People's Leasing Company Limited PLC IPO

 

People's Leasing Company, the market leader in the growing leasing industry, will go public with an IPO on 3rd November 2011. At the offer price of LKR 18.00, we believe PLC, a subsidiary of the state owned People's Bank, offers compelling investment value. In addition to the access to captive leasing portfolios of the parent, PLC is also able to operate on a significantly lower cost model with their ability to piggyback on the parent's branch network. With a leasing portfolio of 25% of the specialized leasing companies' asset base, PLC's disbursements dwarf even the Licensed Commercial Banks' leasing segments. Our TP of LKR 22.00 is based on relative multiples (earnings and book) considering PLC's competitive positioning. SUBSCRIBE.

 

 

 

BRS Equity Research | Bartleet Religare Securities (Pvt) Ltd, Sri Lanka

Lion Brewery (Ceylon) PLC - BRS Equity Research

Stable revenue growth in FY 2012E and FY 2013E

We expect LION to post a revenue of LKR 15.06bn in FY 2012E. Growing local demand for soft liquor and the Company’s increasing focus on capacity expansion would create top line growth in our view. We expect Gross Profit margins to remain healthy at 34% in FY 2012E and 35% in FY 2013E . Our forecasts have factored in a price increase of 3% for both FY 2012E and FY 2013E.

Consistent healthy margins, EBIT margin 16% (FY 2012E)

The Company recorded a recurring EBIT of LKR 1.75bn for FY 2011. We expect the EBIT to reach LKR 2.40bn in FY 2012E. EBIT margins are expected to be 16% in FY 2012E and FY 2013E. We believe the Company will have to manage its administration and distribution cost in order to maintain margins.

EPS estimates – LKR 15.25 (FY 2012E) and LKR 22.21 (FY 2013E)

BRS adjusted EPS for LION stands at LKR 12.11 for FY 2011. We expect the EPS to reach LKR 15.25 (+26% YoY) by FY 2012E and LKR 22.21 (+44% YoY) by FY 2013E. DPS is maintained at LKR 4.00.

Valuation – Attractive, potential value of LKR 252.50

Our valuation is based on the free cash flow method. Based on our forecast the stock has a potential value of LKR 252.50 on a WACC of ~ 10.3% and terminal growth rate of 3%. The cost of equity is based on a beta of 0.87 (based on ASPI vs. stock price movements), risk free rate of 7.4% and an equity risk premium of 5%. The stock has a forward PE multiple of 13.0x on FY 2012E EPS of LKR 15.25 and the current price of LKR 198.00. Based on FY 2013E EPS the stock has a PE multiple of 8.9x. The Food and Beverage sector PE stands at 15.1x as at 13th October 2011.

Sri Lanka climbs 10 places in the Global Competitiveness Report

The Annual Global Competitiveness Report (GCR) from the World Economic Forum (WEF) shows that Sri Lanka has made impressive progress over the last year. The country has climbed 10 places to the 52^nd rank in 2011-12. The GCR finds Asia has become globally more competitive as a result of its rise in economic prominence. Over the past five years, China, Indonesia, Vietnam, and Sri Lanka have made important strides in the GCI rankings.

The GCR report assesses the ability of countries to provide high levels of prosperity to their citizens, which in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity.

Across all indicators, Sri Lanka shows improvements on 80% of them - 80-90 of the 110 indicators - both in terms of scores as well as rank. Sri Lanka made the greatest improvements in scores, year-on-year, in the pillars of ‘macroeconomic stability’ (up by 0.48 points) and ‘infrastructure’ (up by 0.33 points). Meanwhile, the most noteworthy decline in scores was in the pillar of ‘labour market efficiency’ (down by 0.11 points).

