaction Value) Foreign Holding (%) Value* Net Change 21/09/18 14/09/18 (LKR. Mn) JKH 55.66% 56.05% (5,423,638) (702.36) COMMERCIAL BANK 33.73% 33.85% (1,081,646) (123.42) SAMPATH 22.39% 22.53% (378,502) (90.31) HNB 35.97% 36.03% (226,619) (48.50) DISTILLERIES 1.75% 1.81% (2,801,032) (46.50) NESTLE 95.47% 95.50% (20,352) (33.58) DIALOG 94.33% 94.34% (1,560,514) (18.73) HEMAS HOLDINGS 30.32% 30.34% (131,181) (11.69) ROYAL CERAMIC 11.34% 11.36% (29,398) (2.35) UNITED MOTORS 5.74% 5.77% (26,800) (2.29) Note: *Value based on closing price and not on actual traded price 1,000 800 Foreign Purchases Vs. Sales Foreign Purchases Foreign Sales 100-100 Week Ending Net Position of Foreign Holdings 600-300 400-500 200-700 0 17-Sep 18-Sep 19-Sep 20-Sep 21-Sep -900 31-Aug 07-Sep 14-Sep 21-Sep 3
ACUITY STOCKBROKERS RESEARCH SRI LANKA EQUITIES Announcements for the Week Dividend Announcements No Dividend Announcements for the Week Point of View Sri Lankan Equities hit a 2-year low as the ASPI dropped below its previous 6,000 point support level. The benchmark index continued to lose ground over the week with the ASPI dipping 126 points (highest weekly drop since Mar 2016) to end the week at 5,904.90. Heavy losses during the week (2.1% W-o-W) dragged the YTD loss on the ASPI further to ~8.0% from 5.9% last week. Despite Japanese investment bank Nomura correcting its report on the outlook for the Sri Lankan rupee, the LKR hit a new all-time low of 170.66(Selling rate) on Friday and this higher currency depreciation during the week (3.8% W-o-W) remained the major concern for both foreign and local investors. The negative sentiment surrounding the LKR depreciation was reflected in the week s activity levels, and weekly turnover during the week declined ~20.3% to Rs.3.50bn. Blue-chip JKH remained the largest contributor to the turnover with Rs.1.0Bn, while Sampath Bank and Melstacorp accounted for Rs.0.39Bn each.local HNI and Institutional investors were also less interested on equities as crossings for the week accounted for only ~32% of the weekly turnover. The foreign equity sell-off on the bourse meanwhile continued as foreign investors recorded a net outflow of Rs.743Mn cf. Rs.564Mn last week. Subsequently, the YTD foreign outflow on the Colombo bourse increased to Rs.5.9Bn (cf. Rs.5.2Bn). Markets in the week ahead are likely to confirm if the new 5900 Index level is the ASPI s new support level or not. 2Q 18 GDP growth rises to 3.7% Y-o-Y. Sri Lanka s GDP growth rose to 3.7% Y-o-Y in the 2nd quarter of 2018 (cf. 3.0% Y-o-Y in Q2 17 and 3.2% in Q1 18) which led to GDP growth of 3.6% during H1 18 cf. 3.2% in H1 17. An expansion was evident in all three sectors (Agriculture, Industry & Services) with the growth momentum created in 4Q 17 continuing on this year in the Agricultural sector (4.9% Y-o-Y in H1 18 cf. -3.8%) while Service sector growth rose to 4.8% Y-o-Y in H1 18 (cf. 3.5% Y-o-Y in H1 2017). Over this quarter, the Agricultural sector recorded the highest growth among all sectors as Growing of Rice recovered with a notable 59.3% Y-o- Y growth over the period (cf. 40.5% decline last year due to adverse weather conditions). Meanwhile, Growing of Cereal and Growing of Vegetables recorded a growth of 19.2% and 9.6% respectively during the period. In the meantime, Growing of Tea and Growing of Rubber reported substantial declines of 7.1% and 11.9% respectively. Services activities which account for ~60.5% of overall GDP was driving by Telecommunication, Financial Service Activities, and Insurance, Reinsurance & Pension Fund grew at 4.8% Q2 18. The Industrial sector grew marginally in Q2 18 (2.3% Y-o-Y growth cf. 5.6% Y-o-Y in Q2 17) as growth in Construction, Manufacture of Food, Beverages & Tobacco and Manufacture of Coke & Refined Petroleum Products was offset by contractions in Mining and Quarrying and Manufacture of Rubber & Plastic Products. The CBSL projects GDP growth to recover 4.0% - 4.5% in 2018 on the back of recovery in Agricultural sector and continued positive momentum in Services and Industrial sectors. 4
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 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Interest Rates Prime Lending Rate 11.29 11.27 11.10 11.27 11.34 11.20 11.41 11.65 Ave. Wtd. Deposit Rates 9.08 9.05 9.00 8.98 8.91 8.92 8.64 8.66 Ave. Wtd. Fixed Dep. Rates 11.54 11.45 11.41 11.38 11.23 11.26 10.82 10.81 CCPI Inflation Y-o-Y % (Base 2013) 5.8 4.5 4.2 3.8 4.0 4.4 5.4 5.9 2012 2013 2014 2015 2016 2017 Q1 18 GDP Growth (Base 2010) 9.1% 3.4% 4.9% 4.8% 4.4% 3.1% 3.2% Source Central Bank Exchange Rate, Rs. vs. US$ Inflation (CCPI-N) YoY% 170.0 162.0 154.0 146.0 138.0 130.0 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 10.0 8.0 6.0 4.0 2.0 0.0 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 6 Month T-Bill Yield Tea s 12 700 10 9 7 6 620 540 460 380 4 Sep-15 Jun-16 Mar-17 Dec-17 Sep-18 300 Sep-15 Jun-16 Mar-17 Dec-17 Sep-18 Source: Sri Lanka Tea Board Export & Trade Balance Trends in Tourist Arrivals 2000 1600 1200 800 400 0-1400 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Exports (LHS) Imports (LHS) Trade Balance (RHS) 600 200-200 -600-1000 Trade Balance (USD Mn) 250,000 200,000 150,000 100,000 50,000 80% 64% 48% 32% 16% 0% 0-16% Aug-15 May-16 Feb-17 Nov-17 Aug-18 Source: Sri Lanka Tourism Development Authority Y-o-Y Growth 5
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