Documentos de Académico
Documentos de Profesional
Documentos de Cultura
5th Floor,
# 40, NDB Building,
Nawam Mawatha,
Colombo 02.
Tel: +94 11 2131000
Fax: +9411 2314180
Buy
We expect the counter to outperform the broader market. Recommend adding/increasing exposure to the stock at current prices.
Hold
We do not expect the counter to significantly outperform the broader market. Recommend reducing holdings of the share by 50%in case of a downgrade. Maintain
current exposure in case of an upgrade.
Underweight
We expect the counter to underperform the market and recommend reducing holdings by 90%.
Q UARTERLY FINANCIALS
1-De c-14
14.09
10.36
Stock Tracker
Share s
2014
Growth
Ne t Asse ts
NP (mn)
1,609.34
7,244.07
7,244.07
1,187.90
69.08
5,761.92
5,761.92
518.29
588.89
201.03
2,196.60
1,596.45
(123.23)
50.70
50.70
190.89
2,551.88
1,529.00
1,529.00
135.82
154.98
291.26
134.59
489.40
489.40
747.00
398.38
301.47
414.51
414.51
11%
8%
8%
71%
1181%
7%
7%
96%
327%
-6%
49%
24%
44%
5%
5%
45%
54%
48%
48%
8%
2%
5%
48%
-23%
-23%
44%
45%
4%
-34%
-34%
(mn)
22,605.28
69,648.60
69,648.60
45,397.90
2,629.96
63,411.59
63,411.59
6,878.61
25,735.86
1,428.52
28,218.82
13,241.30
977.28
1,019.29
1,019.29
4,604.31
33,996.05
24,674.04
24,674.04
1,302.49
2,235.59
5,304.20
4,733.31
18,282.92
18,282.92
20,950.00
4,735.31
3,467.11
3,686.83
3,686.83
16%
18%
18%
10%
77%
15%
15%
31%
21%
28%
17%
20%
-13%
7%
7%
9%
16%
13%
13%
24%
10%
8%
6%
3%
3%
11%
17%
12%
15%
15%
34.19
13.27
13.27
15.35
17.48
22.51
22.51
29.38
10.57
7.53
27.23
11.02
(2.06)
0.04
0.04
1.25
31.54
8.74
8.74
7.09
4.22
4.75
8.83
18.93
18.93
1.38
2.13
16.67
10.06
10.06
104.75
171.14
313.55
6,619.00
56.61
56.61
3,135.79
53.19
2,606.90
23.06
9.57
546.23
82.28
-51%
-216%
94%
0%
114%
114%
18%
71%
22%
-1%
149%
80%
-70%
1,849.50
11,791.93
10,068.07
4,848.00
2,689.00
2,689.00
60,404.69
1,591.47
4,163.67
853.16
923.37
7,598.16
10,336.96
6%
-3%
12%
193%
10%
10%
13%
12%
101%
5%
5%
27%
0%
6.36
(1.77)
12.79
47.20
2.56
2.56
24.70
7.14
78.72
1.53
1.51
24.64
1.25
101.70
(397.02)
1,215.26
8,841.33
229.54
261.10
261.10
142.60
427.85
427.85
209.86
-39%
-39%
-32%
6,826.66
6,826.66
5,154.76
7%
7%
6%
5.51
5.51
9.60
401.69
120.51
285.20
687
71.86
1,000.00
115.56
1,182.12
644.46
1,215.81
-82%
-3%
10,825.26
15,593.85
1%
15%
2.14
2.36
450.00
350.00
68.00
241.00
8.40
101.00
8.90
16.50
53.50
196.39
75.00
515.29
990.37
2,009.39
406.00
1,954.92
779.00
133.83
1,734.29
958.36
886.91
4,794.03
818.29
1,325.70
307.12
143.38
282.75
(242.90)
886.99
984.20
3,645.61
481.16
1,226.61
665.36
92.91
241.75
814%
8%
-10%
32%
70%
8%
-54%
54%
17%
46,949.66
24,384.85
14,759.18
126,748.50
9,514.35
32,626.20
11,083.05
7,216.61
5,028.80
8%
8%
12%
12%
18%
8%
6%
4%
11%
16.50
152.34
36.47
(72.30)
150%
1,967.05
He althcare
AMSL
LHCL
ASIR
NHL
15.40
49.80
22.40
3.20
528.46
223.73
1,099.09
1,409.51
213.48
269.19
492.46
73.48
211.29
465.06
441.33
171.81
1%
-42%