The dramatic jump by Sri Lanka in the last few years in GCR rankings might not be sustainable going forward. Also, it may be easier to bring in improvements in smaller economies, unlike India. But it may be noted that these strides are not only from peace dividends due to a strong positive sentiment since the end of the civil war. Indeed, most macroeconomic indicators also support the high growth and prosperity in the economy. The report lists inflation, access to financing, inefficient government bureaucracy, political instability, corruption and inadequate infrastructure as the main problems faced while doing business in Sri Lanka. We believe that many of these concerns are likely to wane with proactive policy intervention by the Sri Lankan government, while a few of them might just stay put, being ‘generic’ in nature.We remain positive on the sustainability of growth process in the economy.

On the global economy, Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, and co-author of the GCR, notes in the report - “Amid re-emerging concerns about the global economic outlook, policy-makers must not lose sight of long-term competitiveness fundamentals. For the recovery to be put on a more stable footing, emerging and developing economies must ensure that growth is based on productivity enhancements. Advanced economies, many of which struggle with fiscal challenges and anaemic growth, need to focus on competitiveness-enhancing measures in order to create a virtuous cycle of growth and ensure solid economic recovery.”

Market gain on speculation

* Market oversold; Amana accounts for 78 pct of
volume
* Banks help gain on earnings hope; Keells posts 35 pct
profit
* State bank protects rupee amid importer dlr demand


COLOMBO, July 27 (Reuters) - Sri Lanka's stock market edged
up on Wednesday mainly on retail buying of banking shares in an
oversold bourse, fuelled by speculation the Securities and
Exchange Commission (SEC) may relax an order to end margin
trading.
The main share index gained 0.2 percent or 11.98
points to 6,505.56. It hit a more-than seven-month low on Monday
after negative comments on insider trading.
Analysts said retail investors were snapping up beaten
shares on a rumour the SEC may relax a directive to eliminate
margin trading by the year's end, which have hit the market
badly.
Since June 1, the index has shed 11.9 percent, mainly due to
forced selling to meet the deadline.
The 14-day Relative Strength Index gained to 29.3 from
Tuesday's 28, but was still below the oversold level of 30,
Thomsonreuters data showed.
Banks led the gain on earning hopes with the fourth largest
lender DFCC gaining 4.8 percent and top lender
Commercial Bank of Ceylon rising 1.4 percent. The
second biggest bank HNB closed 1.9 percent firmer.
Market heavyweight John Keells Holdings added 0.4
percent before posting a 35 percent gain in its June quarter net
profit.
Islamic lender Amana Bank, which will start commercial
banking operations shortly, bought 15 percent of Amana Takaful
, boosting the turnover.
Amana, which closed flat, accounted for 78 percent of the
day's total volume of 191.3 million. The bourse' five-day
average is 104.8 million. The 30-day and 90-day average trading
volumes were 101.2 million and 105.7 million, respectively. Last
year's daily average was 67.9 million.
The day's turnover was 1.97 billion Sri Lanka rupees ($18
million), below last year's average of 2.4 billion and this
year's 2.7 billion.
The bourse is down 1.96 percent so far this year, after
being Asia's best performer in 2009 and 2010, with 124 percent
and 96 percent respectively due to optimism over the economy
after the end of a 25-year war in May 2009.
Foreign investors were net sellers of 10.2 million rupees
worth of shares on Wednesday. They have sold 7.7 billion rupees
in 2011 after a record outflow of 26.4 billion in 2010.
The rupee ended steady at 109.49/50 a dollar for
an eighth straight day after gaining to 109.42 due to panic
dollar sales by exporters, who expected a sharp rise after a $1
billion inflow from a sovereign bond sale last week.
However, dealers said a state bank, through which the
central bank directs the market, bought dollars at 109.50 to
keep the currency steady.

FACTORS TO WATCH:
- June quarter earnings of listed firms
- If foreign investors buy shares in large volumes.
- The extent of the rupee's appreciation.

