Colombo Stock Exchange Market Review – 18th Nov 2016

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Colombo Stock Exchange Trade Summary 18-Nov-2016

Colombo Bourse edged lower on Friday for the fifth consecutive day in thin trade. ASI closed at 6,326.11, a dip of 18.17 points (-0.3%) and S&P SL 20 index lost 12.12 points (-0.3%) to close at 3,514.98.

Negative returns in Nestle Lanka (LKR 2,002.50,-2.3%), Sri Lanka Telecom (LKR 35.50,-3.8%) and Hatton National Bank – voting (LKR 229.00,-1.6%) dragged the index to negative territory despite gains in premier blue-chip John Keells Holdings (LKR 146.00,+0.7%).

Market turnover was LKR 272mn. Chevron Lubricants (LKR 69mn) made the biggest contribution to the turnover supported by an off-the-deal of 0.3mn shares at LKR 158.50. Further Dialog Axiata (LKR 46mn) and Access Engineering (LKR 32mn) made noteworthy contributions to the turnover. Along with the crossing in Access Engineering (1mn shares at LKR 24.80), negotiated deals contributed 27% of the day’s turnover.

Market sentiments remained bearish with losers outweighing gainers 67 to 51. Commercial Credit, Access Engineering and John Keells Holdings were among the heavily traded counters.

Foreign investors were net sellers with net foreign outflow of LKR 32mn. Foreign participation was 29%. Top net outflows were seen in Dialog Axiata (LKR 20mn), Richard Pieris (LKR 20mn), Access Engineering (LKR 3mn) while top net inflow was recorded in Expolanka Holdings (LKR 8mn).
Source: LSL

Sri Lankan shares fall for fifth straight session; tax proposals weigh

Reuters: Sri Lankan shares ended for a fifth straight session of declines on Friday, and reached their lowest closing level in more than four months, in thin volume as investor sentiment was hit by budget tax proposals.

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees ($12.36 billion) year-on-year, including revisions in corporate and withholding taxes and meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

The benchmark index of the Colombo Stock Exchange ended down 0.29 percent at 6,326.11, its lowest close since July 7. It declined 1.5 percent in the last five sessions after the budget was presented on Nov. 10.

The index was in the oversold territory, with the 14-day relative strength index at 23.399 versus Thursday's 25.714, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

"Investors are worried with the rising interest rates after the T-bill yields rose this week. There isn't a lot of selling pressure and investors are awaiting cautiously," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Analysts said some of the budget proposals are still unclear, and there are concerns that some of them could be reversed, like what occurred last year.

The market shrugged off a move by Sri Lanka's Securities and Exchange Commission (SEC) to change its minimum floating rule to raise market liquidity.

Foreign investors sold a net 31.95 million rupees worth of shares on Friday extending the year-to-date net foreign outflow of 1.11 billion rupee worth of shares.

Analysts said the increase in various taxes and fees would reduce the disposable income of people and challenge the consumption-led growth.

Turnover was 272.7 million rupees ($1.84 million), well around a third of this year's daily average of 702.2 million rupees.

Shares of Sri Lanka Telecom Plc dropped 3.79 percent, while Hatton National Bank Plc slid 1.59 percent.

($1 = 147.8500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

SEC revises Minimum Public Float rules from January

The Securities and Exchange Commission (SEC) in consultation with the Colombo Stock Exchange (CSE) will revise the Minimum Public Float requirements from January 2017.

This will provide listed public companies with a wider range of options to comply with the Rules without compromising the objective of the Rule,the SEC said yesterday.

A grace period of six months extending up to June 30, 2017 will be granted for Listed Companies to comply with any one of the revised thresholds as detailed in the tables below. The revised minimum requirements will replace the current listing criteria applicable at initial listing both on the Main Board and on the Diri Savi Board. The revised Rules recognise the contribution made to liquidity from both the free float market capitalisation of a company and its public holding.

The free float market capitalisation or the float adjusted market capitalisation is computed by multiplying the Public Holding percentage of a company by the market capitalisation of such company.

www.dailynews.lk

Sri Lanka's Lion Beer re-starts factory

ECONOMYNEXT - The factory of Sri Lanka's Lion Beer, which was repaired after flood damage, has started operating and production is being gradually ramped up, Chief Executive Suresh Shah said.