12%
-57%
3,232.70
4,316.02
5,408.68
3,891.87
28-Nov-14
249.00
159.00
117.00
214.90
49.00
186.00
146.00
164.30
90.00
42.10
239.50
91.50
28.00
1.40
0.40
25.00
229.00
93.00
55.00
43.80
85.00
164.70
288.50
1,400.00
539.50
22.90
21.80
89.00
89.00
69.00
(Mn)
104.88
809.86
55.58
265.10
101.25
321.01
80.70
69.26
475.20
50.00
160.41
230.61
67.50
1,191.77
614.07
295.04
167.91
175.98
168.98
41.55
50.00
85.71
30.00
20.00
6.41
1,560.00
363.00
25.18
46.30
8.01
NP (mn)
1,793.20
7,848.11
7,848.11
2,035.02
884.67
6,166.77
6,166.77
1,017.42
2,512.37
188.36
3,276.27
1,987.34
(69.53)
53.33
53.33
277.08
3,930.67
2,260.12
2,260.12
147.30
158.24
305.35
198.68
374.97
374.97
1,075.00
578.91
314.75
273.03
273.03
16.00
224.00
95.04
187.32
89.77
4.77
300.00
25.50
53.73
30.00
31.40
80.00
40.00
50.85
(198.51)
607.63
6,631.00
120.87
120.87
3,704.85
91.00
3,172.09
22.89
23.78
985.80
24.94
72.90
21.87
29.71
CFIN
COMB*
COMB-x
DFCC
CFVF
HNB*
HNB-x
LFIN
LOLC
LVEN
NDB
NT B*
PMB
SEMB
SEMB-x
PABC
SAMP*
SEYB
SEYB-x
VFIN
HASU
UAL
CT CE
CINS
CINS-x
PLC
JINS
SDB
CDB
CDB-x
6
9
9
6
6
9
9
6
6
6
9
9
6
9
9
9
9
9
9
6
9
9
9
9
9
6
9
9
6
6
6
6
6
6
6
6
6
6
6
6
9
6
6
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Jun
Jun
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
2013
RO E
EPS
Annualise d
DPS
DY
1.16
1.98
1.45
1.25
1.89
1.18
0.92
1.65
1.66
1.50
1.36
1.59
1.93
2.48
0.71
1.60
1.13
1.30
0.77
1.40
1.90
2.66
1.83
2.02
0.78
1.71
1.67
0.65
1.31
1.02
4.70
4.50
4.50
5.50
4.00
8.50
8.50
6.50
0.50
1.00
10.00
2.10
8.00
2.25
2.25
1.00
3.25
6.00
2.00
16.00
16.00
1.25
2.00
12.00
3.00
3.00
1.9%
2.8%
3.8%
2.6%
8.2%
4.6%
5.8%
4.0%
0.6%
2.4%
4.2%
2.3%
0.0%
0.0%
0.0%
0.0%
3.5%
2.4%
4.1%
2.3%
3.8%
3.6%
0.7%
1.1%
3.0%
5.5%
9.2%
13.5%
3.4%
4.3%
115.59
52.64
105.94
25.88
28.44
28.44
201.35
62.41
77.50
28.44
29.41
94.98
258.44
1.10
2.94
2.41
42.31
0.90
0.79
1.00
1.44
27.23
1.48
2.04
6.58
0.47
1.25
2.00
6.00
48.75
0.30
0.30
3.25
2.00
60.00
1.00
4.00
1.50
1.0%
1.3%
2.4%
4.5%
1.2%
1.3%
1.6%
2.2%
2.8%
2.4%
0.0%
0.6%
1.2%
16.67
15.15
11.76
18.80
72.03
72.03
173.49
1.16
0.90
1.04
1.63
1.63
6.00
2.0%
2.5%
3.3%
154.08
2,364.24
20.20
86.75
15.86
150.65
15.59
1.23
2.40
4.00
0.75
2.2%
2.0%
17.66
25.56
3.44
14.81
0.81
6.53
0.31
0.37
4.23
3,468.58
1,916.72
1,773.81
14,667.40
1,636.58
2,651.41
614.24
286.77
565.49
17.54
25.48
13.70
19.75
16.27
10.31
15.47
28.33
44.82
12.66
239.07
325.13
28.64
127.98
4.73
80.36
5.67
9.26
37.58
1.88
1.08
2.37
1.88
1.77
1.26
1.57
1.78
1.42
2.00
5.00
1.00
3.40
0.45
2.00
0.33
0.16
0.95
0.4%
1.4%
1.5%
1.4%
5.4%
2.0%
3.7%
0.9%
1.8%
4%
0.48
72.94
34.46
34.46
12.91
1.28
14%
9%
18%
4%
0.81
1.60
0.90
0.10
426.96
358.92
984.91
146.97
25.24
19.06
31.04
25.00
30.69
6.12
19.29
4.92
2.76
2.52
2.58
4.55
1.16
Earnings
3,586.40
10,746.79
4,070.05
1,769.35
7,225.84
2,034.84
5,024.74
376.72
4,368.36
2,541.29
(139.06)
46.93
369.44
5,295.42
1,537.29
294.60
210.99
407.13
264.91
378.55
2,150.00
