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| Monday, 13 September 2004 |
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HNB Stockbrokers' weekly market review Nawaloka debut brightens market Market fluctuated in a wide range throughout the week, but closed the week flat despite Nawaloka Hospital making a strong debut at the Colombo Stock Exchange (CSE). The ASPI closed the week at 1413.4 points, up marginally by 0.8 points or 0.06% from last Friday's close. Meanwhile the Milanka Price Index (MPI) saw a dip of 0.33% or 7 points to close at 2104.2 points. The market saw a rise on Monday, with indices closing the day at high levels; but failed to continue the momentum throughout the course of the week. Indices fell on Tuesday and continued to remain relatively flat showing just a slight rise on Friday to end the week on a positive note. Weekly turnover bounced back by 54% compared to last weeks activity levels, to stand at Rs. 924.3 million, with a daily average of Rs. 184.9 million. Turnover grew on Thursday and Friday with Nawaloka Hospitals shares being heavily traded with approximately 4.5 and 2.5 million shares being trading on both days. Nawaloka shares started trading on Thursday, after a successful IPO at Rs. 20 per share, which saw the shares being over subscribed by 3 times. The shares were seen trading at prices as high as Rs. 30.00 per share to close at Rs. 29.50 on Friday. On Thursday, approximately 1.2 million of John Keels Holdings shares were traded in the range of Rs. 103.75 to Rs. 104.50 boosting the weekly turnover substantially. Out of these shares, approximately one million shares consisted of a foreign to foreign trade. Foreign purchases for the week totalled to Rs. 282.6 million, while foreign sales for the week was Rs. 261.45 million, resulting in a net inflow for the week of Rs. 21.15 million. Foreign participation for the week stood at 29% of the total activity. Heavily traded counters for the week were, Colombo Land, Marawila Resorts, Nawaloka Hospitals, Blue Diamonds and Blue Diamonds (non voting). Small caps to remain in interest While the indices continued to remain volatile, interest towards selected small caps remained mixed during the week. We feel that the investors should not take a long-term view on these stocks but instead take profits, where it 's available. Furthermore Nawaloka's entrance is expected to improve the retail activity in the market resulting in better market participation. Therefore we continue to advise the investors to make use of the market fluctuations to take trading positions, while monitoring the fundamentally sound blue chips for bargain hunting opportunities. Asiri results 1Q FY 2005 Turnover grows by 49.2% Asiri Hospital released its 1Q results for FY2005, recording a net profit of Rs. 32.9 million, which was an increase of 9% compared to the first quarter of last financial year. The turnover grew substantially by 49.2% to stand at Rs. 241.6 million for the quarter. This increase can be mainly attributed to a positive contribution made by Asiri Medical Services (AMS) towards group revenue. Apart from this fact, an increase in surgical income for the period had also contributed to the surge in revenue. Apart from price increases in drugs and growth in cost of services due to AMS, the recent rupee depreciation has also adversely affected company's cost of services, as import costs of drugs increased in rupee terms. Cost of services showed an increase of 59.1%, to stand at Rs. 89.3 million for the quarter, out performing the growth in revenue. Direct expenses, which include salary costs of operational staff, house keeping expenses and depreciation of medical equipment increased by 54% to stand at Rs. 52.7 million compared to the corresponding period of last financial year. The contributing factor for this increase being, AMS coming into the picture where by most costs including salaries for operational staff and depreciation of medical equipment have increased substantially. Gross profit for the period stood at Rs. 99.5 million, showing a 39.1% increase compared to the same period, last financial year. However the gross profit margins reduced marginally from 44% for the first quarter of last financial year to 41% this quarter, due to the faster increase in cost of services. Depreciation expected to affect bottom line The administration cost for the period showed a 36.4% increase compared to the first quarter of last financial year to stand at Rs. 41.7 million. Administration expenses include depreciation which has seen a considerable increase. This is due to Asiri's asset base increasing with the new building of AMS and new machinery coming in. However according to the management the full impact of depreciation will only be seen during FY2006, as only 75% of construction work of AMS has been completed to date. Another major component of administration costs is the administration staff cost and this too had seen an increase due to new staff being recruited to AMS. After taking these increases into account our forecasted administration cost for the year stands at Rs. 204.5 million. The views based herein are expressed with no malafide intentive to any party whatsoever based on already published data and from the information obtained by the research team. No matter published as above creates any liability of any kind whatsoever on HNB Stock Brokers Pvt Ltd or its associates. The views cannot be reproduced in any form without the explicit (written or otherwise and photocopied) permission from HNB Stock Brokers (Pvt) Ltd. |
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