Sri Lankan shares post 3-mth closing high, led by blue chips

Reuters: Sri Lankan shares posted a three-month closing high on Thursday, led by gains in blue chips such as John Keells Holdings Plc and Ceylon Tobacco Company Plc, while foreign investor buying also boosted sentiment.

The benchmark Colombo stock index ended 0.23 percent, or 15.30 points, firmer at 6,593.25, its highest close since May 20.

Foreign investors, who have been net sellers of 3 billion rupees ($20.63 million) of shares this year, bought a net 343.2 million rupees in their highest purchase since Aug. 1, extending the net foreign inflow in the past 16 sessions to 1.8 billion rupees worth of equities.

"Investors are more focused on blue chips such as John Keells," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd, adding profit-taking had dried up.

Turnover got a boost as a foreign investor sold shares of National Development Bank Plc to other foreign investors, Mathew said.

Turnover stood at 1.78 billion rupees, well above this year's daily average of around 739.1 million rupees.

Shares of John Keells Holdings rose 0.96 percent, while Ceylon Tobacco Company gained 1.09 percent.

Commercial Bank of Ceylon Plc, the country's biggest listed lender, rose 1.46 percent, while National Development Bank ended 0.12 percent weaker. 

($1 = 145.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka Insurance revenue up by Rs 2 bn

Sri Lanka Insurance (SLIC) reported a promising year during 2015 with growth in performance in almost all areas of business.

The growth for the year was robust at 18.65%, a significant improvement over 2014. The total revenue of the organisation grew to Rs. 31 billion in 2015 from Rs 29 billion in the previous year.

Meanwhile, Gross Written Premium (GWP) increased to Rs. 24.5 billion from Rs. 20.6 billion while Net Earned Premium increased to Rs 20 billion from Rs 17.8 billion the previous year. The GWP for life insurance grew by 29 percent to Rs 10.5 billion from Rs 8 billion in 2014, resulting in notable gains in market share, while the General Insurance GWP increased by 12 percent to Rs. 14 billion from Rs 12.5 billion. As a percentage of the total market share, SLIC’s GWP for Life and Non-life stood at 23 and 21 percent respectively.

SLIC saw its Profit Before Tax grow to Rs. 4.8 billion last year from Rs 4.3 billion over the previous year while Profit After Tax grew to Rs 3.4 billion from Rs 3.2 billion in 2014. The company reported one of the largest asset bases in the industry, at Rs 167 billion which had grown steadily over the Rs 162 billion asset base in 2014.

The General Insurance Fund increased to almost Rs 15 billion in 2015 over the Rs 13 billion in 2014 while the Life Insurance Fund grew to Rs 77 billion from Rs 74 billion over the same period, which is the highest ever in the industry. Its shareholders’ fund was also the highest at Rs 63.7 billion. The largest ever bonus, at Rs 5.4 billion, was also paid to Life policyholders during 2015.

Backed by these strong financial credentials, Sri Lanka Insurance also partners with some of the top re-insurance organisations in the world.

The many measures the organisation had implemented to develop its systems infrastructure such as the integrated finance system known as SAP, had borne fruit with these new systems offering solutions for most financial reporting and backend control issues.

An area which will come under the increasing focus of SLIC is the improvement of insurance penetration in the island. It has been found that only 12 percent of the local population and 29 per cent of the employed population have obtained Life policies.

SLIC has led the motor insurance market for the sixth consecutive year in 2015 and in 2016, it hopes to carry this momentum forward while positioning itself as the ‘National Motor Insurance Brand’.
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Market conditions hamper Dunamis, First Capital margins

Dunamis Capital PLC Group revenues increased marginally during the 2015/2016 year to Rs.2.9 bn. Revenue erosion in the Financial Services segment was more than off-set by combined revenues of the Real Estate Development and Manufacturing segments.

The Group cost of sales rose to Rs. 2.2 bn in 2015/16 relative to Rs. 1.3 bn in the previous year, attributable mainly to the development activities of the Kelsey Group, Chairperson Manjula Mathews said.

“We reported a consolidated after-tax loss of Rs. 414 mn during 2015/16 in comparison to a profit after tax of Rs. 570 mn in the preceding year.

The bottom line was negatively impacted by the decrease in First Capital Group’s profitability due to adverse market conditions,” Mathews said.

A total of Rs. 123 mn was paid in dividends to shareholders, with Rs. 51 mn paid to shareholders with non-controlling interest.

The First Capital Group recorded a net trading income of Rs. 504 mn reflecting a 67% decrease YoY. Results were severely impacted due to the Fixed Income business comprising mainly primary dealing underperforming in prevailing market conditions.

First Capital Group’s consolidated net profit amounted to Rs. 47 mn reflecting a 95% decrease YoY from Rs. 985 mn in 2014/15 which included a one-off gain of Rs. 233 mn resulting from the deemed disposal of an equity investment.

