ACUITY STOCKBROKERS RESEARCH | EQUITIES

Weekly Market Review 14 Aug 2020

Daily Average Turnover Hits 7-Month High…Oil th th Heads for Weekly gain Amid Demand Woes… Indices vs. Turnover (10 Aug – 14 Aug)

5,400 ASPI 2,400 ASPI ^ 1.65% | S&P SL20 ^ 4.17% S&P SL20 5,280 2,350

S&P SL20

5,160 2,300 ASPI The Bourse ended the week… Cont. P2 5,040 2,250 4,920 2,200 4,800 2,150 Foreign investors closed the week... Cont. P3 10-Aug11-Aug12-Aug13-Aug14-Aug 3.50 2.80 2.10

Sri Lankan equities continued to rally….… Cont. P4 1.40 LKR Bn) LKR

(Turnover 0.70 0.00 Economic Snapshot………… P5 10-Aug 11-Aug 12-Aug 13-Aug 14-Aug

KEY STATISTICS

Week ending 14-Aug 07-Aug +/- ASPI 5,261.99 5,176.48 1.65% S&P SL20 2,320.10 2,227.19 4.17%

Banks 562.10 538.80 4.32%

Capital Goods 700.95 683.95 2.49% Food, Beverage & Tobacco 735.34 736.05 -0.10% Consumer Durables & Apparel 796.89 805.49 -1.07% Materials 706.62 691.90 2.13% Diversified Financials 772.03 771.52 0.07% Turnover (LKR Bn) 11.43 4.29 166.60% Foreign Buying (LKR Mn) 722.83 53.53 1250.23% Foreign Selling (LKR Mn) 3,595.86 929.20 286.99% Daily Average Turnover (LKR Bn) 2.29 1.07 113.28% Daily Average Foreign Buying (LKR Mn) 144.57 13.38 980.18% Daily Average Foreign Selling (LKR Mn) 719.17 232.30 209.59%

TOP 10 GAINERS TOP 10 LOSERS

Opening Closing WoW % Opening Closing WoW % Company Code Company Code Price Price Change Price Price Change BOGAWANTALAWA BOPLN 10.4 13.6 30.8% INDUSTRIAL ASPH. ASPHNN 0.3 0.2 -33.3% HAYLN 166.2 200.8 20.8% S M B LEASING SEMBN 0.5 0.4 -20.0% CONVENIENCE FOOD SOY N 549.8 650.0 18.2% TESS AGRO TESSN 0.5 0.4 -20.0% DIPPED PRODUCTS DIPDN 142.3 166.6 17.1% TESS AGRO[NV] TESSX 0.5 0.4 -20.0% HATTON HPL N 6.6 7.7 16.7% SERENDIB HOTELS[NV] SHOTX 12.0 10.1 -15.8% MALWATTE[NV] MAL X 5.5 6.3 14.5% LANKA ALUMINIUM LALUN 62.9 53.8 -14.5% MADULSIMA MADUN 8.4 9.6 14.3% ABANS FINANCIAL AFSLN 21.6 19.3 -10.6% EXPON 4.0 4.5 12.5% AMBEON CAPITAL TAP N 4.4 4.0 -9.1% MASKELIYA MASKN 10.7 11.9 11.2% CITRUS WASKADUWA CITWN 4.6 4.2 -8.7% BALANGODA BALAN 11.8 13.1 11.0% CITRUS LEISURE REEFN 11.6 10.6 -8.6%

