Play on plantations

Thursday, 27 January 2011 01:00 -     - {{hitsCtrl.values.hits}}

Investors in the Colombo stock market yesterday stepped up their play on plantation stocks propelling prices of several companies to all time high with the sector index too achieving the same.

Analysts said that investors have re-rated the plantation sector’s prospects following record rubber prices as well as forecast for same with regard to the black gold – tea.

For some time the sector has been underperforming hence the renewed interest, they added.

Out of the top 10 gainers percentage wise eight were plantation companies whilst all in the sector numbering 18 gained yesterday. Ten companies established their highest ever prices yesterday.

Heavy interest saw the plantation sector accounting for Rs. 1.19 billion turnover yesterday, the highest overall with slightly over 21 million shares transacted via 11,657 trades. The sector’s price index is currently at its highest with yesterday it amounting to 1,758.53 up by 208 points or 13.4% whilst on Tuesday the index beat its previous best of 1,517 points.

On the back of strong earnings, Horana Plantations topped the list of gainers overall up 33.5% or Rs. 17.70 to close at Rs. 70.50 whilst it peaked to an intra-day high of Rs. 72. Horana saw over 5 million of its shares traded generating a turnover of Rs. 328 million. First in the sector to report earnings, Horana announced its net profit rose by 352% to Rs. 171 million in the first nine months of 2010/11. Third quarter profit figure was Rs. 135 million, up from Rs. 75 million a year earlier.

Elpitiya ranked second highest gainer up 30% to Rs. 45.60 but failed to beat its 52-week highest of Rs. 56 followed by Hapugastenna up 29%, and Agalawatte up 24%. Madulsima, Malwatte, Watawala, Bogawantalawa all figured with double digit growth percentage wise.

Unfortunately both Horana and Elpitiya were put to the price band by the SEC from today. (see separate story).

Analysts expect more interest to follow on plantation sector stocks though the industry continues to face several longstanding issues. Rise in commodity prices however appear to have overshadowed such concerns.

ASPI passes MPI

Continued retail dominance eventually led the benchmark All Share Price Index ASPI to pass the Milanka Price Index (MPI) yesterday.

NDB Stockbrokers said aggressive buying pressure across the plantation sector, retail driven poultry stocks and institutional investors’ interest in Sampath Bank helped gain ASPI. “Mixed sentiments on blue chips seem to keep the MPI stagnant,” the stock broker added.

Sampath Bank made the highest contribution (Rs. 646 million) to the market turnover with 2.15 million shares traded including three crossings of 1,300,000 shares at Rs. 300. The share price increased by Rs. 8.70 (2.99%) and closed at Rs. 301.

Good demand at tea auctions

Forbes and Walker Tea Brokers said yesterday there was good demand at this week’s tea auctions with overall volume on offer totalled 7.4 m/kgs, marginally lower than the previous week.

It said Ex-estate offerings remained fairly large and totalled 1.3 m/kgs.  Quality of overall offerings showed some improvement particularly for a cross section of the Westerns on offer.  There was better demand particularly in the “tea for price” category where prices were firm and upto Rs.10 per kg dearer.  Nuwara Eliyas continued to be a weak feature, although a few select invoices appreciated sharply following special inquiry.  CTC varieties in general continued to sell around last.  

Low growns totalled 3.6 m/kgs in the Leafy/Tippy catalogues this week.  There was good general demand.  In the Leafy catalogues better BOP1/OP1s sold well with the latter in particular gaining Rs.5-10 per kg.  OP/OPAs too were firm to Rs.10 per kg dearer.  Better Pekoes were irregular, however, a fair cross section of bolder Pekoes together with the teas at the lower end sold at firm to dearer rates.  In the Tippy catalogues too a select range of FBOP/FF1s maintained.  Cleaner secondaries too were firm to irregularly dearer.  At the lower end too there was good demand particularly for the cleaner teas.  Well made Tippy invoices sold well and were firm on last, others were irregular following quality.  There was good demand from CIS, Iran, Dubai, Turkey and Saudi Arabia whilst Iraq too were active.  

Notwithstanding the record crop of 329 m/kgs in Sri Lanka and a record harvest of 399 m/kgs in Kenya and possibly the global tea production reaching a new record in 2010, it appears that all these high volumes have yet to cover the 2009 shortfall.  

“Almost all producer countries appear to be reporting a shift in the weather pattern which is tightening supply and is likely to be the case till at least the end of 1st quarter 2011.  In this scenario tea prices in the short term are most likely to remain buoyant,” Forbes and Walker Tea Brokers said.

3 more to play the Band

The Securities and Exchange Commission (SEC) yesterday announced that a 10% price band has been imposed on C W Mackie (CWM), Elpitiya Plantations (ELPL) and Horana Plantations (HOPL) with effect from 27 January 2011 to 21 February 2011 (both days inclusive).

Meanwhile, PC House which was first to be slapped with the Band in 2011 has completed its 15 market day stint and will trade freely today.

With yesterday’s inclusion there will be four altogether. The other is MTD Walkers which was included in the Band early this week.