Wednesday, June 26, 2013

Today 6,072.68 3,413.63 Point Change - 13.54 - 16.8 % Change -0.22 % q -0.49 % q

ASPI S&P SL 20 Index YTD Performance ASPI S&P SL 20 Index

Level 23, East Tower, World Trade Centre, Colombo 01 Tel: +94 11 727 7000, Fax: +94 11 727 7099 Email: research@equity.softlogic.lk

7.6% 10.6% 2,268.2 903.4 108.0 40.0 2,332.2 -636.8 298.2 935.0 15.4

Today's Turnover (LKR mn) Annual Average Daily Turnover (LKR mn) Volume (mn) Annual Average Daily Volume (mn) Market Capitalization (LKR bn)

JKH dims bourse

Net Foreign Inflow / (Outflow) [LKR mn] - Foreign Buying (LKR mn) - Foreign Selling (LKR mn) YTD Net Foreign Inflow / (Outflow) [LKR bn]

CSE Diary for 26.06.2013

Bourse dips despite higher number of gainers: The bourse turned out to be volatile during the day but slipped into the red led by the drastic drop in value of John Keells Holdings which at one point comprised 10% of the market cap. Bourse ended with a dip of 14 points despite having 103 gainers as against 79 losers. Strong buying in the banking sector was witnessed while turnover was on the high side with crossings registering 81% of turnover. JKH was the story of the day with heavy dips and crossings; John Keells Holdings recorded a sharp dip in value with the counter dropping LKR9.70 to close at LKR249.3 while the counter recorded 2 large crossings amounting to 3.5mn shares dealt at an even lower price of LKR247.0. Ownership of Nanda Investment and Finance changed with 84% stake acquired by LOLC together with Bangladeshs Brac. The counter recorded 8 crossings with 85mn shares changing hands at LKR9.0 Further blocks of 1.7mn, 1.7mn and 1.3mn shares changed hands on-board as well.

BFI sector generates strong investor interest: The BFI sector which has been following the market trend today witnessed strong buying interest with Commercial Bank, Nations Trust Bank, National Development Bank, Hatton National Bank, Sampath Bank and Seylan Bank [Non-Voting] entering top turnover list with most counters registering gains. Sampath Bank recorded 2 large crossings accounting for 1mn shares at LKR204.0 and LKR205.0.

Retailers on the sidelines: Retailers continued to stay on the sidelines with the view that the market would come down further. No major interest was observed except in Nanda Investments and Finance which saw a deal go through.

Statistical Look Up
Treasury Bill (%) 3 months 6 months 12 months AWPLR Excess Liquidity (LKR 'bn) Inflation (%) May-13 as at 26.06.2013 YoY Change Annual Avg Week ending 26.06.2013 8.66 9.70 10.66 12.37 -12.88

6600 6400

Index

6200
6000 5800

7.3 8.8

ASPI

Turnover LKR ('mn)

3700 3600

4,000 3,000 2,000 1,000 0

120.0 100.0 80.0 60.0 40.0 20.0 0.0

Volume ('mn)

Index

3500

3400 3300
3200

S&P SL20

Turnover

Volume

Today All Share Price Index S&P SL20 Index Turnover (LKR mn) Turnover (USD mn) Volume (mn shares) Traded Entities Market Capitalization (LKR bn) Foreign Purchases (LKR mn) Foreign Sales (LKR mn) Net Foreign Inflow (LKR mn) Market PER (X) Market PBV (X) Market Dividend Yield SECTOR INDICES Banks, Finance & Insurance Beverage, Food & Tobacco Construction & Engineering Diversified Healthcare Hotels & Travels Land & Property Manufacturing Plantation Telecom 6,072.7 3,413.6 2,268.2 17.6 108.0 230 2,332.2 298.2 935.0 -636.8 16.6 2.2 2.2 Today 13,192.1 18,950.5 2,812.8 1,948.2 658.2 3,404.4 611.2 3,046.3 779.1 157.2

Pre Day 6,086.2 3,430.4 455.4 3.5 15.2 232 2,337.4 83.5 122.2 -38.7 16.6 2.3 2.2 Pre Day 13,196.3 18,908.5 2,801.7 1,988.6 665.2 3,377.3 595.9 3,024.5 779.2 157.1