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 14 Aug 2020

Market Review

Indices | Liquidity (in Volume Terms) | The Bourse ended the week on a positive note as the The Banks Industry Group dominated the market in ASPI increased by 85.51 points (or +1.65%) to close at terms of share volume, accounting for 19.86% (or 5,261.99 points, while the S&P SL20 Index also 86.30Mn shares) of total volume, with a value increased by 92.91 points (or +4.17%) to close at contribution of LKR 6.31Bn. The Food, Beverage & 2,320.10 points. tobacco Industry Group followed suit, adding 13.99% to total turnover volume as 60.78Mn shares were Turnover & Market Capitalization | exchanged. The Industry Group’s volume accounted for Commercial Bank was the highest contributor to the LKR 0.49Bn of total market turnover value. The week’s turnover value, contributing LKR 2.28Bn or Transportation Industry Group meanwhile, contributed 19.92% of total turnover value. JKH followed suit, 48.99Mn shares (or 11.28%), amounting to LKR 0.21Bn. accounting for 19.08% of turnover (value of LKR 2.18Bn) while DFCC Bank contributed LKR 1.83Bn to Top Gainers & Losers | account for 15.99% of the week’s turnover. Total Bogawantalawa was the week’s highest price gainer; turnover value amounted to LKR 11.43Bn (cf. last increasing 30.8% W-o-W from LKR0.10.40 to LKR13.60 week’s value of LKR 4.29Bn), while daily average while Hayleys (+20.8% W-o-W), Convenience Food turnover value amounted to LKR 2.29Bn (113.28% (+18.2% W-o-W) and Dipped Products (+17.1% W-o- W-o-W) compared to last week’s average of LKR 1.07Bn. W) were also amongst the top gainers. Market capitalization meanwhile, increased by 1.65% W-o-W (or LKR 40.25Mn) to LKR 2,476.49Bn cf. LKR Industrial Asphalt was the week’s highest price loser; 2,436.24Bn last week. declining 33.3% W-o-W to close at LKR0.20. SMB Leasing (-20.0% W-o-W), Tess Agro (-20.0% W-o-W) Liquidity (in Value Terms) | and Tess Agro[NV] (-20.0% W-o-W) were also amongst The Banks Industry Group was the highest contributor the top losers over the week. to the week’s total turnover value, accounting for 55.20% (or LKR 6.31Bn) of market turnover. Industry Group’s turnover was driven primarily by Commercial TOP 10 TURNOVERS Bank, DFCC Bank, Sampath & HNB which accounted for Opening Closing Value 92.07% of the sector’s total turnover. The Capital Goods Company Code Industry Group meanwhile accounted for 23.54% (or Price Price (Rs. Mn) LKR 2.69Bn) of the total turnover value, with turnover COMMERCIAL BANK COMBN 76.9 82.5 2,276.2 JKH JKH N 114.9 124.5 2,180.0 driven primarily by JKH, & Hemas DFCC BANK PLC DFCCN 59.8 61.9 1,826.7 Holdings which accounted for 91.31% of the sector SAMPATH SAMPN 124.0 129.0 1,098.0 turnover. The Diversified Financials Industry Group was HNB HNB N 114.7 123.0 607.4 also amongst the top sectorial contributors, contributing L O L C HOLDINGS LOLCN 137.6 143.9 455.0 5.41% (or LKR 0.62Bn) to the total turnover, with EXPOLANKA EXPON 4.0 4.5 208.1 turnover driven primarily by LOLC Holdings accounting ACCESS ENG SL AEL N 21.4 20.6 150.2 DIPPED PRODUCTS DIPDN 142.3 166.6 145.5 for 73.56% of the total turnover. HHL N 58.8 60.8 126.3

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 14 Aug 2020

Market Review (Cont’d)

Net Foreign Sales (07 Aug-14 Aug) Net Foreign Purchases (07 Aug-14 Aug) CENTRAL FINANCE EXPOLANKA Volume Change ('000s) PEOPLES LEASING Volume Change ('000s) ACCESS ENG SL NESTLE LMF MALWATTE MADULSIMA BROWNS INVSTMNTS RENUKA HOLDINGS HEMAS HOLDINGS

S M B LEASING DIALOG

PEOPLE'S INS JKH SAMPATH COMMERCIAL BANK* HNB DFCC BANK PLC*

0 200 400 600 800 1,000 (3,500) (2,800) (2,100) (1,400) (700) -

*Volume change of DFCC Bank (26.81Mn Shares) & Commercial Bank (12.15Mn Shares) from 07th Aug – 14th Aug not displayed.

