Sri Lankan shares snap 5 sessions of falls on bargain hunting

Reuters: Sri Lankan shares rose on Thursday after five straight sessions of declines, on bargain hunting in beaten-down stocks and foreign buying.

The Colombo stock index ended 0.31 percent firmer at 6,448.98, recovering from its lowest close since Sept. 27 hit in the previous session.

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

Big caps helped the market recover, said Hussain Gani, deputy CEO at Softlogic Stockbrokers, adding that he expected it to settle “at these levels as all the main earnings results are out and foreign interest is also back.”

Foreign investors net bought shares worth 287.4 million rupees ($1.87 million), extending the net foreign inflow into equities to 19.7 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 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 1.02 billion rupees on Thursday, more than this year’s average of around 954.7 million rupees.

Shares in market heavyweight John Keells Holdings ended 0.5 percent firmer, while Ceylon Tobacco Company Plc rose 3.1 percent.

($1 = 153.6000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka’s Colombo Dockyard trims losses in Sept quarter

ECONOMYNEXT – Sri Lanka’s Colombo Dockyard said its net loss narrowed to Rs79 million in the September 2017 quarter from Rs189 million a year ago.

Interim results filed with the stock exchange showed a loss per share of Rs1.10, down from a loss of Rs2.63 the previous year. The stock was trading at Rs91.50 Thursday morning.

Sales of the yard, majority owned by Japan’s Onomichi Dockyard Company, fell 2% to Rs3.15 billion in the September 2017 quarter from a year ago.

In the nine months to September 2017 the yard reported a Rs31 million profit compared with a Rs203 million loss the previous year.

Earnings from ship building and heavy engineering business fell while that from ship repair business improved significantly, the accounts showed.

Sri Lanka’s First Capital Sept quarter net profit up 18.6-pct

ECONOMYNEXT – Sri Lanka’s First Capital Holdings PLC said group net profit rose 18.6% to Rs340 million in the September 2017 quarter from a year ago.

Earnings per share rose 18.3% to Rs3.36, according to interim accounts filed with the stock exchange. The share was last traded at Rs37.

The investment bank’s net trading income rose 188% to Rs517 million over the period, the accounts showed. Income rose 12% to Rs1.16 billion while expenses fell almost 25% to Rs635 million.

EPS for the six months to September 2017 were Rs6.92 with net profit at Rs700 million.

“Whilst we are pleased with our performance to date, we expect earnings to moderate in the 2nd half with interest rates stabilizing resulting in lower trading opportunities for the primary dealer business,” said director and group chief executive Dilshan Wirasekara.

“However, we will continue to work throughout the year towards ensuring that our fundamentals remain strong to sustain our business in the long term. Our main focus is to enhance the fee based activities and the management of risk,” said Wirasekara.

“The primary dealer business dominated the group’s earnings, reporting a profit after tax of Rs538 million for the 1st half (2016/17 – Rs. 371Mn), displaying an impressive performance,” a statement said.

First Capital Treasuries PLC capitalized on opportunities created by declining interest rates in the secondary market, realizing significant trading gains, it said.

With a track record of over 25 years, the company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Sri Lanka, with a capital base of Rs. 2.2 billion.

“A strategic approach has led to improved activity in the corporate finance business, mobilising Rs. 13 billion for clients through structuring and placement of corporate debt securities,” the statement said.

Fee income rose to Rs. 42 million from Rs. 30 million the previous year.

First Capital Asset Management Limited recorded a “substantial growth” in funds under management to end with Rs. 6.7 billion as at 30th September2017, the statement said.

The group’s equity arm, First Capital Equities, took several steps to strengthen its business by establishing strategic partnerships with brokering houses based in Asia and the United States, in addition to reinforcing its local efforts through the group’s expanding branch network.

The credit rating of First Capital Holdings PLC and First Capital Treasuries PLC was reaffirmed by ICRA Lanka Limited in October 2017 at “A-”.

Shangrila-La secures additional 3 ½ acres on 99-year lease

Ahead of mega hotel opening tomorrow

By Shamindra Ferdinando

Hong Kong-based Shangrila-La Group has secured three and a half acres adjoining its latest hotel situated on 10 acres abutting the Galle Face promenade in Colombo.

