Equity Market Outlook - 2015

Quibit · 1 Equity Market Outlook - 2015 Wed Jan 28, 2015 2:03 pm

Quibit

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Given the presidential election related uncertainty, the beginning of 2015 saw the broader market dip 0.3% YTD. Further the current government has announced that there would be a parliamentary election in April 2015. Therefore we might witness the market getting slower closer to the parliamentary elections but we believe that the overall outlook for the broader market is positive for 2015E. Colombo bourse is currently trading on 14.9x earnings (on 4 quarterly trailing basis), 2.8x on PBV. Further bourse is yielding an ROE of 11.3% and a dividend yield of 2.5%.

Expected increase in state employee salaries, reduction in fuel prices (this would reduce the transport cost of individual and corporates) and expected reduction in electricity and gas prices would drive consumption. Further low interest rate environment and private sector friendly government would drive the corporate sector borrowings. However the consumption drive would not put great pressure on inflation as global commodity prices are easing off. We believe the government would continue to support the infrastructure growth in a more efficient manner and would strengthen the laws to create a level playing field for all the corporates. On this backdrop we forecast corporate earnings to grow 18% YoY in 2015E and thereby the broader market is trading on 12.6x 2015E earnings.

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VALUEPICK · 2 Re: Equity Market Outlook - 2015 Wed Jan 28, 2015 7:56 pm

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Thank you for the update. I think general election will be held in June 2015. Am I correct? It is time to identity great opportunities in the market more than elections. Among recommended stocks in this report, I think SPEN and LGL may outperform others. Sometimes we may have more than 100% capital gain during next six to eight months. Remember other stocks such as HNB, SEYB, NDB, JKH and SUN already had massive gain during last 18 months. They may have less than 10% capital gain in 2015. Some times they may go down once they reach next high in their stock prices.

Last edited by VALUEPICK on Wed Jan 28, 2015 8:56 pm; edited 1 time in total

Nuwan Prasad · 3 Re: Equity Market Outlook - 2015 Wed Jan 28, 2015 8:35 pm

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Thank you

VALUEPICK · 4 Re: Equity Market Outlook - 2015 Wed Jan 28, 2015 8:58 pm

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Another positive factor is new Central bank Governor. He is from investment world. Therefore capital market will have further growth.

piras · 5 Re: Equity Market Outlook - 2015 Thu Jan 29, 2015 11:03 am

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VALUEPICK wrote:Thank you for the update. I think general election will be held in June 2015. Am I correct? It is time to identity great opportunities in the market more than elections. Among recommended stocks in this report, I think SPEN and LGL may outperform others. Sometimes we may have more than 100% capital gain during next six to eight months. Remember other stocks such as HNB, SEYB, NDB, JKH and SUN already had massive gain during last 18 months. They may have less than 10% capital gain in 2015. Some times they may go down once they reach next high in their stock prices.

Well said ValuePick... I also expect 100% return from SPEN in mid-term
LGL also good at this level..
SEYB.X-75
HNB.N-225
NDB-280-300

I think SUN had a good run last year. This year I'm not sure