2017: Highest ever foreign purchases during the first half of a year, Are local investors missing out? The presentation highlight how and why foreign investors are investing in Sri Lanka and how local investors can also capitalize on the Sri Lanka opportunity

1. 15 AUGUST 2017
AnalysisofSectoralPerformance
&MarketOpportunities
Expert Analysis & Insight
Candor Research
© Candor Equities Limited
Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
By Ravi Abeysuriya, CFA
Group Director, Candor
President, Colombo Stock Brokers Association (CSBA)
President, Association of Alternate Financial Institutions (AAFI)

2. Expert Analysis & Insight
Candor Research
© Candor Equities Limited
Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
2© Candor Equities Limited
Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Content
➢ All time high net foreign inflows in 1H2017
➢ Possible reasons for foreign interest
➢ Sectoral analysis – where foreign investors see value
➢ Foreign favorites – net foreign purchases as of end July 2017
➢ Are local investors missing out?
➢ How local investors can capitalize on market opportunities

3. Expert Analysis & Insight
Candor Research
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Disclaimer
The information and opinions contained herein are based
upon information obtained from sources believed to be
reliable and made in good faith. Such information has not
been independently verified and no guarantee,
representation or warranty, express or implied is made as to
their accuracy, completeness or correctness. All such
information and opinions are subject to change without
notice. This is for information purposes only, and the
description of any company or their securities mentioned
herein is not intended to be complete and this document is
not, and should not be construed as, an offer, or solicitation of
an offer, to buy or sell any securities or other financial
instruments.
3

4. Expert Analysis & Insight
Candor Research
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Market performance closely correlated with net foreign inflows
4
4.8%
23.4%
-5.5% -9.7%
7.8%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-10
-5
0
5
10
15
20
25
30
2013 2014 2015 2016 2017 (YTD - July)
ASPI Performance
Source: CSE Annual Report 2016, Bloomberg, Candor
NetForeignInflow(Rs.Bn)

5. Expert Analysis & Insight
Candor Research
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Gradual growth in foreign turnover compared to domestic turnover
5
0
50
100
150
200
250
300
350
400
2013 2014 2015 2016 2017 (YTD - June)
Foreign (Rs. Mn)
Domestic (Rs. Mn)
Source: CSE Annual Report 2016, Bloomberg, Candor Research
42.0%
36.0%
Rs.Bn
64.0% 72.4% 65.6% 58.0% 53.1%
27.6%
34.4%
46.9%

6. Expert Analysis & Insight
Candor Research
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0.6%
0.1%
0.4%
1.0%
-0.4%
0.4%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
Malaysia Indonesia India Sri Lanka Pakistan Vietnam
Source: CSE Annual Report 2016, Bloomberg, Candor Research
* PER as at January 2017 – Bloomberg PE Values
Sri Lanka attracted highest net foreign Inflow
as a % of total market cap in 1H2017
6
PER* 16.53 23.26 19.70 11.80 10.45 15.50

7. Expert Analysis & Insight
Candor Research
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SL is one of three Asian countries in the MSCI Frontier Markets Index
7

8. Expert Analysis & Insight
Candor Research
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Top countries that contributed to YTD net foreign inflows to SL
8
9.39
5.74
2.77
1.48
1.08 0.97
0.55
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Luxembourg United States Cayman
Islands
Ireland Virgin Islands
(Br.)
Norway Australia
LKRBillion
Source: CSE , Candor Research

9. Expert Analysis & Insight
Candor Research
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Three sectors with top YTD return had highest foreign inflows
9
14,377
6,970
1,483 970 614 605
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
LKRMillion
Net Foreign Inflow (LKR Mn)
Source: CSE , Candor Research
Industrials
27.6
Financials
17.0
Consumer Staples
18.0
Consumer
Discretionary
2.4
Materials
19.2
Telecommunication
Services
5.5
-
5.0
10.0
15.0
20.0
25.0
30.0
%
Sector Performance % (YTD - July)