Change % -0.22% q -0.49% q 398.01% 398.01% 611.56% -0.86% -0.22% 257.02% 665.33% 1547.59% -0.06% -0.63% 0.00% % Change -0.03% 0.22% 0.40% -2.03% -1.04% 0.80% 2.57% 0.72% -0.01% 0.06% q p p q q p p p q p

Last Week 6,209.2 3,495.7 343.8 2.7 12.7 239 2,384.6 155.5 91.3 64.2 16.9 2.3 2.2 Last Week 13,515.9 19,138.4 2,885.5 2,030.6 677.3 3,502.2 616.6 3,081.4 790.5 162.5

% WoW Change -2.20% -2.35% 559.69% 559.69% 751.26% -3.77% -2.20% 91.75% 924.57% -1091.22% -1.76% -1.94% 0.00% % WoW Change -2.40% -0.98% -2.52% -4.05% -2.82% -2.79% -0.87% -1.14% -1.44% -3.24% Page | 2.

Softlogic Equity Research

High Index Calibre USD350 Mn

Company
JOHN KEELLS HOLDINGS CEYLON TOBACCO CARSON CUMBERBATCH NESTLE LANKA SRI LANKA TELECOM COMMERCIAL BANK [V] BUKIT DARAH DIALOG AXIATA HNB [V] AITKEN SPENCE DISTILLERIES LOLC CARGILLS DFCC BANK SAMPATH BANK ASIAN HOTELS & PROPERTIES

% of Mkt Cap 9.2% 7.9% 3.7% 4.5% 3.1% 3.9% 3.1% 2.9% 2.2% 2.3% 2.4% 1.2% 1.6% 1.6% 1.5% 1.3%

Volume 3,818,381 785 97 815 1,917 420,925 1 379,933 103,999 16,201 7,201 7,197 5 5,952 1,090,315 867

Turnover LKR ('000) 944,798.35 769.20 42.23 1,589.04 76.77 47,759.73 0.71 3,218.64 16,593.82 2,115.00 1,367.64 431.74 0.85 815.58 222,900.28 59.76

Turnover USD ('000) 7,331.92 5.97 0.33 12.33 0.60 370.63 0.01 24.98 128.77 16.41 10.61 3.35 0.01 6.33 1,729.77 0.46

Intraday Intraday High (LKR) Low (LKR) 259.00 990.00 450.00 1,950.00 40.50 115.00 709.00 8.60 161.00 133.00 190.50 60.10 169.90 138.00 206.90 70.00 248.00 979.50 435.00 1,940.00 39.50 113.00 709.00 8.30 159.00 129.90 188.00 59.10 169.90 137.00 202.00 68.60

Close 249.30 979.80 435.20 1,949.80 40.00 113.40 709.00 8.40 159.40 130.20 190.00 59.10 169.90 137.20 205.00 68.90

Price Gainers
Company
CHILAW FINANCE SOFTLOGIC FIN BERUWALA RESORTS EQUITY ONE PLC BLUE DIAMONDS [X]

Price Losers
Today 12.60 33.40 2.20 32.00 1.40 Change + 1.80 + 3.40 + 0.20 + 2.50 + 0.10 % Change Company 16.67% 11.33% 10.00% 8.47% 7.69%
S M B LEASING [X] HOTELS CORP. PC PHARMA RENUKA CITY HOT. HAYLEYS FIBRE

Today 0.30 17.50 3.50 270.00 28.00

Change - 0.10 - 1.50 - 0.30 - 22.60 - 1.90

% Change -25.00% -7.89% -7.89% -7.72% -6.35%

Top 05 Performers for the Day

Company
JKH NANDA FINANCE SAMPATH COMMERCIAL BANK NATIONS TRUST

Today 249.30 8.60 205.00 113.40 62.50

Pre Day 259.00 8.50 202.70 113.90 62.00

% Change -3.75% 1.18% 1.13% -0.44% 0.81%

Volume (mn) 3.82 91.21 1.09 0.42 0.42

Contribution to Total T/O 40.5% 35.2% 9.6% 2.0% 1.1%

Turnover (LKR) 944,798,348 820,659,313 222,900,284 47,759,734 26,083,897

Most Active
Company
NANDA FINANCE JKH SAMPATH FREE LANKA RICHARD PIERIS

Today 8.60 249.30 205.00 2.60 7.00

Pre Day 8.50 259.00 202.70 2.60 7.00

% Change 1.18% -3.75% 1.13% 0.00% 0.00%

Volume (mn) 91.21 3.82 1.09 0.87 0.83

Contribution to Total T/O 35.2% 40.5% 9.6% 0.1% 0.3%

Turnover (LKR) 820,659,313 944,798,348 222,900,284 2,267,873 5,835,244

Softlogic Equity Research

Page | 3.

