Listed firms 1Q earnings gain 16% to Rs. 61 b

Listed firms 1Q earnings gain 16% to Rs. 61 b

Earnings of listed companies witnessed a sharp growth of 16% in the first quarter of 2016 to Rs. 61 billion as against a 5% improvement in the fourth quarter of last year. 

Capital Alliance Research attributed the “strong growth” due to weaker economic conditions during 1Q2015. Trailing twelve month (TTM) market earnings grew 3.3% year on year (YoY) to Rs.209.2 billion supported by low interest rates and improving disposable incomes driving consumption, compared to 17.1% during the same period last year due to improved economic conditions starting 4Q 2014. 

CAL analysed 269 companies which reported earnings in the quarter ended 31 March 2016 and 272 companies reporting earnings for quarter ended on 31 December 2015.

CAL Research, the research unit of Capital Alliance Ltd., said Banks, Finance and Insurance (34%), Diversified Holdings (15%) and Beverage, Food and Tobacco (14%) were the largest sector-wise contributors to market earnings in 1Q2016. 

Power and Energy (+344% YoY), Footwear & Textiles (+158% YoY), and Investment Trusts (+127% YoY) had the largest growth during 1Q2016, while Motors (-56% YoY), Trading (-48% YoY) and Construction and Engineering (-59% YoY) suffered the most.

The largest individual contributors to 1Q2016 earnings were John Keells Holdings (7.4%), Hatton National Bank (5.4%), Commercial Bank (5.3%), Ceylon Tobacco (5.0%) and Dialog (4.4%). TFC reported a net loss of Rs. 1.4 billion vs. a net loss of Rs. 366 million in 1Q2015 due to large impairment charges. Excluding TFC, overall market earnings grew 17.7% YoY. 

The largest individual contributors to TTM 1Q2016 earnings were John Keells Holdings (6.7%), Commercial Bank (6.0%), Hatton National Bank (5.7%), Ceylon Tobacco (5.4%) and Lanka Orix Leasing Company (4.1%), while the largest growth came from Amana Bank (TTM net profit of Rs. 174 million in 1Q2016 vs. a net loss of Rs. 8 million in 1Q2015). 

CAL said the CSE currently trades on a TTM PER of 12.5x as against 11.7 x as at 02.03.2016. The PBV was 1.4x. 


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