Thursday 5 February 2015
Sri Lanka shares recover from over-5-month low on bargain-hunting
Feb 5 (Reuters) - Sri Lankan shares recovered on Thursday from a more-than-five-month low hit in the previous session, on bargain-hunting in financials and telecom stocks as foreign investors bought into the island nation's risky assets.
The main stock index ended up 0.67 percent, or 47.25 points, at 7,047.31. On Monday, it had its lowest level since Aug. 28, on concerns over a retrospective tax announced in the supplementary budget.
Stock and forex markets were closed on Tuesday for a Buddhist religious holiday and on Wednesday for Independence Day.
Net foreign inflows hit a near-three-month high of 967.8 million rupees ($7.32 million) on Thursday, bringing the year-to-date net inflow to 907.7 million rupees. Foreign investors bought a net 22.07 billion rupees worth of stocks last year.
"Relentless buying drove the market up. There was huge buying momentum when investors saw the market is turning around," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.
Shares in leading mobile phone operator Dialog Axiata Plc jumped 7.14 percent while conglomerate John Keells Holdings Plc rose 0.60 percent.
Shares in Ceylinco Insurance Plc rose 4.49 percent, Hatton National Bank Plc rose 3.06 percent and biggest listed lender Commercial Bank of Ceylon Plc gained 0.81 percent.
Turnover was 2.35 billion rupees, its highest since Jan. 12 and well above last year's daily average of 1.42 billion rupees, exchange data showed.
The index fell 5.1 percent in the two sessions through Monday after the new government announced a budget that imposed a one-time 'super gain tax' of 25 percent on companies or individuals who earned over 2 billion rupees profits in 2013/2014.
Analysts expect the market to be on a falling trend due to worries over the 'super gain tax', which could have an impact on listed firms like John Keells Holdings, Dialog Axiata, Sri Lanka Telecom, Ceylon Tobacco Co, and Nestle as they would have to pay the new tax. ($1 = 132.2000 Sri Lankan rupees)
The main stock index ended up 0.67 percent, or 47.25 points, at 7,047.31. On Monday, it had its lowest level since Aug. 28, on concerns over a retrospective tax announced in the supplementary budget.
Stock and forex markets were closed on Tuesday for a Buddhist religious holiday and on Wednesday for Independence Day.
Net foreign inflows hit a near-three-month high of 967.8 million rupees ($7.32 million) on Thursday, bringing the year-to-date net inflow to 907.7 million rupees. Foreign investors bought a net 22.07 billion rupees worth of stocks last year.
"Relentless buying drove the market up. There was huge buying momentum when investors saw the market is turning around," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.
Shares in leading mobile phone operator Dialog Axiata Plc jumped 7.14 percent while conglomerate John Keells Holdings Plc rose 0.60 percent.
Shares in Ceylinco Insurance Plc rose 4.49 percent, Hatton National Bank Plc rose 3.06 percent and biggest listed lender Commercial Bank of Ceylon Plc gained 0.81 percent.
Turnover was 2.35 billion rupees, its highest since Jan. 12 and well above last year's daily average of 1.42 billion rupees, exchange data showed.
The index fell 5.1 percent in the two sessions through Monday after the new government announced a budget that imposed a one-time 'super gain tax' of 25 percent on companies or individuals who earned over 2 billion rupees profits in 2013/2014.
Analysts expect the market to be on a falling trend due to worries over the 'super gain tax', which could have an impact on listed firms like John Keells Holdings, Dialog Axiata, Sri Lanka Telecom, Ceylon Tobacco Co, and Nestle as they would have to pay the new tax. ($1 = 132.2000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)
JKH to engage with Govt. on Waterfront Project Rebranded as Cinnamon Life
Premier blue chip corporate conglomerate John Keells Holdings PLC will engage with the new government on the Waterfront Project, a Ceylon Cold Stores PLC said in a Colombo Stock Exchange filing yesterday.This follows the announcement by Prime Minister Ranil Wickremesinghe in Parliament last week that the agreements entered into with Waterfront Properties ( Pvt) Ltd under the Strategic Development Projects Act will be amended to restrict the ability to rent space for gaming activities.
