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HNB Stockbrokers' weekly market review
Market regains momentum
The market continued its positive momentum, with both indices showing a
growth trend. The week began on a low note with, the ASPI and MPI
falling from last Friday's closing levels. However growth momentum built
up during the latter part of the week, with the ASPI peaking at 1743.5
points on Thursday.
On Friday, the ASPI rose further to close the week at
1745.2 points, up by 25.6 points or 1.46% compared to last Friday's
close. Meanwhile the MPI also showed a similar trend closing the week at
2357.9 points up marginally by 6.1 points or 0.26% from the previous
week's close of 2351.8 points.
The total turnover for the week was at Rs.3.8 billion,
with a daily average of Rs.757.6 million. Turnover showed a thumping
91.8% improvement, compared to the daily average of the week before.
Investor interest continued on Rs.1 par value stocks, as Nawaloka, Royal
Ceramics and Tess Agro remained in investor appetite.
The 3 stocks contributed Rs.898.2 million, Rs.536.4
million and Rs.318.5 million respectively towards total turnover, which
collectively constituted approximately 46% to the turnover.
Apart from the above, JKH counters also contributed
considerably towards the total turnover (Rs.259.7 million), with around
1.9 million of its shares trading. The counter closed at Rs.137.50, down
slightly from last Friday's close of Rs.138.25 per share..
Foreign purchases stood at Rs.387.2 million, while
foreign sales stood at Rs.274.4 million. This resulted in a net outflow
of Rs.112.8 million. Foreign participation was low at 8.7% of total
activity.
Tess Agro, Royal Ceramics, Nawaloka, Vanik Incorporated
and Ceylinco Seylan were among the heavily traded stock. Indices
remained volatile, with the overall positive momentum. With the
political uncertainty easing off, we expect the market to remain
positive but with some volatility due to profit taking.
Apollo 9m results FY2005
Apollo Hospital's released its nine months results for
FY2005, posting a net loss of Rs.95.2 million, showing a 55% reduction
in loss compared to the corresponding period of last financial year. Net
losses reduced for the nine months helped by revenue increases.
The revenue grew by 14% compared to the corresponding
period of previous financial year, to stand at Rs.1.23 billion for the
nine month period.
However, a Quarter on Quarter (QoQ) comparison indicate
that revenue declined by 9.7% to Rs.397.7 million, as opposed to the
second quarter revenue of Rs.440.3 million.
The company attributed the decline in revenue partially
due to the non-availability of consultants, during some part of the 3Q
of FY2005.
However, management pointed out that this issue has now
been addressed, with the infusion of new consultants. Considering that
Apollo has already gone through many issues relating to the availability
of consultants in the past, we strongly believe that the Hospital should
adopt a better policy to address this crucial issue in the long term.
Based on the hospital's current performance and our
forward projections for Apollo, which show significantly high PER's at
current price levels of 132.3x (FY2006) and 6.3x (FY2007), we downgrade
our recommendation to a Hold.
SLT results for FY2004
Sri Lanka Telecom Ltd (SLT) released its unaudited
results for FY2004, reporting a 43% decline in net profits to Rs.1.29
billion, compared to FY2003.
Despite recording a 16% and 21% growth in turnover and
profit before tax and levies, the bottom line suffered a setback due to
a newly introduced International Telecommunication Operators' Levy (ITL)
that amounted to Rs.2.4 billion (for last 21 months) and a Rs.330
million write off on account of the loss due to the tsunami.
The telecom company recorded an encouraging 16% growth
in the top line, backed by additional international call revenue and
rapid growth in Mobitel's revenue.
We forecast a net profit of Rs.3.8 billion for FY2005, a
sharp 118% jump compared to FY2004 (from a low base). These projections
are on the assumption that 2/3rd of the Levy would be recoverable. Based
on the projected EPS of Rs.2.13, the forward multiples are expected to
decline to 7.9x. |
