Vallibel Power Erathna, a heavily traded stock for several weeks after its biggest shareholder Dhammika Perera said he was interested in selling off his stake, and John Keells Holdings (JKH) – criticised over the privatisation of Lanka Marine Services Ltd -- were among the most actively traded stocks last month, according to the CT Smith Stockbrokers monthly report.

Vallibel traded 22.5 million shares, an average of over one million shares per trading day. In addition to the 8.1 million shares traded by JKH, Sierra Cables, Richard Pieris & Company and Chemical Industries were also amongst the highest, trading 19.4 million, 17.7 million and 8.1 million shares, respectively. Despite this heavy trading, the report says that the Colombo bourse fell in August 2008 with the All Share Price Index falling 2.2 % to 2,409 points while the Milanka Price Index fell 5.6 % to 2,789 points.

The average daily turnover fell to Rs.302 million despite the average daily volume rising to 11.3 million shares. The top gainers for the month were Ceylon & Foreign Trades, up 61 %, Central Finance Company up 51 %, Huejay International Investments up 47 %, United Motors Lanka up 46 % and Hotel Developers Lanka up 41 %. CT Smith reported that the biggest losers for the month were East West Properties down 50 %, Hunter & Company down 32 %, Dialog Telekom and Laxapana Batteries both down 22 % and Seylan Merchant Bank down 13 %.

The report stated that Dialog Telekom, the market leader in the robust and highly competitive mobile telecommunications sector in Sri Lanka, posted a net profit of Rs.386 million for 2Q2008 down 84 %, resulting in its 1H2008 net profit falling 72 % year on year to Rs.1,339 million, below market expectations.
Hunter & Company, another one of the biggest losers for August 2008, has experienced some problems over the past few months after its auditors Ernst & Young resigned in a dispute over 'material disclosure' in the company annual report. The Sunday Times FT also reported that the Secretaries to the company, S.S.P. Corporate Services Ltd also resigned in August, less than a month after Ernst & Young resigned.

Lanka IOC (LIOC), the listed petroleum retailer posted a net profit of Rs.1,024 million for 1Q09, up 109 % year on year, above market expectations despite relatively difficult market conditions. The report states that the last price revision in the retail fuel market (for LIOC) was in June when it reduced the price of diesel to Rs.110 to be in line with the Ceylon Petroleum Corporation (CPC). Currently, the price of a litre of petrol is Rs.157 while diesel is priced at Rs.110 per litre.

LIOC's share price has appreciated 17 % in the past month with crude oil prices falling (since reaching record highs in July) and the company having done well in 1Q09. As a result of the strong performance of the company and with falling crude oil prices, CT Smith anticipates revising its forecast following conversations with management.

Ceylon Tobacco Company (CTC), the country's sole legal cigarette producer, recorded a 2Q2008 net profit of Rs.533 million, up 43 % year on year, resulting in its 1H2008 net profit rising 37 % year on year to Rs.894 million, slightly ahead of market expectations. CT Smith reports that the price of Benson & Hedges and Dunhill which stood at Rs.17 and Rs.18 per cigarette was reduced to Rs.16, effective from September 2008, marking the first time that the price of a cigarette has reduced in Sri Lanka. CT Smith stated that it is likely to increase the market share of these brands which is currently estimated at 0.5 %.

CT Smith also expects CTC profits to rise mainly due to the expected increase in revenue via price increments. The report also stated that while the share has outperformed the market by 47 % since the start of the year (adding back dividends), CT Smith believes CTC is one of the few companies that is likely to do well in the current high inflation environment and expects the share to further outperform the market in the medium term. (NG)