Distilleries Company of Sri Lanka PLC Equity Research · Distilleries Company of Sri Lanka PLC the...

LOLC SEC Valuation12M Tgt Price (excl.dividend)

Share PriceUpside/(Downside)Risk Level(refer page 22 for recommendation)

Share DetailsBloomberg Ticker DIST SL

CSE Sector Beverage, Food & Tobacco

GICS Sector Consumer Staples

Market Cap (LKR Mn) 64,800

Issued Quantity (Mn) 300

30-day avg T/O (LKR Mn) 12.71

Beta (6 months) 1.02

Investment FundamentalsLKR Bn 12MTrail. 2016(F) 2017(F) 2018(F)

Revenue 30.8 31.8 33.8 35.3

Net Profit 6.9 5.5 7.9 8.4

S/H's Equity 64.8 69.5 76.2 83.4

Total Assets 91.9 97.9 105.2 112.8

ROA (%) 7 6 8 7

ROE (%) 11 8 11 11

Price MultiplesPE (X) 8.90

PBV (X) 1.06

Price to Sales (X) 2.18

Divdend Yield (%) 1.50

Price Behavior

Per Share Details as at 30.09.2015 (LKR)Earnings per share (trailing 12m) 24.27

Net Asset Value per share 209.51

Sales per share (trailing 12m) 99.29

Dividend Per Share (trailing 12m) 3.25

Shareholder Details

Milford Exports Ceylon Lt 41%

Lanka Milk Foods Cwe Ltd 13%

Yaseen Muzaffar Ali 7%

Shareholders below 5% 33%

Source:CSE, Bloomberg, LOSEC Research

Analyst (s)

Gayan Rajakaruna

[email protected]

26 January 16

Salient Sections of the Report

Inelastic proxy for consumption growth (pg.2)|DIST, undisputed market leadership (pg.4)|

DCSL Arrack, a strong brand name (pg.6)|Budget 2016 trending positive (pg.7)| Strong

balance sheet (pg.9)| Telco & Plantation (pg.10)| SEPN, a sweetener on DIST's value (pg.12)|

Valuation (pg.13)|Sensitivity (pg.15)| Earnings risk comment (pg.15)|Appendices (pg.16 )

ValuationWe assume a cost of equity of 14.34% for our valuation which is a 6% premium on 3 year

treasury bond rate(GOSL), taking into consideration the equity market risk. Accordingly, We

have valued the counter using SOTP approach and derived the value of a share at LKR 291.30.

At the current value, counter is trading at a discount to our valuation. We give a Buy

recommendation for DIST.

Investment ConsiderationsInelastic proxy for consumption growth: Local liquor industry has been a resilient

performer historically, despite continuous tax hikes. With expected GDP per capita income

rise and demand inelasticity, we expect liquor consumption to post modest 1.7% CAGR in

medium term while mitigating the risk of possible consumption downturn based on price

hikes. We believe that illicit/illegal liquor consumption to be cut down on tight regulatory

measures while big players will benefit on increased volumes. Accordingly, DIST being the

leading Arrack producer could leverage on inelastic consumption growth of Arrack and

record strong performance in bottom-line.

DIST, undisputed market leadership: With 67% market share, we estimate to increase its

market share to historical averages (70% by FY18) while Sri Lanka's alcohol consumption

and 'budget 2016' to regulate the industry will augur well with DIST in regaining its lost

market share. Proved business acumen of the owner/chairman of the group will contribute to

be a key factor in group maintaining its market leadership.

'DCSL Arrack', strong brand name attached to local consumers: DCSL has been able to

make a strong foothold in local households through its strong brand name 'DCSL Arrack',

giving competitive advantage for DIST to stand above the competition.

Budget 2016 trending positive for DIST: We believe that Budget 2016 will generate

positive results for DIST in medium to long run while making the industry more concentrated

with few large players. We also expect illicit and illegal liquor consumption to be reduced

noticeably upon effective implementation of budget proposals, giving a market advantage for

DIST.

Strong balance sheet and low gearing to allow for investments: The Group is fairly low

geared and hence can conveniently leverage up for prospective investment opportunities.

SPEN, a sweetener on DIST's value: DIST has an associate investment in Aitken Spence PLC,

a blue chip conglomerate owning one of largest locally owned hotel chains having high

profitability. SPEN contributes 23% to DIST valuation.

Other businesses: We expect Telco and plantation sectors to drag down DIST's ROEs while

DIST's other diversify businesses to grow in line with GDP growth of the country.

Recommendation Guidance, Important Disclosures and Analyst Certification: Page 25

+94 117 880837

Distilleries Company of Sri Lanka PLC

Initiation Coverage

BUY

Equity Research

Leveraging on inelastic consumption growth

Arrack has been a lifestyle alcoholic beverage in Sri Lanka over many years while

experiencing an inelastic demand from a strong habitual consumption amongst Sri Lankans.

DIST being the market leader since its inception supplying Arrack to the local market, we

expect the company to reap benefits from the expected per capita income rise backed by

inelasticity of the industry and measures taken by 2016 Budget to curtail down illicit and

illegal liquor. Excessive levies on liquor producers will also barricade small scale liquor

producers to operate in the industry while benefiting DIST.

LKR 291.30

Business NatureDistilleries Company of Sri Lanka PLC the leading hard liquor

producers in Sri Lanka.It produces different types of Arrack

products and imports other types of liquor products. It also

has other diversified businesses in various industries.

Medium

LKR 264.80

35%LKR 216.00

150170190210230250270290310330

26-Jan-15 26-Apr-15 26-Jul-15 26-Oct-15 26-Jan-16

LK

R

DIST Share Price ASI movement (adjusted to DIST base price)

Initiation Coverage: Distilleries Company of Sri Lanka PLC | 26 January 16

Inelastic proxy for consumption growth

Beverage, Food & Tobacco

Consumer Staples

Source:Excise Department, WHO, LOLC SEC Estimates Source:Excise Department, WHO, LOLC SEC Estimates, Dept. of Statistics

Table 01: Sri Lankans prefer spirits over beer and wineBeer Wine Spirits

Sri Lanka 3.7 lr 2.2 lr 13% 0% 85%

Maldives 1.2 lr 0.7 lr 29% 29% 41%

Nepal 2.2 lr 0.2 lr 48% 1% 51%

India 4.4 lr 2.2 lr 7% 0% 93%

Source:CSE, Bloomberg, LOSEC Research Myanmar 0.7 lr 0.1 lr 83% 6% 12%

Thailand 7.1 lr 6.4 lr 27% 0% 73%

South Asia Avg 2.1 lr 1.0 lr 33% 5% 45%

South-East Asia 2.5 lr 1.8 lr 40% 15% 42%

World 6.2 lr 4.7 lr 35% 8% 50%

* This is based on 2010 data Source:WHO

2 | LOLC Securities Limited

Illicit liquor consumption

accounts ~40% of total

consumption

Based on WHO, Sri Lanka's unrecorded alcohol (illicit) consumption is ~40%. By considering a declining trend of

number of offences recorded under Excise Dept/NATA, we believe that illicit liquor trade carried out by small

manufactures have been gradually declined over the years. Recorded alcohol consumption of the country is relatively

higher than several neighbouring countries and the avg. of South Asia and South-East Asia and also greatly tilted

towards to hard liquor (85%) over soft liquor. We expect DIST will benefit from this positive outlook in regaining its

lost market share during last three years.

Arrack is a lifestyle

product with consistant

demand

Distilled alcoholic beverages have become a lifestyle product amongst the male population of the Island nation since

1505 from western colonisation. Today, alcohol industry has become a matured and profitable industry due to

consistent demand for alcoholic beverages. The beverage segment of DIST which accounts for 66% of group's topline

and approx. 86% of the bottom-line as at FY15 dominates the market since its inception and supplies high quality

alcoholic products, predominantly Arrack to local consumers.

Arrack consumption to

lag economic growth

3.8 litres per capita

Arrack consumption by

2018

In the last decade, Sri Lanka's Arrack consumption has seen a modest growth of 1.4%. This could be largely due to the

increased penetration of illicit & illegal liquor products to the society and disproportionate growth of taxes compared

with disposable income rise.

We estimate recorded Arrack consumption for next 3 years to be inline with 1.7% CAGR by considering expected per

capita income growth (avg.12%), potential shift from cheaper liquor to legal products on rise of disposable income

and curtailing the availability of illicit liquor through tight regulatory controls. Accordingly, we estimate a 3.8 litres

per capita Arrack consumption by 2018 and it could reach to 4 litres by 2020. There is a positive correlation between

GDP per capita income growth with arrack consumption pattern, however the correlation can be affected from a mix

shift from local arrack products to foreign hard/soft liquor products when income rises and lifestyle getting improved

accordingly.

Country Total per

capita

alcohol con.

Recorded per

capita

alcohol con.

