Colombo Stock Exchange Market Review – 1st Feb 2017

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Colombo Stock Exchange Trade Summary 01-Feb-2017

Colombo stock market closed on mixed results with thin market activity. All Share index edged lower by 2.61 index points (-0.04%) to end at 6,130.07 while high cap constituent, S&P SL20 index gained 1.30 index points or 0.04% to close at 3,490.91.

Market breadth was neutral where out of 190 stocks, 64 declined, 57 advanced while 79 remained unchanged. Price decline in Commercial Bank (closed at LKR 143.10, -1.3%) and Dialog Axiata (closed at LKR 10.60, -0.9%) drove the index down but price appreciation in Hatton National Bank (closed at LKR 226.90, +1.0%) eased the pressure.

Daily market turnover was LKR 132mn. John Keells Holdings (LKR 32mn) and Hatton National Bank (LKR 21mn) were top contributors to turnover underpinned by negotiated deals. 0.2mn shares of John Keells Holdings changed hands at LKR 140.00 and 0.1mn shares of Hatton National Bank were transacted at LKR 227.00.

High investor activity was witnessed in Swarnamahal Financial Services and counter advanced to LKR 1.20 (+33.3%) subsequent to positive earnings report. Colombo Land, John Keells Holdings and Union Bank were among heavily traded counters.

Foreign investors were net buyers with a net foreign inflow of LKR 7mn. Net foreign inflows were seen in Hatton National Bank (LKR 20mn) and Ceylon Cold Stores (LKR 5mn) while net foreign outflow was mainly seen in John Keells Holdings (LKR 27mn). Foreign participation was 31%.

Meanwhile at the Treasury bill auction today, three month yield increased by 5bps to 9.08% and one year yield increased to 10.42% (+5bps). However, six month treasury rate declined by 2bps to 10.05%. CBSL offered LKR 28bn worth Treasury bills and the auction was oversubscribed by 2.4 times with bids received amounting to LKR 67.7bn. It was decided to accept LKR 27.1bn worth of treasury bills.

Source: LSL

Sri Lankan shares edge down on political worries

Reuters: Sri Lankan shares slipped in thin trading on Wednesday and closed near a 10-month low hit last week on political worries and fears over further interest rate hikes, brokers said.

Investors turned cautious after the ruling coalition parties decided to contest local polls separately, while a rise in treasury bill yields last week also affected risk appetite, analysts said.

Yields on 91-day treasury bills rates rose 5 basis points at a weekly auction on Wednesday to a near four-year high, a month after the central bank governor signalled reduced intervention to defend the rupee.

Rising interest rates, which move in tandem with T-bill yields, have been a cause for concern, brokers said.

The Colombo stock index ended 0.04 percent down at 6,130.07, near its 10-month closing low hit last week. Turnover fell to 132.4 million rupees ($11 million), the lowest since Dec. 27.

"The market is cheap, but trading was very thin as investors are waiting for more stable promising horizon," said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

Foreign investors, who have been net sellers of 1.65 billion rupees worth of shares so far this year, net bought 6.5 million rupees worth of equities on Wednesday.

Shares of Commercial Bank of Ceylon Plc, the country's biggest listed lender, fell 1.31 percent while Pan Asia Bank Corp Plc tumbled 8.38 percent. 

($1 = 150.1000 Sri Lankan rupees) 

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

Sri Lanka revises CPI base year, composition

Jan 31 (Reuters) - Sri Lanka has revised the base year and the composition of market basket of the Colombo Consumer Price Index (CCPI) with effect from January to reflect changes in the market, the statistics office said on Tuesday.

The Department of Census and Statistics revised the base year to 2013 from the previous 2006/7 introduced in 2008, while increasing the non-food composition to 72 percent of the market basket from the earlier 59 percent, official data showed.

"Obsolete expenditure pattern and inappropriate price changes could lead to misleading signals in policy simulation and decision making," the statistics office said in a statement.

Under the new basket, the government has included alcoholic beverages, tobacco and narcotics along with restaurants and hotels, which were not included in the previous basket.

The new basket has also more than doubled the total consumption expenditure, data showed.

Under the new index, the annual inflation rose 5.5 percent in January, accelerating from the last month's 4.5 percent, while the 12-month moving average rose 4.3 percent this month from 4.0 month recorded in December.

Sri Lanka 03-month T-Bill yield rises to 9.08 pct

ECONOMYNEXT – The yield on three-month Sri Lankan Treasury Bills rose to 9.08 percent at an auction Wednesday, up 05 basis points from the last sale, the debt office of the Central Bank said.

The 06-month bill yield fell 02 basis points to 10.05 percent and the 01-year bill yield rose 05 basis points to 10.42 percent at the auction, a statement said.

The debt office got bids worth Rs68 billion and accepted bids worth Rs27 billion.

Sri Lanka’s Dipped Products returns to profit in Dec quarter

ECONOMYNEXT – Sri Lanka’s non-medical rubber gloves maker Dipped Products said it returned to profit in the December 2016 quarter with earnings of Rs107 million compared with a loss of Rs79 million the year before.

Group sales rose 23 percent to Rs6.2 billion from a year ago, according to interm results filed with the stock exchange.

December quarter earnings per share were Rs1.78. Dipped Products, a Hayleys group unit, last traded at Rs78.

