Tehan Liyanage

Sharing insights on financial markets | Views are personal

[Tehan Liyanage @tehanliy]

Stock Market Milestone Alert! 🚨
(25.10.2024)

Both the All Share Price Index (ASPI) and the S&P SL20 crossed their YTD closing highs recorded on 10th May 2024 during this morning’s trading hours!

[Tehan Liyanage @tehanliy]

Sri Lanka's Construction PMI Declines Ahead of Election

In August 2024, Sri Lanka's Construction PMI fell to 51.4 from 62.9 in July, indicating a continued expansion in construction activities, albeit at a slower pace.

- Companies showed caution due to falling material prices.
- Anticipated lower activity levels ahead of the upcoming presidential election
- Purchases contracted, employment levels continued to decline and suppliers' delivery time lengthened.

[Tehan Liyanage @tehanliy]

Sri Lanka Experiences Deflation for the First Time in Nearly 30 Years

In September 2024, Sri Lanka reported a YoY deflation of 0.5%, down from 0.5% inflation in August, according to the Colombo Consumer Price Index. This marks the first deflation in almost 30 years.

On a YoY basis, Food commodities contributed a decrease of 0.11%, while non-food commodities contributed a decrease of 0.37%, driven mainly by reduced electricity tariffs.

On a MoM basis, food prices contributed a decreased of 0.17%, largely due to falling vegetable prices, while non-food prices contributed a slight increase of 0.06%.

https://t.co/GWqDggqpOr

[Tehan Liyanage @tehanliy]

Sri Lanka’s PMI for Manufacturing and Services 🇱🇰

2/2

Sri Lanka’s PMI for services recorded a value of 65.2 in August 2024, a decrease from 71.1 in July 2024, signaling continued expansion in the services sector, albeit at a slower pace. Notable growth was observed in wholesale and retail trade, transportation, and financial services. New business increased, but employment declined, with backlogs improving.

[Tehan Liyanage @tehanliy]

Sri Lanka’s PMI for Manufacturing and Services 🇱🇰

1/2

Sri Lanka's PMI for manufacturing recorded a value of 55.5 in August 2024, down from 59.5 reported in July 2024. Despite the decline, the index indicates continued expansion in manufacturing activities, albeit at a slower pace compared to the previous month. food and beverage sector boosted new orders and production, but employment declined and suppliers’ delivery times lengthened.

[Tehan Liyanage @tehanliy]

Sri Lanka's tourism sector has exceeded its total earnings from 2023 🇱🇰

Sri Lanka’s tourism sector has experienced notable growth, with 164,609 international arrivals in August 2024, elevating the year-to-date total to 1,362,668. Earnings for August reached USD 282.1 Mn, a 34% increase compared to the same month last year. For the period from January to August 2024, total tourism earnings amounted to USD 2.2 Bn, representing a 66% rise from the previous year. These figures highlight a significant rebound in the sector and its vital role in the country’s economic recovery.

[Tehan Liyanage @tehanliy]

In August 2024, CCPI on a YoY basis declined sharply to 0.5% from 2.4% in July 2024. Food inflation declined to 0.8% in August from 1.5% in July 2024, and Non-Food inflation dropped to 0.4% in August from 2.8% in July 2024.

This decline was mainly driven by reductions in electricity and water tariffs.
https://t.co/FvAPJxGJ1r

[Tehan Liyanage @tehanliy]

Sri Lanka's tourism is thriving! 🇱🇰

July 2024 earnings soared by 50% YoY to $328M, with Jan-Jul hitting $1.885 Bn (+72% YoY). Over 1.3 Mn arrivals so far, nearly surpassing 2023's total. Visa-free access for 35 countries is fueling even more growth.

[Tehan Liyanage @tehanliy]

Access Engineering PLC reported impressive financial results for the first quarter, showcasing a strong recovery in the construction and real estate sectors,

Revenue: Rs. 8.2 billion, a significant increase of 107% YoY.

Net Profits: Rs. 1.1 billion, marking an exceptional growth of 211% YoY and 80% QoQ.

PBV: 0.57x
PER: 2.88x
DY: 7.14%

[Tehan Liyanage @tehanliy]

Asia-Pacific Indices Rebound!

