Monday, 20 November 2017

Sri Lankan shares edges down; traders await fresh cues

Reuters: Sri Lankan shares ended marginally lower on Monday, with traders staying on the sidelines for want of fresh triggers amid expectations of certain amendments in the budget.

The Colombo stock index ended 0.15 percent weaker at 6,473.87. It had lost 1 percent last week.

“We expect the market to prevail at these levels for this year. Foreign interest is still there on some select shares,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

“They (foreign investors) see value in these stocks and the P/E ratio is also low.”

The final budget vote is scheduled for Dec. 9 and the market expects some amendments that could help give the markets some direction.

Market heavyweight John Keells Holdings fell 0.7 percent while Lanka Orix Leasing Company closed 2.2 percent lower.

Foreign investors net bought equities worth 40.2 million Sri Lankan rupees ($261,548) on Monday, extending the foreign inflows to 19.6 billion rupees so far this year.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues in as the budget deficit for the current year slipped to 5.2 percent of the gross domestic product.

Samaraweera imposed taxes on telecom towers and text messages, and introduced a debt repayment levy of 20 cents per 1,000 rupee bank transaction with effect from April 1 next year.

Analysts said the market players have sought more clarification on these taxes and perhaps there could be amendments to these proposals before the final vote.

Turnover was 707.8 million rupees on Monday, less than this year’s average of around 952.5 million rupees. 

($1 = 153.7000 Sri Lankan rupees)

(Reporting by Shihar Aneez; Editing by Vyas Mohan)

Sunday, 19 November 2017

Renuka Hotel shares begin trading on Tuesday

Rs. 139 ‘reference price’ set, 65 for one share split pre-listing

Shares of Renuka Hotels PLC (previously Renuka Hotels Ltd.), the newest company listed on the Colombo Stock Exchange, quoted on the CSE by way of introduction, will begin trading on the Diri Savi board of the CSE from Nov. 21, the CSE announced last week.

The closely-held and largely family-owned and managed company, founded by the well known businessman and Kayts MP Alfred Thambiayah, built the Renuka Hotel on family owned property on Galle Road, Kollupitiya. The hotel was commissioned in 1972.

The 41-room Renuka Hotel is owned by Renuka Hotels Ltd. which has remained unlisted till now. But the company floated and took majority control of Renuka City Hotels PLC, a 58-room hotel built on an adjoining property, which was listed in 1992.

Prior to its introduction to the CSE, Renuka Hotels Ltd. with a modest stated capital of Rs. 6 million with 600,000 shares in issue unlocked its retained value built since inception by increasing its stated capital to Rs. 112.5 million with approx 40.3 million shares in issue by way of capitalization of reserves and a share split.

Reserves of Rs. 106.5 million were capitalized by the issue of one new share for every 30.0571 shares held in Aug. 2015 resulting in the issue of 19,962 new shares followed by a 65 for 1 share split the same day increasing the number of shares presently in issue to 40.3 million.

A ‘reference price’ of Rs. 139 per share has been set for the Renuka share by Chartered Accountants Wijeyeratne and Co. who had done an independent valuation of the company. They have placed a value of Rs.151.24 per share by the discounted cash flow method, Rs. 142.20 by the net assets value method and Rs. 89.77 by the earnings capitalization method.

"Based on the analysis, a value which is within the likely range of Rs. 151.24 to Rs. 89.77 per share can be justified. Hence the reference price of Rs. 139 per share can be considered fair and reasonably," they have said.

The ten largest shareholders of Renuka prior to the listing together owned 78.95% of the company according to the document of introduction. They are Ms. NA Thambiyah, Mr. RB Thambiayah/Ms. SR Thambiayah, Mr. RB Thamiayah/Ms. NR Thambiayah, Mr. R.B. Thambiayah/Ms. AL Thambiayah, Ms. IR Rajiyah, Mr. DJ Nirmalalingam, Mr. RB Thambiayah, Ms. SR Nirmalalingam, Mr. MJ Fernando and Cabraal Consulting Group Pvt. Ltd.

The 13 largest public shareholders pre-listing held 27.4% of the company. This group excludes Mr. Ravi (RB) Thambiayah and his children who run the company but include other family members including his sisters, nephew, brothers-in-law (Cabraal Consulting and Dr. SR Rajiyah) and prominent businessmen Merril. J. Fernando and his son, Dilhan, and Mr. M. Selvanathan.

Mr. Ravi Thambiayah and his daughters controlling and managing the business is not expected to sell down their holding but whether other family members would do so if the price is right remains to be seen, analysts said.

Mr. Thambiayah who trained at the Royal Lancaster Hotel in London after taking an economics degree, has managed the Renuka Hotel since 1972. He developed the group under the Renuka umbrella with group companies, including notably Renuka Hotels and Renuka City, building large quoted share portfolios with market values of over billion rupees including substantial unrealized capital gains.

Both Renuka and Renuka City posts earnings per share substantially above those of other hotel owning companies, both listed and unlisted.

Renuka shares can now be deposited in the Central Depository System and can be transacted, the CSE said.