Graph 01: Arrack consumption maintains a modest growth

of 1.4%-1.7%

Graph 02: Correlation of per capita income growth and

arrack consumption is positive

Industry outlook is positive for big players

-10%

-5%

0%

5%

10%

15%

20%

-

10

20

30

40

50

60

70

80

90

2005 2008 2009 2010 2011 2012 2013 2014 2015(F)

2016(F)

2017(F)

Arrack consumption (lr) YoY Growth Average

Lr (Mn)

-5%

0%

5%

10%

15%

20%

25%

30%

35%

-

1,000

2,000

3,000

4,000

5,000

6,000

2010 2011 2012 2013 2014 2015(F)

2016(F)

2017(F)

Per capita income (USD) Arrack consumption YoY growth

GDP per capita YoY growth

USD


Inelastic proxy for consumption growth (cont…)

Demand inelasticity to augur well with DIST's revenue growth

Graph 03: Avg. price of 1 lr of Arrack to be LKR 1606 by 2017

Source:Excise Department, LOLC SEC Estimates Source:Excise Department, LOLC SEC Estimates

Source:Excise Department, WHO, LOLC SEC Estimates, Dept. of Statistics

2 | LOLC Securities Limited 3 | LOLC Securities Limited

DIST caters to 71% of

total Arrack consumpion

Historically, alcohol industry has seen a demand inelasticity, despite increasing retail prices followed by regular

excise duty increases. We expect that our estimate on modest Arrack consumption growth to be further backed by

price inelasticity which was witnessed previously while enabling DIST to pass down incremental taxes without

significantly deteriorating sales volume. We expect any possible volume decline due to unbearable taxes in coming

years to be off set by positive measures introduced by budget 2016 which will enable DIST to regain lost volumes in

the recent past.

We derived the existing 'net' and 'gross' selling price per Arrack litre based on historical revenue and production

quantity of the company subjected to duties. Net selling price per litre is estimated with 3% CAGR for FY16-18

considering the existing net price, past average growth, expected rise of inflation and premium added over peers

(currently LKR 10-20 per bottle). With 2016 budget proposal, topline tax on net selling prices estimated to be

increased to avg. 250% from current average level of 202% and we believe that impact of this increase to be reflected

by beginning of FY16/17.

Demand inelasticity to

keep sales volume stable

despite price increases

DIST plays a crucial role while catering to 71% of total Arrack consumption in 2014. After making LKR 6bn

investment in FY15, now it is fully equipped with modern blending and bottling plant to facilitate a greater capacity.

Graph 04: People consume Arrack despite price increases

60

65

70

75

80

85

90

648 676 846 959 1,058 1,250 1,332 1,575 1,606

Arrack consumption(lr)

Linear (Arrack consumption(lr))

Lr (Mn)

LKRper lr

(F) (F) (F)

Price increases has seen minimal impact on consumption

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2009 2010 2011 2012 2013 2014 2015/16(F)

2016/17(F)

2017/18(F)

Weighted avg. excise duty per arrack lr

Weighted avg. selling price per arrack lr (incl. taxes)

Weighted avg. selling price per arrck lr (excl. taxes)

LKR per lr


DIST, Undisputed market leadership

Graph 05: DIST has a dominant market share on production Graph 06: Hard liquor market share of top 3 players in 2014


Source:Excise Department, LOLC SEC Estimates

Graph 07: DIST's market share on Arrack consumption


* Arrack consumption given in bulk litres has been converted to proof litres


Disproportionate taxes

on alcohol beverages

compared with income

growth

Though Sri Lanka's recorded Arrack consumption is less volatile historically, there is a drop in last two years which

seems to be due to increasing illicit liquor (unrecorded liquor) in the market and price sensitive customers shifting to

such liquor in based on disproportionate retail price increases in parallel to their income growth. However we believe

that total hard liquor consumption including both recorded and unrecorded consumption to be remained with a

modest growth of 1% - 2% range due to demand inelasticity for alcoholic beverages.

DIST's share on recorded Arrack consumption has registered a drop from 81% to 71% as a result of the drop in

recorded Arrack consumption and consumers shifting from DCSL Arrack to other local Arrack brands who have

significantly under-priced their products by dodging excise duties and channelling them to retail liquor shops run by

same manufactures.

DIST dominates with

avg.75% market share

DIST has been operating as the market leader in Sri Lankan hard liquor industry amidst intense competition from

other licensed liquor manufactures and the continuous influx of illicit liquor to the market. Based on the annual hard

liquor production, DIST has been able to maintain an average 75% market share since 2006. However during last

three years, market share of DIST has seen a dip from 76% to 67% and could be largely due to significant infusion of

cheaply priced illegal liquor to the market by certain licenced manufacturers and consumers opting for lower priced

products despite the difference in quality. Such manufacturers have been capable of pricing their products at a

discount to the market price through cost savings gained on evading excise and import duties.

Graph 08: Gvt. imposes more taxes on liquor than peoples'

income growth

14%

67%

8%

11%

IDL DIST Rockland Other

50%

55%

60%

65%

70%

75%

80%

85%

0

5

10

15

20

25

30

35

40

45

50

55

60

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015(F)

2016(F)

2017(F)

Total production excl. DIST - Proof lr

DIST production - Proof lr

Proof Lr (Mn)

50%

55%

60%

65%

70%

75%

80%

85%

90%

0

10

20

30

40

50

60

2008 2009 2010 2011 2012 2013 2014 2015(F)

2016(F)

2017(F)

DIST arrack sales - proof lt Total arrack consumption - proof lr

DIST share on consumption Average

Proof Lr (Mn)

0%

5%

10%

15%

20%

25%

30%

2010 2011 2012 2013 2014 2015 (F) 2016 (F) 2017 (F)

Per capita income YoY growth Excise duty per lr YoY growth

Avg. per capita income growth Avg. per capita excise duty growth


DIST, Undisputed market leadership (cont…)

Graph 09: Special Arrack accounts for over 85% of total production volume


Market share forecast of DIST




We estimate that DIST will be able to regain lost sales volume during next three years based on tightened government

policies to regulate liquor industry which will lead to deteriorate small players' share in the industry and to

concentrate it with few large players (refer page 07). Further small manufactures will lose pricing advantage created

on untaxed/low-taxed ethanol and liquor, enabling DIST's products to be more price competitive and thereby

increasing sales volumes. Thus we estimate DIST's market share to reach 70% by FY18 from 67% recorded in FY15.

Specially company's leadership; Mr. Harry Jayawardena has shown a strong business acumen over the years to

maintain the market leadership in the highly profitable industry, even during the adverse environments.

In terms of hard liquor consumption, the industry has seen a modest growth of 1.4% since 2005 due to the stagnant

consumers' purchasing power on liquor led by disproportionate excise duty increase. During last 3 years, hard liquor

industry saw a decline in recorded production and consumption largely due to populating illegal and illicit liquor

significantly. There could also be a slight impact from substitution effect of beer, deteriorating hard liquor

consumption. However, we believe that steadfast loyalty towards liquor consumption along with Gvt. support on

curtailing down illicit/illegal liquor will enable DIST to compete in the legitimate alcoholic beverage business with

more equal term.

Competetive advantage

on its leadership

DIST's market share to

reach 70% by FY18

Gvt. to support on

curtailing illicit/illegal

liquor

DIST's and its subsidiary Periceyl Ltd. liquor products are mainly classified as Special Arrack, Coconut & Processed

Arrack, Molasses Arrack and locally made foreign liquor. In Special Arrack segment, DIST has 82% market share in

2014 while Coconut & Processed Arrack segment secured 47% market share in 2014.

83%

84%

85%

86%

87%

88%

89%

90%

91%

92%

93%

15

20

25

30

35

40

45

2007 2008 2009 2010 2011 2012 2013 2014

Special Arrack Coconut & Processed Arrack Molasses Arrack

Country Made Foreign Liquor % Special Arrack on total production

Proof Lr (Mn)


"DCSL Arrack" a strong brand name attached to Sri Lankan consumers

Diagram 01: DCDL has a strong brand image and diverse portfolio of Arrack products


Source:DIST Annual Report 2015

Table 02:Most valuable brands of food & beverage sector in Sri Lanka

Company Rank Brand Value

(USD Mns)

NEST 7 139 AA-CARG 8 122 AALION 10 114 AA-DCSL 13 67 A-CCS 22 35 AA-HARI 50 8 A-KFP 54 6 A+BFL 63 5 BBLMF 66 5 BBBCONV 72 4 A-

Source: Brand Finance


DIST has a regulatory

advantage

National Authority on Tobacco & Alcoholic (NATA) Act prohibits advertising and promoting alcoholic brands which

has created a platform for DIST to stay resilient amidst hefty competition since peers also can not promote their

brands or products through any form of media while DIST has already been maintaining well established and reputed

brand name over the years. This will naturally be an entry barrier for new comers as well preventing them to

promote their products. Accordingly, this regulatory barrier will essentially create a competitive edge for DIST over

its peers to dominate the industry.

Brand

Rating

We believe that strong brand name of Distilleries which has been built over last couple of decades is the greatest

strength of the company for its continued success. DCSL has been able to make a strong foothold in Sri Lankan

households through its strong brand name "DCSL Arrack" while its unique taste and affordable "kick-per-buck" have

made an inerasable image amongst Sri Lankan consumers. Proving its brand strength, DCSL has been honoured

within top fifteen most valuable brands (Brand value - LKR 9602 Mn) and one of the most valued corporate entities of

the country.

DCSL amongst most

valuable brands


Budget 2016 trending positive for DIST

Source:Excise Department Source:Excise Department

*Foolproof sticker - positive for DIST upon effective execution


Foolproof sticker to

curtail illicit liquor

Graph 10: Small liquor producers account only 11% of total

duty payment

Graph 11: Small manufactures with 11% market share pay

below LKR 250 mn

Small liquor producers

have to increase price to

absorb incremental cost

*Single annual licence fee of LKR 50 mn

It was proposed to impose a flat annual license fee of LKR 150 mn for liquor manufacturers irrespective of volume

could adversely affect the small companies who do not have a strong scale of production volume. However as per

"Excise Ordinance Notification No.983", this fee has been brought down to LKR 50 mn per annum. We believe that

new fee is more affordable for medium size and big firms while small liquor manufacturers to find ways absorb this

incremental cost.