Cabinet spokesperson and Sports Minister Dayasiri Jayasekera yesterday said the government had re-negotiated with the Shangrila-La Group what he called a much better deal than the one struck by the previous administration.

Jayasekera was addressing the post-cabinet media briefing at the Government Information Department. Minister Jayasekera was flanked by Minister Gayantha Karunatilleke and Military Spokesman Maj. Gen. Roshan Seneviratne.

Jayasekera confirmed that the lease was for a period of 99 years.

President Maithripala Sirisena, Prime Minister Ranil Wickremesinghe and industry leaders are scheduled to attend the opening of Shangrila-La, Colombo tomorrow (Nov 17).

The then Economic Development Minister Basil Rajapaksa broke ground in February 2012, three years after the conclusion of the conflict.

Minister Jayasekera said the government had leased three and a half acres of land at a rate of Rs. 13.1 mn per perch whereas the previous administration had agreed to Rs 6.5 mn per perch.

Jayasekera said the previous government in which he, too, was a member leased 10 acres for 99-years and then negotiated a separate agreement on the adjoining three and a half acre property for Rs. 6.6 bn.

The Ministry of Defence and Urban Development were responsible for negotiations with Shangrila-La for 13 and a half acres during the previous administration. After the change of government in 2015 January, the new leaders had called for a fresh valuation to ensure the country received the best possible terms, Minister Jayasekera said.

Cabinet spokesman Jayasekera told The Island yesterday evening that the previous government had leased 10 acres at a rate of Rs 9.5 mn (with taxes) per perch.

In accordance with the plan finalised by former Defence Secretary Gotabhaya Rajapaksa, the Defence Ministry and Army headquarters were to be shifted to Akuregoda defence complex now under construction.

Minister Jayasekera told the media that President Maithripala Sirisena hadn’t been involved in negotiating or promoting the Shangrila-La project. He said the proper procedures had been followed in finalising the second transaction with the Shangrila-La Group.

www.island.lk

‘Unusual selling pressure’ for some blue chip stocks

By Hiran H.Senewiratne

The Colombo Stock Exchange (CSE) witnessed unusual selling pressure, especially for JKH stocks, which dropped their per share price by more than 3 percent compared to the previous day. Because of this trend, prices in other counters also dropped considerably, stock market analysts said.

Amid those developments, both indices showed a downward trend; ie, the All Share Price Index went down by 20.07 points and S and P SL20 was down by 20.11 points. However, the day's turnover stood at Rs. 928.64 million with one crossing. That crossing was from JKH where 2.5 million shares crossed for Rs. 373.33 million and the per share value was Rs. 150.

In the retail market, again JKH became the main contributor to the day's turnover which was Rs. 395 million and 2.5 million shares were traded during the day. Two other companies that mainly contributed to the day's turnover were: Commercial Bank Rs. 22.3 million (163,000 shares traded) and HNB (Non voting) Rs. 16.4 million (80,000 shares traded).

During the day 15.28 million share volumes changed hands in 3928 transactions.. JKH shares dominated the market but other counters in the CSE did not trade in a significant manner. It is said that 83 percent of the day's turnover was contributed by JKH.

Analysts said the release of the government gazette notification on the new Inland Revenue Act will also weigh on the market over the next few days.

Turnover was Rs. 670.3 million on Tuesday, less than this year’s average of around Rs. 928.6 million .

Top private lender Commercial Bank of Ceylon fell 2.3 percent, while market heavyweight and top conglomerate John Keells Holdings closed 3 percent weaker.

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

Meanwhile, JKSB reports -

ASPI: 6,428.83 (-29.07 pts; -0.45%); Val T/O: Rs. 929mn (US$6.05mn); Vol T/O: 15.2mn; Trades: 3,928

Advance/decline ratio: 88/82; Top gainer: HAPU.N (+18.11%) ; Top loser: SEMB.X (-33.33%)

Highlights:

• The ASPI ended lower amid improved turnover levels. JKH, COMB, and HNB.X led market activity with trading in JKH amounting to 83% of total turnover.