While the proposed amendments to the Act will constrain the ability to command premium rentals on this component of the project, the multifaceted nature of this development gives your Board, the confidence that the project was still viable, given its diverse portfolio of revenue streams and the iconic designs, which we believe, will transform the landscape of Colombo, the filing said.
As such, the project, will continue as planned. The overall brand architecture for the Waterfront Project, has now been finalized with the project being branded as 'Cinnamon Life' and demand for both residential and commercial spaces continues to remain encouraging, the filing said.
While the proposed amendments to the Act will constrain the ability to command premium rentals on this component of the project, the multifaceted nature of this development gives your Board, the confidence that the project was still viable, given its diverse portfolio of revenue streams and the iconic designs, which we believe, will transform the landscape of Colombo, the filing said.
As such, the project, will continue as planned. The overall brand architecture for the Waterfront Project, has now been finalized with the project being branded as 'Cinnamon Life' and demand for both residential and commercial spaces continues to remain encouraging, the filing said.
www.ceylontoday.lk.
Stock markets' volatility to continue due to unstable rupee
By Paneetha Ameresekere
Ceylon Finance Today: Volatility in markets will continue today from where it left off on Monday after a brief two day interlude due to the poya and independence day holidays because of the restart of foreign funds' exit from the stock market, import pressure and the State buying of US dollars to meet its various commitments, sources told Ceylon FT.
Monday saw a net foreign outflow (NFO) of Rs 180.4 million led by JKH, the bourse's largest capitalized stock which suffered a NFO of Rs 404.1 million due to a mix of exchange rate (ER) volatility, the interim budget of the new government confirming that the group's proposed casino business was banned and a retrospective 25% tax on corporates, which earned more than a Rs two billion profit in the financial year 2013/14, to which bracket JKH too falls into, also introduced in that budget.
Casualties of retrospective taxes are not only companies, but also the middle class citizen, where, as a result of such retrospective taxes included in that budget, duties of hybrid vehicles had also gone up by Rs two million even after letters of credit had been open for such imports, prior to the budget.
Meanwhile, rupee volatility on the previous market day (Monday) was led by State buying of US dollars on thin trading, compounded by foreign exits from the stock market, which saw the Central Bank of Sri Lanka (CBSL) pressing the panic button due to fears that such activities would cause depreciating pressure on the rupee.
A weak rupee hits the poor the hardest because SriLanka is an import dependent economy. It also compounds Government of Sri Lanka's (GoSL's) foreign debt servicing commitments, as the required dollars, which are bought after paying the equivalent in rupees to meet such obligations become more expensive, when the local currency becomes week.
"What is causing GoSL to panic is the forthcoming general elections due to be held in another four months' time from now in June," sources said. Until such timeGoSL will be keen to keep the rupee stable so as to not upset the voter, they said.
Monday was a classic case of panic by the authorities vis-à-vis the ER, sources said. The ER which closed weaker last Friday (30 January) at Rs 133.20 to the US dollar in interbank 'spot next next' trading on thin volumes, started the following day Monday (2 February) stronger at Rs 133, they said.
However, CBSL in trying to distort the market, tried to place a cap on the dollar at Rs 132.80 in 'spot next next' trading, they said. However, the market reacted strongly against this negativism, by trading on seven days forward instead, at a premium price of Rs 133.40, unchanged over its previous day's close.
This effectively meant that the market was paying a 60 Sri Lanka cents premium for each dollar bought over that of the administered "spot next next" price which only had a theoretical value of Rs 132.80, they said.
That premium price was for a three day disadvantage vis-à-vis the selling (exporter) banks, they said. Whereas spot next next purchases made on Monday would be settled on 10 February, those of seven day forwards would be settled three days later, on 13 February.
If an importer made a US$ one million booking on seven days forwards on Monday that would translate to him having to pay a premium of Rs 600,000 over an administered spot next next price of Rs 132.80 under CBSL's moral suasion umbrella, sources said.
That premium cost would ultimately have to be borne by the consumer because the importer would pass on that burden to the end user and not absorb such costs, they said.
