Financial Times

Investors eye food, beverages
Banking and hotel shares along with Sri Lanka Telecom drove the market higher last week and brokers said the bull run is likely to continue this week with investors looking at the food and beverage and manufacturing stocks which were still undervalued.

The All Share Price Index closed the week at 1,326.40 and is inching closer towards its all-time high of 1,378 points in March 1994. The MPI closed the week at 2,445.70. Angelo Ranasinghe of Bartleet Mallory Stockbrokers said there was some profit taking in the hotels sector towards the end of the week but banking stocks rose higher.

Other brokers said hotel stocks were looking overvalued after the gains of recent weeks. One share that shot up to phenomenal heights purely on speculation was that of Hotel Developers (Lanka), owners of the five-star Colombo Hilton.

Its share price, which had been stagnating at Rs 13 for a long period, closed at Rs 73 on Friday, having hit a high of Rs 79 earlier in the week. Brokers said many parties were looking at the Hilton property and that the stock rose because of news the government wants to sell its controlling stake and speculated interest by John Keells. "There is no information on the company's finances," said a broker. "It has not filed financial results since 1998."

Brokers said it was difficult to say whether JHK was interested given that it has just completed a big deal to buy Asian Hotels and was in the process of raising money to fund the acquisition. Hotel Developers (Lanka) chairman Ajith Dias announced that the government, which has a 64 percent stake in the company, has decided to dispose of its holdings.

Ranasinghe of Bartleet Mallory Stockbrokers said the food and beverages and manufacturing stocks were still undervalued and trading at very low PEs compared to other sectors.

Meanwhile, JKH announced it had sold a 69.9 percent stake of Beruwala Walk Inn Limited (Hotel Swanee) at Rs.47.75 per share to Banyan Tree Holdings Pte Ltd. Banyan Tree and JKH intend to work together to refurbish and reposition Hotel Swanee and develop other properties in suitable locations in Sri Lanka, it said.

"We have sold our stake in Beruwala Walk Inn Limited to facilitate the speedy implementation of Banyan Tree's strategy for investment in Sri Lanka. We will work in partnership with Banyan Tree to further enhance our presence in the leisure industry," said Chairman Vivendra Lintotawela of JKH.

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