FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka


Submit PostSubmit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post



Latest topics

» 14 May onwards -Road Clear to Enter one of the Asias Most Undervalued Stock Market
by kalu351 Today at 6:34 am

» Plantation Sector
by කොටස් වෙළඳපොළ2020 Yesterday at 10:13 pm

» FUTURE of BROWNS INVESTMENT PLC (BIL)
by ONTHEMONEY Yesterday at 9:50 pm

» Company Financials or Group Financials?
by ronstyn53 Yesterday at 8:07 pm

» Banking Sector Analysis
by ADVENTUS Yesterday at 7:34 pm

» CHEVRON LUBRICANTS LANKA PLC ((LLUB.N0000)
by Bakkabwoi Yesterday at 5:24 pm

» Sri Lanka Bonds Go From Asia’s Worst to Best After China Loan
by J-CAT Yesterday at 3:58 pm

» කොටස් වෙළඳපොළ2020
by කොටස් වෙළඳපොළ2020 Yesterday at 1:52 pm

» Grain Elevators Earnings Review With Q1 Results
by EquityChamp Yesterday at 10:11 am

» What will happen tomorrow?
by Lakshman wijayawardhana Yesterday at 9:57 am

» Most Undervalued Shares
by Lakshman wijayawardhana Yesterday at 9:54 am

» Future of Talawakelle Plantation PLC
by කොටස් වෙළඳපොළ2020 Yesterday at 5:02 am

» GLAS will be winner with Super Gain.
by invest thinker Thu May 13, 2021 11:59 am

» NEVER GIVE UP BECAUSE: Stock market for beginners
by Asoka Samarakone Wed May 12, 2021 9:37 pm

» Make it your goal to stay positive in a negative market
by reyaz Wed May 12, 2021 9:01 pm

» Daily Foreign Transactions
by Pradeep90 Wed May 12, 2021 8:32 pm

» Ban of chemical fertilizers is a great news
by samaritan Wed May 12, 2021 9:59 am

» SANASA DEVELOPMENT BANK PLC (SDB.N0000)
by samaritan Wed May 12, 2021 9:48 am

» Price prediction on GRAN and TAFL
by Antonym Wed May 12, 2021 8:47 am

» CENTRAL INDUSTRIES PLC (CIND.N0000)
by Bakkabwoi Wed May 12, 2021 12:25 am

EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

CHRONICLE™ NEWS PRODUCTS

FINANCIAL CHRONICLE™

Views & Reviews, Analysis, Evaluations, Discussions, Gossip and Hot Tips relating to Sri Lankan companies listed on the Colombo Stock Exchange (CSE)
Contribute




DAILY CHRONICLE™

Latest news and articles published in Newspapers, Websites, Blogs and other online news sites relating to business and investments in Sri Lanka
Contribute



ECONOMIC CHRONICLE™

This is a section that provide news, views, analysis, predications relating to Political and Socio-Economic factors and how such activities affect the Stock Market and other economic activity of the Country.

Contribute




EXPERT CHRONICLE™

This is an exclusive section for Expert Articles which will help member to share knowledge through comments and responses of the members. All members are allowed to reply and make comments to these articles.

Contribute


Submit Post


CHRONICLE™ YouTube

Youtube Videos and other visual presentations relating Stock market and other investment advise submitted by members or other contributors.

Contribute


Submit Post


කොළඔ කොටස් වෙළඳපොළේ වංශකථාව
කොළඔ කොටස් වෙළඳපොළේ ලැයිස්තුගත සමාගම් කොටස් ගැන තොරතුරු¸විශ්ලේෂණ¸සාකච්ඡා¸ කටකතා¸රසකතා යන සියල්ල අපේම සිංහලෙන් කතා කළ හැකි ‘කතා මණ්ඩපය’