The sale of 45 residential units of the Templer’s Square development in Mount Lavinia drove the Kelsey Group’s revenues up to Rs. 1 bn in 2015/16 up markedly from Rs.103 mn in 2014/15.

Realised contribution from Templer’s Square for the year amounted to Rs. 128 mn.

In 2015/16 Primo revenues grew to Rs. 395 Mn from Rs. 141 Mn in the previous year.

Revenue growth however has not been sufficient at this early stage to cover fixed costs, resulting in a net loss of Rs. 132 Mn for the year under consideration.
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Abans Finance 1Q profits grow by 31%

Abans Finance, a member of the Abans Group, has registered a pre-tax profit of Rs. 51.5 million for the quarter ended June 30, compared to Rs. 36.3 million recorded in the corresponding period of 2015, achieving a year-on-year growth of 41.86 %.

The post–tax profit of the company for the quarter under review has also improved by 31.1%, from Rs. 26.12 million in Q1 2015 to Rs. 34.24 million in Q1 2016. The company has continued to increase its profitability amidst external challenges such as increasing interest rates and slow down in consumption.

Nevertheless, NII of the company recorded a remarkable increase of Rs. 58.8 million or 37.7 % during the period under review from Rs. 155.9 million in Q1 2015 to Rs. 214.7 million in Q1 2016, aided by the significant expansion of the asset-base of the company since Q1 2015, coupled with prudent liability management strategies.

Non fund based income (NFBI) which mostly comprises of fees, commissions and other fee based income decreased to Rs.12.9 million as opposed to Rs.15.0 million earned for the first three months of the year 2015, reflecting a decline of 13.8%.

A 380.1% growth was recorded in other operating income for the period under review as compared to the corresponding period in 2015. Other operating income earned during the first quarter of 2016 amounted to Rs. 4.5 million whereas Q1 2015 was only Rs.0.95 million.Operating expenses of the company which stood at Rs. 82.4 million for the first quarter in 2015, increased to Rs.109.5 million during the same period in 2016, reflecting a YoY increase of 32.8%. This increase was mainly due to the increase in personnel costs. However, the Cost to income ratio without VAT and NBT on financial services in Q1 2016 has improved to 47.1% from 47.8% recorded in the first quarter of the previous year.

Impairment charge on Loan and Receivables for the first quarter of the year 2016 amounted to Rs.60.2 million which is an increase of Rs.10.4 million as compared to Rs.49.7 million impairment charges recorded for the first quarter of the previous year. Despite these challenges, the company’s total asset base grew by 2.53% during the quarter (annualized 10.13%) and stood at Rs.6, 304.37 million as at 30 June 2016.

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Softlogic Holdings Group 1Q revenue up to Rs. 14.8 bn

The first quarter financial results of FY2016/17 reflected mixed fortunes for Softlogic Holdings PLC.

The floods and landslides that affected Sri Lanka in May, had taken its toll on some parts of the economy dampening the business sentiment further.

Healthcare Services reported a top line of Rs. 2.4 Bn, a 4.6% increase, during 1QFY17 with sector’s operating profit reaching Rs. 428.3 Mn, down by 14.1% to conclude quarterly PAT at Rs. 296.0.

The introduction of VAT to the healthcare sector resulted in some services being viewed by the public as too expensive to bear, which adversely affected the quarter results of this sector. However, with the suspension of VAT subsequently, sector’s performance has been restored. Nonetheless, Group revenue increased a strong 13.3% to Rs. 14.8 Bn for the quarter. Group turnover was primarily dominated by its fully owned sectors – Retail (32.1%) and ICT (30.6%). Financial Services improved its contribution to Group revenue to 17.2% whilst Healthcare Services sustained its turnover contribution at 16.4%. Automobiles continued with a marginal contribution as plans are underway to improve the sector performance in the periods to come.

Gross Profit registered a marginal improvement of 4.2% to Rs. 4.5 Bn during the first three months of the financial year. Despite increasing business activities, operational cost margins were optimized at 24% during the period with operational expenses increasing 14.5% to Rs. 3.5 Bn. Distribution costs increased 30.3% to Rs. 853.0 Mn whilst administrative costs registered an increase of 10.2% to Rs. 2.7 Bn during the quarter. Other operating income, primarily composing of fees received for new loans at Softlogic Finance PLC increased 53.9% to Rs. 298.4 Mn. Subsequently, results from operating activities reached Rs. 1.3 Bn for the quarter under review.

Finance Income continued to contract on the back of unrealized fair value gains at Asian Alliance Insurance PLC’s investment portfolio with increasing interest rates affecting its bond portfolio. ICT revenue was up 19.6% to Rs. 4.5 Bn for the quarter. ‘Samsung’ operations led the sector performance followed by ‘’Microsoft’ and ‘HTC’.

Movenpick hotel fit-out is at final stages with testing and commissioning work expected to start in October so that the hotel will be operational by January 2017. This would be the country’s first five-star hotel in three decades.

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