With a year-to-date gain of 3% in dollar terms and a Price Earnings Ratio of 12 times, the valuation of Sri Lanka’s stock market remains attractive in comparison to its peers, according to an analysis by a broking firm. “On a valuation basis, while the Sri Lankan Bourse is certainly not the cheapest, when juxtaposed against global peers, it is now one of the most attractive at a PE of 11.8X (dollarized) and at a 30-40% discount to the EM world, leaving considerable room for upside,” First Capital Equities said. It said the
divergence between global equity markets and Sri Lanka’s Bourse during the month has been stark, with both developed and emerging markets rising significantly while the Sri Lankan Bourse experienced only mediocre growth. “Notwithstanding the economic woes in the Eurozone, the eurostoxx 50 rose by 8.6% during the month while the S&P 500 gained 1.6%. Most Asian markets jumped on to the bandwagon as well, with the Sensex up 17.8%, Hang Seng up 3.4% and the Kospi rising by 5.7%. The sharp run up during the month resulted in valuation multiples for most global markets rising to relative highs,” it added. According to First Capital Equities, the key takeaways of CSE include: Bourse is up 3.0% YTD (dollarised) and trading at a PE of 11.8X, still low compared to traditional EMs and leaving considerable scope for upside. Foreigners continued their buying spree with net inflows of Rs. 18.96 billion (US$ 142 m) recorded in 2013 YTD while having reported Rs. 39 billion (US$ 303 m) in 2012. First Capital Equities expects foreign buying to accelerate going forward but limited to bluechip counters, particularly high growth stocks in the diversified, banking, food and beverage and hotel sectors. “Despite our optimism regarding the Bourse, not all stocks however will perform. Current market conditions present an opportunity for investors not following the herd to invest in a basket of stocks that will outperform over a complete market cycle,” First Capital Equities stated. Commenting on the market’s trajectory, while the general lull in the Sri Lanka
Bourse is certainly uninspiring, First Capital Equities believes that this is a temporary dislocation and for international fund managers squaring off their books in other emerging markets, Sri Lanka offers alpha. Meanwhile for domestic investors, with the likelihood of a further softening of interest rates, the Bourse offers firm value in high growth companies. “Consequently, we advise investors to refrain from assuming any speculative positions but concentrate on a stock picking strategy to identify companies with a largely domestic focus in order to ‘beat’ the market and generate above market returns,” the broking firm said. “We reiterate the need for investors to take a directional call, make an informed investment decision, build a robust portfolio and maintain a strict investment discipline over a reasonable investment horizon in order to benefit fully from the market’s break to the upside that we believe will occur sooner than later,” First Capital Equities added.
First Capital Equities changed its name to First Guardian Equities from Wednesday. This follows the exit of debt specialist First Capital Ltd. (FCL) from the stock brokering business. FCL’s 40% stake was purchased by Dawi Investment Trust; Ranjan Hulugalle, an existing director of the company and Lakdasa Hulugalle, a Geneva based Oxford educated former UN Economist.
The company backs its investment advice with solid indepth top down research using the quantitative and qualitative methods keeping with the best international wealth management practices. It deploys cutting edge technology to gather, store and distribute timely and accurate information to its key stakeholders.
The brokerage pays detailed attention to systems and processes to ensure accuracy and efficiency in deal execution and reporting, benchmarking against world-class service organisations.
The Company has committed itself to be the guardian and the protector of its client’s wealth and has the board of directors behind the company’s plans and strategies.
Three of the original investors in the company, the Hirdaramani Group, the high net worth New York based Sri Lankan Raj Rajaratnam of the Galleon Hedge Fund and Guardian Equity have remained as shareholders and backers.
Under the new structure B. R. L. Fernando, Deputy Chairman Commercial Bank and Chairman and CEO of the CIC Group of companies and Ranil Pathirana, finance director in several companies in the Hirdaramani Group, continue to extend their services to the company, while some prominent figures in the corporate world are to join the board soon.
The First Guardian Equities team is driven by Managing Director and CEO Rohan Goonewardene, who has wide experience studying and working in the UK and Switzerland and Ranjan Hulugalle, a US-based Sri Lankan lawyer and President of Hulugalle Capital, a Las Vegas based fund management company.
– Sunday Times –
First Guardian Equities has recommitted itself to excellence in customer service in the investment management industry by being the first and only stockbroker in Sri Lanka to achieve an International Organization for Standardization certification. ISO 9001:2000 for Quality Management Systems is intended for use in organizations that provides any form of service.
It provides a number of requirements which an organization needs to fulfill if it is to achieve customer satisfaction through consistent products and services which meet customer expectations, setting its standards way above the rest.
“Customer who invest with us do so on trust, not only on the investment advice but that the systems and processes we have ensure that our service standards are benchmarked against world-class service organisations”, said CEO and Managing Director of First Guardian Equities, Rohan Goonewardene.
“The ISO 9001:2001 standard requires that we adhere to a program of continuous improvement in the area of customer service, something that we have committed ourselves to in the coming years” Rohan Goonewardene further said.
First Guardian Equities is a venture by Raj Rajaratnam of the Galleon Hedge Fund, Lakdasa Hulugalle formerly of the UN, Hirdaramani’s, DAWI Investment Trust and Guardian Equity.
Its board members are BRL Fernando, Chairman and CEO of the CIC Group of companies and Deputy Chairman of Commercial Bank, Ranil Pathirana, Finance Director of Hirdaramani’s, Ranjan Hulugalle, President of Hulugalle Capital a Las Vegas based fund management company.
– Sunday Observer –