DATA
Colombo Stock Exchange:
Stock Market Volume (Shares)
Current Volume Average Volume 30 Days
191,253,747 101,161,176

Yield and Price of Sri Lanka's sovereign bonds:
Maturing year Tenure amount Reuters yield
2012 5-yr $500 mln 3.031-2.634
2014 5-yr $500 mln 4.193-3.901
2020 10-yr $1,000 mln 5.8920-5.7525
2021 10-yr $1,000 mln 5.9838-5.8519

* For Sri Lankan treasury securities benchmarks and data,
please click and
* For interbank lending rate or call money rate or

* For secondary market rates, please see <0#LKBMK=>.
($1 = 109.495 Sri Lanka Rupees)

(Reporting by Ranga Sirilal; Editing by Shihar Aneez and Bryson
Hull)

LSE in talks with Sri Lanka exchange over share trading

(Reuters) - The London Stock Exchange is in talks with Sri Lanka's Securities and Exchange Commission over allowing trading of some of the island nation's shares on the London bourse and vice versa, a regulator official said on Monday.

An agreement will help Sri Lanka's selected blue chips to be traded in London, opening up its market to foreign investors.

"This is still in an initial stage. We hope to progress after the discussion and if happens, it will be a great opportunity for Sri Lanka," Malik Cader, the director general of the SEC told Reuters in the sidelines of a national economic forum in Sri Lanka's capital, Colombo.

Cader declined to comment on the time frame for the process.

The LSE (LSE.L), which was forced to abort its $3.5 billion merger with Canada's TMX Group last week, has links with Sri Lanka after buying Sri Lankan technology company, Millennium IT.

The SEC is encouraging foreign companies to list on the Colombo Stock Exchange .CSE in order to get access to trade their shares in London market.

(Reporting by Shihar Aneez; Editing by Louise Heavens)

Q411 Earnings Review - Royal Ceramics PLC (RCL)- bartleetstock

Net Revenue up 29.2% YoY to LKR 5,751mn from LKR 4,451mn

We believe the growth in volumes to be the key catalyst that led to top line growth. The prices have remained constant for both its Tile and Sanitary ware segment; indicating that the growth in volumes drove revenue in FY 2011. We expect a Net Revenue growth of 19.1% to LKR 6,848mn (previous estimate- LKR 7,460mn) for FY 2012E and a growth of 20.9% to LKR 8,279mn for FY 2013E, further steered by increased volumes.

Flat Gross Profit Margins

RCL achieved a Gross Profit growth of 25.4% to LKR 2,656mn in FY 2011. We expect RCL’s Gross Profit to grow by 17.4% YoY to LKR 3,120mn (previous estimate- LKR 3,446mn) in FY 2012E and by 22.8% to LKR 3,828 in FY 2013E. Gross Profit margins are expected to be steady at 45.6% for FY 2012E and 46.2% for FY 2013E.

EBIT growth of 27.2% in FY 2011 to LKR 1,579mn (previous estimate – LKR 1,560mn)

EBIT is adjusted for non-recurring gains of LKR 164mn in FY 2011. We expect an EBIT growth of 5.5% to LKR 1,665mn (previous estimate-LKR 1,875mn) in FY 2012E and 25.2% to LKR 2,085mn in FY 2013E. We believe the growth in volumes coupled with cost savings will aid in EBIT growth.

Valuation – Attractive at the current price of LKR 155.60; upside potential of 11.8%

Based on our new estimates we have arrived at a target price of LKR 173.93(previous estimate-LKR 165.28). Our valuations are based on a WACC of ~ 9.4% and terminal growth of 3.0%. The WACC is based on a debt to equity of 50%, beta of 0.91(based on ASPI vs. RCL stock price movements), risk free rate of 7.3% and an equity risk premium of 4.0%. 