If however there was no GoSL intervention on Monday and assuming that "spot next next" transactions continued to be conducted at Rs 133 as had been the case at the beginning of that day, the premium over the administered spot next next price would have had been only 20 cents, translating to a premium cost of only
Rs 200,000 on a US$ one million transaction; with the added advantage of the consumer being able to get his goods three days earlier, saving other possible additional costs such as possible higher borrowing costs, they said.
"The message is that the authorities can never control market," the sources said.
But by attempting such perversions, the cure would be worse than the sickness as the aforesaid example showed, sources said.
www.ceylontoday.lk
Ceylon Finance Today: Volatility in markets will continue today from where it left off on Monday after a brief two day interlude due to the poya and independence day holidays because of the restart of foreign funds' exit from the stock market, import pressure and the State buying of US dollars to meet its various commitments, sources told Ceylon FT.
Monday saw a net foreign outflow (NFO) of Rs 180.4 million led by JKH, the bourse's largest capitalized stock which suffered a NFO of Rs 404.1 million due to a mix of exchange rate (ER) volatility, the interim budget of the new government confirming that the group's proposed casino business was banned and a retrospective 25% tax on corporates, which earned more than a Rs two billion profit in the financial year 2013/14, to which bracket JKH too falls into, also introduced in that budget.
Casualties of retrospective taxes are not only companies, but also the middle class citizen, where, as a result of such retrospective taxes included in that budget, duties of hybrid vehicles had also gone up by Rs two million even after letters of credit had been open for such imports, prior to the budget.
Meanwhile, rupee volatility on the previous market day (Monday) was led by State buying of US dollars on thin trading, compounded by foreign exits from the stock market, which saw the Central Bank of Sri Lanka (CBSL) pressing the panic button due to fears that such activities would cause depreciating pressure on the rupee.
A weak rupee hits the poor the hardest because SriLanka is an import dependent economy. It also compounds Government of Sri Lanka's (GoSL's) foreign debt servicing commitments, as the required dollars, which are bought after paying the equivalent in rupees to meet such obligations become more expensive, when the local currency becomes week.
"What is causing GoSL to panic is the forthcoming general elections due to be held in another four months' time from now in June," sources said. Until such timeGoSL will be keen to keep the rupee stable so as to not upset the voter, they said.
Monday was a classic case of panic by the authorities vis-à-vis the ER, sources said. The ER which closed weaker last Friday (30 January) at Rs 133.20 to the US dollar in interbank 'spot next next' trading on thin volumes, started the following day Monday (2 February) stronger at Rs 133, they said.
However, CBSL in trying to distort the market, tried to place a cap on the dollar at Rs 132.80 in 'spot next next' trading, they said. However, the market reacted strongly against this negativism, by trading on seven days forward instead, at a premium price of Rs 133.40, unchanged over its previous day's close.
This effectively meant that the market was paying a 60 Sri Lanka cents premium for each dollar bought over that of the administered "spot next next" price which only had a theoretical value of Rs 132.80, they said.
That premium price was for a three day disadvantage vis-à-vis the selling (exporter) banks, they said. Whereas spot next next purchases made on Monday would be settled on 10 February, those of seven day forwards would be settled three days later, on 13 February.
If an importer made a US$ one million booking on seven days forwards on Monday that would translate to him having to pay a premium of Rs 600,000 over an administered spot next next price of Rs 132.80 under CBSL's moral suasion umbrella, sources said.
That premium cost would ultimately have to be borne by the consumer because the importer would pass on that burden to the end user and not absorb such costs, they said.
If however there was no GoSL intervention on Monday and assuming that "spot next next" transactions continued to be conducted at Rs 133 as had been the case at the beginning of that day, the premium over the administered spot next next price would have had been only 20 cents, translating to a premium cost of only
Rs 200,000 on a US$ one million transaction; with the added advantage of the consumer being able to get his goods three days earlier, saving other possible additional costs such as possible higher borrowing costs, they said.
"The message is that the authorities can never control market," the sources said.
But by attempting such perversions, the cure would be worse than the sickness as the aforesaid example showed, sources said.
www.ceylontoday.lk
Lankem buys 72% of JF Packaging for Rs. 600 m
Lankem Ceylon Plc has acquired 72.5% of J.F. Packaging Ltd., for Rs. 600 million.
