ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 06 July 2018

ASPI Rebounds from 15-Month Low… Policy Rates nd th Indices vs. Turnover (2 Jul - 6 Jul) Held Steady for 2nd Time Since April 6,150 ASPI 3,400 S&P SL20

6,126 3,370 S&P SL20 6,102 3,340

ASPI ˅ 1.39% | S&P SL20 ˅ 1.93% ASPI 6,078 3,310 6,054 3,280 The Bourse ended the week … Cont. P2 6,030 3,250 02-Jul 03-Jul 04-Jul 05-Jul 06-Jul

0.80 Foreign investors closed the week... Cont. P3 0.64 0.48

0.32 LKR Bn) LKR

(Turnover 0.16 Sri Lankan equities remained in ….… Cont. P4 0.00 02-Jul 03-Jul 04-Jul 05-Jul 06-Jul Economic Snapshot………… P5

KEY STATISTICS

Week ending 06-Jul 29-June +/- ASPI 6,108.71 6,194.63 -1.39% S&P SL20 3,323.52 3,388.88 -1.93%

Banking & Finance 15,986.54 16,262.61 -1.70%

Food & Beverage 23,837.76 24,166.41 -1.36% Diversified 1,588.13 1,621.29 -2.05% Hotel & Travel 2,724.59 2,741.03 -0.60% Plantations 786.83 804.08 -2.15% Manufacturing 3,043.53 3,033.71 0.32% Turnover (LKR Bn) 2.85 2.94 -3.17% Foreign Buying (LKR Mn) 845.54 1,761.36 -51.99% Foreign Selling (LKR Mn) 1,745.93 2,153.56 -18.93% Daily Average Turnover (LKR Bn) 0.57 0.74 -22.53% Daily Average Foreign Buying (LKR Mn) 169.11 440.34 -61.60% Daily Average Foreign Selling (LKR Mn) 349.19 538.39 -35.14%

TOP 10 GAINERS TOP 10 LOSERS

Opening Closing WoW % Opening Closing WoW % Company Code Company Code Price Price Change Price Price Change ADAM INVESTMENTS AINVN 0.1 0.2 100.0% ADAM CAPITAL PCHHN 0.4 0.3 -25.0% CEYLON PRINTERS CPRTN 51.0 61.9 21.4% AMANA TAKAFUL ATL N 0.8 0.7 -12.5% TESS AGRO [NV] TESSX 0.5 0.6 20.0% MULLERS MULLN 0.8 0.7 -12.5% TESS AGRO TESSN 0.6 0.7 16.7% SAMSON INTERNAT. SIL N 105.8 92.6 -12.5% PARAGON PARAN 48.0 55.6 15.8% BIMPUTH FINANCE BLI N 39.7 35.0 -11.8% ACL PLASTICS APLAN 86.3 99.0 14.7% SOFTLOGIC FIN CRL N 30.0 27.0 -10.0% LUCKY LANKA [NV] LLMPX 0.7 0.8 14.3% RENUKA CITY HOT. RENUN 250.0 225.6 -9.8% PEOPLE'S MERCH PMB N 10.2 11.3 10.8% JETWING SYMPHONY JETSN 13.4 12.1 -9.7% AMANA LIFE ATLLN 1.1 1.2 9.1% MASKELIYA MASKN 15.9 14.4 -9.4% ALUFAB ALUFN 18.4 20.0 8.7% LMF LMF N 170.0 154.0 -9.4%

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 06 July 2018

Market Review

Indices | Liquidity (in Volume Terms) | The Bourse ended the week on a negative note as the The Banking, Finance & Insurance also dominated the ASPI decreased by 85.92 points (or -1.39%) to close at market in terms of share volume, accounting for 39.17% 6,108.71 points, while the S&P SL20 Index also (or 33.57Mn shares) of total volume, with a value decreased by 65.36 points (or -1.93%) to close at contribution of LKR 1.13Bn. The Diversified sector 3,323.52 points. followed suit, adding 23.96% to total turnover volume as 20.53Mn shares were exchanged. The sector’s volume Turnover & Market Capitalization | accounted for LKR 1.10Bn of total market turnover JKH was the highest contributor to the week’s turnover value. The Manufacturing sector meanwhile, contributed value, contributing LKR 0.71Bn or 25.09% of total 7.12Mn shares (or 8.30%), amounting to LKR 0.16Bn.