Asia-Pacific stock markets saw heavy declines on Monday, with the Nikkei 225 plunging 12.5%, its worst drop since 1987, before soaring over 10% today. The KOSPI also rebounded 3% after a drop.

[Tehan Liyanage @tehanliy]

Sri Lanka's economic reforms are showing positive results, with three consecutive quarters of GDP growth and a 5.3% YoY increase in Q1 2024. Inflation is below the CBSL's 5% target, domestic borrowing rates have dropped, and international reserves rose by $1.2 billion in the first half of 2024, reaching $5.6 billion. Fiscal revenue collections increased during the same period. Going forward, these improvements need to translate into better living conditions for all of Sri Lankans.

For 2025, the budget aims for a 2.3% primary balance of GDP through effective revenue measures, spending restraints, relaxed motor vehicle import restrictions, tax reforms, cost-recovery energy prices, and targeted cash transfers for the under-privileged. The approval of the Public Financial Management Act and the Public Debt Management Act will enhance fiscal discipline and transparency.

The National Anti-Corruption Agenda focuses on implementing key reforms and EFF commitments to combat corruption and restore public confidence.

The third review of the EFF program will be scheduled after discussions with the government following the upcoming presidential elections.
https://t.co/haLHPzFjCv

[Tehan Liyanage @tehanliy]

Quarterly Financial Highlights
Ceylon Cold Stores (CCS)

Total revenue reached Rs. 38Bn for the quarter ended 31st June 2024, 5% increase QoQ and a 10% increase YoY with gross profits rising 40% YoY.

Despite a 38% drop in net finance costs, selling and admin costs grew by 31% and 21% (YoY). Tax expense surged nearly by 498% YoY.

PAT stood at Rs1.2Bn showing a 265% increase YoY but a 27% decline QoQ.

Company’s valuation shows a PBV of 2.55 times and a PER of 12.46 times.

A divided payment of 0.738 per share was announced (XD Date- 07.08.24)

Link to financial statements,
https://t.co/sK0tgd9Tvx

[Tehan Liyanage @tehanliy]

CBSL reduced policy rates by 25 bps. This reduction is intended to keep inflation around 5% over the medium term and help the economy operate at full capacity.

SDFR- 8.25%
SLFR- 9.25%

Furthermore, CBSL raised Rs. 160 Bn at today's Treasury Bill auction, with rates falling across all three tenors. This trend of declining rates is anticipated to continue in the coming weeks.

https://t.co/htbrFFhuWR

[Tehan Liyanage @tehanliy]

Lanka IOC’s (LIOC) latest quarterly financial results showcase notable performance metrics:

Total Revenue reached Rs. 73Bn, reflecting a 34% YoY growth but a 2.5% decline QoQ.

Company achieved a 35% (YoY) reduction in admin expenses and a significant 194% (YoY) increase in net finance income.

PAT stood at Rs. 3.8Bn, marking a 54% (YoY) increase.

Lanka IOC’s valuation shows a PBV of 0.82 times and a PER of 4.17 times.

Link to financial statements,
https://t.co/rAY7M51dDX

[Tehan Liyanage @tehanliy]

Despite a 0.35% decline in the ASPI, closing the week at 11,727, the market saw a significant rise in consolidated turnover which surged by 84.58% to Rs. 5,788 Mn.

Investor sentiment is anticipated to be influenced by the performance of corporate earnings as the June quarter results are announced.

[Tehan Liyanage @tehanliy]

CBSL offered and accepted Rs. 110Bn at the auction held on the 17th July 2024 and T bill rates fell down for the second consecutive week.

This downward trend is expected to persist in the coming weeks as well.

[Tehan Liyanage @tehanliy]

Inflation Overview for June 2024

Headline Inflation (YoY Change in CCPI) increased to 1.7% in June 2024 up from 0.9% in May 2024 and this increase follows three consecutive months of decline in month to month inflation.

Core inflation accelerated to 4.4% in June 2024, compared to 3.5% in May 2024.

Upside Risks to Inflation
- Upward pressure on global energy prices
- Adverse weather on agricultural production
- Exchange rate depreciation more than the levels of projections.

Source- CBSL