16 out of 20 licenced

arrack producers pay

below LKR 250 mn per

month

*Minimum excise duty of LKR 250 mn per month

Budget 2016 has proposed to impose a minimum excise duty of LKR 250 mn per month (LKR 3 Bn/year) from liquor

manufactures which will adversely affect small manufactures while benefiting big players like DIST. In 2014, DIST

accounted 66% out of total duties of LKR 52.55 bn paid for hard liquor while 11% came from small manufacturers

whose contribution were less than LKR 3 Bn per year. However, assuming that what is declared by them holds true,

most of the small players are likely to be wiped out from the industry upon implementation and 11% to be even out

amongst top few players.

However reality may deviate from the estimates as there is a considerable volume of illegal supply which are not

taxed/disclosed and thus paying below this threshold eroding Gvt revenue though they have the capacity pay proper

tax amount. Upon effective implementation, a policy of this nature will enable such illegal players to pay more taxes

in the future and thereby preventing them to price liquor products way below the market rate. However as per

various sources, there is a court case pending against this and may not come to effect in short term. But current Gvt is

considered to be aggressive on revenue collection and thus we believe this policy to be gradually effective with some

amendments and eventually leaving the industry more concentrated with big players.

As per budget proposal 2016, every tax paid liquor bottle must be labelled with a fool-proof sticker enabling a visual

identification for the excise officers in identifying the tax paid liquor bottles. The decision is favourable to DIST, but

while unregulated liquor being curtailed down, we believe that the execution should be effective and free from

systematic loopholes to get rewards.

66%

14%

9%

11%

DIST+Periceyl

International Dist.

Rockland

Other

89%

11%

Top 3 contributors

Contributors<LKR250mn


Budget 2016 trending positive for DIST (cont…)

Source:Excise Department

Graph 12: Excise duty growth % of beer is greater than Arrack

Source: Excise Department, Parliament Gazettes


*Increased custom and excise duties on foreign liquor, beer and imported ethanol

Gvt has increased the total tax burden (mainly on custom import duty) of imported foreign liquor from LKR 1850/lr

to LKR 2500/lr while adding further 70% as excise levy. This will make foreign liquor further costly and consumers

will tend to shift to country made foreign liquor or Arrack supporting local producers like DIST to gain market share.

On a negative note, company has to incur an additional cost due to increased import duties on ethanol (from LKR

300/lr to LKR 400/lr), since 50% of ethanol required for DIST's production is imported while the rest is produced

locally. Production cost will be further affected due to Rupee depreciation as ethanol cost accounts to 40% of cost of

production. Thus we estimate that cost of production of one proof lr of Arrack to record a 4% CAGR over next three

years from the current weighted avg. cost of LKR 303 in order to absorb expected cost increase.

*Imposing higher percentage of excise duties on beer over hard liquor

Percentage growth of excise duties imposed on strong and mild beer based on 'October and November 2015 price

revisions' are considerably above those on hard liquor. Thus beer manufactures will be pushed to increase prices at a

higher percentage compared to liquor manufactures to reflect the revised taxes, which could negate beer demand

and substitution effect on hard liquor.

Beer to take a greater hit

from budget 2016

*Income tax rate to be reduced from 40% to 37.5%

With the introduction of 30% corporate tax rate and 25% of surtax for liquor industry, the total effective income tax

will be estimated as 37.5%. This will be a 2.5% drop from the existing rate of 40% enabling DIST to have a positive

impact on its bottom-line. However it remains high compared to other industries which is 15%-30%.

2.5% decline in corporate

tax

*Annual manufacturing license fee of LKR 150 mn for each distillery

Gvt proposed to increase the annual manufacturing license fee for each distillery owned by the manufacturer to LKR

150 mn through 'budget 2016'. Subsequently, as per "Excise Notification No.983", it has been reduced to LKR 100 mn.

However, this is not effective yet and as per Excise Department and "Daily Mirror on 26.12.2015" and few other

publications indicated that the Gvt. is to withdraw this decision due to the plea made by liquor producers based on

possible collapse of many liquor manufacturing companies if this was implemented. Accordingly, it is likely that this

will not be effective and thus we have not factored the negative impact to our valuation.

If this becomes effective, DIST may have to pay LKR 300 mn for two distilleries. We believe that DIST and other

players will accordingly increase price to pass cost to consumers.

DIST's cost of production

will increase

Proposed license fee for

each distillery may not be

implemented

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Nov-14 Oct-15 Nov-15Arrack Foreign liquor Mild beer-alcohol vol.<5% Strong beer-alcohol vol.>5%

Exc

ise

du

ty %

gro

wth


Strong balance sheet and low gearing to allow for investments

Graph 13: DIST has a low gearing ratio and sound asset base Graph 14: Low gearing over listed peers

Source: Bloomberg, LOLC SEC Estimates Source:DIST Annual Report, Bloomberg

Graph 15: Total asset value comparison

Source:DIST Annual Report, Bloomberg


Out of the largest companies in terms of asset base (excluding bank, finance & insurance sector), DIST has been

amongst the top ten listed companies.

DIST has been able to generate strong free cash flow balances and gearing has continued to be below 23% over last

three years which will open up further avenues for raising debt to venture into new projects. We don't expect any

significant debt financing in years ahead since a LKR 6 Bn investment for a blending and bottling plant has been

already made and expect DIST to maintain the same low level of gearing for next three years. Its cash balance

(combined with cash in hand and short-term investments) by FY15 is LKR 6.5 bn which is significant compared to

most of the Sri Lankan corporates. Thus DIST has appeared to be a self-financed business during previous years while

indicating its capability of internal capital formation for capital investments.

DIST maintains strong

cash base and low

gearing

0%

5%

10%

15%

20%

25%

30%

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

2010 2011 2012 2013 2014 2015 2016(F)

2017(F)

2018(F)

Cash and cash equivalents Total Assets Gearing

Gearings ratio are below 25% and declining

LKR Mn

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

2010 2011 2012 2013 2014 2015

DIST LION BREW

0

20

40

60

80

100

120

140

160

180

200

220

240

JKH CARS BUKI VONE SLTL DIAL DIST HAYL SHL BREW LION


Telecommunication and Plantation sectors, dragging DIST's ROEs

Graph 16: Lanka Bell's CDMA market share is dropping Graph 17: Fixed broadband market is growing


Source:SLTL & DIAL annual reports, TRCSL, LOLC SEC Estimates Source:SLTL & DIAL annual reports, TRCSL, LOLC SEC Estimates



Negative outlook of

plantation industry

curtails growth prospects

Plantation sector of DIST entails Balangoda Plantations PLC (BALA), a subsidiary with 43.23% ownership and

Madulsima Plantations PLC (MADU), an associate business with 45.9% holding. BALA recorded a loss of LKR 95 mn

by FY15 and LKR 310 Mn loss has already been incurred for 9MFY16, signalling a possible performance decline in

years ahead. MADU also follows a similar loss making pattern while deteriorating the contribution from associate

businesses to the Group. With the down turn of global tea prices and increase in cost of production on wage increases

of plantation sector workers, we expect plantation sector to generate negative earnings and thus affecting DIST's

bottom-line in FY16,17 and 18.

Lanka Bell could see a potential in its data business through 4G LTE network as the country has seen a rapid growth

of internet usage over the years. Proving market's growth potential, fixed broadband subscribers have increased at

19% CAGR since 2010. However, Lanka Bell has a uphill task of capturing a strong market share to make a recovery

from loss territory as other two leading players, DIAL and SLTL aggressively operate to increase their share of data

market.

Lanka Bell has potential

in growing data business

Lanka Bell's fixed

telephony market share is

deteriorating

DIST's full owned subsidiary "Lankabell Private Ltd." mainly operates in fixed telephony and broadband segments of

the country which are intensely competitive and dominated by two telecom giants SLTL and DIAL. It has been

pioneering CDMA technology in local market with 25% market share in fixed lines and has recently introduced its 4G

LTE network on a bandwidth of 25 MHz in the 2.3 GHz spectrum which is the most sought after brand in the Asian

region.

Lanka Bell's fixed telephony (CDMA) segment has seen a continuous decline of its market (subscriber base) over the

past three years due to consistent market growth of SLTL through its economies of scale and rapid growth of mobile

telephony usage over fixed lines in Sri Lankan households . Thus we believe that fixed line segment of Lanka Bell will

continue to see pressure on performance.

Plantation sector

0%

10%

20%

30%

40%

50%

60%

70%

2012 2013 2014

SLTL DIAL Lanka Bell

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2009 2010 2011 2012 2013 2014

Fixed Mobile YoY Growth

Fixed broadband subscribers growing by 19% CAGR


Telecommunication and Plantation sectors, dragging DIST's ROEs

Graph 18: BALA and MADU has incurred losses

Source:BALA & MADU Annual Reports, Bloomberg Source: CBSL Annual Report, LOLC SEC Estimates

Source:SLTL & DIAL annual reports, TRCSL, LOLC SEC Estimates

Graph 20: Diversified segment to grow inline with expected GDP growth

Source:DIST annual reports, LOLC SEC Estimates


Diversifed segment to

grow with GDP growth

Diversified business segment of the Group has been yielding positive earnings for last four years with a 33% CAGR of

PBT. Its contribution to the total revenue is 18% and 6% to Group's earnings. Group's restructuring program to

consolidate subsidiaries and associates under Melstacrop has seem to be paid off well in terms of improved financial

performance and enhancing the contribution from non-alcoholic sector while reducing the Group's dependency on

liquor business.