771.88
419.66
465.56
80.50
7,409.69
182.01
4,229.45
45.77
47.56
1,971.59
49.87
Annualise d
BV
PER
7.28
11.98
8.82
14.00
2.80
8.26
6.49
5.59
8.51
5.59
8.79
8.30
(13.59)
35.55
10.16
19.97
7.26
10.65
6.30
6.18
20.14
34.67
32.67
73.97
28.50
16.62
10.25
5.34
8.85
6.86
215.53
80.48
80.48
171.25
25.97
157.86
157.86
99.32
54.16
28.57
175.92
57.42
14.48
0.56
0.56
15.61
202.47
71.53
71.53
31.35
44.71
61.88
157.78
692.16
692.16
13.43
13.04
137.72
67.89
67.89
20.16
19.98
(87.34)
19.94
23.20
9.97
8.80
8.19
12.62
26.80
27.53
39.61
25.36
97.21
Research Team Sidath Kalyanaratne, Vaishalie Shakespeare, Raguram Raamakrishnan, Upul Atapattu
PBV
1.56
1.50
0.55
0.06
0.0%
10.1%
3.0%
2.5%
1.9%
HO LD
BUY
HO LD
BUY
BUY
HO LD
7%
3.50
49.23
1.38
4.00
5.9%
Sept
Sept
Sept
Sept
Sept
79.90
90.00
16.00
30.10
24.00
336.29
5.86
1,456.15
75.51
36.01
496.51
9.06
470.91
12.92
12.92
573.48
(6.37)
146.21
(92.15)
(92.15)
-13%
242%
222%
114%
114%
15,283.54
273.66
18,201.15
1,989.20
1,989.20
6%
7%
8%
1%
1%
2.95
3.09
0.95
0.23
0.23
993.02
18.13
1,383.34
17.50
8.35
27.06
29.09
16.84
129.87
103.55
45.45
46.71
12.50
17.84
17.84
1.76
1.93
1.28
1.69
1.35
1.50
-
1.9%
0.0%
0.0%
0.0%
0.0%
194.00
28.40
21.20
87.84
44.52
6.43
4,183.28
157.14
157.14
(653.12)
100.49
100.49
741%
56%
56%
23,828.20
2,999.69
2,999.69
38%
11%
11%
95.25
6.17
6.17
8,366.56
274.62
2.12
2.04
4.60
3.44
271.28
58.88
58.88
0.72
0.48
0.36
5.00
0.70
0.70
2.6%
2.5%
3.3%
41.80
25.70
80.30
199.88
843.48
66.00
(35.18)
2,174.64
288.25
6.32
1,769.03
294.36
-657%
23%
-2%
2,721.44
24,239.69
3,590.73
-2%
7%
11%
(0.23)
2.12
5.82
(46.91)
1,790.94
384.34
16.60
(178.11)
12.10
13.79
13.62
28.74
54.40
3.07
0.89
1.48
1.45
3.00
0.0%
5.6%
3.7%
10.87
11.44
6.54
7.77
(102.26)
10.74
15.05
9.64
6.43
10.49
8.44
13.27
8.85
6.44
10.26
104.48
124.32
128.19
45.91
3.54
49.57
110.21
110.05
98.41
31.23
71.25
28.92
28.92
4.35
0.74
2.75
1.06
0.87
1.33
6.90
0.77
0.86
1.15
2.37
1.53
2.11
1.54
4.53
1.00
5.50
0.14
0.38
15.00
1.50
3.00
1.00
1.65
4.00
1.30
1.30
1.30
1.3%
0.0%
4.0%
0.4%
8.1%
4.4%
1.8%
3.2%
0.9%
2.2%
3.7%
2.1%
2.9%
6.6%
6
6
6
6
6
2014
NP (mn)
774.92
2013
NP (mn)
960.21
Growth
%
-19%
Ne t Asse ts
(mn)
21,797.52
RO E
EPS
17.67
Annualise d
PER
19.43
Annualise d
Earnings
2,213.88
AHUN
HSIG
KHL
SHOT
SHOT -x
Share s
(Mn)
442.78
BV
PBV
DPS
DY
Manufacturing
ACL
6
CERA
6
DIPD
6
GRAN
9
GLAS
6
LLUB*
9
KCAB
6
LWL
6
RCL
6
T YRE
6
T ILE
6
T KYO
6
T KYO-x
6
T JL*
6
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
77.10
111.50
136.50
40.00
4.70
342.00
85.00
94.80
113.00
74.00
108.80
61.00
44.40
19.70
59.89
30.00
59.86
60.00
950.09
120.00
21.80
54.60
110.79
80.40
53.05
222.75
111.38
655.00
201.79
255.85
526.05
(17.60)
207.79
2,188.85
96.10
402.46
596.71
352.39
217.48
1,151.44
1,151.44
445.84
190.48
64.75
483.48
135.42
376.75
1,941.78
130.43
112.24
32.68
336.14
338.15
1,209.93
1,209.93
503.58
6%
295%
9%
-113%
-45%
13%
-26%
259%
1726%
5%
-36%
-5%