Contribute

Twitter Feeds
POPULAR COMPANIES
A

ABANS ELECTRICALS PLC

ACCESS ENGINEERING PLC Hot

ACL CABLES PLC

ACL PLASTICS PLC

ACME PRINTING & PACKAGING PLC

AGSTAR PLC

AITKEN SPENCE HOTEL HOLDINGS PLC

AITKEN SPENCE PLC

ANILANA HOTELS AND PROPERTIES PLC

ARPICO INSURANCE PLC

ASIA ASSET FINANCE PLC

ASIA CAPITAL PLC

B

BAIRAHA FARMS PLC

BALANGODA PLANTATIONS PLC

BIMPUTH FINANCE PLC

BLUE DIAMONDS JEWELLERY WORLDWIDE PLC

B P P L HOLDINGS PLC

BROWNS BEACH HOTELS PLC

BROWNS INVESTMENTS PLC

C

CARGO BOAT DEVELOPMENT COMPANY PLC

CENTRAL INDUSTRIES PLC

CEYLON COLD STORES PLC

CEYLON GRAIN ELEVATORS PLC Hot

CEYLON TEA BROKERS PLC

CEYLON TOBACCO COMPANY PLC

CHEVRON LUBRICANTS LANKA PLC

COLOMBO FORT LAND & BUILDING PLC

COMMERCIAL BANK OF CEYLON PLC

CITRUS LEISURE PLC Hot

COMMERCIAL CREDIT AND FINANCE PLC

D

DANKOTUWA PORCELAIN PLC

DFCC BANK PLC

DIALOG AXIATA PLC

DIALOG FINANCE PLC

DIPPED PRODUCTS PLC

DISTILLERIES COMPANY OF SRI LANKA PLC

DUNAMIS CAPITAL PLC

E

EAST WEST PROPERTIES PLC Hot

EASTERN MERCHANTS PLC

EXPOLANKA HOLDINGS PLC

E-CHANNELLING PLC

F

FIRST CAPITAL HOLDINGS PLC

G

GALADARI HOTELS (LANKA) PLC

GUARDIAN CAPITAL PARTNERS PLC

H

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HAYLEYS FABRIC PLC

HAYLEYS FIBRE PLC Hot

HEMAS HOLDINGS PLC

HIKKADUWA BEACH RESORT PLC

HNB ASSURANCE PLC

HVA FOODS PLC

J

JANASHAKTHI INSURANCE COMPANY PLC

JOHN KEELLS HOLDINGS PLC Hot

JOHN KEELLS HOTELS PLC

L

LANKA ASHOK LEYLAND PLC

LANKA IOC PLC

LANKEM CEYLON PLC

LANKEM DEVELOPMENTS PLC

LAUGFS GAS PLC

LAUGFS POWER LIMITED

LOLC FINANCE PLC

LOLC HOLDINGS PLC

LUCKY LANKA MILK PROCESSING COMPANY PLC

M

MELSTACORP PLC

N

NATIONAL DEVELOPMENT BANK PLC

NATION LANKA FINANCE PLC

NESTLE LANKA PLC

O

ORIENT FINANCE PLC

OVERSEAS REALTY (CEYLON) PLC

P

PANASIAN POWER PLC

PEOPLE'S LEASING & FINANCE PLC

PIRAMAL GLASS CEYLON PLC

PRIME FINANCE PLC

R

RAIGAM WAYAMBA SALTERNS PLC

RENUKA AGRI FOODS PLC

RENUKA CAPITAL PLC

RENUKA HOLDINGS PLC

RICHARD PIERIS AND COMPANY PLC

RICHARD PIERIS EXPORTS PLC Hot

ROYAL CERAMICS PLC

S

SAMPATH BANK PLC

SEYLAN BANK PLC

SIERRA CABLES PLC

SINGHE HOSPITALS PLC Hot

SMB LEASING PLC

SOFTLOGIC HOLDINGS PLC

SOFTLOGIC LIFE INSURANCE PLC

SRI LANKA TELECOM PLC

SWISSTEK (CEYLON) PLC Hot

T

TEEJAY LANKA PLC

TESS AGRO PLC

THREE ACRE FARMS PLC

TOKYO CEMENT COMPANY (LANKA) PLC Hot

U

UNION BANK OF COLOMBO PLC

V

VALLIBEL FINANCE PLC

VALLIBEL ONE PLC Hot

VALLIBEL POWER ERATHNA PLC

W

WASKADUWA BEACH RESORT PLC


You are not connected. Please login or register

FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Sri Lanka: Colombo All Share Price Index to reach 12,000 by 2013-report