Currency Board
Local - Indicative Rate against LKR
Currency Australia China EU India Japan Malaysia Russia Saudi Arabia Singapore Switzerland Thailand UK USA Dollar Yuan Euro Rupee Yen Ringgit Rouble Riyal Dollar Franc Baht Pound Dollar Indicative Rate 26.06.2013 119.28 20.96 168.52 2.16 1.32 40.38 3.93 34.36 101.39 137.36 4.15 198.67 128.86

Announcements
Dividends
Company Sigiriya Village Hotels PLC Colombo Investment Trust PLC York Arcade Holdings PLC 0 0 0 0 0
Company Description

DPS (LKR) 2.00 1.00 0.40 0.00 0.00 0.00 0.00 0.00
Proportion 0

XD Date 19-07-2013 29-07-2013 29-07-2013 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00

XR Date

Payment Date 30-07-2013 06-08-2013 06-08-2013 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00 00-Jan-00
Renunciation

Rights Issues / Scrip Dividend / Sub division / Capitalization

No Annoucements 0 0 0 0 0 1/0/1900 1/0/1900 1/0/1900 1/0/1900 1/0/1900 1/0/1900

Source: www.cbsl.gov.lk

Global Markets
Index AMERICA Dow Jones Industrial Average S&P 500 Index EUROPE EURO STOXX 50 Price EUR FTSE 100 Index ASIA Nikkei 225 Hong Kong Hang Seng Index
* Time is as at ET

Value 14,760.3 1,588.0 2,595.3 6,165.0 12,834.0 20,338.6

Change 100.8 14.9 51.9 63.0 -135.3 482.8

Change % 0.69% p 0.95% p 2.04% p 1.03% p -1.04% q 2.43% p

Time* 0-Jan 0-Jan 06:46 06:46 02:28 04:01

Source: www.bloomberg.com

Commodity Markets
Commodity ENERGY Crude Oil (Brent) Crude Oil (WTI) AGRICULTURE ICE Cotton #2 CBOT Wheat METALS COMEX Gold COMEX Silver COMEX Copper
* Time is as at ET

Units USD/bbl. USD/bbl. USd/lb. USd/bu. USD/t oz. USD/t oz. USd/lb.

Price 101.23 94.84 84.90 685.50 1,226.90 18.55 303.85

Change -0.03 -0.48 -0.05 0.50 -48.20 -1.00 -3.75

Change % -0.03% q -0.50% q -0.06% q 0.07% p -3.78% q -5.12% q -1.22% q

Time* 06:34 06:35 06:34 06:50 06:35 06:35 06:34

Source: www.bloomberg.com

Softlogic Equity Research

Page | 4.

CSE Announcements
CSE Media Release: Mr. Asanga Seneviratne was elected a Director of the CSE at the Annual General Meeting held on 25th June 2013 in place of Dr. Saman Kelegama. Hotel Services [SERV: LKR11.7]: The company informed the change of name of the company from Hotel Services PLC to The Kingsbury PLC.

