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POSITIVES & TARGETS BY IMTIAZ BUHARDEEN

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samaritan
ChooBoy
CHRONICLE™
Imti2020
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1POSITIVES & TARGETS BY IMTIAZ BUHARDEEN Empty POSITIVES & TARGETS BY IMTIAZ BUHARDEEN Wed Jun 02, 2021 10:50 am

Imti2020


Expert
Expert

POSITIVES & TARGETS BY IMTIAZ BUHARDEEN
My take on the market for 2021 and beyond

I am pointing out the positives that will drive CSE to the next levels. I gave a prediction with 31 points in October ‘20 when ASPI was 6,000 that it will hit 10,000 by December 2021. By end-January it touched 9,000 and reversed due to the letter by CSE and is struggling slowly to get back there. It was a forced correction and nothing to do with fundamentals, in fact earnings have gone up tremendously and are really undervalued now.

The following events dragged the market down:

February: CSE letter
March: UNHRC resolution
April: Delay in Port City Bill
May: COVID third wave

My 30 positive pointers for take-off:

1. Interest rates very low AWPLR 5.65 Fixed deposits 5%

2. Corporate Tax rates reduced. 28 to 14 – Construction, 28 to 24 – Banks, 28 to 18 – Manufacturing, 28 to 14 – Healthcare

3. VAT rates reduced 15 to 8%. Also threshold increased.

4. Amnesty on unofficial money – to be gazetted soon.

5. Political stability with 2/3rd majority

6. Local manufacturers supported by CESS, after import restrictions, lots of companies have expanded or gone for new investments.

7. Market/business sentiments improved with above concessions.

8. Rupee depreciation. Nov. 19 – 180, Jan. 21 b - 185 – 2.7%, May 21 - 198 - 7.0%. Overall 6.6% average for 1 1/2 years. It’s good for export, remittances and tourism but bad for imports, but less imports now.

9. Business-friendly budget proposals for agriculture, livestock, pharmaceutical logistics, construction, manufacturing, IT, etc.

10. Government projects in infrastructure-road works 100k km, water projects one trillion worth, housing, BIA expansion, highways, power, etc.

11. Currently 289 ongoing projects each over 1 billion, totalling 5 trillion.

12. Port City will be a game changer/take off for FDI and Investments – road shows to follow to attract investments. $ 5 billion in next 5 years and another 10 billion 5-10 years later. It will be an international financial centre.

13. Mergers and acquisition on banks and finance companies and regional players targeting good companies through stock exchange.

14. New Listings in CSE – 200 companies by 2025. 15 companies in pipeline for 2021 with tax concessions.

15. Partial Listing of SOEs through Selendiva Investments

16. Dedicated minister in charge of capital market development.

17. Demutualisation and new SEC act will be another game changer for CSE with a possible foreign exchange partnership and listing.

18. New products to be introduced shortly to the market – REITS, Gold, Short selling and borrowing of shares, New Debt instruments and DVP.

19. Digitalisation with all E services for Account opening, Payments, IPO, Rights, Dividend, CDS and AGM. Even during lockdown all areas can function smoothly.

20. More new accounts opened, especially under 40s, education by CSE, seminars and school curriculum to promote share market opportunities.

21. Social media awareness and enthusiasm among investors.

22. Valuations. Currently we are trading at 10 PE (after new results announced) December ‘20 quarter was best ever with 85 b profits, March ‘21 results just coming in has already surpassed December results, we will easily exceed 100 b profits for the quarter, after providing for losses mainly from the tourism sector. If we achieve 350-400 b for a year at a PE of 15 our market cap should be 5-6 trillion; that’s almost double from now. Dividend yield of 2.5-3% means 85-100 billion is paid out from profit-making companies alone. While Singapore PE at 38, India at 31 and Malaysia at 27. At peak in 2011 we were at 29.5.

23. ASPI reached its peak in February 2011, was 7,800 then in January 2021 it broke and went to 9,000. Compared to 2011 and currently, ASPI 7,800-7,300 down 6.4%, Nifty 4,600-15,500 up 237%, Dow 12,000-34,500 up 187%. Most of the other markets also experienced similar growth. Above India and USA had the highest COVID numbers and currently market at record levels. We have not moved only backwards.

24. Stock market cap to GDP we are at only 20% whereas USA at 200; According to Warren Buffet indicator less than 75 is really undervalued. Maybe our stock market is not properly reflected in the economy.

