Friday rise puts ERI back into Top 20 league

A sudden jump in share price on Friday put Environmental Resources Investments (ERI) last week into the elite league of top 20 most valuable companies.

ERI rose by an emphatic Rs. 12.70 on Friday, which incidentally was the full week’s gain to close at Rs. 98.60, propelling its market capitalisation to Rs. 31.23 billion, thereby placing it in the top 20.

ERI share touched a peak of Rs. 99.80 last week and a low of Rs. 80. In the previous week ERI share price gained by Rs. 4.30 only. ERI closed 2010 with a market capitalisation of Rs. 27.19 billion and was placed 21st.

In climbing to top 20, ERI displaced John Keells Hotels.

Four of ERI’s warrants also figured among the top gainers on Friday with increases ranging from 23.6% to 19%.

Some analysts linked Friday’s upsurge to news of ERI’s parent and 85% owning shareholder Lionhart being adjudged Europe’s best performing hedge fund and world’s second best with a return of 79% in 2010. Others attributed to the rise overall bullish sentiment which the market witnessed on Friday. The ASPI gained by 1.2%, its highest for the week.

ERI Group recorded a revenue of

Rs. 792.9 million for the first six months of 2010/2011, displaying a 239% increase compared to 31 March 2010 year end. The Group recorded a Net Profit After Tax of Rs. 212 million for the first six months ended 30 September 2010 with a 95% increase compared to 31 March 2010 year end.



Net Asset Value of the group has increased from Rs. 18.29 per share to Rs. 22.71, recording a 24% increase compared to previous year.

In the first half of 2010/11 financial year, net profit attributable to equity holders amounted to Rs. 74 million, in comparison to a loss of Rs. 17 million in the corresponding period of last year. The second quarter figure was Rs. 63 million as against a loss of Rs. 14 million a year earlier.

Stock market this week: Cautious optimism; 2011’s first T+5 effective date today

Despite bullish opening week that passed by brokers are cautiously optimistic about the Colombo bourse’s prospects this week given the 2011’s first T+5 rule takes effect today.

 “We expect market activities to initiate on a slow pace with Monday being the effective date for T+5 settlements,” Asia Securities said.

“However, we hope the investors will be prudent at this point to capitalise on this opportunity whilst being watchful on panic selling. Going forward, we believe the market to be active and sustain growth, as the macro-economic outlay seems favourable for the corporate to generate solid earnings,” Asia pointed out.

Stock market...

“We expect the (upward) movement to persist whilst profit taking on several counters after a certain level is likely while fundamental stocks will be sought after by the investors,” Acuity Stockbrokers opined.

Last week the bourse ushered in the year with optimistic sentiments leading to active trading and healthy turnover backed with commencement of margin trading and return of retail investors.

The optimistic sentiments ran through the week as indices gained each week day adding healthy turnover to the bourse. ASPI closed at 6891.96 adding 256 points and was up 3.86%. MPI gained 225.42 points reflecting a growth of 3.19% against last week to end at 7286.88.

The SEC on 29 December having taken note of the concerns of the stock broking industry also permitted the stockbrokers to grant a brief grace period to buyers (of shares from 3 January and not legacy trades) who are in default of settlement by T+3. Accordingly stockbrokers will be granted an additional 2 days to force-sell securities of buyers which are in default of settlement by T+3 in order to recover the monies owing to them by such defaulting client.  Alternatively they can transfer to margin trading accounts.