• Diversified Holdings was the most actively traded sector (-1.67%)

• Plantations was the best performing sector (+2.34%), supported by gains on MAL (+7.69%)

• Investment Trusts was the worst performing sector (-4.84%), dragged down by declines on CINV (-6.61%)

www.island.lk

Four new taxes added in Budget 2018

The 2018 Budget has added four new taxes and it will increase the number of tax to 39, said Suresh Perera, Principal, Tax and Regulatory, KPMG. He was speaking at a post-Budget seminar organised by the National Chamber of Exporters. The new taxes are the debt repayment levy, carbon tax, cellular taxes levy and SMS advertising levy.

He said that Sri Lanka’s Doing Business Index had deteriorated from 109 to 111 while India’s position has increased a great deal. “I think the reason for this is that the simplification of tax and India hopes to be among top 70 in this raking soon.”

He said the government hopes to collect a revenue of Rs. 12 billion annually from the cellular tower tax per year in addition to tax from sms advertising which would be 25 cents and this has to be borne by the advertiser.

Perera also said that they are very happy about the tax on sugar products for soft drinks and said that this was a welcome move.

“A sugar tax was first implemented in 1922 and it is now being implemented in many countries.” (SS)

www.dailynews.lk

Softlogic suffers loss in 2Q; 1H net profit down 99%

Diversified Softlogic Holdings Plc has suffered a net loss in the second quarter whilst first half net profit had dipped by 99% though the group’s results from operating activities have seen strong positive growth.

Group Revenue grew 6.4% to Rs. 31.1 billion during the first half of the financial year with the quarter also registering a similar growth of 6.5% to Rs. 15.9 billion. Group top-line for the six months was led by Retail (30.8%), ICT (26.4%), Healthcare Services (19.1%), Financial Services (16.5%) and Automobile (3.8%).Gross Profit improved 21.2% to Rs. 11.2 billion during 1HFY18, indicating a healthy improvement in GP margin from 31.5% in 1HFY17 to 35.9% in 1HFY18.

The quarter also registered similar GP margin improvements, taking the quarterly gross profit to 5.7 billion (up 21.1%). Cost control measures and economies of scale helped maintain profit margins amidst systemic challenges.

Results from operating activities rose by 40% to Rs. 4.05 billion in 1H and by 44% to Rs. 2.2 billion in 2Q.

Group EBITDA for the quarter improved 42.1% to Rs. 2.9 billion while the cumulative EBITDA increased 40% to Rs. 5.4 billion Net finance expenses increased 28.2% to Rs. 2.2 billion during 1HFY18 with the quarter increasing 28.6% to Rs. 1.2 billion.

Profit before tax for the cumulative period was Rs. 1 billion (down 16%) while the quarter reported a PBT of Rs. 358.1 million (down 41%). In FY17 Group pre-tax profit was 1.68 billion.

Profit after taxation for the first half of FY2017/18 closed at Rs. 677.9 million (down 25%) with the quarter concluding with a PAT of Rs. 248.2 million (down 37%). In FY17, the figure was Rs. 821 million.

Net profit attributable to equity holders of the parent in 1H was a paltry Rs. 2.46 million, lower by 99% compared to Rs. 196 million in the first half of last year. In 2Q, the net loss of Rs. 41 million was against a profit of Rs. 94 million a year earlier. In FY17, Softlogic’s bottom line amounted to Rs. 108 million.

Softlogic Chairman Ashok Pathirage in his review accompanying interim results said investments in group activities continue especially in the retail arena, with the planned expansion of Odel in Colombo City Centre by March 2018 and Shangri-La by June 2019.

“We expect to benefit from economies of scale and synergies so as to become the only fashion retailer with a portfolio of international and local brands in a captive market,” he said.

“The current macroeconomic conditions, although are challenging, should tourism grow at the expected pace, the leisure and retail sectors would be beneficiaries. The upcoming Asiri Hospital Kandy would undoubtedly be a preferred hospital in the Central Province further boosting this sector thus unlocking cash flows from such new investments,” Pathirage added.

www.ft.lk