Equity Analysis /
Sri Lanka

Sri Lanka: Q3 19 earnings preview

    Kavinda Perera
    Kavinda Perera

    Head of Research

    Contributors
    Isuri Munasinghe
    Naveed Majeed
    Mangalee Goonetilleke
    Lakshini Fernando
    Asia Securities
    16 October 2019
    Published by
    • Banking sector credit growth continues to be weak, NIM pressure rising, and impairment charges still high
    • Telco data usage continues to rise, but FX weakness to weigh on DIAL’s reported earnings
    • Counters exposed to leisure sees an earnings drag; consumer sees a faster recovery in Conglomerate earnings
    • FMCG/R food retailers continue to perform well in 2Q
    • LION volumes continue to benefit from pricing; DIST to benefit from higher local ethanol sourcing in the Alcoholic beverage sector
    • Q2 FY 20e to be better than Q1; however, still slow for the Construction sector
    • Textile names to have a strong quarter in the Manufacturing sector
    • Healthcare sector OPD footfall pickup in early Q2 FY 20e post April events
    • Insurance sector general to be marred by competition; push into alternative channels to sustain growth in Life
    • A challenging year with elections on the cards; gradual impact to be expected through FY 20e the Energy sector
    • Logistics sector business shifts to other Asian markets from China; minimal impact on EXPO
    • Vehicle registrations show marginal pickup; competition from the banking sector a likely factor for NBFIs
    • Borah conference largely to benefit City Hotels; Resorts to remain steady qoq in the Leisure sector