      Business Editor : Eriq Dewanarayana
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Business Editor : Eriq Dewanarayana
|
Out of the total quantity of 5.2 million kgs on offer this week, Ex Estate comprises a mere 0.58 million kgs. Once again BOPFS out-sold their corresponding brokens with a selection of improved better Western High Grown BOPFs in particular a strong feature. The poorest however, especially Brokens slipped slightly on last prices. CTC PFIs also sold well and the better teas in particular advanced fairly sharply on last week’s lower price levels.
Low Growns on the other hand tended lower and the drop was most evident on the Pekoes which advanced substantially last week. Tippy teas too met with less demand. Dust and Off Grades sold at irregularly lower levels.
The crop figure for the month of September at 23.4 million kgs is an all time record for the month bettering the previous highest of 20.9 million kgs achieved in 1993. The September 1998 figure is an increase of 2.6 million kgs on the corresponding quantity last year. The cumulative figure for January/September 1998 records an increase of 9 million kgs of 4.5% over the corresponding figure last year. The entire increase is due to the Low Growns with a gain of 13.5 million kgs or 14% on the corresponding figure last year whilst High & Medium Growns reflect declines of 1.7 million kgs and 21.8 million kgs respectively. Low Grown production therefore comfortably exceeds 50% of our total production and continues to be the growth area of Sri Lanka’s tea crop.
Russia
The Sri Lanka Tea Board has received intimation from our Tea Commissioner in Moscow that the increase of 3% on import duties imposed across the board with effect from 15th August 1998 was abolished on the 14th October 1998.This means that there would be a 3% reduction on all import duties including tea, with effect from 14th October 1998.
Low Growns—change in cataloguing procedure
with effect from Sale No 49 of 15th /16th December 1998 for which the catalogues are scheduled to close on 24th November 1998 the Low growns will be categorised into a leafy grade catalogue and tippy/small leaf catalogue instead of the the present Low Grown Large Break and Small Break catalogues.Low Grown leafy grade catalogue would have on offer the following grades FOP/OP, OPI, OPA, PEKOE/FP, BOP.
Tippy/Small Leaf catalogue would have on offer the following grades: FBOPF, FBOPFI, FBOPF’ ‘SP’/EX, SP, FBOP, FBOP1, BOP/BOP’S’, BOPF/BOPF’S’.
Forbes & Walker
Nilkamal Plastics India & Eswaran Bros. tie-up
Nilkamal Plastics Limited, India’s largest plastics injection moulding company and leaders in moulded furniture and material handling and bottle crates, is setting up a joint venture company with Eswaran Brothers, a conglomerate of Sri Lanka. The JV Co. will manufacture world class moulded furniture products in the island. Nilkamal Plastics Limited, a company headquartered in Mumbai, has five plants located in North, South and West India. These plants have the state of the art production facilities that roll out top quality furniture products at high productivity levels. Nilkamal plants are ISO 9002 certified by TUV Bayern Germany.
Nilkamal Plastics Limited is the largest producer, with a capacity of over 10 million chairs per annum. Apart from chairs, the wide range includes other furniture products like stools, dining tables, TV trolleys, centre tables, etc. Nilkamal Plastics is famous in India for its highest productivity among all Indian processors, with quality meeting international standards. This high productivity is achieved by designing machines with several special features for very low production time, and average chair in Nilkamal is produced, less than 45 secs. compared to 70 secs. by other producers.
Nilkamal Plastics Ltd. is setting up a state of the art plant with the capacity to produce 150,000 chairs a month at a projected cost of Sri Lankan Rupees 165 million at Piliyandala. The joint venture company, Nilkamal Eswaran Plastics (P) Limited, with the holding of 76% by Nilkamal Plastics Ltd., and 24% by Eswaran Brothers, has already acquired the land and building of Simplex International through DFCC Bank.
While Nilkamal will bring in its expertise for the day-to-day management of the company, Eswaran Brothers will bring in the expertise of marketing through their already existing huge distribution network in the island.
Nilkamal has world wide contacts with raw material suppliers as it consumes over 2000 MT of polymers a month. These contacts will help the new company Nilkamal Eswaran Plastics (P) Ltd to obtain lowest polymer prices. Nilkamal Eswaran Plastics (P) Ltd., intends to grab the lion share of the moulded furniture market in Sri Lanka with low cost, high productivity and established marketing net work. Nilkamal
Eswaran Plastics (P) Ltd., will introduce six models of chairs, two models of baby chairs and 2 models of stools in the first phase. The parent company in India shall export various other products to the joint venture company, to complete and market wide range of other furniture products like T/V Trolleys, Dining Tables, wide range of stools for different applications and premium chairs which were recently introduced by NPL in India. The parent company from India shall also lend the moulds to the joint venutre to offer the entire range to Sri Lankan market.
The project, funded by DFCC Bank, will have 1:1 debt equity ratio. The machines and moulds are shortly reaching the island shores and the company will go in production by January, 1999.
The joint venture has already appointed Julius & Creasy as their solicitors. Mr. R. S. Inglay from India, stationed in Sri Lanka, will look after the day-to-day operations as a head of JV Company.