Diversified segments contains variety of businesses under 19 subsidiaries while Insurance (Continental Insurance),

Financial Services (Melta Regal), Leisure (Herittance Negambo) and power generation (Bogo Power) being the key

contributors of the segmental performance. This segment is highly diversified, we expect the segmental performance

to improve in par with the economic growth (GDP) potential of the country.

Diversified sector will reduce dependency on Arrack business

Graph 19: Tea export price decline and cost of production

increase make losses for plantation companies

(400)

(300)

(200)

(100)

-

100

200

300

2010 2011 2012 2013 2014 2015 (9M)

BALA MADU

LKR Mn

-30%

-20%

-10%

0%

10%

20%

30%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2009 2010 2011 2012 2013 2014 2015

YoY Growth of tea export price (LHS)

YoY Growth of cost of production (LHS)

Margin per kg (RHS)

5%

6%

13%

9%

11%12%

11% 11% 12%

0%

2%

4%

6%

8%

10%

12%

14%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2010 2011 2012 2013 2014 2015 2016(F) 2017(F) 2018(F)

Diversified revenue GDP growth % of segment contribution to revenue

LKR Mn


Aitken Spence PLC - A sweetener on DIST's value

Graph 21: SPEN's tourism segment has superior profitability

Source: CBSL Annual Report, LOLC SEC Estimates

Source: Bloomberg Source: SPEN's Annual Report 2015

Source: SLTB, Ministry of Tourism Maldives Source: Company annual reports, LOLC SEC Estimates


DIST carries SPEN its book at LKR 7.45 Bn. We expect SPEN to generate superior earnings as a diversified holding

backed by tourism growth potential in the region and expected GDP growth in Sri Lanka and thereby add significant

value to DIST in years ahead.

SPEN 's growth to

continue, adding value

to DIST

We expect SPEN to post a 20% average earnings growth in next three years for equity holders which will be largely

driven by the growing number of tourist arrivals inline with ongoing capacity expansion of its tourism segment,

despite political turmoil of Maldives resulting to see a earnings decline in last two quarters. AHUN's room capacity

will increase from 2141 to total of 3145 by 46% by 2018 and we estimate 75% earnings contribution derived from

tourism segment for next three years.

Graph 24: AHUN's room inventory to reach 3145 rooms by

2018 and continue to be the second largest hotelier

AHUN's room inventory

will increase from 2141

to total of 3145

Graph 23: Tourism segment of SPEN to grow with industry

growth in Sri Lanka & Maldives

DIST has invested in Aitken Spence (SPEN) as an associate business owning 43.07% of this blue chip diversified

conglomerate with main exposure to tourism through Aitken Spence Hotel Holdings PLC (AHUN). With post war

tourism boom in Sri Lanka along with tourism growth in Asian region, SPEN has been able to generate 9% average

annual earnings growth during last five years mainly through its high profitable hotel business. Currently, its tourism

segment account for 75% of its net earnings and rest is derived from various businesses in power, logistic and

services industries.

SPEN is one of the largest

blue chip conglomerate

Graph 22: Earnings composition of SPEN's business

segments

-

2

4

6

8

10

12

14

AHUN CONN AHPL JKHL SHOT

AHUN CONN AHPL JKHL SHOT

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014 2015(E)

Earnings

YoY Tourist arrival growth in Sri Lanka

YoY tourist arrival growth in Asia & Pacific

LKR Mn

0

500

1000

1500

2000

2500

3000

3500

AHUN CONN AHPL & JKHL CHOT SHOT

# of rooms

3145 rooms by 2018

75%

13%

10%2%

Tourism Maritime & Logistics Strategic investments Services


Table 03: Valuation Sensitivity Matrix

12% 13% 14% 15% 16%0.5% 241 234 227 221 2160.8% 281 269 259 250 2431.0% 320 304 291 280 2701.3% 359 340 324 309 2971.5% 398 375 356 339 324

Source:CSE, Bloomberg, LOLC SEC Estimates

Table 04: SOTP Valuation of DISTSource: SPEN's Annual Report 2015

Beverages 48,754 163 Plantation 521 2 Telecommunication 4,684 16 Diversified 5,612 19 Associate Investments: SPEN 20,238 67

MADU 667 2 Investments on financial assets 17,654 59 Cash 2,048 7 Group's debt (adjusted for NCI) (12,810) (43)

Source:LOLC SEC Estimates

Table 05: Peer Comparison

Name PE (x) PBV (X) ROE %

Distilleries Co Of Sri Lanka (Sri Lanka) 450 9.43 1.03 1.50 11.17Lion Brewery Ceylon Plc (Sri Lanka) 300 26.68 4.86 0.74 19.65Ceylon Beverage Holdings Plc (Sri Lanka) 110 18.52 3.54 1.06 20.68

Source: Company annual reports, LOLC SEC Estimates Radico Khaitan Ltd (India) 220 30.04 5.79 0.72 21.80Hite Jinro Co Ltd (South Korea) 1608 55.08 1.46 3.62 2.59Takara Holdings Inc (Japan) 1552 26.40 1.30 1.31 5.11Luzhou Laojiao Co Ltd-A (China) 4476 30.74 2.92 3.81 9.51Thai Beverage Pcl (Thailand) 11667 15.65 3.87 3.72 26.17

Source:CSE, Bloomberg, LOLC SEC Research

12 | LOLC Securities Limited 13| LOLC Securities Limited

Share price in LKR

Ter

min

al

Gro

wth

Rat

e

Segment

We have used the 'Sum of the Parts' (SOTP) approach in deriving the valuation for DIST. Accordingly we estimate

total valuation for the company at LKR 87.37 billion. We assume a cost of equity of 14% which is 6% premium to 3

year Sri Lanka Govt Treasury Bond Yield. A risk premium of 6% has been taken considering the equity market risk in

CSE. We have taken a mid-term growth (4-6 years) of 3% and a free cash flow terminal growth (>6 years) of 1% of

valuing beverage segment. Accordingly, we value the share at LKR 291.30 which is a 35% discount to the current

price of the share. At the current share price, DIST is trading at forward PE of 8.2X and a forward PBV of 0.9X.

Sensitivity of valuation for Terminal Growth and Cost of Equity is indicated below and sensitivity of key assumptions

are evaluated separately in proceeding section.

Cost of Equity

Equity value (LKR Mn) Value per Share (LKR)

Market Cap (USD Mn) Dividend

Yield %

Total Equity Value of DIST 87,369 291

Valuation


Valuation (cont…)

Beverage segment

Plantation

Telecommunication

Diversified

Investments on financial assets

Associates: SPENSource:LOLC SEC Estimates

Source:CSE, Bloomberg, LOLC SEC Research

13| LOLC Securities Limited 14 | LOLC Securities Limited

We have estimated already paid total super gain tax liability and factored in FY16 earnings which has resulted a

considerable drop in net earnings estimated for FY16. Effective corporate tax of 37.5% has been applied in

forecasting net earnings of the beverage segment.

Balangoda Plantation (BALA) is largely in to tea plantation and therefore we valued the segment based on PBV

multiple method by considering the sector average PBV derived from selected set of counters which are

predominantly into tea plantation. We valued Madulsima Plantations (MADU-associate business) in the same manner

adjusting it for Melstacrop's stake.

Diversified segment of DIST has been into many business segments and Melstacrop Limited operates as the holding

entity of these widespread businesses. We believe that this business segment has similar characteristics of holdings

companies listed under diversified sector of CSE. Accordingly we valued the segment based on PE multiple method

considering sector average PE. We adjusted the derived equity value for DIST's effective ownership of Browns Beach

Hotel.

Short term and long term financial assets are valued on the estimated market value as at December 31, 2015.

For telecommunication segment, we have applied EV/EBITDA multiple method discounted to the average EV/EBITDA

of two listed players (SLT & DIAL). We used a 20% discount to the average EV/EBITDA considering Lanka Bell's

market share drop, loss making scenario over last three years and SLT & DIAL dominance in local data business.

In valuing SPEN, We used market multiple method and applied an average of weighted average 'Hotel' and

'Diversified' sectors PE and PBV multiples for its trailing 12M earnings for common equity holders and for the current

book value. We expect a 75% to 25% earnings mix from both hotel and diversified segments and weighted sector

multiples accordingly. In deriving weighted hotel sector multiples, we selected only leading hoteliers who hold hotel

chains locally and overseas. We adjusted the DIST's ownership of 43.07% for the average value derived from both

multiples and derived the value of DIST's stake of SPEN as LKR 20,238 Mn.

We have valued the beverage segment by applying the Residual Income method, applying a 14.34% required rate of

return which comprised with 8.34% risk free rate and a market risk premium of 6%. We have estimated a 3%

medium term residual income growth (4 -6 years) of the beverage segment by applying a discount to the expected

per capita income growth and considering stable profit making ability inherited in the hard liquor industry. 1%

terminal growth rate has been applied by considering the flat growth rate of arrack consumption in valuing the

beverage segment. Accordingly, we valued the segment at LKR 48,754 Mn while generating a LKR 163 per share.

In valuing DIST, we applied Sum of the Parts (SOTP) analysis approach based on several valuation techniques in

valuing respective segments of SOTP model which is illustrated in Table 04.