The stake amounts to 488,034 shares and the strike price is approximately Rs. 1,300 per share.
J.F. Packaging is engaged in business of manufacturing, supplying, designing, laminating and printing a wide range of packaging solutions.
Founded in 1987, the company began as a family business established in a small town near Kandy by Joseph De Fonseka (current Chairman is Lakshman De Fonseka) with the initial aim of creating jobs for the residents of the area.
JF Packaging is the first company in a non-food processing industry to comply with Food Safety Standard Requirements laid down in standards such as HACCP as well as ISO 22000:2005 certification. Its top clients include global giants Unilever and Nestle.
Last year JF Packaging was honoured with two awards for packaging excellence at the
Lanka Star Awards. One Gold was for the ‘Stand-up Pouch with Spout’ for Unilever’s Vim Dishwash liquid that is a replacement of a costly plastic bottle as an economic substitute.
This is the same product that won the award for the most ‘Innovative support in Packaging’ by Unilever Sri Lanka at their Supplier awards night.
The second Gold Star was presented for ‘Bistro Tea, Coffee and Energy Drink Sticks’. It is an innovative patented pack originated with Sri Lankan tea and coffee in the form of a triple laminated micro perforated ‘Stick’. The stick packed with tea or coffee to be immersed in hot water to make a cup of tea or coffee.
Lankem Ceylon PLC is a fast growing player in the diversified conglomerate sector with interests in agriculture, plantations, consumer, food and feed ingredients, industrial chemicals, industrial flooring, road surfacing, paints, pest control and hotels. Its investments span over 25 subsidiaries. The company has expanded its presence in South East Asia with its investment in rubber production in Cambodia.
www.ft.lk
The stake amounts to 488,034 shares and the strike price is approximately Rs. 1,300 per share.
J.F. Packaging is engaged in business of manufacturing, supplying, designing, laminating and printing a wide range of packaging solutions.
Founded in 1987, the company began as a family business established in a small town near Kandy by Joseph De Fonseka (current Chairman is Lakshman De Fonseka) with the initial aim of creating jobs for the residents of the area.
JF Packaging is the first company in a non-food processing industry to comply with Food Safety Standard Requirements laid down in standards such as HACCP as well as ISO 22000:2005 certification. Its top clients include global giants Unilever and Nestle.
Last year JF Packaging was honoured with two awards for packaging excellence at the
Lanka Star Awards. One Gold was for the ‘Stand-up Pouch with Spout’ for Unilever’s Vim Dishwash liquid that is a replacement of a costly plastic bottle as an economic substitute.
This is the same product that won the award for the most ‘Innovative support in Packaging’ by Unilever Sri Lanka at their Supplier awards night.
The second Gold Star was presented for ‘Bistro Tea, Coffee and Energy Drink Sticks’. It is an innovative patented pack originated with Sri Lankan tea and coffee in the form of a triple laminated micro perforated ‘Stick’. The stick packed with tea or coffee to be immersed in hot water to make a cup of tea or coffee.
Lankem Ceylon PLC is a fast growing player in the diversified conglomerate sector with interests in agriculture, plantations, consumer, food and feed ingredients, industrial chemicals, industrial flooring, road surfacing, paints, pest control and hotels. Its investments span over 25 subsidiaries. The company has expanded its presence in South East Asia with its investment in rubber production in Cambodia.
www.ft.lk
CIC Holdings records impressive Q3 results
CIC Holdings PLC continued its momentum of growth in the third quarter of the FY 2014/2015 ending 31 December 2014. Both the company and group turnover increased by 19.77% and 7.86% respectively to Rs. 5,355 million and Rs. 17,746 million.
Key contributors to the company’s revenue growth were the Consumer and Healthcare segment and the Crop Solutions segment. The Consumer and Healthcare segment and the Agriculture and Livestock segment were the main contributors to the group turnover.
CIC Holdings PLC also recorded an impressive increase in profits in Q3 of 2014/2015, with Profit After Tax (PAT) for the company being recorded as Rs. 326 million up from a negative Rs. 453 million last year and PAT for the Group being recorded at Rs. 820 million up from a negative Rs. 395 million last year. The increase in company and group profits have largely been attributed to an increase in revenue along with the group’s ongoing effort to control costs and spending across all CIC business units.