Local News
Central Bank reduces Statutory Reserve Requirement (SRR) by 2%: Since December 2012, in response to the reasonably stable inflation prevailing in the country for a prolonged period of time, the Monetary Board has been gradually easing its monetary policy stance, with two reductions in the policy rates and the removal of the credit ceiling. In keeping with such policy, an adjustment of general lending rates has taken place, albeit rather slowly. At the same time, the Monetary Board has noted with some concern that the spread between deposit and lending rates in Sri Lanka is still considerably higher than those of regional economies. While such situation may signify a comparatively lower efficiency of financial intermediation in Sri Lanka, a further contributory factor was considered to be the comparatively higher SRR of Sri Lanka in relation to other emerging economies. Accordingly, at its meeting on 25th June 2013, the Monetary Board was of the view that a reduction of the SRR would enable the banking sector to reduce lending rates further, while also reducing the interest rate spread. Hence, the Monetary Board decided to reduce the SRR on all rupee deposit liabilities of commercial banks by 2% to 6% with effect from 1st July 2013, thereby bringing the SRR in line with several other emerging peer economies. [Source: www.cbsl.gov.lk] Sri Lanka Treasuries yield down after SRR cut: Sri Lanka's Treasuries yields fell at Wednesday's auction with the 12-month yield falling as much as 19 basis points to 10.66%, after a reserve ratio cut by the Central Bank. The debt office, which is a unit of the Central Bank said. The 6-month yield fell 10 basis points to 9.70% and the 3-month yield was flat at 8.66%. The debt office offered LKR12.0 bn in bills for rollover and accepted LKR42.4 bn in bids, made up of 627 mn in 3-months, 7.7 bn in 6-month and 34.1 bn in 12-month bills. In the secondary market a liquid 5-year bond fell to 11.22/27 levels in mid-day trading from 11.60/63 closing levels on Tuesday. [Source: www.lbo.lk] More FDIS, tax revenue critical for growth to continue: Mathai: International Monetary Fund resident representative Koshy Mathai reiterated the need to attract Foreign Direct Investment to the country in order to continue the growth path Sri Lanka has set herself with the end of the 30-year long conflict. Sri Lanka has to attract more FDIs because apart from its extolled virtues, it also brings in the new technologies and know how to the country, he said, while calling the country to focus on exports to emerging economies such as China. Speaking at the Annual General meeting of the Sri Lanka Chamber of the Pharmaceutical Industry, Mathai further noted that Sri Lanka has to reverse the current trend in exports. We have always focused on the EU and the US, but its time now to focus on emerging markets such as Chin, the ASEAN and India. Since the late 90s, exports have dropped from 30% to 17% and this trend must be reversed, he said. Mathai went on to state that despite Sri Lanka doing well to curb inflation and control its foreign reserves, the country has to focus on increasing revenue. The tax revenue relative to the GDP is 11% and that is a very low figure he said and called for the Inland Revenue Department to focus on collecting more taxes in order increase revenue. You cant starve the beast owing to discrepancies. Revenues must increase for further growth he quipped. [Source: www.dailymirror.lk] Sri Lanka's LOLC, Bangladesh's Brac buys finance firm: Sri Lanka's LOLC group [LOLC: LKR59.1] and Brac International connected to a top bank in Bangladesh have bought control of a finance company in Sri Lanka, officials said. Nanda Investments and Finance is a registered finance company founded by Sri Lanka's Mallawarachchi family. The firm's control has been sold for LKR900 mn. "It is double the book value and we Softlogic Equity Research Page | 5
5

thought this is a good deal," Anura Mallawarachchi managing director of Nanda Investments and Finance told LBO. About 84% of Nanda Investments and Finance were traded through several off-market deals on the Colombo Stock Exchange Wednesday at 9.0 rupees a share, while other small blocks were also traded. Brac International is expected to hold 56% of the firm and LOLC group 33%, an official said. [Source: www.lbo.lk] Sri Lanka unlikely to get new US waiver for Iran crude: Sri Lanka received its first waiver in June last year after cutting Iran crude imports by 23%. New waivers would be based on a gradual reduction of imports. It was unable to buy any Iran crude parcels in the second half of last year, largely because sanctions imposed on Iran by the European Union made it difficult to secure ships or insurance. Yapa said US officials told him that Sri Lanka was no longer eligible for a waiver extension because the quota wasnt used. Actually, we cant use it, Yapa said. An official at the US Embassy in Colombo said if Sri Lanka has not imported any Iran oil in the previous six months, it effectively had no more reductions to make. Officials at State-run Ceylon Petroleum Corporation have said that the sanctions defeated three attempts by Sri Lanka to buy an Iranian crude cargo in the second half of 2012. [Source: www.ft.lk] HNB raises USD49 mn long-term debt from overseas: Hatton National Bank [HNB: LKR159.4, HNB.X: LKR118.0] recently signed an agreement with China Development Bank to raise a long term loan of USD49 mn. Speaking at the occasion, Acting CEO of HNB Jonathan Alles stated: This is the second loan granted to HNB by CDB since 2012 and it demonstrates the confidence international banks have placed in us based on our strength and stability. Alles added: The funds raised will form a part of HNBs long term funding plan and so far in this year, the bank has raised over LKR10 bn through a combination of tier II capital and long term senior debt to support the balance sheet growth of the bank. [Source: www.ft.lk]