turnover value. Commercial Bank followed suit, accounting for 16.08% of turnover (value of LKR Top Gainers & Losers | 0.46Bn) while contributed LKR 0.32Bn to Adam Investments was the week’s highest price gainer; account for 11.19% of the week’s turnover. Total increasing 100.0% W-o-W from LKR0.10 to LKR0.20. turnover value amounted to LKR 2.85Bn (cf. last week’s Ceylon Printers gained 21.4% W-o-W to close at value of LKR 2.94Bn), while daily average turnover LKR61.90. Tess Agro’s Non-Voting (+20.0% W-o-W) and value amounted to LKR 0.57Bn (-22.53% W-o-W) Voting (+16.7% W-o-W) shares were also amongst the top gainers. compared to last week’s average of LKR 0.74Bn. Market capitalization meanwhile, decreased by 1.39% W-o-W (or LKR 40.14Bn) to LKR 2,853.62Bn cf. LKR 2,893.76Bn Adam Capital was the week’s highest price loser; last week. declining 25.0% W-o-W to close at LKR0.30 while Amana Takaful (-12.5% W-o-W), Mullers (-12.5% W-o- Liquidity (in Value Terms) | W) and Samson International (-12.5% W-o-W) were also The Banking, Finance & Insurance sector was the amongst the top losers over the week. highest contributor to the week’s total turnover value, accounting for 39.74% (or LKR 1.13Bn) of market TOP 10 TURNOVERS turnover. Sector turnover was driven primarily by Commercial Bank (Voting & Non-Voting), HNB, Sampath Opening Closing Value (Rs. Company Code and Central Finance accounted for 78.47% of the Price Price Mn) sector’s total turnover. The Diversified sector JKH JKH N 147.5 142.0 714.89 meanwhile accounted for 38.52% (or LKR 1.10Bn) of the COMMERCIAL BANK COMBN 123.0 124.0 458.36 total turnover value, with turnover driven primarily by MELSTACORP MELSN 52.5 53.6 318.80 JKH and Melstacorp which accounted for 94.17% of the HNB HNB N 225.0 220.1 139.92 sector turnover. The Beverage, Food & Tobacco sector SAMPATH SAMPN 303.1 294.9 139.27 was also amongst the top sectorial contributors, CARGILLS CARGN 199.6 200.0 92.44 contributing 6.71% (or LKR 0.19Bn) to the market CENTRAL FINANCE CFINN 97.6 100.0 78.62 COMMERCIAL BANK [NV] COMBX 94.0 93.6 72.41 driven by Cargills which accounted for 48.36% of the DIALOG DIALN 14.2 13.9 69.35 sector turnover. LANKA IOC LIOCN 32.9 31.7 67.18

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 06 July 2018

Mar ket Review (Cont’d)

Net Foreign Sales (29 Jun-06 Jul) Net Foreign Purchases (29 Jun-06 Jul) LION BREWERY TOKYO CEMENT [X] Volume Change ('000s) SIERRA CABL Volume Change ('000s) A.SPEN.HOT.HOLD. NATIONS TRUST ACCESS ENG SL CENTRAL FINANCE KEELLS HOTELS COMMERCIAL BANK [X] RICHARD PIERIS ANILANA HOTELS NATION LANKA MELSTACORP CARGILLS COMMERCIAL BANK TEEJAY LANKA* JKH S M B LEASING [X]* DIALOG* - 100 200 300 400 500 (3,100) (2,480) (1,860) (1,240) (620) - *Volume change of S M B Leasing [NV] (6.7Mn Shares), Teejay Lanka (0.97Mn Shares), and Dialog (4.71Mn Shares) from 29th Jun – 06th Jul not displayed. Foreign investors closed the week in a net selling position with total net outflow amounting to LKR 0.90Bn relative to last week’s total net outflow of LKR 0.39Bn (-129.6% W-o-W). Total foreign purchases decreased by 52.0% W-o-W to LKR 0.85Bn from last week’s value of LKR 1.76Bn, while total foreign sales amounted to LKR 1.75Bn relative to LKR 2.15Bn recorded last week (-18.93% W-o-W). In terms of volume S M B Leasing (NV) & Teejay Lanka led foreign purchases while Dialog & JKH led foreign sales. In terms of value Cargills & Lion Brewery led foreign purchases while JKH & Commercial Bank led foreign sales.