Stock Market Weekly
Fluctuations ahead...The international scene seemed quite active this week Singapore, Taipei, and Seoul and Bangkok saw increases of almost 10% over the past week. The Colombo market also seemed to be on the same track early during the week, but the surge tailed off on Thursday and the All Share index ended the week at 541, 24 points up from last Friday. The Sensitive Price Index also showed the same trend ending at 815, 55 points up from last Friday, after peaking at 846 on Wednesday.
Reasons? Well it’s hard to pinpoint, There is speculation that the Fed will reduce interest rates even further. That seemed to spark the investors in Major international markets and we felt the effects of that here.
There are also some who acted on local performances. The Banking and Finance sector has reported some positive performances in their third quarter interim reports and this spurred the market up. However, the decline at the end of the week can be attributed to profit taking after the initial rise in stock prices.
Last week’s sway towards foreign net purchases didn’t hold. This week we saw the familiar and dreaded net foreign sales figure show up, this time in excess of Rs. 20 million.
Turnover levels raised peaked on Wednesday and fell back to Monday’s levels. Heavy Institutional trading drove Wednesday’s heavy market. An indication that the Colombo bourse can be successful even with little foreign involvement.
Still, a specific direction the market will move in is hard to predict. Healthy buyers still exist in the market, so some mild fluctuations could be expected in the coming week though around the 540 to 550 levels.
The market is still one better suited for long-term investors. Lanka Lubricants, Sampath Bank, DFCC, JKH, NDB, Distilleries, Maskeliya, Kelani valley and Aitken Spence are medium to long term buys such investors may be interested in. For the riskier investor Grain Elevators, Dockyards, Lion Brewery, and Watawala could offer short term gains.
MMBL, Group Research
Market Review
Week ending 20th November 1998
ASPI moves up 4.5% as market continues to rise.
The Colombo market continued to gain despite some losses registered at the end of the week. The All Share Price Index gained 4.5% WoW. The SSPI also gained 7.2% to close at 815.2 points on the same day. Average daily turnover for the week was Rs. 71. 1m. increased foreign participation was seen as foreigners remained net buyers with foreign activity contributing to 70.8% (+7.7% WoW) of the total. Price advances were lead by Lanka Lubricants, Ceylon Grain Elevators, Sampath Bank and AMW.
Corporate results for the week:
Watawala Plantations Ltd: The 9M F12/98 results indicate that turnover is up by 2.6% YoY to Rs. 858.7 m. Trading profit is down by 30% YoY to Rs. 80.8 m. PAT for the period has come in at Rs. 89 m. down by 29.3% YoY:
Haycarb Ltd: 6 MFY 3/99 results indicate a drop in net turnover by 2% YoY to Rs. 644.3 m. Operating profits are down by 5.7% YoY to Rs. 90.5 m. PAT for the period has come in at Rs. 50 m. down by 28.6% YoY.
Tokyo Cement Company (Lanka) Ltd: 6M results indicate that turnover is down by 5.8% YoY to Rs. 824.5 m. PAT for the period has come in at Rs. 102.3 m. up by 19.6% YoY.
Associated Motorways Ltd: Results for 1HFY 3/99 indicate that turnover is up by 24.7% YoY to Rs. 714.4 m. PAT is up by 265% YoY to Rs. 38.2 m.
Hayleys Ltd: Results for 1HFY3/99 indicate that has increased by 9.7% Rs. 4.1 bn. PAT has increased by 2.7% Rs. 163.6 m.
Singer Sri Lanka Ltd Results: 9M FY 12/98 indicate that turnover is up 14.2% YoY to Rs. 2.6 bn. PAT has come in at Rs. 160.4 m., up 35.8% YoY.
Ceylon Grain Elevators: Results 9M FY 12/98 indicate that net turnover is up by 11% YoY to Rs. 2.6 bn. Operating profits have increased by 88% YoY to Rs. 204 m. PAT for the periood has come in at Rs. 202.3 m. up by 92% YoY.
Ceylon Class Company LTD: 1H FY3/99 results indicate that net turnover is up by 33.7% YoY to Rs. 321m.. Operating Profits are up by 4.1% YoY to Rs. 80.8 m. Interest cost is down by 18.5% YoY to Rs. 17.2 m. PAT for the 1H has come in at Rs. 20.8 m. Up by 35.2% YoY.
Hayleys Exports Ltd: Results for 1H FY 3/99 that net turnover is up by 10% YoY to Rs. 108.7 m. Operating profits have increased by 9.3% YoY to Rs. 10.9 m. PAT for the period has come in at Rs. 20.1m, up by 2.1% YoY.
Market expected to sustain upward momentum: We believe that performance of the Colombo market will be spurred by the sentiment of the local retail investors as well as foreign investors, who of late have become increasingly active in the market. We believe that the current levels offer cheap valuations for investors who have holding power in the medium term. We recommend: Sampath Bank, Colombo Dockyard, Lanka Lubricants, Lion Brewery, Nestle Lanka and Ceylon Brewery. (JF — HNB Research)