Foreign investors closed the week in a net selling position with total net outflow amounting to LKR 2.87Bn relative to last week’s total net outflow of LKR 0.876Bn (-228.1% W-o-W). Total foreign purchases increased by 1250.2% W-o-W to LKR 0.72Bn from last week’s value of LKR 0.05Bn, while total foreign sales amounted to LKR 3.60Bn relative to LKR 0.93Bn recorded last week (+287.0% W-o-W). In terms of volume, HNB, Sampath & People’s Insurance led foreign purchases while DFCC bank, Commercial Bank & JKH led foreign sales. In terms of value, HNB, Sampath & Nestle led foreign purchases while DFCC Bank, Commercial Bank & JKH 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 14/08/20 07/08/20 (LKR. Mn) 14/08/20 07/08/20 (LKR. Mn) HNB 27.30% 26.90% 1,644,223 202.24 DFCC BANK PLC 17.83% 26.59% (26,808,878) (1,659.47) SAMPATH 15.68% 15.43% 950,965 122.67 COMMERCIAL BANK 17.14% 18.38% (12,150,974) (1,002.46) NESTLE 94.91% 94.85% 31,911 34.60 JKH 43.81% 44.08% (3,550,295) (442.01) PEOPLE'S INS 1.42% 1.06% 724,981 16.38 HEMAS HOLDINGS 22.52% 22.80% (1,683,152) (102.34) CARGILLS 7.50% 7.49% 15,000 2.87 DIALOG 93.08% 93.12% (3,161,137) (35.72) CENTRAL FINANCE 15.36% 15.35% 30,784 2.40 LMF 30.62% 31.45% (331,890) (26.48) CEYLINCO INS.[X.0000] 54.13% 54.08% 2,992 2.39 COLD STORES 10.55% 10.59% (36,902) (24.76) CARSONS 23.05% 23.04% 8,100 1.34 LION BREWERY 37.34% 37.36% (22,361) (12.53) RENUKA HOLDINGS 11.80% 11.74% 52,743 0.84 DIPPED PRODUCTS 8.81% 8.92% (68,624) (11.43) TOKYO CEMENT 19.65% 19.64% 17,929 0.69 CHEVRON 18.29% 18.35% (138,841) (10.52)

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

1,250 Foreign Purchases Foreign Sales -100 1,000

750 -900 LKR. Mn LKR. 500 Mn LKR.

-1,700 250

0 -2,500 10-Aug 11-Aug 12-Aug 13-Aug 14-Aug 24-Jul 31-Jul 07-Aug 14-Aug

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 14 Aug 2020

Announcements for the Week

Dividend Announcements

Company DPS (Rs.) Type XD Date LANKA ASHOK LEYLAND 5.00 First & Final 28-09-2020 CEYLON TOBACCO COMPANY 15.00 Second Interim 25-08-2020 ASIA SIYAKA COMMODITIES 0.05 First & Final 24-08-2020 CONVENIENCE FOODS 5.50 Final 16-09-2020 CEYLON COLD STORES 8.50 First Interim 24-08-2020 ACCESS ENGINEERING 0.50 First Interim 21-08-2020 RENUKA CAPITAL 0.10 First & Final 29-09-2020 RENUKA AGRI FOODS 0.12 First & Final 29-09-2020 VALLIBEL POWER 0.40 First Interim 21-08-2020 CEYLON INVESTMENTS 0.25 Final 15-08-2020 CEYLON GUARDIAN INVESTMENT 1.15 First & Final 15-08-2020 TALAWAKELLE TEA ESTATES 2.75 First Interim 18-08-2020

Company Proportion Shares to be Issued Type CEYLON INVESTMENTS 1:52.67 1,888,311 Scrip

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 14 Aug 2020

Daily Average Turnover Hits 7-Month High Oil Heads for Weekly Gain Amid Demand Woes