Ceylon Beverage Holdings Plc, the owning company, said it lost Rs515 million after tax in the quarter to September 2016, down from a profit of Rss689 million a year earlier, interim accounts filed with the Colombo Stock Exchange showed.

In the six months to September, it lost Rs1.2 billion after tax, down from a profit of Rs2.0 billion.

The firm said it will submit insurance claims and the factory was repaired with bank finance.

Lion Beer said it had been selling imported beer, where the state gave it an opportunity to pay the same taxes as it did for domestic production to maintain some of its market share.

The firm sells Lion Beer, its own brand, and license produces Carlsberg.

With domestic production starting, beer in glass bottles will come back to the market.

Ceylon Beverage Holdings said over the past two years tax on beer was raised 70 percent and hard spirits 25 percent, leading to a 39 percent fall in beer sales and a 9 percent rise in spirits.

Ceylon Beverage Holdings said small-time 'toddy' production has gone up, although accurate data is not given to excise authorities.

Sri Lanka’s Dockyard makes Rs189mn loss in Sept quarter

ECONOMYNEXT – Sri Lankan shipyard Colombo Dockyard said it made a loss of Rs189 million in the September 2016 quarter compared with a profit of Rs183 million the year before.

Group sales fell 20 percent to Rs3.2 billion during the period, according to interim results filed with the stock exchange.

The yard, majority owned by Onomichi Dockyard Company Limited of Japan, with big stakes also held by several state entities including the Employees’ Provident Fund (EPF), reported a loss per share of Rs2.63 in the September 2016 quarter.

For the nine months to September 2016, Colombo Dockyard reported a loss per share of Rs2.94, with sales down 25 percent to Rs8.5 billion and a loss of Rs211 million against a profit of Rs500 million the year before.

Ship building sales and profits were down sharply in the nine month period, while ship repair revenue rose slightly and profits also increased.

The EPF, with a stake of 16.34 percent, is the second-largest shareholder of Colombo Dockyard, followed by Sri Lanka Insurance Corporation Ltd-General Fund with 5.0 percent, Sri Lanka Insurance Corporation Ltd-Life Fund with 4.9 percent, Sri Lanka Ports Authority with 3.0 percent, Employees Trust Fund Board with 2.4 percent and National Savings Bank with 1.7 percent.

Sri Lanka’s CIC Holdings Sept net profit down 36-pct

ECONOMYNEXT – Sri Lanka’s CIC Holdings said September 2016 quarter net profit fell 36% to Rs164 million from a year ago mainly because of a sharp increase in finance costs on borrowings to fund increased capital expenditure, investments and working capital requirements.

Group sales rose 44% to Rs9.3 billion during the period, according to interim results filed with the stock exchange.

Earnings per share for the September quarter were Rs1.73. CIC Holdings’ EPS for the six months to September 2016 were Rs4.37 with net profit down 27% to Rs414 million although sales rose 38% to Rs17.8 billion from the year before.

CIC Holdings chairman Harsha Amarasekera attributed the slump in profits to “a steep increase in finance costs.”

This was because of a 28% increase in total borrowings and an underlying industry wide increase in borrowing rates, he said in a note accompanying the results.

“The rise in CIC’s debt balances are due to increased capex, new investments and additional working capital required for increased business volumes,” he said. “The revenues from the capex and new investments will begin to flow from the beginning of the next financial year.”

Amarasekera said that despite the increase in debt, CIC reduced its financial leverage measured by debt to annualized EBITDA to 3.4x, compared to 4.3x as at FY16.

“We are also confident that the payoff from the investments would both in terms of financial returns and improved group synergies will be significant,” Amarasekera said.

“Our strategy is focused on long term and sustainable growth, and have already factored the expected near term increases in interest costs as a result of the investments into our corporate planning.”

Amarasekera said CIC Group expects to improve on last year’s performance given that CIC’s earnings in the second half are materially higher than the first half, due to the inherent seasonality of CIC’s agri dependent businesses.

Sri Lanka Treasuries yields rise at auction

ECONOMYNEXT – Yields on 03-month Sri Lankan Treasury Bills held steady at Wednesday’s auction, but those on longer tenors rose, the Central Bank’s debt office said.

It said in a statement that the yield on the 03-month bill remained at 8.60 percent, the same as last week.