10. Expert Analysis & Insight
Candor Research
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Key stocks within the performing sectors
10
Sector
(GICS)
Key Stocks
Net Foreign
Inflow (LKR
Mn)
YTD -
Total
Return
(%)*
PE(x) -
Jan
2017
Current
PE(x)
Industrials 14,377.00 27.59
JOHN KEELLS HOLDINGS PLC 10,239.52 28.29 12.47 13.49
HEMAS HOLDINGS PLC 1,453.00 54.24 17.46 23.77
RICHARD PIERIS AND COMPANY PLC 312.17 69.94 6.22 7.72
EXPOLANKA HOLDINGS PLC 1,180.85 9.05 13.95 13.06
Financials 6,970.20 16.99
SAMPATH BANK PLC 1,145.89 10.67 4.85 4.89
HATTON NATIONAL BANK PLC 811.53 8.00 6.13 6.32
LB FINANCE PLC 210.46 17.67 4.20 4.67
Source: CSE, Bloomberg, Candor Research
* Bloomberg Total Return – Return with dividend Reinvested

11. Expert Analysis & Insight
Candor Research
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Key stocks within the performing sectors
11
Sector
(GICS)
Key Stocks
Net Foreign
Inflow (LKR
Mn)
YTD -
Total
Return
(%)*
PE(x) -
Jan
2017
Current
PE(x)
Consumer Staples 1,483.06 18.00
SUNSHINE HOLDINGS PLC 757.86 30.98 12.24 13.58
CEYLON TOBACCO COMPANY 230.87 21.17 12.13 14.16
CEYLON COLD STORES PLC 261.37 15.41 19.03 22.68
Materials 614 19.2
TOKYO CEMENT PLC 1,137 53.0% 6.19 9.00
CHEVRON LUBRICANTS PLC -607 -6.8% 11.6 12.5
Source: CSE, Bloomberg, Candor Research
* Bloomberg Total Return – Return with dividend Reinvested

12. Expert Analysis & Insight
Candor Research
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Foreign favorites – net foreign inflow YTD July 2017
12
Company Name Net Foreign Inflow - Rs. M YTD - Price Return PE(X) Jan 2017 PE(X) Aug 2017
1 John Keells Holdings plc 10,239.5 24.1% 12.56 14.33
2 Commercial Bank of Ceylon plc 5,284.7 -0.5% 8.79 8.10
3 Hemas Holdings plc 1,453.0 47.0% 18.15 24.10
4 Expolanka Holdings plc 1,180.9 4.9% 14.19 13.06
5 Sampath Bank plc 1,145.9 8.1% 4.87 4.54
6 Tokyo Cement company (Lanka) plc - (NV) 1,137.5 53.0% 6.19 9.00
7 Sunshine Holdings plc 757.9 22.4% 12.83 13.93
8 Hatton National Bank plc 658.6 4.9% 6.13 6.31
9 Access Engineering plc 656.3 7.7% 9.88 9.64
10 Dialog Axiata plc 605.1 9.5% 9.48 11.76
11 Teejay Lanka plc 462.9 -3.5% 12.80 16.14
12 Royal Ceramics Lanka plc 351.8 12.6% 4.02 4.53
13 Richard Pieris and company plc 312.2 50.6% 6.22 7.73
14 The Kandy Hotels company plc 285.1 -8.8% 13.08 14.42
15 Ceylon Cold Stores plc 261.4 12.3% 19.03 23.41
16 DFCC Bank plc 231.1 2.2% 9.46 7.15
17 Ceylon Tobacco Company plc 230.9 16.9% 12.13 14.01
18 Lb Finance plc 210.5 7.3% 4.29 4.77
19 Tokyo Cement company (Lanka) plc 182.5 55.2% 6.19 9.00
20 Hatton National Bank plc – (NV) 152.9 1.8% 6.13 6.31
21 Commercial Bank of Ceylon plc – (NV) 147.8 -4.6% 8.79 8.10
22 Lanka IOC plc 133.2 7.9% 3.18 19.37
23 Lanka Tiles plc 97.1 19.9% 4.84 5.00
24 Hayleys plc 72.8 9.3% 7.00 9.72
25 Piramal Glass Ceylon plc 67.0 14.8% 10.80 12.16
26 Renuka holdings plc 66.9 20.0% 2.32 3.61
27 Cargills (Ceylon) plc 56.8 6.9% 18.39 21.57