For the nine months to 31 December 2016, EPS were Rs1.42, with net profit up 13 percent to Rs85 million and sales up 11 percent to Rs18 billion.

The Hand Protection sector reported a pre-tax profit of Rs598 million, up 30 percent from the year before, a statement said.

The group’s plantation sector made a loss of nearly Rs357 million due to lower crop, mainly arising from adverse weather conditions and restrictions on weedicides, it said.

Dipped Products claims a 5 percent share of the global market for non-medical rubber gloves.

Sri Lanka’s Trans Asia Hotels December quarter net Rs202mn

ECONOMYNEXT – Sri Lanka’s Trans Asia Hotels said December 2016 quarter net profit shot up 147% to Rs202 million from a year ago when its Cinnamon Lakeside hotel had been partly closed for refurbishment. .

Sales rose 27% to Rs894 million in the period, according to interim accounts filed with the stock exchange.

The main activity of Trans Asia Hotels is operating the five-star Cinnamon Lakeside Hotel which was partially closed more than half the year for refurbishment in 2015, reducing revenue and profits.

The share was last traded at Rs78. Net profit for the nine months ending December 2016 was Rs461 million, up from Rs12 million the year before, with earnings per share rising to Rs2.30 from six cents.

The firm also derives rental income from the investment property adjoining the hotel.

Sri Lanka's United Motors net down 61-pct

ECONOMYNEXT - Profits at Sri Lanka's United Motors Plc, which has agencies for Mitsubishi and Perodua, fell 61 percent to 226 million rupees in the December 2016 quarter amid flat revenues and narrower margins, interim accounts show.

The group reported earnings of 2.24 rupees per share for the quarter. In the nine months to December the group reported earnings of 8.57 rupees per share on total profits of 861 million rupees, which were down 41 percent.

Sri Lanka's car imports plunged in 2016 amid tax and interest rates hikes and an administrative credit squeeze.

Vehicle registration data shows steep falls in sports utility vehicles as Mitsubishi Montero and Outlander. However smaller Perodua vehicles sales have been resilient, according to data compiled by JB Securities.

Revenues at United Motors rose 4.1 percent in the December quarter to 4.8 billion rupees, but cost of sales grew at a faster 15 percent to 3.9 billion rupees, shrinking gross profits 26 percent to 895 million rupees.

Sri Lanka fabric maker net down 30-pct; hopes up on GSP+

ECONOMYNEXT - Teejay Lanka Plc, a Sri Lanka-based fabric maker said profits fell 30 percent to 473 million rupees in the December 2016 quarter amid higher raw material costs and the end of a tax holiday but future growth will be helped by resumed trade access to the European Union.

The setbacks were temporary and the group was also expanding capacity in India.

"As regional expansion plans move forward to secure Teejay’s long term growth trajectory, the prospects of GSP Plus in the future would further augment the Group’s progress in to the future," Chairman Bill Lam told shareholders.

The group reported earnings of 68 cents per share for the quarter. For the nine months to December it reported earnings of 2.10 rupees per share on profits of 1,462 million rupees up 9 percent from a year earlier.

Teejay group revenues rose 14 percent to 6.34 billion rupees, cost of sales rose at a faster 20 percent to 5.5 billion rupees making gross profits fall 15 percent to 831 million rupees.

Chairman Bill Lam said higher raw material costs, lack of coal in the island which pushed up energy prices were among reasons for lower gross profits.

The firm's tax holiday at also ended in the latter half of the year, pushing the income tax bill to 78 million rupees from 22 million a year earlier.

Sri Lanka’s Watawala Plantations December net up 163-pct

ECONOMYNEXT – Sri Lanka’s Watawala Plantations said December 2016 quarter net profit rose 163% to Rs466 million from a year ago helped largely by sharp gains in palm oil sales and prices.

Group sales grew 5% to Rs1.4 billion during the period, according to interim accounts filed with the stock exchange.

Earnings per share for the December quarter were Rs1.97 compared with 75 cents the year before.

Palm oil business profits rose to Rs238 million from Rs122 million a year ago while the tea sector profits rose to Rs194 million from Rs30 million.

EPS for the nine months to December 2016 rose to Rs4.28 from Rs1.85 the year before with sales up 03% to Rs4.7 billion.

Watawala Plantations Managing Director Vish Govindasamy said the palm oil segment grew 47% to reach Rs1.7 billion.

“The growth in revenue is primarily driven by price and volume growth of 25% and 19% respectively,” he said. “The segment made a significant contribution to the profitability of the company, recording a net profit of Rs979 million for the nine month period.”

But he warned: “We see some negative impact on selling price of Crude Palm oil following the recent reduction in import duty by Rs20 a kilo.”

Tea segment sales fell 8% to Rs2.7 billion.

“However, currently the tea market is seen to be improving and as reported in the last quarter, the management continues to lead on the decision to change the tea sector strategy by driving through the perspective of quality instead of quantity,” Govindasamy said.

“This change of strategy has reaped benefit by gaining higher NSA over the last year and above the budget.”

The tea business faced many challenges and adverse weather conditions, which negatively impacted the business resulting in a crop loss of 1,325,010 kgs (18%) YoY, he said.

The net profit on exports fell 35% YOY mainly due to lower volume of business.