• Weekly Stock Market Review
• Low Growns: Excellent demand
• Seylan Bank's 'Tikiri' Carnival

Weekly Stock Market Review
Week ending 12th June 1998

Market tumbles on continued selling
The week began on a steady note but changed towards the end of the week as panic selling by domestic retail investors added to the slide begun by frenzied foreign selling. The ASPI lost 28 points (-4.4%WoW) to drop below the 650 psychological barrier, while the blue chip index lost 32 points (-3.2% WoW) to cross the 1,000 mark and close at 977.1 on Friday. Average daily was down marginally to Rs. 104.85m. from Rs. 108.6 m last week. Foreign activity remained on the selling side with a net outflow of Rs. 32.68m. and total activity falling to 27% of total turnover from 38% last week.

Ceylon Cold Stores earnings revised up: Full year results for Ceylon Cold Stores Ltd. (CCS) show a turnover growth of 18.1% YoY to Rs. 1.69bn. while PAT has expanded by 41.5% YoY to Rs. 216.1m. At the current price of Rs. 80, the is undervalued at 5.5xFY3/99 and 4.3x FY3/oo. Tea Small Holders Factories Ltd (TSML): full year results for FY3/98 show a turnover growth of 31.4% YoY to Rs. 922.8m, while PAT has expanded by 25.5% YoY to Rs. 103.9m. We forsee that the regional plantation companies (RPC's) and bought leaf operations, such as TSML will face a tough 2nd half in CY98, as the tea prices are expected to come off their prevailing high levels. Prices have already taken a dive at auctions in the last two weeks. We shall revise our current earnings forecasts of Rs. 136.7m. for FY3/99 and Rs. 173m. for FY3/00 after talking to the management. At the current price of Rs. 49, the stock is trading at 5.5xFY99 HOLD.

JFIN announce a 4:5 rights issue at Rs. 100
James Finlay Sri Lanka Ltd. (JFIN) has announced a 414 rights issue at Rs. 100 to refinance their 51% acquisition of PIMC for Rs. 1.6 bn. At the current price of Rs. 70, the counter is price at 9xFY12/98. We maintain our recommendation. Buy.

TCL share price drops by 20%
The share price of Tokyo Cement Ltd 9 (TCL) has dropped by 20% since the ASPI began its downward trend amonth ago. At the current price of Rs. 56 the stock is trading near its 18 month low. We are bullish on TCL because the current cement industry conditions are very favourable. At the last traded price of Rs. 56 the stock is trading at 2.3x and 1.8x prospective earnings. TCL is one of the cheapest stocks offering the highest growth potential. BUY.

Market should bottom out
While it is difficult to see where the market will consolidate given the scale of the decline some buying support could be seen in the week ahead. Our core recommendations remain: Ceylon Grain Elevators, Maskeliya Plantations, Watawala Plantations and Colombo Dockyard, Lanka Lubricants. (JF-HNB Research. This information is as at 12th June 1998)

Low Growns: Excellent demand

The 22nd sale of the year which was concluded on June 10 was one day auction. A total of 6 million kgs came under the hammer of which Ex-Estate offerings comprised an increased quantum of 1.48 million kgs.

Low growns continued to meet excellent demand and the majority of teas witnessed a firm to dearer trend in prices. This would result in the weekly Low Grown sale average moving up further on its record average of Rs. 152/18 per kg established last week.

The 1.48 million kgs of teas on offer in the ex-estate catalogues comprised largely of average to plain quality teas. The large availability of such teams combined with the limited interests results in prices declining, sharply by Rs. 10 to Rs. 30 per kg and more.

Next week's offerings show a further increase and total 6.4 million kgs.

- (Eastern Brokers Limited)

Seylan Bank's 'Tikiri' Carnival

Once again there will be all the fun of the fair when Seylan Bank's 'Tikiri' carnival opens its gates to kiddies on Saturday 20th June at Sathutu Uyana from 9 am to 7 pm. There will be games and kiddies' musical programmes, free rides and surprises galore from Yes FM.

Entrance is through Tikiri pass books but the very popular Tikiri Savings Accounts could be opened at the entrance.