The yield on the 06-month bill rose 09 basis points to 9.65 percent, from 9.56 percent last week.

The yield on the one-year t-bill rose 06 basis points to 10.20 percent from 10.14 percent last week.

The debt office received almost Rs42 billion worth of bids, but accepted only Rs1 billion in bids.

Sri Lanka Laugfs Gas Sept quarter net down 51-pct

ECONOMYNEXT – Sri Lanka’s Laugfs Gas said September 2016 group net profit fell 51 percent to Rs269 million from a year ago as finance costs rose sharply, with the group borrowing heavily to fund investments.

Sales rose 56 percent to Rs4.3 billion during the period, according to interim results filed with the stock exchange.

Finance costs rose 312 percent to Rs320 million, accounts showed. Earnings per share for the September 2016 quarter were 70 cents.

EPS for the six months to September 2016 were 76 cents, down 66 percent from the year before, although sales went up 51percent to Rs8.2 billion.

Laugfs Gas group hotels losses widened, while its energy, and transportation and logistics business profits rose.

“Our long-term investments have weighed in on the bottomline of the company,” Laugfs Group Chairman and Chief Executive W. K. H. Wegapitiya said.

“With the commercialisation of the (investment) projects and specially with the renewable energy investment being on the verge of commencing operations, this momentary dip in profitability will be reversed with much more potential for future growth.”

The group is investing in the energy and related sectors of the economy and has “charted for itself a growth trajectory encompassing several sectors that show enormous potential in the economy,” Wegapitiya said.

“We have moved fast to claim a stake in such sectors with a long-term view for growth, while acknowledging that we will have to bear a short-term dip in profitability.”

Laugfs Gas group's investment on a 20MW solar power plant at Hambantota is progressing according to plan and is expected to generate significant revenue in the fourth quarter of the current financial year,” Wegapitiya said.

It also expects to commission the port-based LP Gas import and export terminal being built at Hambantota Port in the fourth quarter of the next financial year.

“This will generate significant foreign exchange revenue for the country by being able to satisfy the LPG requirements of the country, as well as being able to export the excess capacity,” Wegapitiya said.

“Our investment in Bangladesh's downstream LPG business is showing promising results and exceptional growth prospects.

“Our investment into the leisure sector is also showing promising results as both hotels (Chillaw and Paasikuda) have now commenced commercial operations.”

Sri Lanka's First Capital Holdings profits up

ECONOMYNEXT - Profits of Sri Lanka's First Capital Holdings Plc, a financial services group, rose to Rs306 million in the September 2016 quarter up from a loss of Rs172 million a year earlier, helped by its primary dealer unit.

The group reported earnings of Rs2.84 per share. In the six months to September, the group reported earnings of Rs3.81 per share, in accounts filed with the Colombo Stock Exchange.

The firm said First Capita Treasuries Plc, a primary dealer in government, made profits of Rs371 million in the first half of the year, compared to a loss of Rs97 million a year earlier.

First Capital Limited, which is in capital markets advisory, had helped raise Rs6.8 billion through listed debentures and other debt.

Dilshan Wirasekara, CEO of First Capital Holdings, said the firm "expects to navigate the unsettled market conditions with caution during the second half of the financial year."

Sri Lanka's Janashakthi net up 12-pct in Sept quarter

ECONOMYNEXT - Profits at Sri Lanka's Janashakthi Insurance Plc rose 12 percent from a year earlier to Rs159.1 million in the September 2016 quarter, interim accounts show.

The firm reported earnings of 0.29 cents per share for the quarter. In the nine months to September, it reported earnings of Rs1.45 per share on total profits of Rs789 million, up from Rs352 million a year earlier.

Gross written premium rose 34 percent to Rs3.32 billion in the quarter from a year earlier and net premium after re-insurance rose 24 percent to Rs2.8 billion.

Investment income rose 28 percent to Rs465 million.

Benefits and claims were up 32 percent to Rs2.6 billion.

The firm posted growth despite seeing a spike in claims from floods, underlining its re-insurance strength, Managing Director Prakash Schaffter said.

Janashakthi said it had a deal to transfer land leased from the Urban Development Authority, in Staples Street Colombo, to Sanken Construction (Pvt) Ltd, which had been approved by the cabinet of ministers.

The firm said the UDA had imposed more levies, and profits from the deal was now estimated at Rs361 million.