Sri Lanka: Colombo All Share Price Index to reach 12,000 by 2013-report

Go down  Message [Page 1 of 1]

Hanoifortune

Hanoifortune
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
THIS IS A 2011 NEWS ARTICLE

[/b]Colombo, 09 May,2011 (Asiantribune.com): While for long term growth, the Colombo stock market needs to expand further, improving liquidity and introducing effective measures to curb manipulation; a recent research report on Sri Lankan equity investments by NDB Stockbrokers forecasts that the analysts expect the All Share Price Index (ASPI) to reach 12,000 levels by 2013.

“But do not believe the exceptional gains witnessed in 2009 and 2010 are feasible in the immediate future.” NDB analysts stressed adding that they remain bullish on the equity market, although that investment decisions based on logic rather than speculation is vital to sustain the positive momentum.

The Analysis by NDB stock brokers forecast that Lankan Equity Market needs expansion as the Sri Lankan equity market does not properly represent the overall economy. Accordingly, the report outlines that the key sub segments of the economy including Retail trade, Transportation, Banking and Insurance giants such as Bank of Ceylon (BOC), People’s Bank (PB), National Savings Bank (NSB), Sri Lanka Insurance Corporation (SLIC), Business Process Outsourcing giants such US listed Virtusa, Millenium Information Technologies (MIT), Textiles giants such as Brandix, MAS Holdings, Power & Energy giants such as Ceylon petroleum Corporation (CPC), Ceylon Electricity Board (CEB), Mining segments, Paddy, Minor Exports and Fishing segments are hardly represented in the equity market.”

“Hence we estimate the equity market represents less than 30% of the overall economy,” NDB analysts outline. However the report points out that the robust economic growth will be reflected in the increase in revenues recorded by all listed companies, although certain sectors will record higher growth compared to others.

“In line with the real GDP growth estimate of 8%, but we estimate an average revenue growth of 15% per annum.” The report further highlights adding that a one off benefit of over 10% is expected to the corporate profits in 2011 with the reduction of corporate tax from 35% to 28%. Analysts also forecast that in addition with economies of scale and increased utilization of capacity (operating leverage), the operating profit margins are estimated to improve by 1% per annum.

“Accordingly we estimate an average growth in core earnings excluding exceptional items per share, basis of 40% for 2011 and around 25% for 2012 and 2013.”

Meanwhile, the report also stress that raising of capital for expansion, in the form of rights issues would dilute profits on a per share basis in the short run while the NDB analysts have ignored that impact assuming that in the long run the businesses will maintain the Return on Equity (ROE), resulting in a substantial growth in profits on a per share basis.

According NDB analysts estimates the overall market Price to Forward Earnings (P/E) based on the estimated earnings for Financial Year 2010/2011 is 18 times.

“However the P/E increases to 20 times once the exceptional (non-recurring) gains are excluded.” The analysts forecast adding that over the next 3 year time, they consider a P/E of 15 times considering earnings excluding exceptional gains are justifiable since the initial growth phase of the country is likely to maintain the positive sentiment.

Accordingly NDB analysts forecast that in line with the growth in earnings, the overall share prices on average could gain 20% per annum over the next 3 years, while certain sectors and companies will outperform the overall market.

As per the report the stock market steamed ahead in January to February in 2011 with the All Share Price Index (ASPI) recording an 18% gain. While such an upraise had followed the exceptional gains made in 2009 and 2010, of 114% and 91% respectively NDB analysts outlines that around 40% of the gains made in January and February were shed in March 2011.

The market activity had been lukewarm in April 2011 with the indices remaining stagnant added with the turnover levels and foreign investor participation remaining low. The report also stresses that while banks have increased lending for share trading through margin trading facilities, the credit exposure of banks and broking houses for share trading is at over Rs.10 billion and Rs.2 billion respectively.

