SRI LANKA - BUY NATIONAL DEVELOPMENT BANK

SECTOR                        -  BANKS,FINANCE & INSURANCE

SECTOR  P.E.               -  10.30 

BANK'S  P.E. RATIO  -  4.4

SHARE PRICE             -  Rs 201.50


ASI                                 -  3292.76

27/12/2009 - Last week we saw  several large parcels of NDB bank changing hands once again @ Rs 200 *1,000,000 & @ Rs 205 *564,700. NDB bank is one of Sri lanka's top developments banks in the past & now doing commercial banking activities as well with a branch network of 40.

Nine months profitability as at 30/09/2009 saw a significant growth of 50% (Group) YOY . Nine months profits were Rs 1.6 b.n. as against a profit of Rs 1.06 b.n. in year 2008

Earning per share is Rs 23.96 as at 30/09/2009 & Book value per share is Rs 167.58.

NDB bank has  one of the best loan books in our country which consists of low Non Performing Facilities & is the one of best capitalized banks in the country. Capital  adequacy ratio is around 20% which is well above minimum standards.

 They have significant stakes in CDIC & Eagle insurance company. Further we can expect profits from banks overseas business arm in Bangladesh in future as well.

NDB bank paid a high dividend for its share holders in the past.  This time also we can expect a better dividend from the bank,which is due withing the first quarter of year 2010.

Since the market is trading at  peak levels in its history, we would like to advise the investors to collect the share in small blocks,especially in the event of any price drop of the share in future.


Recommend - Buy

BUY - SINGER SRILANKA ( A HIDDEN OPPORTUNITY)

SECTOR                    -   TRADING

SHARE PRICE         -   Rs 76.00

ASI                             - 3385.55

31/12/2009 - Singer Sri lanka is a more than 100  year old company operating in our country. To day it is a large diversified company hold dealership for several powerful brands (Philips/Kenwood/Titan) in Sri lanka. It has acquired the Heylease consumer electronic channel in year 2008.

Singer has a very good network covering major towns,Rural areas etc. They are rewarded MOST POWERFUL BRAND IN SRI LANKA  by the Ac Nielsen/SLIM  & Most popular teen brand in  Sri lanka.
Singer  profitability was severely affected by low consumer demand,war situation & high interest costs for the past two years. Now with the economic rebound/low interest regime we can expect the reverse of the same from the company in future taking in to consideration their strong presence in agricultural/rural ares. 

They have following strategic business units-

*Sewing related products             * Consumer electronics                * White goods (Refrigerators/ Freezers)
*Communication (computers)       * Kitchen related products           * Furniture
*Transportation (Motor bicycles)  * Agro (water pumps/Threshers) * Singer finance

We believe that the company is well positioned to grab the opportunities available in future specially from the economic revival & the  North & East areas.

NAV of the company as at 30/09/2009 is Rs 47.97 . Reported  profit for the same period was Rs49 m.n as against a profit of Rs 183 m.n.(This is with one off sale of commercial leasing in 2008).However for the last quarter there was a significant profit growth announced by the company. As at 30/09/2009 quarter profit was Rs 14.9 m.n. as against a loss of Rs 40.9 m.n a growth of 137% YOY.

Company has Reserves to the value of Rs 1.9 b.n in its books.as at 30/09/2009.

Singer finance will be the main driving arm of Singer Sri lanka's profitability in future.

Major share holders - 
               *  Singer (Sri Lanka) BV                      53,906,425 86.11  -   86.11%
               *  Singer Industries (Ceylon) PLC             1,050,700 1.68 -    1.68%

Singer Sri lanka is a high dividend paying company in its history as LLUB, NEST, TOBACCO.
Singer has been listed in CSE during the year 1982.Since then they have given 13 bonus issues to its share holders up to the year 2006.

RECOMMEND - LONG TERM BUY