First Capital Equities (Private) Limited

Market Indices
ASI
S&P SL20 ASI S&P SL20

25th 2014 16th February August 2013

Market Performance
3,400 3,300 3,200 3,100

Daily
24.02.2014 5,883 3,208 499.4 145.8 169.9 237 15.6 2,457 18.6 3.0 1.9 %Chg. -0.8 -0.9 -14.5 -59.1 3.7 -3.8 -0.8 -0.8 -0.8 0.0 -0.8

6,200

6,100
6,000 5,900 5,800
19/2/2014 20/2/2014 21/2/2014 24/2/2014

MARKET WATCH

ASPI S&P SL 20 Turnover (mn) Foreign Purchases (mn) Foreign Sales (mn) Traded Companies Market PER (X) Market Cap (LKR bn) Market Cap (US$ bn) Dividend Yield (%) Price to Book (X)

25.02.2014 5,836 3,180 426.9 59.7 176.3 228 15.5 2,437 18.4 3.0 1.9

Market Outlook
Continuing the bourses declining trend, the ASPI fell 0.8% during the day to close at 5836. Turnover however declined to LKR427 mn with trading in John Keells Holdings and Commercial Bank accounting for 35% of the weeks total. Losers outpaced gainers with PC House, George Steuart Finance, Miramar Beach Hotel declining 25.0%, 16.9% and 16.5% and offsetting gains in Horana Plantations, Huejay International Investments and Hapugastenna Plantations which rose by 16.3%, 14.9% and 12.1% respectively. Meanwhile, global shares reached a 6-year peak following record highs on Wall Street, while moves by China to stamp out easy 12 betting on the yuan triggered the currency's biggest drop in over three years. In 4Q2013, Commercial Bank of Ceylon (COMB) recorded an 11.4%YoY increase in interest income from LKR 14.4 bn to LKR 16.0 bn while interest expenses rose by 8.6%YoY to LKR 9.3 bn. During the year 2013, the groups interest income and interest expenses rose by 18.1%YoY (to LKR 62.2 bn) and 23.6%YoY (to LKR 36.8 bn) respectively. Total operating income in 4Q2013 rose by 23.0%YoY to LKR 10.1 bn while operating expenses remained virtually unchanged at LKR 3.7 bn, thus resulting in a 13.7%YoY increase in operating profit to LKR 4.7 bn. Consequently the groups net profit rose by 25.3%YoY from LKR 2.6 bn to LKR 3.3 bn in 4Q2013 while reporting a 4.9%YoY improvement for the whole year. The group meanwhile announced a cash dividend LKR 2.00 per share and a scrip dividend at a proportion of one new voting share for every 63.61 shares held and one new nonvoting share for every 52.61 shares held by shareholders.

25/2/2014

Turnover Composition & Net Foreign Flows

14%
1,500 1,000 500 0 -500 -1,000 -1,500 -2,000 -2,500 -3,000 -3,500 -4,000 -4,500

YTD

MTD

WTD

86% Foreign Domestic

Gainers /Losers (%)

Ceylon Leather (W0014) Miramar Beach Hotel George Steuart Finance PC House

-14.3 -16.5 -16.9 -25.0 11.0 12.1 14.9 16.3

The Nuwara Eliya Hotels

Hapugastenne Plantations Huejay International Invest. Horana Plantations

Market Trajectory
With the banking sector results popping in to the market, we advise investors to choose the counters which have reported strong corporate results and are impervious to market fluctuations. We expect the bourse to recover from its current sideways flag, with rising domestic purchases indicating a positive local investor sentiment. Hence we recommend investors bottom fishing of blue chip stocks which has solid fundamentals and higher growth potential in the near term.

BRICS Performance Vs ASPI (YTD dollarised)

10.0% 5.0% 0.0% -5.0% -10.0%

Market Liquidity (Turnover)

1500 1000

LKR Mn

500 0
2014-Feb-25
2014-Feb-19 2014-Feb-20 2014-Feb-21 2014-Feb-24

Brazil

Russia

India

China

South Africa

Sri Lanka

Global Markets
Sri Lanka - ASPI India - Sensex Pakistan - KSE 100 Taiwan Weighted Singapore - Straits Times Hong Kong - Hang Seng S&P 500 Euro Stoxx 50 MSCI Asia Pacific

Index 5836 20,852 25,560 8,576 3,104 22,317 1,848 3,147 137

%Chg. -0.80 0.20 -0.83 0.18 -0.05 -0.32 0.62 -0.30 1.22

Interest Rates & Currencies

Prime Lending Rate (Avg. Weighted) Deposit Rate (Avg. Weighted) Treasury Bill Rate (364 Days) Dollar Denominated Bond Rate Inflation Rate (YoY) LKR/US$ (Selling Rate) LKR/EURO (Selling Rate) Gold (USD/oz) Oil (Brent) (USD/barrel)

LKR Mn

25.02.2014 9.29% 9.14% 7.07% 6.00% 4.40% 132.42 182.67 1,334.40 110.18

This Review is prepared and issued by First Capital Equities (Pvt) Ltd. based on information in the public domain, internally developed and other sources, believed to be correct. Although all reasonable care has been taken to ensure the contents of the Review are accurate, First Capital Equities (Pvt) Ltd and/or its Directors, employees, are not responsible for the correctness, usefulness, reliability of same. First Capital Equities (Pvt) Ltd may act as a Broker in the investments which are the subject of this document or related investments and may have acted on or used the information contained in this document, or the research or analysis on which it is based, before its publication. First Capital Equities (Pvt) Ltd and/or its principal, their respective Directors, or Employees may also have a position or be otherwise interested in the investments referred to in this document. This is not an offer to sell or buy the investments referred to in this document. This Review may contain data which are inaccurate and unreliable. You hereby waive irrevocably any rights or remedies in law or equity you have or may have against First Capital Equities (Pvt) Ltd with respect to the Review and agree to indemnify and hold First Capital Equities (Pvt) Ltd and/or its principal, their respective directors and employees harmless to the fullest extent allowed by law regarding all matters related to your use of this Review. No part of this document may be reproduced, distributed or published in whole or in part by any means to any other person for any purpose without prior permission.

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