Summarized Sensitivity of Assumptions

Graph 25: GDP per capita growth sensitivity: Medium Graph 26: Currency sensitivity on beverage seg.: Medium

Source:LOLC SEC Estimates Source:LOLC SEC Estimates

Graph 27: Corporate tax sensitivity on beverage seg.: Medium Graph 28: Tourist arrivals sensitivity on SPEN: Medium

Source:LOLC SEC Estimates Source:LOLC SEC Estimates


Earnings Risk Comment

Sri Lankan liquor industry is exposed to considerable regulatory risk due to regular import and excise duty hikes to

increase Gvt's tax revenues. As a result, licensed liquor manufactures are often compelled to increase selling prices

by passing incremental costs to consumers to maintain their margins. To a certain extent consumers will not be

price sensitive due to drinking necessity, however when price rises become greatly disproportionate to disposable

income growth, price sensitive consumers tend to shift to low priced soft and illicit liquor products.

Currently, industry has an entry barrier from regulation. If Gvt. decided to liberalize the industry, it will lead the

industry to be more competitive and deteriorating market share of the existing players. Further, inline with

country's growth if Gvt removed hefty taxes and import restrictions enforced on foreign liquor enabling Sri Lankans

to consume high quality foreign liquor, DIST as the market leader will face a significant risk of losing its market

share.

As a national initiative if the Gvt enforces restrictions on liquor supply to the market or a complete halt of liquor

production and consumption due to rising health implications and religious/social pressure for such closure, DIST

as the largest player will certainly plunge to liquidating position. But tobacco and liquor industry being the second

highest contributor to the Gvt. revenue makes it a highly unlikely enforcement.

Longer term demographic and lifestyle changes could also affect future earnings of DIST as liquor is highly

correlated with social & cultural acceptance . Over the years, Sri Lankan elderly and female population have been

growing over young males lowering demand for hard liquor. Elderly people do not tend to consume liquor on for

better health while females would not consume liquor on cultural norms. Some religions have stricter principles on

liquor consumption which will essentially create a risk of deteriorating demand when their population is growing at

a higher rate. However, we foresee these demographic changes as more long term driven and somewhat distant

from medium term impact. As part of lifestyle changes, a considerable increase in soft liquor (beer and wine)

consumption is also witnessed in the recent past along with rise of disposable income, creating a substitution effect

on hard liquor. We believe that the DIST's market share to be protected from this shift due to demand inelasticity

and brand loyalty towards 'DCSL Arrack'.

In summary, We don't see a much risk of losing a substantial market share of DIST in short to medium term, despite

regular Gvt. tax hikes which will be soften by consumption inelasticity. Therefore with expected modest growth of

the liquor industry, we are confident that DIST will not run into significant risks in medium term.

284

286

288

290

292

294

296

-1% 0 1%

Change of corporate tax on liquor forecast

LKR

+1%

-1%

282

284

286

288

290

292

294

296

-1% 0 1%USD:LKR forecast

-1.5%

+1.5%

LKR

278

280

282

284

286

288

290

292

294

296

298

-1% 0 1%Change of GDP per capita income growth forecast

+2%

-2%

LKR

278 280 282 284 286 288 290 292 294 296 298

-1% 0 1%Change of average tourist arrival growth rate forecast

+2%

-2%

LKR


Appendices

Table 06: Return comparison

3 months -21.45 -10.67 -13.82 -14.296 months -23.19 -12.95 -18.98 -13.04YTD -12.20 -8.22 -9.02 -14.291 year -6.49 -13.51 -19.48 -12.20

Source:CSE, Bloomberg

Graph 29: Share Price Movement


Source:CSE, Bloomberg

Graph 30: PE Chart Graph 31: PBV Chart


Source:CSE, Bloomberg Source:CSE, Bloomberg




Graph 34: CSE PE Chart Graph 35: CSE PBV Chart

Graph 32: Price per Sales Graph 33: Dividend Yield

S&P SL 20

IndexLIONASI Index% DIST

100

150

200

250

300

350

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

Rs

Vo

lum

e

Volume Price

SMAVG (50) SMAVG (100)Highest Price at 11.05.2015: LKR 310.203 Year Lowest Price as at 05.04.2013: LKR 160

0.0025.0050.0075.00

100.00

1/26/13 7/26/13 1/26/14 7/26/14 1/26/15 7/26/15 1/26/16

RSI (14)

4.0

6.0

8.0

10.0

12.0

14.0

1/26/13 7/26/13 1/26/14 7/26/14 1/26/15 7/26/15 1/26/16

PE ratio Highest Average Lowest

0.6

0.8

1.0

1.2

1.4

1.6

01/26/13 07/26/13 01/26/14 07/26/14 01/26/15 07/26/15 01/26/16

PBV ratio Highest Average Lowest

1.0

1.5

2.0

2.5

3.0

3.5

1/26/13 7/26/13 1/26/14 7/26/14 1/26/15 7/26/15 1/26/16

Price to Sales ratio Highest Average Lowest

8.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

16.0

01/26/13 07/26/13 01/26/14 07/26/14 01/26/15 07/26/15 01/26/16

ASI PE ratio Highest Average Lowest

1.4

1.5

1.5

1.6

1.6

1.7

1.7

1.8

1.8

1/26/13 7/26/13 1/26/14 7/26/14 1/26/15 7/26/15 1/26/16

ASI PBV ratio Highest Average Lowest

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

1/26/13 7/26/13 1/26/14 7/26/14 1/26/15 7/26/15 1/26/16

DIST dividend yield Highest Average Lowest


Table 07: Financial Summary ForecastFigures in LKR Mn (31st March) FY 13 FY 14 FY 15 FY 16 (E) FY 17 (F) FY 18 (F)Income StatementGross Revenue 65,790 63,186 66,765 77,387 94,918 99,504

Net Revenue 28,766 28,983 28,693 31,841 33,838 35,257

Cost of Revenue (15,898) (15,219) (16,234) (16,966) (18,159) (19,167)

Gross Profit 12,869 13,764 12,459 14,876 15,678 16,090

Operating Expenses (6,190) (6,084) (5,568) (6,160) (6,599) (6,947)

Operating Income 7,059 7,680 7,302 9,054 9,452 9,553

Share of profit of equity accounted invt 1,292 1,440 1,391 1,506 1,752 2,236

Pretax Income 8,084 9,494 9,728 11,272 11,750 12,232

Income Tax Expense (2,826) (3,263) (3,254) (3,662) (3,749) (3,748)

Net Profit att. to shareholders 5,140 6,122 6,553 5,485 7,907 8,386

Balance Sheet Cash & Near Cash Items 4,843 3,924 6,505 5,789 6,815 7,803

Accounts & Notes Receivable 1,601 4,017 3,300 3,652 3,892 4,055

Inventories 6,140 4,436 4,984 5,195 5,575 5,884

Total Current Assets 21,469 21,755 23,791 23,638 25,284 26,744

Total Long-Term Assets 57,078 61,987 68,898 74,271 79,897 86,050

Total Assets 78,547 83,742 92,689 97,909 105,181 112,795

Accounts Payable 1,276 941 1,210 1,261 1,353 1,428

Other Short-Term Liabilities 21,771 22,719 22,368 22,690 22,945 23,130

Total Current Liabilities 23,047 23,660 23,577 23,951 24,298 24,558

Total Long-Term Liabilities 2,787 2,489 4,287 4,465 4,660 4,875

Total Liabilities 25,834 26,148 27,865 28,416 28,958 29,433

Share Capital 300 300 300 300 300 300

Retained Earnings & Other Equity 47,678 53,336 60,704 65,373 72,103 79,241

Total Equity 52,713 57,593 64,824 69,493 76,223 83,361

Total Liabilities & Equity 78,547 83,742 92,689 97,909 105,181 112,795

Cash Flow Statement Net Income 5,140 6,122 6,553 5,485 7,907 8,386

Depreciation & Amortization 1,700 1,540 1,575 1,990 2,168 2,330

Changes in Non-Cash Capital (832) (2,666) (1,598) (511) (528) (397)

Cash From Operations 5,054 4,823 4,693 6,964 9,547 10,318

Capital Expenditures (2,594) (4,812) (10,271) (4,000) (4,000) (4,000)

Increase in Investments (270) (1,636) - 575 (2,043) (2,247)

Cash From Investing Activities (3,154) (7,251) (3,851) (4,931) (7,794) (8,483)

Dividends Paid (891) (898) (975) (816) (1,176) (1,248)

Change in Long Term Borrowings (686) (965) 1,086 178 195 215

Cash from Financing Activities (1,486) (1,800) 154 (316) (726) (848)

Net Changes in Cash 414 -4,229 996 1,716 1,026 988




Table 08: Forecast Ratios FY 13 FY 14 FY 15 FY 16 (E) FY 17 (F) FY 18 (F)

Profitability Ratios

GP Margin (%) 45% 47% 43% 47% 46% 46%

NP Margin (%) 18% 21% 23% 17% 23% 24%

ROE (%) 11% 11% 11% 8% 11% 11%

ROA (%) 7% 7% 7% 6% 8% 7%

Earnings per share (LKR) 17.13 20.41 21.84 18.28 26.36 27.95

Dividend per Share (LKR) 3.00 3.25 3.25 2.72 3.92 4.16

Credit Ratios

Total Debt/Equity Ratio (%) 23% 25% 23% 22% 20% 19%

Interest Coverage (X) 4.3 6.3 10.5 9.2 8.1 7.1

Total Assets/Equity (X) 1.6 1.6 1.5 1.5 1.5 1.4

Net Debt/EBIT (X) 0.9 1.2 1.3 0.9 0.8 0.8

Liquidity Ratios

Current Ratio (X) 0.9 0.9 1.0 1.0 1.0 1.1

Quick Ratio (X) 0.7 0.7 0.8 0.8 0.8 0.8

Asset Turnover Ratio (X) 0.4 0.3 0.3 0.3 0.3 0.3

Net Asset Value per share (LKR) 160 179 203 219 241 265

Growth Ratios

Revenue Growth YOY% 7% 1% -1% 11% 6% 4%

Earnings growth YOY% -7% 19% 7% -16% 44% 6%

Total Assets YOY% 7% 7% 11% 6% 7% 7%

Total Debt YOY% -10% 20% 3% 4% 3% 3%

Investment Ratios

PE Ratio (X) 9.72 9.95 11.01 11.81 8.20 7.73

Price to Book Value (X) 1.04 1.14 1.18 0.99 0.89 0.81

Dividend Yield (%) 1.80% 1.60% 1.35% 1.26% 1.82% 1.93%





Company


Source: Annual Reports, Bloomberg Source: Annual Reports, Bloomberg


Beverage segment represents the majority of Group's revenue and profitability while registering 66% and 86% contribution by FY15

respectively. Revenue generated from the beverage segment has seen a considerable growth from 2010 to 2013 and then seen a slightly drop in

during last two years mainly due to decreasing volumes and shrinking market share as a result of excessive taxes and large influx of cheaper

liquor to the market.

