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Analysts are predicting a strong plantation rally in the Colombo Stock Exchange in the coming days, driven by the soaring prices of tea, rubber and palm oil in international markets.
According to them, the signs of this really have already appeared and the upward trend of the plantation stocks has already begun.
"Plantation sector is going to boom. All the commodities prices are going up. The present interest in the market for plantation stocks is the sign of a huge impending plantation rally" Sarath Rajapaksa, Director Research at Capital Trust Securities said.
According to him share prices of the listed plantation companies have always remained under-priced and the plantation industry has been usually termed 'sluggish'.
"Plantation companies in fact have a lot of hidden values which are not disclosed in their balance sheets. Currently these companies are understating their profits to avoid various complexities that can arise from wage issues to various other problems of the plantation labour community" he said.
Rajapaksa also opined that not only the plantation counters, but also hotel and banking sectors would also do really well in 2011.
"The reduction in corporate tax and Financial Services VAT would be huge boost to the profits of the banks and once the December quarter results start to flow in we will be able to witness this" Rajapaksa said.
According to sources, the general provisioning requirement on performing loans which is currently at 1 percent is likely to be reduced to 0.5 % by 2012 and this will further improve banking sector profitability.
However some analysts are doubtful on the possibility of a plantation rally due to the wage hike revision that is scheduled two months ahead.
"Even with the high internationally prices not every plantation company is doing well. So the investors should be mindful and selective when it comes to investing, rather than going behind every plantation share in the market" a plantation sector analyst said.
In the latest rubber auction in Colombo a kilo of crepe rubber crossed the Rs.650 mark and tea production in 2010 has recorded an increase in 14 %, earning US $1.2 billion for the country.
Treasury asks RPC's to go public for funds
By Dianne Silva
The Treasury Secretary P.B Jayasundara had recently suggested to the Regional Plantation Companies (RPCs) to go public to raise capital rather than them going to banks to borrow funds.
According to him such a move would help RPC's find funds to re-cultivate the idle lands in their plantations.
According to a senior Treasury official only five to six RPCs out of the 23 are doing well and at least four of them can issue shares at Colombo Stock Exchange and raise funds.
In a press conference held yesterday, Plantation Industries Minister Mahinda Samarasinghe said that the government had taken a decision to redistribute land given to private RPCs if this land had not been cultivated by the end of a six month grace period that ends in June 2011.
Treasury is the golden shareholder of the plantation companies.
In the early 1990's the Government privatized the management of the country's Tea and Rubber plantations thus bringing in private sector participation to the sector.
Price bands on HOPL, ELPL, CWM
Colombo Stock Exchange yesterday imposed 10 percent price bands on the shares of Elpitiya Plantations PLC, Horana Plantation PLC and plantation rich C.W Mackie PLC amidst heavy investor attraction.
According to them, the signs of this really have already appeared and the upward trend of the plantation stocks has already begun.
"Plantation sector is going to boom. All the commodities prices are going up. The present interest in the market for plantation stocks is the sign of a huge impending plantation rally" Sarath Rajapaksa, Director Research at Capital Trust Securities said.
According to him share prices of the listed plantation companies have always remained under-priced and the plantation industry has been usually termed 'sluggish'.
"Plantation companies in fact have a lot of hidden values which are not disclosed in their balance sheets. Currently these companies are understating their profits to avoid various complexities that can arise from wage issues to various other problems of the plantation labour community" he said.
Rajapaksa also opined that not only the plantation counters, but also hotel and banking sectors would also do really well in 2011.
"The reduction in corporate tax and Financial Services VAT would be huge boost to the profits of the banks and once the December quarter results start to flow in we will be able to witness this" Rajapaksa said.
According to sources, the general provisioning requirement on performing loans which is currently at 1 percent is likely to be reduced to 0.5 % by 2012 and this will further improve banking sector profitability.
However some analysts are doubtful on the possibility of a plantation rally due to the wage hike revision that is scheduled two months ahead.
"Even with the high internationally prices not every plantation company is doing well. So the investors should be mindful and selective when it comes to investing, rather than going behind every plantation share in the market" a plantation sector analyst said.
In the latest rubber auction in Colombo a kilo of crepe rubber crossed the Rs.650 mark and tea production in 2010 has recorded an increase in 14 %, earning US $1.2 billion for the country.
Treasury asks RPC's to go public for funds
By Dianne Silva
The Treasury Secretary P.B Jayasundara had recently suggested to the Regional Plantation Companies (RPCs) to go public to raise capital rather than them going to banks to borrow funds.
According to him such a move would help RPC's find funds to re-cultivate the idle lands in their plantations.
According to a senior Treasury official only five to six RPCs out of the 23 are doing well and at least four of them can issue shares at Colombo Stock Exchange and raise funds.
In a press conference held yesterday, Plantation Industries Minister Mahinda Samarasinghe said that the government had taken a decision to redistribute land given to private RPCs if this land had not been cultivated by the end of a six month grace period that ends in June 2011.
Treasury is the golden shareholder of the plantation companies.
In the early 1990's the Government privatized the management of the country's Tea and Rubber plantations thus bringing in private sector participation to the sector.
Price bands on HOPL, ELPL, CWM
Colombo Stock Exchange yesterday imposed 10 percent price bands on the shares of Elpitiya Plantations PLC, Horana Plantation PLC and plantation rich C.W Mackie PLC amidst heavy investor attraction.
