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.
FINANCIAL CHRONICLE™

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

Click Link to get instant AI answers to all business queries.
Click Link to find latest Economic Outlook of Sri Lanka
Click Link to view latest Research and Analysis of the key Sectors and Industries of Sri Lanka
Worried about Paying Taxes? Click Link to find answers to all your Tax related matters
Do you have a legal issues? Find instant answers to all Sri Lanka Legal queries. Click Link
Latest images

Latest topics

» Latest Financial Status and Future Outlook of SMB Finance PLC
by ChatGPT Yesterday at 11:15 pm

» Latest Financial Status and Future Outlook of Overseas Realty PLC
by ChatGPT Yesterday at 11:00 pm

» Latest Financial Status and Future Outlook of Merchant Bank of Sri Lanka & Finance PLC
by ChatGPT Yesterday at 10:55 pm

» McDonald’s අපේ නෙමෙයි අපේ බෝස්ගේ – අබාන්ස් කියයි
by ChooBoy Yesterday at 10:19 am

» AI Assistance for Stock Market Research and Analysis
by ChatGPT Yesterday at 7:12 am

» Comparative Analysis of the Insurance Sector
by God Father Tue Mar 26, 2024 11:46 pm

» Sri Lanka: Why Pay Exorbitant Taxes?
by ChatGPT Tue Mar 26, 2024 10:52 pm

» LANKA CREDIT AND BUSINESS FINANCE PLC (LCBF.N0000)
by K.R Tue Mar 26, 2024 3:15 pm

» CENTRAL INDUSTRIES PLC (CIND.N0000)
by D.G.Dayaratne Tue Mar 26, 2024 9:11 am

» SIYAPATHA FINANACE PLC (SLFL.N0000)
by ChatGPT Tue Mar 26, 2024 7:58 am

» FINANCE AND LEASING SECTOR
by ChatGPT Mon Mar 25, 2024 6:45 am

» LOLC FINANCE PLC (LOFC.N0000)
by ChatGPT Mon Mar 25, 2024 6:36 am

» CIC HOLDINGS PLC (CIC.N0000)
by ChatGPT Mon Mar 25, 2024 6:18 am

» UNION ASSURANCE PLC (UAL.N0000)
by ChatGPT Mon Mar 25, 2024 6:15 am

» First Capital Holdings PLC: Current Financial performance and future outlook
by God Father Sun Mar 24, 2024 10:58 pm

» LankaBizz: Sri Lanka's First ever Artificially Intelligent (AI) Business and Research Assistant
by God Father Sun Mar 24, 2024 7:27 am

» HOTEL AND TRAVEL SECTOR
by ErangaDS Wed Mar 20, 2024 7:22 am

» CIC Holdings Good Times Ahead
by ashan silva Mon Mar 18, 2024 11:00 am

» EPF Fund keep eye on low P/E Shares
by K.R Mon Mar 18, 2024 8:45 am

» SINS - the Tailwind effects of a crisis hit Economy
by Hawk Eye Mon Mar 18, 2024 8:37 am

» Ceylon cold stores
by Hawk Eye Mon Mar 18, 2024 8:25 am

» Asha securities Provide buy signal for CIC
by ddrperera Fri Mar 15, 2024 1:10 am

» CSE ready for another Downtrend?
by D.G.Dayaratne Thu Mar 14, 2024 11:24 am

» LankaLAW Forum : Sri Lanka’s #1 Discussion Platform for Legal Questions and Answers
by blindhog Thu Mar 14, 2024 9:14 am

» Sri Lanka poised to benefit from demand surge for ‘non-China origin’ graphite
by samaritan Wed Mar 13, 2024 1:31 pm

LISTED COMPANIES

Submit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)



CHRONICLE™ YouTube

Disclaimer
FINANCIAL CHRONICLE™ Disclaimer

The information contained in this FINANCIAL CHRONICLE™ have been submitted by third parties directly without any verification by us. The information available in this forum is not researched or purported to be complete description of the subject matter referred to herein. We do not under any circumstances whatsoever guarantee the accuracy and completeness information contained herein. FINANCIAL CHRONICLE™ its blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or indirectly in any manner whatsoever. Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility, FINANCIAL CHRONICLE™ blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. The information on this website is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.

Further the writers and users shall not induce or attempt to induce another person to trade in securities using this platform (a) by making or publishing any statement or by making any forecast that he knows to be misleading, false or deceptive; (b) by any dishonest concealment of material facts; (c) by the reckless making or publishing, dishonestly or otherwise of any statement or forecast that is misleading, false or deceptive; or (d) by recording or storing in, or by means of, any mechanical, electronic or other device, information that he knows to be false or misleading in a material particular. Any action writers and users take in respect of (a),(b),(c) and (d) above shall be their own responsibility, FINANCIAL CHRONICLE™ its blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental violation of securities laws of any country, damages or loss arising out of the use of this information.


AI Live Chat

You are not connected. Please login or register

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

4 posters

Go down  Message [Page 1 of 1]

SunilNayaka


Equity Analytic
Equity Analytic

By J.A. Fernando in Colombo

Colombo, 09 May, (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.

Go to Link: http://www.asiantribune.com/news/2011/05/08/sri-lanka-colombo-all-share-price-index-reach-12000-2013-report

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics

@Jithendra: Thanks - This summary makes sense! With your journalistic contacts, would it be possible for you to get a copy of NDB's full report and upload it on the Research section?

econ

econ
Global Moderator

yeah in the long term I think lankan market has long way to go. many large companies are still out of the market.

Rocky

Rocky
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Shall we cross this bridge first?

Sponsored content



Back to top  Message [Page 1 of 1]

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