The increase in credit granted for share trading have contributed to short term, speculative trading.

“While such trading is essential to improve liquidity, it should result in increased level of activity within a relatively narrow share price band.” NDB analysts opine adding it should not result in steep increase in prices of shares in the absence of a fundamental rationale.

They highlights that the influx of IPOs combined with bank guarantees offered at attractive terms attracted a substantial number of investors to the equity market and as a consequence the initial public issues were over-subscribed by many times due to the artificial demand created. NDB analysts further stresses that the heavy over-subscription resulted in allocation of miniscule proportions of shares to applicants.

“Thus the effective cost per share shot up for investors who utilized seemingly attractive bank guarantees. This result in artificially high prices once the share starts trading in the secondary market.” The analysts outline.

According to the report excessive speculative trading could result in a crash and NDB stockbrokers outline that as per their earlier report, Taiwan is a case study in uncovering the long term repercussions of excessive short term speculative trading.

“The Taiwan equity market is yet to fully recover from the crash in 1990.” NDB analysts outline adding that they remain bullish on the medium term outlook of the equity market due to robust growth in corporate profits and the resultant attractiveness in terms of share. However NDB analysts’ forecasts that attempts to manufacture returns such as the returns made in 2009 to 2010 in the short term may result in creating asset bubbles and unpleasant consequences in Lankan capital market.

The report said that Sri Lanka posted a Gross Domestic Product (GDP) growth of 8.0% in 2010, which was ahead of IMF estimates of 7.0% and the second highest since independence and Lankan Macroeconomic performance had achieved best since 1978. Accordingly empirical evidence from countries such as India, China, Malaysia and Brazil indicate the success of diversification of industries. Hence, Sri Lanka should utilize its location advantages and development of ports by promoting industries such as steel, warehousing and shipbuilding according to NDB stockbrokers.

The report pin points the Service Sector as the star performer as it posted an 8.0% growth in 2010, the highest since 2002 and up from a 3.3% growth in 2009. The marked growth in the Hotels and Tourism subsector was supported by a 46% Year on Year (YOY) rise in tourist arrivals, and a 62% increase in tourists’ earnings as per report. Subsequently transport and communication sector growth was supported by a 17% increase in cargo handling, a 13% rise in post and telecommunication and an 11% increase in passenger and goods transportation.

New vehicle registrations had gained 76% YOY encouraged by a reduction of import duty since June 2010. The report pinpoints however the rising inflation which is above 9% is a main concern.

Meanwhile Foreign Direct Investment (FDI) in Sri Lanka had dropped to US $ 516 million in 2010, from US $ 601 million in 2009. NDB analysts expect the FDI figure to exceed US $ 1 billion in 2011. However, in other developing economies such as Vietnam US $ 9 billion worth of FDI has flown into the country in the first 10 months of 2010.

“Thus, in our opinion, more FDI needs to come into the country in construction and infrastructure, communication, information technology, entertainment and tourism, health, education and export-oriented product sectors to support economic growth” NDB stockbrokers suggested in its report.

- Asian Tribune -

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics
When this article was written last year, the ASI was around 7400...

Considering the present situation and mood, it would take a brave man to predict even 6000.

sahan8896


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
looks like NDB stockbrokers have made a great prediction Razz

balapas


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Everyone knew that the market was over valued even then. My gosh to say 12,000 by 2013. I bet they invested a lot and suffering as a result and not the people who read their research.

aj


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Thanks Hanoifortune for bringing this up. Experts say billions of things. It's like the astrologists. Billions of times they are wrong. But when 1 of a billion come true, then they jump up and say I told you so, my prediction came true. And then people believe that, not realizing he was wrong other billion times.
What kind of market expert a paid professionals who are doing this for a living, learned the subject, would say such a thing? Would you believe what they say now? Didn't they see it was overvalued*2 then? (Nope now it's not undervalued either. it's may be fairly valued but could be overvalued depending how the profit growth declines in the coming quarters. It's not like companies are making massive profits now. They can't even sell shares to show profits)

Sponsored content


Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum