AIA operating profit up 16 %, interim dividend up 17 %

AIA has delivered an excellent set of results in the first half of 2017 with record VONB growth of 42 per cent to US$1,753 million.

The Board has declared a 17 per cent increase in the interim dividend for 2017. This reflects AIA’s excellent financial results in the first half as well as our confidence in the outlook for the Group.

“AIA has significant competitive advantages created over our long history in Asia. We have a clear strategy that is working well and is fully aligned with the substantial opportunities presented by the extraordinary social changes and substantial economic growth taking place across the region. Our strong track record of value creation is the direct outcome of our many experienced teams working collectively to deliver our strategic priorities. We will continue to challenge ourselves and our strategy to ensure we capture the many significant opportunities that the region presents – well into the future.

“Today’s announcement is the first time I have reported our financial results since I assumed the role of Group Chief Executive at the beginning of June and I am delighted that we have delivered a very strong performance. AIA is an exceptional company with outstanding people and a unique franchise. I look to the future with great enthusiasm as we continue to realise AIA’s full potential in Asia and generate sustainable value for our customers and shareholders,” said Ng Keng Hooi, AIA’s Group Chief Executive and President.

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Sinhaputhra records post tax profit of Rs 154 mn

Sinhaputra Finance has reported an increase of 84% in pre tax profit compared to the previous year, despite allowing for a provision of Rs. 329 mn. The effect of this provision was a reduction in capital funds which now stands at Rs 1.1 bn.

During the last 39 years, there have been no less than six economic busts, some stretching for long periods. Sinhaputhra’s responses have been modulated during these ups and downs and safeguarding depositor’s assets have always been the centre of concern during these periods.

Managing Director Ravana Wijeyeratne said, “whilst this cautious growth pattern of the company has been reflected in its mature asset quality and a realistic consideration of the nation’s debt repayment capacity, it has also allowed the company to build its human capital and core competencies in response to these real issues rather than being seduced by risky opportunities during periods of dizzying growth periods that would mask such underlying issues with glossy ratios, but may result in future problems.”

Ali Asger Shabbir buys over CFT

Dr. Ali Asger Shabbir purchased 85,557,022 ordinary shares of Ceylon and Foreign Trades PLC (CFT) at a price of Rs. 5 per share thereby increasing his stake to 61.027%.

Dr. Shabbir confirmed the purchase and mandatory offer to acquire the balance issued and fully paid voting shares of CFT in a corporate disclosure sent to the Colombo Stock Exchange yesterday. Ceylon and Foreign Trades PLC traces its history back to 1949, one year after the country gained independence from British rule, when a group of pioneering businessman banded together to form this company.

CFT is one of the oldest trading companies in Sri Lanka, which was established in 1949 and became a publicly quoted company in 1978.

CFT, an asset rich company which is mainly into real estate, at present owns a two-acre warehousing complex at Bloemandal Road, Colombo, a 96-perch plot of land in Sedawatta, a five-acre property in Grandpass which is known as the Unilever property and 22% ownership in On’ally Holdings PLC which is a public quoted company with substantial real estate interest in the country including Unity Plaza, becoming it’s second largest shareholder.

The Net Asset Value of CFT amounts to Rs. 12.54 per share as per the latest published interim accounts which is a significant discount to its market trading price.
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Three strongest private banks make cash calls within weeks of each other

Three of the country’s strongest privately owned banks have made cash calls on their shareholders within a matter of weeks to increase their Tier l capital to comply with Basel 111 requirements.

Hard on the heels of the Commercial Bank of Ceylon PLC’s recent rights issue for both its voting and non-voting shares, Hatton National Bank floated a similar rights issue which closed last week for its voting and non-voting shares.

Now Sampath Bank PLC on Friday announced a rights issue under which slightly over 31.03 million new shares will be issued in the proportion of one new share for every six shares held at a price of Rs. 245 a share. Sampath has only voting shares with no non-voting category.