25. Turnover has increased from 1.8 b in 2020 to 4.5 b in 2021, so far, we have surpassed 2020 t/o already. Market cap at 3.3 trillion. CDS accounts 700 k.

26. Total fixed deposits in banks is around 10 trillion earning less than 5% now. Even if 10% is withdrawn and comes to CSE 1 trillion that’s quite a significant amount and more can come in the future.

27. EPF fund is 3 trillion. In this low interest environment 30-40% can come to Equity. At least another 10% comes 300 b.

28. Foreigners have been nett sellers even if you take the last 10 years 820 b buying against 897 b selling, Nett 77 b outflow for last 10 years (2020 and 2021 – 75 b outflow).

29. Without EPF and foreigners we have increased turnover levels and had a reasonable rally, once both and more FD conversion to Equity comes in, we can enjoy a good rally and a more liquid market.

30. COVID is only drag currently, that too with travel restrictions and vaccines to be given, hopefully will be brought under control. Most of the European countries and USA have controlled and vaccination given to more than 35%. Next Asia will follow with improvements.



My targets with above facts:

1. Expect turnover per day 5-10 b by 2022 and 25 b by 2025.

2. Further 1 m new accounts by 2025 (20% of 5 m employed private and public sector)

3. Market cap 5-6 trillion by 2022 and 25 t by 2025.

4. ASPI 10,000 by 31/12/21; 12,500 by 31/5/22; 15,000 by 31/12/22; 30,000 by 31/12/25

(The writer is a high net worth individual and long-term investor in the Colombo stock market.)


https://www.ft.lk/columns/My-take-on-the-market-for-2021-and-beyond/4-718573

samaritan, Hitazz, RajapaksaDON, KingMaker2020 and Bakkabwoi like this post

Imti2020


Expert
Expert

https://twitter.com/BuhardeenImtiaz/status/1401458661675962373?s=20

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ChooBoy


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Unrealistic Optimism at a time of Pandemic.
Any intelligent fool can make things bigger and more complex... It takes a touch of genius - and a lot of courage to move in the opposite direction.
E. F. Schumacher

samaritan


Moderator
Moderator

ChooBoy wrote:Unrealistic Optimism at a time of Pandemic.
Any intelligent fool can make things bigger and more complex... It takes a touch of genius - and a lot of courage to move in the opposite direction.
E. F. Schumacher
During the pandemic the Corporate sector has performed well, some recording highest ever profits.
Pandemic is not the end of the world, with the vaccination in progress situation ought to improve. 
The SLEF recorded the highest number of online users yesterday (6th June 2021) numbering 1085. 

ChooBoy


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

POSITIVES & TARGETS BY IMTIAZ BUHARDEEN Screen51

https://twitter.com/ChronicleLK/status/1541803829934452737?s=20&t=wZwSY52vWhU921vYfPTqvQ

surfjj


Stock Analytic
Stock Analytic

Yes, EXPO has very good points and some bad points. At least in a forum like this it would be better if they list both sides of the story without having this over enthusiastic optimistic attitude. Sad.

ddindika likes this post

surfjj


Stock Analytic
Stock Analytic

Yes, EXPO has very good points and some bad points. At least in a forum like this it would be better if they list both sides of the story without  having this over enthusiastic optimistic attitude. Sad.

samaritan


Moderator
Moderator

surfjj wrote:Yes, EXPO has very good points and some bad points. At least in a forum like this it would be better if they list both sides of the story without  having this over enthusiastic optimistic attitude. Sad.
surfji,

IMO if a Company is not upbeat on future earnings they may not declare a hefty interim dividend. When the overall investor sentiment is down, even the best of stocks too come down. But those will be the ones which will appreciate higher than others when market turns bullish. 

You can get the weekly market report from EFL by registering via the following link:


https://lnkd.in/ekCmDTM

10POSITIVES & TARGETS BY IMTIAZ BUHARDEEN Empty Re: POSITIVES & TARGETS BY IMTIAZ BUHARDEEN Wed Jun 29, 2022 11:56 am

surfjj


Stock Analytic
Stock Analytic

Thanks for the reply.

surfjj


Stock Analytic
Stock Analytic

samaritan wrote:
surfjj wrote:Yes, EXPO has very good points and some bad points. At least in a forum like this it would be better if they list both sides of the story without  having this over enthusiastic optimistic attitude. Sad.
surfjj,

IMO if a Company is not upbeat on future earnings they may not declare a hefty interim dividend. When the overall investor sentiment is down, even the best of stocks too come down. But those will be the ones which will appreciate higher than others when market turns bullish. 

