Between Lines

Companies operating in controversial industries like tobacco and alcohol give a better return to shareholders than traditional banking and finance stocks, a research report said Friday. Companies operating in controversial industries like tobacco and alcohol give a better return to shareholders than traditional banking and finance stocks, a research report said Friday.

Stockbrokers LOLC Securities have analysed the long-term return of selected
counters on the Colombo bourse based on the return on equity (ROE) and required
rate of return (RRR).

Using 52-week market data ending Oct. 8, the report highlights stocks who’s
ROE’s have exceeded RRR.

Ceylon Tobacco topped the list with an ROE of 48 percent, Distilleries
Company of Sri Lanka came second with 36 percent followed by Caltex Lanka
Lubricants 32 percent.

Market heavy weights, John Keells Holdings gave an ROE of 16 percent, while
Sri Lanka Telecom managed only 9.6 percent.

Tourism stocks – the darling of the investors these days – saw ROE’s of 16
percent for Aitken Spence Hotel Holdings, 7.8 percent for Trans Asia and 7.2
percent for Asian Hotels.

ROE indicates the return