-5%
-11%
6,257.94
3,729.53
7,673.71
2,754.40
3,360.02
5,948.87
2,402.49
6,008.58
10,902.89
2,510.51
3,779.80
9,664.48
9,664.48
2,849.90
7%
14%
13%
-1%
12%
51%
8%
11%
11%
29%
12%
25%
25%
27%
6.74
17.06
17.58
(0.39)
0.44
22.73
8.82
14.74
10.77
8.77
8.20
6.89
6.89
1.92
403.57
511.70
1,052.10
(23.47)
415.59
2,727.60
192.21
804.93
1,193.42
704.78
434.96
1,535.25
Motors
DIMO
UML
6
6
Sept
Sept
687.00
100.00
8.88
100.90
67.40
401.04
76.49
1,086.35
-12%
-63%
8,715.72
8,187.41
2%
10%
15.19
7.95
134.80
802.08
17.28
45.24
12.58
981.89
81.14
0.70
1.23
10.00
12.00
1.5%
12.0%
O il Palms
BUKI
Sept
730.00
102.00
1,123.75
(569.64)
297%
29,527.88
8%
22.03
2,247.50
33.13
33.13
289.49
2.52
3.00
0.4%
Plantations
BALA
KGAL
KVAL
NAMU
MASK
T PL
WAT A
KOT A
BOPL
ELPL
9
6
9
6
6
9
6
6
6
6
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
Sept
25.00
90.20
72.00
90.00
12.90
34.00
17.50
31.90
11.50
22.40
23.64
25.00
34.00
23.75
53.95
23.75
236.67
40.00
83.75
72.87
14.27
108.32
7.45
108.97
(52.40)
91.72
262.14
(333.85)
114.68
161.27
98.05
214.46
191.82
158.41
(205.46)
101.12
98.58
(337.87)
(35.46)
86.39
-85%
-49%
-96%
-31%
74%
-9%
166%
1%
423%
87%
2,770.82
3,542.80
2,662.28
2,184.19
1,356.86
1,518.83
4,362.13
2,770.86
1,029.88
3,069.58
1%
6%
0%
10%
-8%
8%
12%
-23%
23%
11%
0.81
8.67
0.29
9.18
(1.94)
5.15
2.22
(16.69)
2.74
4.43
19.03
216.63
9.93
217.93
(104.81)
122.29
524.28
(667.69)
229.35
322.54
10.06
31.05
10.41
246.51
9.81
(6.64)
6.60
7.90
(1.91)
4.20
5.06
117.23
141.71
78.30
91.97
25.15
63.95
18.43
69.27
12.30
42.13
0.21
0.64
0.92
0.98
0.51
0.53
0.95
0.46
0.94
0.53
1.00
13.50
3.50
10.50
3.00
0.75
2.50
0.10
0.75
4.0%
15.0%
4.9%
11.7%
0.0%
8.8%
4.3%
7.8%
0.9%
3.3%
18.00
6.90
5.40
57.00
40.00
34.60
125.20
747.11
477.27
532.53
335.00
52.00
(62.23)
619.31
181.28
2,336.45
822.89
822.89
194.12
497.33
137.48
2,834.93
890.21
890.21
-132%
25%
32%
-18%
-8%
-8%
2,450.69
2,611.68
1,300.78
18,580.64
7,277.29
7,277.29
-5%
54%
30%
26%
23%
23%
(0.99)
1.66
0.76
8.77
4.25
4.25
(124.45)
1,238.63
362.56
4,672.89
1,424.64
221.14
7.10
(18.11)
4.16
7.11
6.50
9.41
8.14
19.57
3.50
2.73
34.89
18.80
18.80
0.92
1.97
1.98
1.63
2.13
1.84
1.40
0.60
0.10
2.00
2.00
2.00
7.8%
8.7%
1.9%
3.5%
5.0%
5.8%
Te le communications
DIAL*
9
Sept
SLT L
9
Sept
13.00
47.50
8,143.78
1,804.86
4,619.49
5,043.00
4,078.30
3,897.00
13%
29%
42,045.18
63,257.00
14%
11%
0.70
3.73
5,700.64
6,724.00
15.42
18.57
12.75
5.16
35.05
2.52
1.36
0.58
0.85
4.5%
1.8%
109.00
59.50
117.00
70.88
35.99
125.21
942.76
75.70
464.56
363.30
84.80
370.11
159%
-11%
26%
15,199.50
1,732.39
5,115.61
13%
9%
12%
26.60
4.21
4.95
1,885.52
151.40
619.41
9.23
4.10
14.14
23.65
214.45
48.14
40.86
0.51
1.24
2.86
0.50
3.00
2.50
0.5%
5.0%
2.1%
Trading
BRWN
CWM
SINS
6
6
9
Sept
Sept
Sept
1,257.60
HO LD
BUY
HO LD
HO LD
BUY
HO LD
HO LD
Recommendations
JKH - Hold