Profits in the Consumer and Healthcare segment, the Packaging segment and the Agriculture and Livestock Industry segment increased by 352%, 51% and 29% respectively.
Despite a reduction in the share of profit of equity accounted investees, these businesses have contributed significantly to the group’s overall improved financial performance.
Both the company and group’s efficient working capital management policy, along with favourable economic conditions in the country resulted in the reduction of the financing cost. Additionally the improvement in working capital was represented by the positive operating cash flow figures of the company and group amounting to Rs. 702 million and Rs. 1,738 million respectively.
CIC Managing Director/CEO S.P.S. Ranatunga commenting on the group’s performance for Q3 of the FY 2014/2015 said, “I am pleased to report yet another fruitful and successful quarter for CIC Holdings PLC. CIC has grown over the last few years and is now yielding impressive financial results. Both company and group profits and revenue have increased significantly and we are well poised to meet our annual financial targets.
“As we look ahead to the future, we will continue to nurture life in all aspects of our business operations, in order to effectively support the well-being of our nation and the people of Sri Lanka. I am also confident that the policies put in place by the Government, will helps us work towards the common goal of further uplifting key industries and the country at large.”
CIC has been a leading blue chip conglomerate in Sri Lanka for decades and its business portfolio extends into the areas of agriculture, animal feed, nutrition, healthcare, industrial materials and consumer products.
www.ft.lk
Key contributors to the company’s revenue growth were the Consumer and Healthcare segment and the Crop Solutions segment. The Consumer and Healthcare segment and the Agriculture and Livestock segment were the main contributors to the group turnover.
CIC Holdings PLC also recorded an impressive increase in profits in Q3 of 2014/2015, with Profit After Tax (PAT) for the company being recorded as Rs. 326 million up from a negative Rs. 453 million last year and PAT for the Group being recorded at Rs. 820 million up from a negative Rs. 395 million last year. The increase in company and group profits have largely been attributed to an increase in revenue along with the group’s ongoing effort to control costs and spending across all CIC business units.
Profits in the Consumer and Healthcare segment, the Packaging segment and the Agriculture and Livestock Industry segment increased by 352%, 51% and 29% respectively.
Despite a reduction in the share of profit of equity accounted investees, these businesses have contributed significantly to the group’s overall improved financial performance.
Both the company and group’s efficient working capital management policy, along with favourable economic conditions in the country resulted in the reduction of the financing cost. Additionally the improvement in working capital was represented by the positive operating cash flow figures of the company and group amounting to Rs. 702 million and Rs. 1,738 million respectively.
CIC Managing Director/CEO S.P.S. Ranatunga commenting on the group’s performance for Q3 of the FY 2014/2015 said, “I am pleased to report yet another fruitful and successful quarter for CIC Holdings PLC. CIC has grown over the last few years and is now yielding impressive financial results. Both company and group profits and revenue have increased significantly and we are well poised to meet our annual financial targets.
“As we look ahead to the future, we will continue to nurture life in all aspects of our business operations, in order to effectively support the well-being of our nation and the people of Sri Lanka. I am also confident that the policies put in place by the Government, will helps us work towards the common goal of further uplifting key industries and the country at large.”
CIC has been a leading blue chip conglomerate in Sri Lanka for decades and its business portfolio extends into the areas of agriculture, animal feed, nutrition, healthcare, industrial materials and consumer products.
www.ft.lk
Softlogic says no deal on Milco Land
In response to various media reports, Softlogic Holdings Plc in a filing to the Colombo Stock Exchange on Monday said there is no deal with regard to the Milco Land at Kirimandala Mawatha, Colombo 5.
It said after having expressed interest in October 2014 along with several other parties in respect of the tender called by the Board of Investment for the Milco Land project, Softlogic to date has not received any further information about its application which was under consideration.
Softlogic also categorically denied that the company has entered into any formal agreement with the BOI on the Milco Land property despite media reports to the contrary.
www.ft.lk
It said after having expressed interest in October 2014 along with several other parties in respect of the tender called by the Board of Investment for the Milco Land project, Softlogic to date has not received any further information about its application which was under consideration.
