Investor focus shifts to plantations as CSE manages to close positive

• Plantation-heavy food, beverage and tobacco sector most traded value and volume wise, with 8 out of 10 biggest gainers percentage wise being plantation companies
• JKH regains most valuable stock status; persistent demand pushes Expolanka share price up
• YTD net foreign outflow tops Rs. 44 b mark

Investor focus for the first time in recent months shifted to the under-performing plantations stocks yesterday, as the Colombo Bourse began a fresh and important week positive though less convincing.

The benchmark All Share Price Index (ASPI) ended the day almost flat, whilst the more active S&P SL20 index gained by 12 points.  Turnover was lower by 29% (Rs. 2.5 billion) from Friday which capped a stellar week. 

The Food, Beverage and Tobacco sector was the most traded and accounted for the highest turnover of Rs. 473 million with 42.5 million shares changing hands via 10,293 trades.  Focus on plantation stocks, saw eight of the top 10 gainers percentage wise from the sector, whilst Ceylon Tea Brokers was another.  Kotagala gained by 40% to Rs. 10.20 with 6.6 million of its shares traded for Rs. 64.5 million. 

Madulsima gained by 25% to Rs. 11.50, whilst Balangoda and Maskeliya enjoyed a 20% gain in share price to close at Rs. 16.50 and Rs. 16.90 respectively. Hatton was up 19.5% to Rs. 10.40 and Malwatte Non-Voting was up 18% to Rs. 9.50. Bogawantalawa and Hapugastenna saw 13% gain to close at Rs. 16.50 and Rs. 20.90.

However the sector index lost 0.34%. The Price Earnings Ratio of the sector is 12.86 times, which is above the market’s 10 times.

Investor play on plantation stocks could be given their relative under performance and some betting on revival in the medium-term. First nine months tea crop is the lowest in over 20 years, helping keep auction prices up. Industry also saw export volume dip in September, but up in terms of first nine months, whilst earnings wise performance was up, though lagging year-to-date (YTD).

Due to sharp decline in crop, National Tea Sales average in September totalled Rs. 619.33 ($ 3.38), up by Rs. 108.02 ($ 0.48), as against Rs. 511.31 ($ 2.84) a year earlier.

Additionally, likely increase in demand in new markets have made some re-rate prospects upward for the plantation stocks, though the industry continues to face many challenges including rising cost. 

Play on plantation however, was welcome as investors look for more opportunities. 

“Bourse remained resilient amidst mixed activities, managing to eke a gain for the fourth consecutive session,” said First Capital.  “Index spiked within few minutes of trading and thereafter recorded a gradual downtrend for the rest of the session, despite the buying interest in selective food and beverage counters and closed at 5,946 gaining a mere 0.3 points,” it added.

Asia Securities said turnover remained healthy despite lower participation by retail and HNI investors who took a wait-and-see approach as an increase in the number of COVID-19 cases was seen. “Institutional investors remained on the sidelines,” it said adding the ASPI closed at 5,946.08 up 0.29 points (+0.01%) with some profit taking witnessed during the day.

Separately, John Keells Holdings (JKH) regained the top status in terms of value as its share price gained by Rs. 2.40 or 1.81% to close at Rs. 135.20. This enabled it to increase its market capitalisation to Rs. 178.2 billion. JKH contributed 7% to ASPI’s gain, followed by Expolanka and Sri Lanka Telecom (SLT).

CTC market capitalisation was Rs. 177 billion, following its share price declining by 30 cents to Rs. 945. 

NDB Securities said the ASPI edged up as a result of price gains in counters such as JKH, Expolanka Holdings and SLT.

“High net worth and institutional investor participation was noted in Expolanka Holdings and JKH. Mixed interest was observed in Tokyo Cement Company and Kelani Tyres, whilst retail interest was noted in Access Engineering and ACL Cables,” it added.

Expolanka Holdings which accounted for highest turnover of Rs. 443.6 million with 23 million shares traded, increased by Rs 0.60 (3.21%) to close at Rs 19.30. Share price of Tokyo Cement Company non-voting moved down by Rs 0.30 (0.53%) to close at Rs 56.50. Tokyo Cement Company Voting recorded a loss of Rs 0.70 (1.05%) to close at Rs. 66.10 while the share price of Kelani Tyres declined by Rs. 5.60 (6.03%) to close at Rs. 87.20.

The market also saw a net foreign outflow of Rs. 161 million yesterday, increasing the YTD figure to Rs. 44 billion.