Speculative play returns to market

Speculative play returned to the credit-feasting Colombo stock market yesterday in greater velocity as retailers and high net worth investors cashed in on rebound in sentiments.

Colombo Land and Lanka Hospitals were cherry picks of the speculative play as they figured number one and third in terms of percentagewise price gainers and turnover generators, in addition to accounting for 30% of trades.

Around 23.7 million shares of Colombo Land changed hands via 7,643 trades for Rs. 1.4 billion turnover. It topped the list of percentagewise gainers up 26% or Rs. 12.80 to close at Rs. 61.80 after hitting an intra-day high of Rs. 64.80 beating its previous all time high of Rs. 54.90.

On Tuesday 7.7 million shares of CLD traded for Rs. 368 million with share price up Rs. 6.30. Last week it gained by Rs. 6.80 with six million shares traded.

With the property sector still being actively looked at by investors, East West and Ceylinco Seylan Developments were among retailers’ active trade list as they have been in recent weeks.

Even CT Land, which is relatively illiquid, wasn’t spared as one million of its shares traded before closing up Rs. 2.10 to Rs. 35.40 after peaking to Rs. 37.

The Land and property sector was the higher turnover generator with Rs. 1.8 billion as 40 million shares changed hands via 13,218 trades. Its price index outperformed the market by gaining 35 points or 5%.

Lanka Hospitals too came under continued speculative play yesterday. On Tuesday it was the star with 8.5 million shares traded for Rs. 623.4 million on Tuesday (price up by 60% or Rs. 31.40 to Rs. 84.10 including a peak of Rs. 89.50).

Yesterday a relatively lower quantity was on play as 4.5 million shares changed hands via 3,138 trades for Rs. 449 million. It emerged third biggest gainer percentagewise up 24% or Rs. 20 to close at Rs. 104. Having surpassed its all time high of Rs. 59.50 on Tuesday, Lanka Hospitals is on a real high.

Deals on Lanka Hospitals were sparked by rumours that a 29% stake owning Fortis Healthcare of Singapore/India was keen to up stake at a pre-determined price. Speculation follows Fortis Executive Chairman Malvinder Mohan flying in his private jet for a board meeting of Lanka Hospitals on Thursday as exclusively reported by the Daily FT on Friday.

The board meeting chaired by Lanka Hospitals Chairman and Defence Secretary Gotabaya Rajapaksa focused on maximisation of synergies between the world-renowned healthcare firm and Sri Lankan entity.

If talk of Fortis increasing stake were to happen a mandatory offer would be triggered. The stock going up likely to Rs. 100 was hinted on Tuesday and market talk yesterday was that the target price was Rs. 200.

More cautious analysts have shot down these theories. Its net asset per share is only Rs. 12.20 (as at end 2010) and Earnings Per Share is Rs. 1.30, both however at their all time high levels.

The 350-bed hospital owning Company is majority owned by Sri Lanka Insurance Corporation Ltd. with a stake of 55% whilst BOC owned Property Development Ltd., owns 9.5% stake.

Lanka Hospitals Corporation (LHCL) last week announced a net profit of Rs. 131 million for the first half of 2011 financial year up by 26% over the corresponding period of last year. Second quarter net profit was down by 3% to Rs. 66 million. Revenue rose to Rs. 1.8 billion from Rs. 1.4 billion in the first half of 2010.