The directors of Renuka Hotels are Ms. SR Thambiayah (Executive Chairperson and Joint MD), Ms. AL Thambiayah, Executive Joint MD, Mrs. SR Dominic, Messrs. Merril J Fernando, GU Nanayakkara, S. Nagendra, Mrs. M.A. Jayawardena (Executive Director/Company Secretary), Ms. NR Thambiayah and Mr. RN Asirwatham.

Saturday, 18 November 2017

Impairment charge leads to loss at Sri Lanka Guardian Capital Partners

ECONOMYNEXT – Sri Lanka’s Guardian Capital Partners has attributed its loss in the first half of this year to impairment charges arising from alleged fraud at an investee firm, Swiss Institute for Service Industry Development (Pvt) Ltd.

The company, part of the Carson Cumberbatch group, reported a loss of Rs29.9 million in the six months to September 2017, compared with a Rs16 million net profit the year before.

For the September 2017 quarter, Guardian Capital Partners (GCP) said net profit was almost Rs7 million, down 13% from a year ago.

Quarterly earnings per share were 27 cents, down from 31 cents the previous year. The share last traded at Rs33.10.

For the six months to September 2017, it reported a loss per share of Rs1.16 compared with EPS of 61 cents the year before.

“The loss recorded was primarily due to an impairment of Rs. 42.1 million made against the investment in Swiss Institute for Service Industry Development (Pvt) Ltd, as reported in Q1, due to an alleged misappropriation of funds in the said investee company,” a managers’ review accompanying the accounts said.

It has said GCP and the other co-investors of the investee company had filed a complaint with the Criminal Investigation Department about alleged misappropriation of funds by the Managing Director and Promoter of the investee company against whom legal proceedings have been initiated by the CID in the Magistrates Court of Colombo.

Sri Lanka's LVL Energy seeks Rs1.2bn from IPO

ECONOMYNEXT - Sri Lanka's LVL Energy Fund has been given the go ahead by the Colombo Stock Exchange to offer 120 million shares at 10 rupees to raise 1.2 billion rupees from an initial public offer.

Subscriptions will open on December 14, 2017.

LVL Energy Fund is a unit of publicly trade Lanka Ventures Plc.

It has investments in mini hydro plants.

Sri Lanka's LOLC to list 5 & 2-year senior bonds

ECONOMYNEXT - Sri Lanka's Lanka Orix Leasing Company Ltd, is listing 2.7 billion rupees of bonds in 5 and 2 year tenors, which had been issued on July 31.

The 5-year debentures with a coupon on 13.00 percent paid every six months, (effective rate 13.42 percent) will mature in 2022.

The 2-year bond with a coupon on 12.65 percent, (effective rate 13.05 percent), matures in 2019.

The bonds have an [SL] A (stable) by ICRA Lanka Limited.

Sri Lanka Telecom Sept net profit down 60-pct, sales flat

ECONOMYNEXT – Sri Lanka Telecom (SLT) said net profit fell 60.4% to Rs730 million in the September 2017 quarter from a year ago as sales remained flat while costs rose sharply.

Quarterly earnings per share fell to 40 cents from Rs1.02 the previous year, according to interim accounts filed with the stock exchange. The stock was last traded at Rs29.30.

September 2017 quarter sales were flat at Rs19 billion while operating costs rose and depreciation and amortisation costs were sharply higher, the accounts showed. Other income was lower.

In the nine months to September 2017, pre-tax profit from fixed ICT operations fell sharply to Rs994 million from Rs2.4 billion while mobile phone unit profit also fell to Rs3 billion from Rs3.7 billion.

EPS fell to Rs1.79 in the nine months to September 2017 from the previous year’s Rs2.59 with net profit down 32% to Rs3.2 billion from Rs4.7 billion over the period.

Friday, 17 November 2017

Sri Lankan shares rise for 2nd session on John Keells

Reuters: Sri Lankan shares rose half a percent on Friday, climbing for a second straight session, buoyed by gains in market heavyweight John Keells Holdings on bargain hunting.

The Colombo stock index ended 0.54 percent firmer at 6,483.55, recovering from its lowest close since Sept. 27 hit on Wednesday.

It shed 2.6 percent in the five sessions through Wednesday on worries over new taxes on cash-rich telecom and banking sectors. It shed 1 percent this week.

“There was strong interest in Keells shares. The market is recovering after some unclear budget policies,” said Jaliya Wijeratne, CEO at First Capital Equities.

John Keells shares rose 2.3 percent, while Cargills (Ceylon) Plc climbed 2.4 percent.

Foreign investors, who have net bought equities worth 19.6 billion rupees so far this year, net sold shares worth 92.6 million rupees ($602,865) on Friday.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 budget outlined last week, as the budget deficit for the current year slipped to 5.2 percent of the gross domestic product.

Samaraweera imposed taxes on telecom towers and text messages, and introduced a debt repayment levy of 20 cents per 1,000 rupee bank transaction with effect from April 1 next year.

Turnover was 717.6 million rupees on Friday, less than this year’s average of around 953.6 million rupees. 

($1 = 153.6000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)