However, the segment has been able to increase their PBT during last three years due to operational efficiencies and the streamlined cost

structure. Despite of 10% and 12% revenue contribution from plantation and teleco segments, both have incurred losses during FY15.

Diversified segment has managed to yield average 7% contribution to Group's PBT over last four years while associate businesses were able to

generate positive earnings for the Group with 35% CAGR over last five years. DIST has been operating as a crucial contributor to Gvt. revenue

while paying LKR 41 bn to the state by way of taxes.

Graph 37: DIST's PBT breakdown

History of DIST

Excise Department of Ceylon which was initially created in 1913 as the enforcement authority to distribute and sell

liquor products in Sri Lanka branched out into the distillation and manufacture of liquor products. The State

Distilleries Corporation which was incorporated in 1974 took over this venture while the Excise Department

realigned its operation as a monitory body. Under a government policy decision made in 1989, the State Distilleries

Corporation was converted into a limited liability company. Subsequently, the transfer of ownership took place at CSE

in 1992 enabling the company to stand out as a private entity. After this privatisation, the company saw a significant

turnaround in terms of production volumes, process efficiencies and superior financial performance while making

DIST to become the largest distiller in the country.

Distilleries Company of Sri Lanka PLC (DIST) is the market leader in the beverage industry with avg. 75% volume

market share of domestic hard liquor market while also maintaining a diversified portfolio of other business

operations. In its beverage business category, the company distils, manufactures and distributes liquor products for

the local market. Other business operations entail plantation, telecommunication, insurance and other financial

services, power generation, logistics, textiles, business process outsourcing (BPO) services, media and tourism. DIST

operates under state-of-the-art fully automated bottling plants and pot and patent distillation units located in four

strategic regions in Seeduwa, Kandy, Kalutara and Badulla and an island wide distribution network consisting of a

large fleet of vehicles coupled with massive warehouse facilities.

DIST is currently headed by Mr. Harry Jayawardena who is a prominent business personnel in Sri Lanka. DIST is one

of the largest cap counters in the Colombo Stock Exchange (CSE) with the market capitalisation of LKR 68700 Mn

(USD 474 Mn) and it is the only listed player operating in the hard liquor manufacturing sector.

Financial Snapshot

Graph 36: DIST's net revenue breakdown

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

-

5,000

10,000

15,000

20,000

25,000

2010 2011 2012 2013 2014 2015

Beverages PlantationTelecommunication DiversifiedYoY growth

LKR Mn

-50%

0%

50%

100%

150%

200%

250%

(2,000)

-

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014 2015

Associates profit DiversifiedTelecommunication PlantationBeverages YoY growth

LKR Mn


DIST Business Segments

Beverage segment

Source: Annual Reports, Bloomberg


Diversified Businesses

DIST's diversified business have been restructured under Melstacorp Limited which holds 19 direct and indirect

subsudiries and 2 associated companies. This has enabled Distilleries Company to more focus on the beverage

segment whilst Melstacorp to provide greater focus on diversified businesses and investments.

Plantations: This segment mainly engeges in cultivation and processing tea and rubber via Balangoda Plantation

PLC(BALA), an entity of which DIST has an effective ownership of approx. 58%. Plantation segement accounts for

10% of DIST's net revenue in FY15. It has 23 Estates is over 13,000 hectares comprising of Sri Lanka’s most fertile tea

and rubber Estates.

Telecommunication: This segment accounts for 12% of DIST's net revenue in FY15 and operates in the fixed

telecommunication and broadbrand sectors via its subsidiary Lanka Bell. Lanka Bell is the second largest fixed line

operator in Sri Lanka with a subscriber base in excess of 1.2 million. Lanka Bell has 62 own branch offices islandwide

along with the customer reach through over 600 retail outlets around the country.

Other diversified businesses (excluding associate companies): DIST's other diversified businesses mainly

engages in insurance (Continental Insurance), financial services (Melsta Regal Finance), auto mobile servicing and

logistics (Melsta Logistics), textile (Texpro), BPO and KPO services (BellVantage) , leisure (Browns Beach Hotel PLC)

and media (Splendor media) industries. Divesified segment accounts 18% of DIST's net revenue in FY15.

Imported foreign brands: Periceyl also distributes the world renowned range of wines and spirits, which are owned

by Group Pernod Ricard France, such as Royal Salute, Chivas Regal, The Glenlivet, Ballantines whiskies, Martell

Cognac, Absolut Vodka, Beefeater Gin, Havana Club Rum, Jacob’s Creek, Long Mountain , Montana wines and G.H.

Mumm and Perrier Jouet champagnes.

This segment accounts 66% of Group's revenue and 86% of profit before tax as of FY15 and currently operates under

three sub segements.

Cocunut and processed arrack: DIST offers cocunut arrack and special arrack brands such as Old Arrack, White

Label Arrack, Blue Lable Arrack, Double Distilled Arrack, Extra Special, Pure Cocunut Arrack, etc. Sri Lankan cocunut

arrack is believed to be one of the purest, naturally derived alcoholic bevereges in the world distilled through a

natural fermentation process.

Locally manufactured foreign liquor: This segment is largerly managed by Periceyl (Pvt) Ltd, a joint venture

between DIST and France-based Pernod Ricard in 1996. Periceyl manufactures and distributes locally manufactured

foreign liquor and Arrack via DCSLs extensive distributor network. Periceyl’s flagship brands include Galerie

Napoleon French Brandy, Franklin Brandy, Black Opal Arrack - the unique premium arrack, and Flinton Gin, Balmora

Rum, Petroff Vodka and House of Tilbury Whisky .

DIST's core business entails distilation and distribution of beverage products including sevral varieties of coconut

based arrack, locally manufactured foreign liquor and imported foreign liquor varieities. Over the years, DIST has also

succesfully diversified in to other industires such as telecommunicarion, plantation, telecommunication, financial

services, textile, IT and leisure.

Associate companies: The Group's two associate investments include 43.07% ownership of Aitken Spence PLC

(SPEN) which is a leading diversified conglomarate in Sri Lanka and 45.9% stake of Madulsima Plantations PLC which

is mainly in to tea cultivation and processing. SEPN is amongst the largest cap counters in CSE with a capilisation of

LKR 35.9 Bn and predominatly does businesses in hotel and tourisum industries locally and overseas.


DIST Shareholding Distribution (as at 30. 09.2015)

Shareholder % Stake

Milford Exports (Ceylon) (Pvt) Limited 41.5%Lanka Milk Foods (CWE) Limited 12.7%Mr. Muzaffar Ali Yaseen 7.5%Commercial Bank of Ceylon PLC/L.E.M.Yaseen 4.4%

Melstacorp Limited 2.9%

HSBC International Nominees Ltd- Morgan Stanley And Co INTL P 1.5%HSBC INTL NOM LTD – SSBT – Wasatch Frontier Emerging Small COU 1.4%Commercial Bank of Ceylon PLC/M.A.Yaseen 1.3%Caceis Bank Luxembourg S/A Barca Global Master Fund LP 1.2%Lahugala Plantation (Private) Limited 1.2%Mrs. Shantha Marie Chrysostom 0.9%Northern Trust CO S/A National Westminister Bank PLC as Trust C/O Standard Chartered Bank 0.9%BNYM SA/NV – Blackrock Frontiers Investment Trust PLC 0.9%Citigroup Global Market Limited Agency Trading Prop Securi 0.9%Mrs. Lorraine Estelle Marlene Yaseen 0.8%BNYM SA/NV – Consilium Frontier Equity Fund L.P. 0.7%7 Stassen Exports Limited 0.7%HSBC INTL Nominees Ltd-SSBT-Frank Russel Investment Company 0.7%Mr. Don Hasitha Stassen Jayawardena 0.6%HSBC International NOM Ltd- MSCO-Route One Fund 1, L.P. 0.6%Other 16.7%Total 100.0%

Source: Annual Report FY14/15 Source: Annual Report FY14/15

Source: Annual Report FY14/15


Graph 40: Composition of EDs and NEDs

2,622,188

Graph 39: Shareholder structure 2 (as at 31.03.2015)

4,400,000 4,230,100

As one of the most respected Sri Lankan entities, DIST is managed by a skilled and experienced Director Board while

33% of Directors being functioned as Independent Non Executive Director (NEDs). There are three Executive

Directors and one Non-Independent Non-Executive Director representing the Board. DISTs Group operations are

subjected to regulations of various governing bodies including Excise Department, NATA, CBSL , TRCSL, IBSL, CSE &

SEC, Central Environmental Authority, etc.