Sri Lankan equities continued to rally for a 4th consecutive week Global oil price headed for weekly gain of ~1% after reaching its as renewed investor participation amid mixed earnings releases highest level of $45.43/bbl. since early-March 2020 on for the Jun’20 quarter drove market momentum this week. Wednesday when oil prices were buoyed by planned output cuts Markets opened the week on a negative note as some profit taking by Iraq and a deeper than anticipated drop in U.S. crude in DIAL led the benchmark index to slip ~26 points during the day stockpiles. Brent crude oil has recovered nearly 131% since its amidst relatively lower turnover level (Rs. 0.7Bn cf. YTD average lowest level in Apr’20 when oil prices plummeted 70% from the daily turnover of Rs. 1.3Bn). However, average daily turnover start of the year to stand at a 18-year low of $19.33/bbl. Global oil levels improved significantly over the remainder of the week on markets have recovered gradually since May, recording 3- the back of stronger local retail, HNI and institutional buying consecutive monthly gains amid OPEC+ members decision to cut momentum. Consequently, average daily turnover for the week hit output by 9.7Mn bpd, from May and a gradual recovery of global a 7-month high to reach Rs. 2.3Bn for the week (up 113% W-o-W oil demand. Despite Monday’s 5-month high, shifting oil market from Rs. 1.1Bn last week) as strong interest in COMB, JKH, DFCC, perceptions led Brent crude oil falling ~1% to settle at and SAMP dominated market activity. Meanwhile, crossings for $44.95/bbl. on Friday evening amid concerns of a recovery in the week contributed 27% to total turnover this week (cf. to a demand due to the coronavirus pandemic as the International mere 9% last week), accounting for Rs. 3.1Bn of this week’s Energy Agency (IEA) and OPEC trimmed their oil demand turnover levels. Interest remained concentrated mainly on COMB forecasts for 2020 this week. The International Energy Agency’s and JKH which accounted for 73% of total crossings this week. (IEA) decision to cut global oil demand forecasts for 2020E and Retail investors took cues from the strong local HNI and 2021E was based on the significant slowdown in air travel as the institutional interest, and the broad-based momentum in the number of COVID-19 cases remains high. The IEA cut oil demand market helped the benchmark ASPI gain ~ 86 points over the by 8.1Mn bpd day to 91.1Mn bpd for 2020E while also reducing week to hit a high since early March. Gains on the index so far this global oil demand estimates to 97.1Mn bpd for 2021E despite a month helped bring down the YTD loss on the ASPI to -13.9% (cf. - recovery in business and industrial activity. Meanwhile, global 16.1% end-Jul’20). Despite the renewed investor appetite by local manufacturing activities recorded an expansion for the first time retail, HNI and institutional investors, the foreign sell-off on since Jan’20 as the latest Purchasing Managers’ Indices (PMI) from domestic equities heightened this week and net outflows from the IHS Markit signaled a revival of global activity. The Global Bourse totaled to Rs. 2.9Bn (cf. Rs. 0.9Bn last week) amid Manufacturing PMI rose to a 6-month 50.3 in Jul’20 from 47.9 in heavy selling pressure in select Banking sector stocks (DFCC & Jun’20, with a reading above 50 indicating growth. COMB) during the week. Markets are likely to take cues from ongoing earnings releases while investors wait for clarity on the economic policies of the new government in the weeks to come.

Sources: Reuters, OPEC, HIS Makit

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ACUITY STOCKBROKERS RESEARCH | SRI LANKA EQUITIES

Weekly Market Review 14 Aug 2020

Economic Snapshot

Nov’19 Dec’19 Jan’20 Feb’20 Mar’20 Apr’20 May’20 Jun’20 Interest Rates Prime Lending Rate 10.21 10.00 9.68 9.51 9.35 9.38 9.28 8.78 Ave. Wtd. Deposit Rates 8.27 8.20 8.14 8.06 7.90 7.77 7.57 7.38 Ave. Wtd. Fixed Dep. Rates 10.14 10.05 9.97 9.83 9.65 9.51 9.26 9.00 CCPI Inflation Y-o-Y % (Base 2013) 4.4 4.8 5.7 6.2 5.4 5.2 4.0 3.9

2013 2014 2015 2016 2017 2018 2019 GDP Growth (Base 2010) 3.4% 5.0% 5.0% 4.5% 3.6% 3.3% 2.3% Source Central Bank

Exchange Rate, Rs. vs. US$ Inflation (CCPI-N) YoY%

10.0 220.0

8.0 200.0

180.0 6.0 CCPI

Rs /USD Rs 160.0 4.0

140.0 2.0

120.0 0.0 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jan-17 Sep-17 May-18 Jan-19 Sep-19 May-20

Source: Central Bank Source: Central Bank

6 Month T-Bill Yield Tea Prices

12 700

11 640

10 580

9 520

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

- T

8 460 Rs. Per kilo(Average ) kilo(AveragePer Rs.

7 400 Sep-16 Jun-17 Mar-18 Dec-18 Sep-19 Oct-16 Jul-17 Apr-18 Jan-19 Oct-19

Source: Central Bank Source: Sri Lanka Tea Board

Export & Trade Balance Trends in Tourist Arrivals

2000 600 Trade Balance (USD Mn 300,000 70%

1600 200 240,000 40% Y

-

o

- 1200 -200 180,000 10% Y Growth

800 -600 120,000 -20% Total Arrivals Total

400 -1000 ) 60,000 -50% Exports /Imports (USD Mn) (USD /Imports Exports 0 -1400 0 -80% Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Mar-17 Dec-17 Sep-18 Jun-19 Mar-20 Exports (LHS) Imports (LHS) Trade Balance (RHS) Source: Central Bank Source: Sri Lanka Tourism Development Authority

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