Regards,

BMS Equity Research Team | Bartleet Mallory Stockbrokers

Recommendations for Expolanka IPO

Broker pulse on Expolanka IPO
Broker        Comment

•     Acuity         Yes
•     Asha Phillip     Yes/Medium to Long Term
•     Asia Securities     Yes
•     Assetline     Neutral/Yes Long Term
•     Ceylinco     Yes
•     CT Smith    Yes
•     DNH        Yes/Medium to Long Term
•     Heraymila    Yes
•     IIFL Ceylon    Yes/Long Term
•     John Keells    Yes
•     NDB        Report Out Today
•     Richard Peiris     Neutral/Yes Long Term
•     SC Securities    Yes
•     Taprobane    Yes

expo ipo

Expo Lanka Holding Limited - IPO

Sri Lanka's stock exchange has approved an initial public offering by Expolanka Holdings to raise 2.4 billion rupees by issuing 172 million ordinary voting shares at 14 rupees each. The IPO opens May 12 with the prospectus was available on April 25.

The company has said it plans a sell-down of a 25 percent stake including a recent private placement to raise funds for expansion and repay debt.

The company announced after its recent private placement that three independent directors had been appointed to its board. 

post by Sinhala Ayojakaya,

Expo Lanka Holding Limited, another IPO.As usual our retails investors are very busy to find cash to apply for said ipo.Some time they sell their good stocks to find cash. Who cares prospectus? Why? Every IPO share price is going up in first day. So no need to read prospectus and best thing is applying all IPOs. Do you think same? We think that most of our retail investors think so. Companies, those come to IPOs, they know how our investors think and they value their IPO price with smart premium and rest will be handed over to our investors. They are doing job well. Finally IPO is oversubscribed by many times.

If above comments is not relevant to you, please forget it.

Here we would like to highlight few points regarding Expo Lanka Holding Limited.

·       Stated capital of the company Rs.1,782,915,000/=.its equal to issued no of shares (before IPO).This means promoters cost of shares is Rs.1.if directors sell 127,351,071 shares @14,their cost for the company is zero. They can do this without changing major shareholding.

·       15%, out of IPO shares will be allocated to employees, its means 25,800,000 no of shares. In addition to this another 2,678,500 shares will be allocated on May 2011 under ESOP. some time they may dump their holding in first day,if they feel,price is getting down and they know their company real value.

·        316,667,500 shares were transferred @ rs.6.we can’t say exactly their decision on first trading day. but  we know if they sell @14,they will get  a wonderful capital gain (14-6).

·        ROE of the company is 15%, EPS .711 for nine months ended including major one off income, Book value per shares 2.41 after IPO increased to 3.42.pls make your valuation.

·       Company has declared dividend for the nine months ended 31st December 2011,cents 0.121.this reduced further cost of a share of directors

·         During the year Rs.100,626,192 has been granted to directors as advance.

Note. If you think that above comments are wrong, please discuss with Sinhala Ayojakaya.

Union Bank IPO

Sri Lanka bank IPO creates record

Feb 25, 2011 (LBO) - An initial public offer for 375 million rupees of stock in Sri Lanka's Union Bank has drawn record subscriptions of 84 billion rupees or 225 times making it the largest oversubscription ever in the island.
The registrars said 30,100 applications had been received for the issue which closed on Thursday, and from the applications processed so far 3.375 billion shares had been applied for.
The bank only offered 15 million shares to the public.


The previous high was with Singer Finance, a small finance company which attracted subscriptions for 135 times the offer, advisors NDB Investment Bank said.

Softlogic IPO in March

“The country has a high number of small banks and they are unable to provide massive development loans. The banks need to consolidate to support growth and the development process of the country,” Softlogic Holdings Chairman and Managing Director Ashok Pathirage said.

“The corporate sector needs to undertake projects and support the country’s socio economic development. It is important that top banks merge to provide these funding facilities within the country,” Pathirage said.
“We could manage with three to four solid banks considering the country’s size and population. The banking industry has the necessary regulatory framework to move forward. However, merges within the industry will facilitate the huge capital requirement to carry out the development projects,” he said.
The Softlogic Finance company will focus on high performance in keeping with its brand name and reputation. It has a strategic plan in place to achieve Rs 500 million profitability within the next three years.
“This is the level that we are planning to reach in the next few years. We will expand our branch network to widen the reach and will also introduce more finance products to increase our customer base,” Pathirage said.
Softlogic Holdings will go for an IPO in March to raise funds to further build the company.