However, DIST is significantly dependant on its influential Chairman/Managing Director Mr. Harry Jayawardena

while his family operates as a controlling shareholder of the company with an effective ownership of 52.1%.

Company's dependence on an individual in driving the business could have a negative impact in good corporate

governance while company could run in to a significant risk at the absence of his contribution.

2,456,000 2,208,189

No. of shares

1,839,153

300,000,000 49,967,143

8,650,732

4,000,000

Corporate governance structure

1,882,833

Graph 38: Shareholder structure 1 (as at 31.03.2015)

2,114,200 2,044,036

124,470,500

2,628,568

3,695,560 2,847,500 2,800,000

3,713,286

37,961,500 22,418,512 13,050,000

Individuals19%

Institutions81% Resident

77%

Non-Resident23%

EDs50%

Independent NEDs33%

Non Independent NEDs17%


Key Management (Source: Company Annual Report 2014/15)




Mr. D. Hasitha S.

Jayawardena

Non-Independent Non-

Executive Director

Capt. K. J. Kahanda

(Retd.)

Executive Director

Dr. Naomal Balasuriya, a medical doctor turned-entrepreneur is internationally sought

after as a life changing motivational speaker. His professional expertise ranges from

medicine, military, management, marketing, mentoring to motivational speaking. He holds

both the Master of Business Administration (MBA) and CIM (UK) qualifications.

Dr. Naomal Balasuriya

Independent Non-

Executive Director

Mr. Hasitha Jayawardena holds a Bachelor’s Degree in Business Administration BBA (Hons)

from the University of Kent in the United Kingdom. Mr. Jayawardena joined Stassen Group

in February 2013.

Profile

Mr. Harry Jayawardena is one the most successful and prominent business magnates in Sri

Lanka. He was elected Chairman of the DCSL Group in 2006 after serving as its Managing

Director for almost two decades. He heads many successful ventures in diversified fields of

business. He is the founder Director and the present Chairman / Managing Director of the

Stassen Group of Companies. He is a former Director of Hatton National Bank PLC. and

former Chairman of Ceylon Petroleum Corporation and SriLankan Airlines. Mr.

Jayawardena is the Honorary Consul for Denmark and was the only Sri Lankan honoured

with the prestigious “Knight’s Cross of Dannebrog’ by Her Majesty, Queen Margrethe II of

Denmark, for his significant contribution to the Danish arts, sciences and business life. He

has also been awarded the title, “Deshamanya” in recognition of his services to the

Motherland, since November 2005.

Mr. D. H. S.

Jayawardena

Chairman / Managing

Director

Name of Director

Mr. C. R. Jansz has many years of experience in Logistics and in Documentation, Insurance,

Banking and Finance relating to international trade. He is the Chairman of DFCC Bank PLC

and DFCC Vardhana Bank. He serves on the Board of Melstacorp Limited, Balangoda

Plantations PLC., Lanka Bell Limited and several other companies of the Distilleries Group.

He is also a Director of Lanka Milk Foods (CWE) PLC. and its subsidiaries.

Mr. C. R. Jansz

Executive Director

Mr. Niranjan Deva Aditya, is an aeronautical engineer, scientist and economist, is a

Conservative Member of the European Parliament elected from the SE England. He is the

Vice President of the Development Committee; ECR Coordinator and Conservative

Spokesman for Overseas’ Development and Co-operation.

Mr. N. de S. Deva Aditya

Independent Non-

Executive Director

Captain Kahanda joined the Company in 1993 as Regional Manager (Central Region) and

was appointed a Director in December 2006. Being a former officer of the Sri Lanka Army,

he spearheaded the re-organisation of the operations of the Central Region since

privatisation. He specialises in logistics, distribution and security matters, and is also a

Director of G4S Security Services (Pvt) Ltd. and Pelwatte Distilleries (Pvt) Ltd., a subsidiary

of the Group.


Liquor industry in Sri Lanka

DIST 229.00 68,700 6,553 203 11.4 7.5 10.0 1.1 1.4LION 551.00 44,080 1,330 99 17.9 5.3 36.1 5.0 0.6BREW 800.00 16,790 659 188 17.8 2.6 22.3 3.8 1.1

Source: Bloomberg

Graph 41: Comparison of alcohol consumption

Indicator Value

PER 17.12PBV 14.35Dividend Yield 2.49%

Source: LOLC SEC Estimates

Graph 42: Alcohol consumption as a % of population

Source: NATA Source: Excise Department


*Company overview, DIST shareholding distribution, Composition of Eds and NEDs, Key management, History, SWOT analysis, Industry analysis are taken from the extracts of websites, Annual reports, Bloomberg and LOSEC

research materials.

Table 10: Selected "beverage, food and tobacco" sector

indicators

Price(LKR

per Share)

Market Cap

(LKR Mn)Counter NAV(LKR per

Share)

ROE% ROA%

During the recent years there have been a number of changes implemented with regard to alcohol policies in Sri

Lanka which were more at a disadvantage to the liquor industry. Further Sri Lanka's demographic differences such as

region, culture and societal perception on drinking play a major role in shaping the direction of local liquor industry.

Majority of Sri Lankans are Buddhists and they take a pledge to prevent alcohol consumption, even though Buddhism

does not impose such a religious rule. However there is about 9% Muslim population who are strictly prohibited from

alcohol consumption. Further, Sri Lankan women usually do not consume hard or soft liquor as they perceive it as an

unacceptable social habit while greatly discouraging their husbands, fathers and sons from consuming alcohol.

According to Excise department, 24 licensed liquor manufacturers operates in Sri Lanka where 13 players

manufacture Molasses Arrack, 12 produce coconut and processed arrack and 17 players produce special arrack.

There are 3 malt beer manufacturers and 2 wine manufacturers operating in the soft liquor industry.

Table 09: Financial performance comparison of listed companies operating in alcohol industry

Distilleries Company of Sri Lanka (DIST) is the only listed hard liquor manufacturer and Ceylon Beverage Holdings

and Lion Brewery Ceylon are the listed players in soft liquor industry.

PBV Dividend

Yield %

Y/E Net

Profit(LKRMn)

The Sri Lankan coconut arrack is believed to be one of the purest, naturally derived alcoholic beverages in the world

distilled through a natural fermentation process. In ancient times, toddy extracted from coconut trees was a very

popular beverage amongst Sri Lankans. After Britain took possession of what is now Sri Lanka (then Ceylon) in 1802

Arrack became popular as a alcoholic beverage and was named as "Ceylon Arrack". Ceylon arrack was produced from

‘toddy’, fermented juice of the coconut palm, extracted by cutting the flowers from the tree and hanging a bucket

below the cut to gather the free-flowing sap. Local alcohol industry currently consists of recorded hard liquor and soft

liquor along with illicit liquor production. Further toddy production through Coconut, Palmyrah and Kithul tree can

also be seen in Sri Lanka. Despite the availability of different types of arrack categories, Special Arrack is more

preferred among the consumers due to the affordable "kick-per-buck".

PER

- 20 40 60 80 100 120 140

Hard liquor

Soft liquor

Toddy

Lr Millions2014 2013 2012

34%

66%

Consumers Non concumers


SWOT Analysis

Strengths

Market leader in the hard liquor industry in Sri Lanka with a history of over 100 years.Mr. Harry Jayawardena, a influential and prominent business personnel backing DIST as Managing DirectorStrong brand image along with strong distribution networkStrong balance sheet and low gearing allowing DIST's for investments

Company is significantly dependant on Mr.Jayawardena's direction of driving the businessTelecom and plantation sectors erode Group's profitability

Price inelasticity of demand for alcohol productsIncrease per capita income and growth of tourist arrivals leading to a higher demand for alcohol

Continuous increase in selling prices due to regular increases of taxes making liquor products expensive for consumersCultural, religious and social pressure on curtailing alcohol consumptionInefficiencies in executing rules and regulations related to curbing illicit and illegal liquorRupee depreciation leading to increase ethanol cost

Bargaining power of suppliers

Bargaining power of customers

Threat of substitutes

Threat of new entrants

Existing RivalrySource: Excise Department


Weaknesses

Opportunities

Threats

Company still awaits compensation from the Gvt takeover of its Sri Lankan insurance stake and Pelwatte Sugar

Industries stake

Unfavourable implication from budget 2016 for small liquor manufacturers will deteriorate their market share and

support big players to capture it

Buyers are seen as price takers in the industry as sellers set the price of products passing price hikes as a result of

excise duties changes to buyers. Consumers tend to buy liquor products amidst increased prices, however after some

point when prices become unaffordable they become price-sensitive and shift to illicit and illegal products at a

cheaper rate. Thus we view bargaining power of customers as "Medium".

Rivalry among industry players are High since the market is crowed with 24 licenced companies. In addition there is

a significant competition from beer companies like LION. Competition from illicit manufactures are also intense as

they are capable of offering products significantly below normal prices.

Substitutes for the industry can be in the form of alcoholic and non alcoholic beverages such as beers, wine, soft

drinks and fizzy drinks. There has been witnessing a significant threat from beer as beer consumption is growing at a

rapid phase over arrack consumption. But we believe that most of the beer consumers tend to drink hard liquor as

well while mitigating the substitution effect. Threat of substitutes of the industry could be considered "Medium".