Net Foreign Purchases (By Transaction Value) Net Foreign Sales (By Transaction Value)

Foreign Holding (%) Value* Foreign Holding (%) Value* Company Net Change Company Net Change 06/07/18 29/06/18 (LKR. Mn) 06/07/18 29/06/18 (LKR. Mn) CARGILLS 6.84% 6.66% 462,198 92.44 JKH 57.64% 57.86% (3,050,355) (433.15) LION BREWERY 37.04% 36.95% 76,500 43.12 COMMERCIAL BANK 33.89% 34.16% (2,577,492) (319.61) TEEJAY LANKA 45.45% 45.31% 973,794 30.19 MELSTACORP 26.00% 26.13% (1,502,004) (80.51) CENTRAL FINANCE 12.83% 12.76% 150,000 15.00 DIALOG 94.37% 94.42% (4,707,750) (65.44) NATIONS TRUST 24.29% 24.25% 88,933 8.00 SAMPATH 22.84% 22.92% (221,521) (65.33) KELANI CABLES 4.45% 4.17% 61,084 4.91 COMMERCIAL BANK[X.0000] 24.15% 25.15% (651,288) (60.96) CHEVRON 20.99% 20.97% 62,267 4.83 NAT. DEV. BANK 14.27% 14.44% (310,188) (34.37) RICHARD PIERIS 73.84% 73.83% 226,870 2.52 A.SPEN.HOT.HOLD. 0.56% 0.69% (452,148) (12.66) S M B LEASING[X.0000] 10.01% 8.90% 6,782,326 1.36 TOKYO CEMENT[X.0000] 42.80% 43.10% (404,721) (12.47) SOFTLOGIC LIFE 45.70% 45.69% 46,465 1.02 31.15% 31.17% (99,490) (10.84)

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.

Foreign Purchases Vs. Sales Week Ending Net Position of Foreign Holdings 50 600 Foreign Purchases Foreign Sales

-160 480

360 -370

LKR. MnLKR. LKR. Mn LKR.

240 -580

120 -790

0 -1,000 02-Jul 03-Jul 04-Jul 05-Jul 06-Jul 14-Jun 22-Jun 29-Jun 06-Jul

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 06 July 2018

Announcements for the Week

Dividend Announcements

Company DPS (Rs.) Type XD Date ACL CABLES 1.50 Interim 12-07-18 ON’ALLY HOLDINGS 2.30 Final 16-07-18 PANASIAN POWER 0.13 Interim 13-08-18 Company Proportion Type XD Date COLOMBO FORT INVESTMENTS 1:41.67 Scrip To be notified COLOMBO INVESTMENT TRUST 1:52.08 Scrip To be notified

Point of View Policy Rates Held Steady for 2nd Time Since April

Sri Lankan equities remained in the doldrums yet again this The CBSL held policy rates steady during its 4th review for the week, recording its 2nd highest weekly loss for the year (~86 year (SDFR-7.25% and SLFR-8.50%) citing stabilizing inflation points cf. 103 point loss two weeks ago) and breaching the key levels and amid slower Q1’18 growth. The Monetary Authority 6100 -mark to hit a 15-month low (6044.03 points). However, noted that although money market rates have remained elevated the ASPI rebounded from this low within a day as the continuous (despite its rate cut in April), nominal and real interest rates slide on the benchmark index over the last seven weeks led to would gradually adjust downwards in line with the CBSL’s bargain-hunting on blue-chip stocks. The ASPI consequently neutral policy stance and the prevailing low inflation recorded its highest daily Index gain in 14-months, with the environment. The CBSL also noted that private credit growth has