13. Expert Analysis & Insight
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Increasing % foreign holdings of performing stocks
13
JOHN KEELLS HOLDINGS PLC EXPOLANKA HOLDINGS PLC SAMPATH BANK PLC
HEMAS HOLDINGS PLC TOKYO CEMENT PLC SUNSHINE HOLDINGS PLC
Foreign Holding % August 2017 Foreign Holding % Jan 2017
Source: CSE, Candor Research
26.11%
31%
50.92%
57%
70.72%
82%
16.84%
19%
29.89%
32%
37.65%
49%

14. Expert Analysis & Insight
Candor Research
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Declining market PE levels resulted in increased foreign participation
while domestic participation decreased
14
0
2
4
6
8
10
12
14
16
18
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
2013 2014 2015 2016 2017 (YTD - June)
PE(x)
Foreign&DomesticParticipation(%)
Average PE(x) Foreign (%) Domestic (%)
Source: CSE Annual Report 2016, Bloomberg, Candor Research

15. Expert Analysis & Insight
Candor Research
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
15
Are local investors missing out? Behavioral aspects explain
Source: The 4 Psychological Phases of Asset Bubbles

16. Expert Analysis & Insight
Candor Research
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How local investors can capitalize on
market opportunities
16

17. Expert Analysis & Insight
Candor Research
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Use screens to identify bargains & Invest based on fundamentals
17
JKH 11.26 -1.9% 16.9% 20.07 14.26 13.40 12.25 12.59 2.19 1.47 1.17 120.91 6.13 4.32
TKYO 9.95 17.8% 130.6% 12.03 5.73 6.47 6.50 6.23 2.10 1.10 1.54 40.19 1.56 2.51
HEMS 5.60 37.7% 0.6% 18.19 10.85 16.23 19.69 19.36 2.70 1.53 2.61 41.51 1.50 1.38
Bloomberg
Code
Forec
asted
EPS
Earnings Growth (%) P/E Analysis (1x) PBV Analysis (1x)
Dividend
AnalysisFinancial
Year
Latest
Quarter
3YRAvg
HighP/E
3YRAvg
LowP/E
2016/03
/02
2017/03
/02
Forward
PER
3YRAvg
HighP/B
3YRAvg
LowP/B
PBV
BVPS
(LKR)
DPS
Dividen
d Yield
%
CLND
4.16 761.9% -1656.0% 68.16 18.08 - 7.94 6.02 2.49 1.49 1.01 24.76 - -
LGL
0.38 -11.3% -169.9% 12.63 9.06 9.54 16.68 79.46 2.22 1.59 1.39 21.58 0.75 2.50
Source: Candor Stock Tracker 31 Mar 2017, (based on Bloomberg data)