JKH group PBT grew by 39.0% and profit attributable to the equity holders grew by 29.0% in Q2FY14/15 over the previous year. The property sector recovered in Q2FY14/15 due to higher
revenue recognition at the residential apartments whilst Consumer foods and Retail, Financial Services and Information Technology sectors performed exceptionally well. However, City
hotels to the leisure segment contribution have been below par whilst transport segment continue to struggle amidst stiff competition. Hence, we continue to recommend HOLD.
GLAS - Hold
Revenue growth in FY14/15H1 was a marginal 3.0% YoY while net profits grew significantly by 348.4% mainly due to the contribution of Rs 267 Mn from a land sale. The positive trend in
the domestic market continued during the 2nd Quarter with an increase of 18.0% being achieved. The company continued its upward momentum in productivity, by surpassing the
production volume during this half year as against that of the corresponding period of the last financial year. Amidst the substantial cost escalations, the increase in productivity helped
the company to better its profitability.
TJL - Buy
TJLs performance in 2QFY14/15 as anticipated recovered from the set back in the previous quarter due to drop in sales volumes to the US caused by abnormal weather. The top line and
bottom line in 2QFY14/15 grew YoY for by 7.5% and 7.2% respectively. The decline in cash balance by 31.7% from the prior quarter was partly due to capital expenditure and dividend
payments of USD 4.1 Mn and USD 2.7 Mn respectively. The new investment in the multi-fuel boiler and power plant successfully completed the construction phase as expected in
2QFY14/15 and is to be fully in operation in the quarter to follow. TJLs strong ROE, consistently high dividend payout, strong balance sheet position and expected profit growth tickers
down to an intrinsic value with a potential upside of 16.8%. Therefore we reiterate a BUY.
OSEA - Buy
Revenue grew 25.8% YoY due to a significant growth in the revenue from apartment sales of 34.0% as a result of the revenue recognition policy in respect to apartment sales from phase 2.
Gross margins remained intact despite the increase in cost of sales. Meanwhile, the bottom line grew at 15.4% YoY. Amidst falling treasury yields coupled with companys growth
prospects, the counter continues to show a notable upside.
NTB - Hold
NII increased QoQ by 20.0% to LKR 2.4 Bn for Q3FY14. Profit after tax increased QoQ by 35.0% to LKR 830.0Mn for Q3FY14. The bank continued to pursue high yielding income segments
whilst CASA increased to 30.0% of deposits by end Q3FY14. Therefore, bank NIM increased to 5.9% in Q3FY14/15 quarter compared to 5.7% witnessed in Q2FY14/15. The loan book
recorded a 10.0% increase for the nine months and a 15.0% YoYincrease. Despite the promising medium to long term growth prospects, coupled with attractive P/E valuations, we remain
cautious on the short term prospects.