Index gaining ~74 points (or 1.22%) on Thursday (cf. ~97 point moderated from the ‘festive season-led credit expansion’ in one-day loss in April 17). Stronger buying on Thursday helped Mar’18 and that inflation is expected to stabilise at mid-single push the Index back over the 6100-mark and appeared to digit levels despite temporary supply side pressures. Urban and establish 6100 as the new support level for the Index. However, national inflation levels remained at low single digit levels, confusion over fuel price changes created a sense of policy despite upward revisions to domestic fuel prices and although uncertainty once again, and dragged sentiment lower on Friday. the CBSL expects some upside pressure on near term inflation Sri Lanka’s fuel-pricing revisions which were previously due to the off-season of domestic food supplies, inflation over scheduled to come into effect every two months, was the remainder of the year is expected to remain at the desired unexpectedly changed on Thursday to be revised weekly. The mid-single digits amid ‘firmly anchored inflation expectations broadshare ASPI consequently dropped a marginal 9 points over and appropriate policy adjustments’. The CBSL acknowledged

Friday, but the Index held on above the 6100-level mark to close meanwhile that Q1’18 GDP growth remained subdued (3.2% Y- the week at 6108.7 points. The foreign equity sell-off on the Sri o-Y cf. 3.3% Y-o-Y in Q1’17) amid slower growth in Industry - Lankan equities meanwhile, continued once again this week, related activities. The Bank noted that while the i) sustained with the net outflows from the CSE expanding notably to Rs. recovery in the global economy, ii) the low inflation

900Mn from Rs.392 last week. Foreigners have been net sellers environment and, iii) appropriately valued flexible exchange on the Index for four consecutive weeks, tracking the heightened rate are expected to facilitate higher growth over the remainder risk -aversion (over the last four weeks) for EM/FM assets in of the year, the GoSL’s continued commitment to the general. Markets in the week ahead are likely to look for cues implementation of structural reforms an d fiscal consolidation both from domestic political developments and broader global will be vital for the country to achieve its medium-term growth financial market themes. potential.

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 06 July 2018

Economic Snapshot

Oct’17 Nov’17 Dec’17 Jan’18 Feb’18 Mar’18 Apr’18 May’18 Interest Rates Prime Lending Rate 11.30 11.40 11.33 11.29 11.27 11.10 11.27 11.34 Ave. Wtd. Deposit Rates 9.22 9.19 9.07 9.08 9.05 9.00 8.98 8.91 Ave. Wtd. Fixed Dep. Rates 11.72 11.69 11.48 11.54 11.45 11.41 11.38 11.23 CCPI Inflation Y-o-Y % (Base 2013) 7.8 7.6 7.1 5.8 4.5 4.2 3.8 4.0

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%

155.0 10.0

149.0 8.0

143.0 6.0 CCPI

Rs /USD Rs 137.0 4.0

131.0 2.0

125.0 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 0.0 May-15 Dec-15 Jul-16 Feb-17 Sep-17 Apr-18

Source: Central Bank Source: Central Bank

6 Month T-Bill Yield Tea Prices

13 700

11 620

9 540

7 460

Bill (6M ) Rate (%) Rate ) (6M Bill

- T

5 380 Rs. Per kilo(Unweighted)Per Rs. 3 300 Feb-15 Nov-15 Aug-16 May-17 Feb-18 Jun-15 Mar-16 Dec-16 Sep-17 Jun-18

Source: Central Bank Source: Sri Lanka Tea Board

Export & Trade Balance Trends in Tourist Arrivals

2000 600 Trade Balance (USD Mn 250,000 80%

1600 200 64%

200,000 Y

-

o -

48% Y Growth 1200 -200 150,000 32% 800 -600 100,000 16% 400 -1000 Total Arrivals ) 50,000 0% Exports /Imports (USD Mn) (USD /Imports Exports 0 -1400 0 -16% Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 May-15 Feb-16 Nov-16 Aug-17 May-18 Exports (LHS) Imports (LHS) Trade Balance (RHS) Source: Sri Lanka Tourism Development Authority Source: Central Bank 5

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