Global News
BIS: Central banks must end 'whatever it takes' policy: The Bank for International Settlements (BIS) says banks have done their bit to help economic recovery and now governments must do more. The Basel-based organisation - usually dubbed the "central banks' central bank" - believes it is time to end the "whatever it takes" approach. It says it wants to see a return to "strong and sustainable growth". Last week the US central bank said it planned to stop its asset purchase programme, sparking market volatility. In its annual report, the BIS said the world's central banks had done what they could to offset the worst effects of the six-year long global credit crisis. As the credit crunch hit, central banks tried a number of tactics to try to keep the money flowing, initially cutting interest rates and later adding in quantitative easing, buying in assets and releasing vast sums into the banking system. But now that the world was "past the height of the crisis", it was time for such interventionist policies to change. But now that the world was "past the height of the crisis", it was time for such interventionist policies to change. [Source: www.bbc.co.uk] U.S. Inflation Notes Set for Second-Worst Monthly Drop on Record: Treasury inflation-linked securities were set for their second-worst monthly slump on record before data tomorrow that may show a gain in consumer prices was near an all-time low. Ten-year yields snapped a seven-day advance after Pacific Investment Management Co.s Bill Gross said Federal Reserve Chairman Ben S. Bernanke may guide policy makers toward achieving a higher inflation target. Bernanke said last week the Fed may reduce bond buying this year and end it in mid-2014 if economic growth is in line with central bank projections. Core-inflation measures show the trend of an increasing slowdown, said Shinichiro Kadota, a strategist for non-yen debt in Tokyo at Barclays Plc. With the Fed expected to taper bond buying, real yields will probably continue to underperform, he said, referring to inflation-linked notes. [Source: www.bloomberg.com]

Softlogic Equity Research

Page | 6
6

Softlogic Equity Research

Dimantha Mathew dimantha.mathew@equity.softlogic.lk +94 11 7277030 Kavindu Ranasinghe kavindu.ranasinghe@equity.softlogic.lk +94 11 7277031 Imalka Hettiarachchi imalka.hettiarachchi@equity.softlogic.lk +94 11 7277032

Softlogic Equity Sales

Dihan Dedigama dihan.dedigama@equity.softlogic.lk +94 11 7277010, +94 77 7689933 Chandima Kariyawasam chandima.kariyawasam@equity.softlogic.lk +94 11 7277058, +94 77 7885778 Sonali Abayasekera sonali.abayasekera@equity.softlogic.lk +94 11 7277051, +94 77 7736059 Thanuja De Silva thanuja.desilva@equity.softlogic.lk +94 11 7277059, +94 77 3120018

Branches
Horana Madushanka Rathnayaka st No. 212, 1 Floor, Panadura Road, Horana madushanka.rathnayaka@equity.softlogic.lk +94 34 7451000, +94 77 3566465 Negambo Krishan Williams No. 121, St. Joseph Street Negambo krishan.williams@equity.softlogic.lk +94 31 2224714-5, +94 77 3569827 Kurunegala Bandula Lansakara No.13, Rajapihilla Mawatha, Kurunegala bandula.lansakara@equity.softlogic.lk +94 37 2232875, +94 77 3615790 Matara Lalith Rajapaksha nd No.8A, 2 Floor, FN Building, Station Road, Matara lalith.rajapaksha@equity.softlogic.lk +94 41 7451000, +94 77 3031159

The report has been prepared by Softlogic Stockbrokers (Pvt) Ltd. The information and opinions contained herein has been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified and no guaranty, representation or warranty, express or implied is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only, descriptions of any company or companies or their securities mentioned herein are not i ntended to be complete and this document is not, and should not be construed as, an offer, or solicitation of an offer, to buy or sell any securities or other financial instruments. Softlogic Stockbrokers (Pvt) Ltd may, to the extent permissible by applicable law or regulation, use the above material, conclusions, research or analysis in which they are based before the materialized disseminated to their customeLKRNot all customers will receive the material at the same time. Softlogic Stockbrokers, their respective directors, officers, representatives, employees, related persons and/or Softlogic Stockbrokers, may have a long or short position in any of the securities or other financial instruments mentioned or issuers described herein at any time and may make a purchase and/or sale, or offer t o make a purchase and/or sale of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principal or agent. S oftlogic Stockbrokers may make markets in securities or other financial instruments described in this publication, in securities of issuers described here in or in securities underlying or related to such securities. Softlogic Stockbrokers (Pvt) Ltd may have recently underwritten the securities of an issuer mentioned herein. This document may not be reproduced, distributed, or published for any purposes.

Softlogic Equity Research

Page | 7
7