KHL - Hold
Revenue for Q2FY14/15 recorded QoQ growth of 14.4% as opposed to the 33.2% decline recorded in the previous quarter. GP margin has thus improved to 65.2%. Finance expense has
shown a substantial QoQ reduction of 25.6% mainly due to Rs 726.6 Mn of interest bearing borrowings retired during the quarter. Profit after taximproved to Rs 344.7 Mn from Rs 250.1 Mn
recorded in the Q2FY13/14. Net profit margin improved from the previous quarter to 12.9%. Considering Q3 and Q4 being the best quarters for the hotel sector and hence KHL, we expect
this counter to post improved results in the quarters to follow.
LLUB - Hold
The revenue for FY14Q2 experienced a 11.0% YoY growth to Rs.3 Bn while cost of sales increased at a slower momentum of 3.0% YoY to Rs.1.8 Bn, resulting in a growth in the gross
margin by 23.0%. Despite a significant decline in finance income by 63.0% YoY a net profit growth of 23.0% was witnessed due to falling operational expenses. The construction of
Chevron Lankas USD 15 Mn blending plant in Sapuguaskanda is scheduled for completion this year. Despite the healthy quarterly performance, given the long term future prospects, we
would continue to maintain HOLD.
COMB - Hold
NII declined marginally by 0.2% to LKR 6.7Bn QoQ in Q3FY14, whilst bottom line increased 20.9% to LKR 3.3 Bn for the concerned period. Similar to the sector, COMBs other income grew
QoQ by 42.4% in Q3FY14 whilst the gain from financial investments was LKR 1.3 Bn. However, NIMs continued to drop to 3.8% in Q3FY14 in comparison to 4.1% registered in Q2FY14.
Therefore, considering the high trading multiples and short term sector competition, we dont expect the counter to offer a significant upside potential in the short term.
AEL - Buy
AELs top line and bottom line in 2QFY14/15 grew QoQ by 29.2% and 19.2% respectively. The engineering segment had QoQ growth of 37.0% and 25.9% respectively. The growth in
revenue was mainly due to the commencement of the construction of phase two of the Henamulla housing project, with the order book now totaling approximately Rs 101 Bn. Bottom line
growth was a result of AELs order book increase its concentration in high margin water and waste management projects. Sathosa motors saw its revenue decline marginally by 0.5% QoQ
due the drop in the number of Isuzu sales. Despite the 18.1% revenue growth experienced by Access Realities, the bottom line dipped 14.7% QoQ.
LIOC - Hold
LIOCs performance for 2QFY14/15, the bottom line saw a 23.6% YoY decline mainly due to declining gross profit margins, despite revenue increased marginally by 7.6% YoY. With the
recent significant decline in global oil prices we expect improved earnings in the quarters to follow. Therefore we maintain a HOLD.
HNB - Buy
NII declined by 5.0% QoQ to LKR 6.1 Bn for Q3FY14 whilst loan book improved marginally by 4.4% as at Septtember Q3FY14 from Q2FY14. Due to reprising of the portfolio and high
exposure towards high yielding SME, Micro and retail segment, the NIM improved to 4.6% in Q3FY14 compared to 4.1% witnessed in Q2FY14.
Pawning portfolio exposure continued to reduce to 7.4% in Q3FY14 compared to 9.1% in the previous quarter. Despite the drop in top line, the bottom line improved by 7.0% to LKR 2.5Bn
partially due to 72.0% increase in other operating income and collective impairment reversal of LKR 320Mn for the quarter. Considering the robust growth prospects, the counter remains
attractive.
SAMP - Buy
SAMP group net interest income declined by 8.5% to LKR 4.2Bn for Q3FY14 whilst profit for the period increased by 30.2% to LKR 1.1 Bn. Due to prudent management of the pawning
portfolio, the impairment charge for the quarter declined by 55.8% whilst other operating income increased by 128.8%. SAMP continued to reduce pawning exposure to 10.9% in Q3FY14
from 13.2% in Q2FY14 whilst growing the loan book by 5.8%.
Furthermore, the NIM improved significantly to 4.0% by Q3FY14, compared to 2.8% in Q2FY14. Therefore, considering the expected pick up in the credit growth coupled with improving
margins, the stock remains undervalued.
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Disclaimer
This document is based on information obtained from sources believed to be reliable, but NDB Securities
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