You can get the weekly market report from EFL by registering via the following link:


https://lnkd.in/ekCmDTM
Samaritan, I read your comments often. They are useful. Thanks. However, IMO there are a few issues about EXPO that are not discussed openly. Yes, it's a good $ earning share. But
1. The dividend %  is not too high, though in this quarter the dividend value is high. They probably gave it this time as sending $ to Japanese owners, may be an issue. 
2. There are issues of a world recession affecting the growth of shipping companies in the coming months.
3. This did well mostly as a COVID share (at least during that period). These shares can go down if the market sentiments go down drastically. 
4. There is a lot of marginal trading issues effecting this particular share. 
5. They are too many web seminars based on some brokerage companies that try to 'pump the share up' even when it was coming down from 400 to 100. The sad part is that these companies have a vested interest in this share as they/their clients have invested heavily in this company. In another country this would not be allowed. 
6. With the countries political situation the share value is too volatile though it's a liquid share.

ddindika likes this post

God Father


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

surfjj wrote:
samaritan wrote:
surfjj wrote:Yes, EXPO has very good points and some bad points. At least in a forum like this it would be better if they list both sides of the story without  having this over enthusiastic optimistic attitude. Sad.
surfjj,

IMO if a Company is not upbeat on future earnings they may not declare a hefty interim dividend. When the overall investor sentiment is down, even the best of stocks too come down. But those will be the ones which will appreciate higher than others when market turns bullish. 

You can get the weekly market report from EFL by registering via the following link:


https://lnkd.in/ekCmDTM
Samaritan, I read your comments often. They are useful. Thanks. However, IMO there are a few issues about EXPO that are not discussed openly. Yes, it's a good $ earning share. But
1. The dividend %  is not too high, though in this quarter the dividend value is high. They probably gave it this time as sending $ to Japanese owners, may be an issue. 
2. There are issues of a world recession affecting the growth of shipping companies in the coming months.
3. This did well mostly as a COVID share (at least during that period). These shares can go down if the market sentiments go down drastically. 
4. There is a lot of marginal trading issues effecting this particular share. 
5. They are too many web seminars based on some brokerage companies that try to 'pump the share up' even when it was coming down from 400 to 100. The sad part is that these companies have a vested interest in this share as they/their clients have invested heavily in this company. In another country this would not be allowed. 
6. With the countries political situation the share value is too volatile though it's a liquid share.

It always good to look both negative and positive side proper to making an investment decision. EXPO is a good share but it is overrated!

It may be advisable for anyone to look at the overall performance of the SG Holdings https://www.sg-hldgs.co.jp/en/ir/financial/ and compare that with of EXPOLANKA.

Logistics Business
In the Logistics Business, disruption of global supply chains continued with strain on air cargo space
because there is still no resolution in sight for the global shortage of marine containers. As a consequence, while marine and air freight charges remained high, Expolanka Holdings PLC, as a subsidiary, stably secured container space to meet strong customer demand. In Japan, we received contracts for new business such as 3PL (third party logistics) through comprehensive solution proposals made by GOAL.
As a result, operating revenues from this business segment increased by 129.6% year on year to 477,031 million yen while operating income increased by 280.2% to 48,459 million yen.


https://ssl4.eir-parts.net/doc/9143/ir_material_for_fiscal_ym3/116893/00.pdf

Gowri123


Senior Equity Analytic
Senior Equity Analytic

When you are valuating a company like Expo where Sri Lankan economy situation is next to nothing for concern. But what matters is US economy situation. Currently there is a worry of recession and inflation issues so the consumer demand has decreased as well the container rates.
But EXPO has the advantage of exchange gains. In FY22, most of the exchange rate valued at Rs 200/225(4th QTR).
But FY 23 onwards it will be valued at Rs 365 minimum. So even if there is a decrease in profit due to less volume for Q1 of 23, exchange gains will compensate that and logistics peak season is generally from July to December. So have to wait and see the demand changes in coming months.
This is my view not a BSH advice.

14POSITIVES & TARGETS BY IMTIAZ BUHARDEEN Empty Re: POSITIVES & TARGETS BY IMTIAZ BUHARDEEN Mon Jul 04, 2022 11:34 am

cseguide

cseguide
Vice President - Equity Analytics
Vice President - Equity Analytics

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