Rehan Wijetunge and Investnow.lk

Investnow.lk bar temporarily!


Letter from Rehan about the suspend of InvestNow.lk

My Apologies...

---

Dearest Members, Investors and those who are just starting out,

It is with great regret that I write this message to you all that I am temporarily suspending the forum in order to rework our strategy and create a professional entity that will continue to help investors navigate the great depths of the market and act to be a credible guide with the help of you all, the community.

The events that have taken place over this short period of time have convinced me that we seriously need to make a stand to save what we have all built and act in a manner that best serves the community, our country and that can truly help the Colombo Stock Exchange reach greater heights and be free from manipulative control through education and creating awareness.

In the coming weeks I will be developing a more robust system that can handle these issues and I hope that I can count on your support to do this.

If anyone who like to have a refund for any services paid for that are still valid then please send me an email. I'll be happy to do the needful.

Sorry for the inconvenience.

Kind Regards, Rehan Wijetunge

in InvestNow.lk post by MukeshAmbani,

Check share trading account of Rehan Wijetunga

I think SEC and CSE should immediately check the share trading account of Rehan Wijetunge because many believe that he is front running share by publishing article on it website through various nominee account. Front running is a criminal offence under the SEC Act. Details of Rehan Wijetunga can be provided to CSE for a immediate investigation.

Reply from Rehan

Well, our moderators had some issues with approving this post since it can be considered as "mud-slinging" but then I decided that maybe this needs to be discussed :)

I do however thank you for your reply to my post, "Message to All Our Members" which you have highlighted the benefit of my proposed system :D

http://investnow.lk/2011/01/24/message-to-all-our-members/11506/32037/

To be honest, I like your initiative; it's bold and if that is what is necessary to bring some credibility to this system then so be it :D

I actually haven't traded in months, not something you might have expected from the guy running this thing; heck I should be rolling in cash and make it open to everyone even without verification like some other sites claiming no responsibility for what happens and leave it entirely to their membership to abuse. Well, that's not the way I like to run things ;)

Let's create an approachable market serviced by professionals who actually care about developing the share market with no agenda and free it from the manipulators whose aim is to ride the market and leave the small guys holding the bag; shame on them!

Consider this a movement; my hope is that we share the same goals and can encourage more reputable organizations to join and create an investment culture that best serves the community and for that we require the assistance of the SEC and all related parties.

This is an invitation to really serve our community :D

Thank you

Rehan 

Update on 31 Jan, 2011


An article was published on lbo.lk about the incident..
author: Ishara M Gamage



Sri Lanka stock website shuts after regulator warning
Jan 31, 2011 (LBO) - A Sri Lanka stock investment website has closed after warnings against misleading investors by the capital markets regulator, whose officials said they were cracking down on such sites.
An official at the Securities and Exchange Commission said they warned the people operating the website, saying misleading advice that influence share prices could violate SEC regulations.


The operator of the site, investnow.lk, decided to close last week after the warning by the regulator.


A notice posted on the website said it was "temporarily suspending" the forum in order to "rework" its strategy and create a "professional entity that will continue to help investors navigate the great depths of the market and act to be a credible guide with the help of you all, the community."


It said it would act in a manner that "best serves the community . . . and be free from manipulative control through education and creating awareness."


The site offered to refund members for any services paid for that are still valid.


The SEC official said they were also monitoring other websites that offer advice on investing in the stock market which has been on a bull run since the island's 30-year ethnic war ended in 2009.


The SEC was also investigating stock brokers believed to be behind some of the websites that offer advice to investors, he said.


The Colombo bourse was Asia's second-best performing market last year