18. Expert Analysis & Insight
Candor Research
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Use screens to identify bargains & Invest based on fundamentals
18
JKH 11.26 -1.9% 16.9% 20.07 14.26 13.40 12.25 12.59 2.19 1.47 1.17 120.91 6.13 4.32
TKYO 9.95 17.8% 130.6% 12.03 5.73 6.47 6.50 6.23 2.10 1.10 1.54 40.19 1.56 2.51
HEMS 5.60 37.7% 0.6% 18.19 10.85 16.23 19.69 19.36 2.70 1.53 2.61 41.51 1.50 1.38
Bloomberg
Code
Forec
asted
EPS
Earnings Growth (%) P/E Analysis (1x) PBV Analysis (1x)
Dividend
AnalysisFinancial
Year
Latest
Quarter
3YRAvg
HighP/E
3YRAvg
LowP/E
2016/03
/02
2017/03
/02
Forward
PER
3YRAvg
HighP/B
3YRAvg
LowP/B
PBV
BVPS
(LKR)
DPS
Dividen
d Yield
%
CLND
4.16 761.9% -1656.0% 68.16 18.08 - 7.94 6.02 2.49 1.49 1.01 24.76 - -
LGL
0.38 -11.3% -169.9% 12.63 9.06 9.54 16.68 79.46 2.22 1.59 1.39 21.58 0.75 2.50
Source: Candor Stock Tracker 31 Mar 2017, (based on Bloomberg data)
Return
YTD
(%) -
July
24.14
55.19
47.00
-5.88
-18.24

19. Expert Analysis & Insight
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Licensed and Regulated by the Securities & Exchange Commission of Sri Lanka
Regularly review portfolio returns
19
Portfolio A
Stock Quantity Avg Cost Total Cost
Market Value as
at 31st July
2017
Portfolio Value as
at 31st July 2017
Unrealized
Gain/Loss
Total
Return%
Annualize
Return %
JOHN KEELLS HOLDINGS PLC 100 140 14,000.00 173.80 17,380.00 3,380.00 24.14% 45.63%
HEMAS HOLDINGS PLC 100 100 10,000.00 147.00 14,700.00 4,700.00 47.00% 95.35%
RICHARD PIERIS & CO PLC 100 8.1 810.00 12.20 1,220.00 410.00 50.62% 103.78%
SUNSHINE HOLDINGS PLC 100 49.41 4,941.00 60.50 6,050.00 1,109.00 22.44% 42.20%
CEYLON COLD STORES PLC 100 740 74,000.00 831.00 83,100.00 9,100.00 12.30% 22.33%
SAMPATH BANK PLC 100 248.38 24,838.00 268.50 26,850.00 2,012.00 8.10% 14.50%
Total Portfolio Return 27.43% 53.97%
ASPI Return 7.80% 12.80%
S&P SL20 Return 9.74% 17.54%
Portfolio Btfolio B
Stock Quantity Avg Cost Total Cost
Market Value as
at 31st July
2017
Portfolio Value as
at 31st July 2017
Unrealized
Gain/Loss
Total
Return%
Annualize
Return %
COLOMBO LAND & DVLP CO PLC 100 25.5 2,550.00 24.00 2,400.00 (150.00) -5.88% -10.00%
BLUE DIAMONDS JEWELLERY WORL 100 1.4 140.00 1.30 130.00 (10.00) -7.14% -12.09%
ADAM INVESTMENTS PLC 100 0.95 95.00 0.60 60.00 (35.00) -36.84% -55.00%
LANKEM DEVELOPMENTS PLC 100 3.9 390.00 3.00 300.00 (90.00) -23.08% -36.62%
ADAM CAPITAL PLC 100 1.3 130.00 1.00 100.00 (30.00) -23.08% -36.61%
Total Portfolio Return -19.20% -30.06%
ASPI Return 7.80% 12.80%
S&P SL20 Return 9.74% 17.54%

20. Expert Analysis & Insight
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20
Do not make these amateur mistakes
1. Investing based on Rumors or Gossip (unproven facts)
2. Believing that the stock market is inherently risky

21. Expert Analysis & Insight
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• It takes a lot of hard work to be a successful investor
• Invest in your financial education before you invest
• The goal of enlightened stock analysis – is to identify
underpriced securities relative to their true intrinsic value
• Take time to learn about the company before you buy, to be
sure it meets your criteria for achieving your goal(s)
• If you don't have the time, or interest in following individual
stocks, unit trust funds are a more efficient way to invest
21
Educate yourself & gain experience on investing before you start

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THANK YOU
22