Softlogic also categorically denied that the company has entered into any formal agreement with the BOI on the Milco Land property despite media reports to the contrary.
www.ft.lk
Seven customers of Touchwood file urgent application
On 30 January, an urgent application was made to the Commercial High Court of Colombo by seven former customers of Touchwood Investment PLC including JAT Holdings Ltd., into the winding up case of Touchwood Investment PLC (Case No. 31/2014 CO).
The said customers had by a previous Motion brought it to the attention of the Commercial High Court on 18 December that their private properties to which they have title to were wrongfully and illegally attempted to be included as part of the assets of Touchwood Investment PLC.
Thereafter the said matter was fixed for inquiry for 6 February before the said Commercial High Court.
Notwithstanding this, the aforesaid urgent application on 30 January was made on behalf of the said former customers as the Liquidator was attempting to take steps to enter the subject lands owned and possessed by the said parties including JAT Holdings Ltd.
Kuvera de Zoysa, President’s Counsel with Attorneys-at-law Nishan Premathiratne and Sashanee De Silva instructed by Peummi Premathiratne appearing on behalf of the said former customers made submissions to court that it had been brought to the notice of the said customers that the Liquidator appointed by Court has taken steps unlawfully lop off the glyricedia plants (host of the sandalwood plantation) on subject lands belonging to the said customers.
The President’s Counsel reiterated that the said properties do not form part of the assets of Touchwood Investments PLC and hence the Liquidator has no right whatsoever to pursue with the said mode of conduct which was in gross violation of the proprietary and maintenance rights of the said customers.
Furthermore, the Counsel submitted that if the Liquidator and or any of his agents enters the subject properties and commences lopping of the glyricedia plants, grave and irreparable loss and damage would be caused to the entire sandalwood plantation of the said customers.
The Commercial High Court Judge hearing extensive submissions made by the said President’s Counsel issued an interim order against the Liquidator and/or his agents from entering the said subject lands and taking any steps on the plantations therein, thus to ensure that the present status quo is to be maintained until this dispute is to be inquired by the said Commercial High Court on 6 February.
Due to the grave urgency, Court made appropriate directions to expeditiously inform the Liquidator of the said order by facsimile and telephone. The matter is fixed for inquiry and scheduled to be taken up on 6 February.
www.ft.lk
The said customers had by a previous Motion brought it to the attention of the Commercial High Court on 18 December that their private properties to which they have title to were wrongfully and illegally attempted to be included as part of the assets of Touchwood Investment PLC.
Thereafter the said matter was fixed for inquiry for 6 February before the said Commercial High Court.
Notwithstanding this, the aforesaid urgent application on 30 January was made on behalf of the said former customers as the Liquidator was attempting to take steps to enter the subject lands owned and possessed by the said parties including JAT Holdings Ltd.
Kuvera de Zoysa, President’s Counsel with Attorneys-at-law Nishan Premathiratne and Sashanee De Silva instructed by Peummi Premathiratne appearing on behalf of the said former customers made submissions to court that it had been brought to the notice of the said customers that the Liquidator appointed by Court has taken steps unlawfully lop off the glyricedia plants (host of the sandalwood plantation) on subject lands belonging to the said customers.
The President’s Counsel reiterated that the said properties do not form part of the assets of Touchwood Investments PLC and hence the Liquidator has no right whatsoever to pursue with the said mode of conduct which was in gross violation of the proprietary and maintenance rights of the said customers.
Furthermore, the Counsel submitted that if the Liquidator and or any of his agents enters the subject properties and commences lopping of the glyricedia plants, grave and irreparable loss and damage would be caused to the entire sandalwood plantation of the said customers.
The Commercial High Court Judge hearing extensive submissions made by the said President’s Counsel issued an interim order against the Liquidator and/or his agents from entering the said subject lands and taking any steps on the plantations therein, thus to ensure that the present status quo is to be maintained until this dispute is to be inquired by the said Commercial High Court on 6 February.
Due to the grave urgency, Court made appropriate directions to expeditiously inform the Liquidator of the said order by facsimile and telephone. The matter is fixed for inquiry and scheduled to be taken up on 6 February.
www.ft.lk
Subscribe to:
Posts (Atom)