Company collects toddy from local toddy suppliers and pay a fair rate if suppliers meet required quality standard.

Currently there is no scarcity of toddy and hence we see toddy suppliers bargaining power as "Low". Companies

import ethanol mostly while big players like DIST produces sugar based ethanol locally to cover part of their

requirement and use it for blending. Currently, global ethanol alcohol prices are experiencing a price drop, and thus

liquor manufactures can obtain a cheap supply. Hence bargaining power of ethanol suppliers could be considered as

"Low".

Industry Analysis

Alcohol Industry is highly regulated and obtaining manufacturing licences are very difficult and costly. Gvt also

maintains tight controls on not issuing new licences. However threat from new entrants is significant in the illicit

segment of the industry where illegal institutional and individual brewers enter and exit the market frequently. Thus

we view threat of new entrants as "High" for alcohol industry.


Recommendation Guidance

BUY – expected return > 10% in excess of benchmark return

SELL – expected return less than benchmark return

HOLD – expected return between 0% and 10% in excess of benchmark return

Investment Horizon: 3 years

12 months target price (12M Tgt Price) is based on the expected capital appreciation of the share excluding dividend.

Benchmark Interest Rate: Average Weighted Fixed Deposit Rate (AWFDR) published by Central Bank of Sri Lanka.

Risk Level Evaluation

High: Maximum price volatility to be up or down more than 50% monthly

Medium: Maximum price volatility to be up or down between 25% - 50% monthly.

Low: Maximum price volatility to be up or down less than 25% monthly.

Risk Level is calculated taking the historical standard deviation measures.

Financial Glossary

EPS = Earnings per Share

ROA = Return on Assets (adjusted net profit/average total assets)

ROE = Return on Equity (adjusted net profit/average total equity)

CAGR = Compound Annual Growth Rate ((End Value/Start Value) ̂(1/number of years) -1)

GP= Gross Profit

EBITDA= Earnings before interest, tax, depreciation and amortization

PBT= Profit before tax

PAT= Profit after tax

NP= Net Profit

PBV= Price to book value ratio

PE= Price to earnings ratio


Analyst certification: The Analyst(s) who is/are responsible for compiling or co-compiling this research and whose names appear as the analyst(s) of the research certify that the views

expressed in this research accurately reflect the personal view of the analyst(s) about the subject securities and issuers and/or other subject matter as appropriate and has taken

reasonable care to achieve and maintain independence and objectivity in making any recommendations. No part of the compensation received by the analyst(s) was, is or will be

directly or indirectly related to specific inclusion of specific recommendation or views in this research. On a general basis analyst’s performance appraisal may be influenced by quality of

the content and efficacy of the research. The analyst(s) who is/are responsible for compiling or co-compiling this research and whose names appear as the analyst(s) receive

compensation based on overall revenues of LOLC Securities Limited and its holding company (Lanka ORIX Company PLC – LOLC Group), which may include brokerage revenue from

transactions involved with the securities mentioned in this research.

General Disclaimer: LOLC Securities Limited is a company incorporated in Sri Lanka and licensed by the Securities and Exchange Commission of Sri Lanka to operate as a

stockbroker/stock dealer in Sri Lanka. LOLC Securities Limited is a trading member of Colombo Stock Exchange. This research is based on information from sources that LOLC

Securities Limited believes to be reliable. Whilst reasonable care has been taken to ensure accuracy of the information presented in the research, LOLC Securities Limited does not

give a guarantee on the accuracy of the information presented in the paper nor will take the responsibility on investment decisions taken based on the information provided by the

research and hence LOLC Securities Limited nor its employees accepts any liability whatsoever for any loss arising from investments decisions taken using the information provided in

this paper. The reader also should note this paper does not give recommendations to any particular category of investors and investor should consult investment advisors for further

clarifications regarding risks involved in investing in equity market. Investing in securities has inherent risks with no guaranteed return and price may be subjected to significant

volatilities. No part of this report should be considered as a solicitation to buy or sell any security or product or to engage in or refrain from engaging in any transaction. LOLC Securities

Limited or its employees may or may not hold positions in the securities discussed in the research and the information provided in the research should not be construed as a buy or sell

instruction for any securities mentioned in the research, Unless otherwise specifically mentioned. This research is intended for general use for clients of LOLC Securities Limited and

must not be copied in whole or in part or distributed to any third party for commercial use without permission from LOLC Securities Limited. If the reader is not the intended recipient

please inform LOLC Securities Limited immediately by return email to [email protected]. LOLC Securities Limited’s other staff including sales people, traders and other

professionals may provide oral or written market commentaries or trading strategies to our clients which reflect opinions which are contrary to the opinions expressed in this research

which may be influenced by different circumstances.


General Line: +94 11 7880880

General Email: info@ lolcsecurities.com

Research Email: research@ lolcsecurities.com

Website: www.lolcsecurities.com

Head Office

Sriyan Gurusinghe Managing Director / CEO 011 7880888 / 077 7891871 sriyang@ lolcsecurities.com

Manjula Kumarasinghe COO - Sales & Marketing 011 7880808/077 7874310 [email protected]

Maniesh Rodrigo Assistant General Manager Sales 011 7880805 / 077 7896064 manieshr@ lolcsecurities.com

Samadhi Jayasinghe Manager Institutional Sales 011 7880806 / 077 3954993 samadhij@ lolcsecurities.com

Imesh Fernando Assistant Manager Sales 011 7880814 / 077 3954992 imeshf@ lolcsecurities.com

Balendiran Janegan Senior Investment Advisor 011 7880811 / 077 5619827 janeganb@ lolcsecurities.com

Naleen Sadeesh Investment Advisor 011 7880839 / 077 2383209 naleensa@ lolcsecurities.com

Damith Chaminda Investment Advisor 011 7880819 / 077 3367313 damithc@ lolcsecurities.com

Dushan Rajaguru Investment Advisor 011 7880834 / 077 9090511 dushanr@ lolcsecurities.com

Asendra Wijesiri Investment Advisor 011 7880833 / 077 3410627 asendraw@ lolcsecurities.com

Dinuka Niwantha Investment Advisor 011 7880838 / 077 3367313 dinukan@ lolcsecurities.com

Niraj Jayamanne Investment Advisor 011 7880813 / 0775 965645 nirajj@ lolcsecurities.com

Rehan Ariyaratne Business Development Associate 011 7880831 / 076 5446255 rehana@ lolcsecurities.com

Kurunegala Branch

Rohana Chandrasiri Assistant General Manager 037 7201221 / 077 3623001 rohanac@ lolcsecurities.com

Anurudda Rajakaruna Investment Advisor 037 7201221 / 077 3409464 anuruddhar@ lolcsecurities.com

Nuwan Fernando Investment Advisor 037 7201221 / 077 8365921 nuwanfe@ lolcsecurities.com

Nuwan Fernando Investment Advisor 037 7201221 / 077 8365921 [email protected]

Galle Branch

Bimal Malinda Branch Head 091 7200852/ 077 3409243 bimalm@ lolcsecurities.com

Thilina Sameera Investment Advisor 091 7200852/ 077 8894968 thilinawa@ lolcsecurities.com

Ushan De Silva Investment Advisor 091 7200852/ 077 1927998 ushand@ lolcsecurities.com

Matara Branch

Lalinda Liyanapathirana Investment Advisor 041 4936079/ 077 3692257 lalindal@ lolcsecurities.com

Ahamed Aadil Investment Advisor 041 4936079/ 077 7538986 aadila@ lolcsecurities.com

Malitha Jayawardena Investment Advisor 041 4936079/ 076 6843569 malithj@ lolcsecurities.com

Shehan Bartholomeuz Head of Research 011 7880835 / 077 7699148 shehanb@ lolcsecurities.com

Gayan Rajakaruna Senior Research Analyst 011 7880837 / 077 4469070 gayanraj@ lolcsecurities.com

Hiruni Perera Associate Research Analyst 011 7880809 / 077 0652797 hirunipe@ lolcsecurities.com

Head Office Kurunegala Branch Galle Branch Matara Branch

LOLC Securities Limited No 06, 1st Floor, No 18, 1st floor,

Level 18, West Tower, Union Assurance Building, Sri Dewamitta Mawatha, E.H. Cooray Towers,

World Trade Center Rajapilla Mawatha Galle No 24, Anagarika Dharmapala Mawatha,

Colombo 01 Kurunegala, Sri Lanka Matara

Sri Lanka Sri Lanka Tel : +94 773 409243 Sri Lanka

Tel: +94 11 7880880 Tel: +94 377 201221 Tel: +94 414 936079

Fax: +94 11 2434771 Fax: +94 372 225511

LOLC SEC Research Reports are also available at Bloomberg LOLC <GO>


RESEARCH

SALES

LOLC Securities Limited, a trading member of the Colombo Stock Exchange (CSE), is engaged in facilitating stock trading transactions at

Colombo Stock Exchange, providing investment research on Sri Lankan equity, providing investment planning advices with services such

as portfolio construction & formulation of IPS (Investment Policy Statement) and facilitating other investment opportunities in the country

including private equity.

LOLC Securities Limited

mailto:ushand@%20lolcsecurities.com

Distilleries Company of Sri Lanka PLC Equity Research · Distilleries Company of Sri Lanka PLC the...

Documents

Transcript of Distilleries Company of Sri Lanka PLC Equity Research · Distilleries Company of Sri Lanka PLC the...