Commercial Bank priced its new shares at considerably less than the trading price of these shares at the time the rights issue was floated giving its existing shareholders a distinct price advantage and ensuring the likelihood of full subscription that was achieved.

"Some of the major shareholders of ComBank like motor vehicle importer Indra de Silva and the DFCC Bank, ComBank’s top shareholder, sold part of their holdings to raise funds to subscribe for their rights," a share analyst said.

"In the event, Silva bought a part of the DFCC holding that was put out for sale after he had sold his stake and subscribed to the rights accruing to those shares."

ComBank priced its voting shares at Rs. 113.16 and the non-voting shares at Rs. 90.80 offering one new share for every 10 held on the rights issue. The day the issue was announced the voting shares were trading above the Rs. 140 level. The issue was fully subscribed infusing Rs. 10.1 billion zero cost capital into the bank’s books.

HNB which offered both its voting and non-voting shares in the proportion one for 10, priced the voting shares at Rs. 220 and the non-voting at Rs. 190 seeking to infuse Rs. 15 billion new equity funds into its books.

"Unlike ComBank, HNB priced its rights fairly close to the trading price giving its shareholders less of an advantage," a broker said. "In fact, when the issue closed last week, the non-voting shares were trading at around the issue price."

Analysts said that ComBank shareholders who applied for additional shares over and above their rights entitlement from unsubscribed rights were satisfied to some extent indicating that some shareholders did not subscribe despite the profit that could have been made by taking and selling the shares.

Whether this would be so in the case of HNB too is being watched by the share broking and trading community. The Sampath share closed on Friday at Rs. 272.10 against the rights price of Rs. 245.

HNB has not yet made an announcement on the results of its rights issue. This is likely to be made in the near future, analysts said.

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Kelani Cables profits down despite historically high turnover

Kelani Cables PLC has seen a dip in net profit to Rs. 378 million in the year ended March 31, 2017 from Rs. 499 million a year earlier despite the company achieving a historically high turnover of Rs. 7.12 billion during the year against the previous year’s Rs. 6.62 billion.

Mr. Upali Madanayake, the company’s chairman, has said in its recently released annual report that they had succeeded in "sustaining commendable growth despite adverse conditions both globally and locally to ensure consistent shareholder value."

"Our sales team performed well despite tough market conditions and the growth over last year amounts to 8% year-on-year," he added.

Director/CEO Mahinda Saranapala reporting the historically high turnover said the overall performance was highly commendable considering the market conditions and severe condition in the distribution market.

Kelani Cables which was founded in 1969 to manufacture and distribute power and telecommunication cables and enameled winding wires began operations with just 12 workers. The brand is today a household name with a 500-strong workforce and a solid reputation for quality and stability, the company said in the report.

It has undergone several changes in ownership since its founding by the Wijegoonewardena family. The company became a subsidiary of Australian multinational Pacific Dunlop Cables Group in 1994 and in late 1999 the majority shareholding was acquired by ACL Cables.

"These alliances have provided opportunities for expansion and knowledge sharing which have enabled the company to enhance its operations.

Kelani became a public quoted company in 1973 and its shares are quoted on the Colombo Stock Exchange. Madanayake said that the Kelani share had traded during the year under review between a high of Rs. 112.50 and a low of Rs. 101. Net assets per share were up to Rs. 159.38 from Rs. 146.47 the previous year.

Despite the drop in net profits, a dividend of Rs. 4.50 a share against the previous year’s Rs. 3 has been proposed.

The company has a stated capital of Rs. 218 million and total assets of Rs. 5.65 billion against total liabilities of Rs. 2.17 billion.

He also reported that a capacity expansion program was currently in progress and a new cable manufacturing line installed the previous year was performing well. They were also exploring the possibility of investing in new state-of-the-art machinery with high speeds to further boost productivity.

"We also hope that the current political and economic conditions will remain steady," he said, "ensuring that consistent policies are in place to spur the economy to greater performance."

Lanka Olex Cables (Private) Ltd. with 75% of the company is the controlling shareholder. All other shareholders including the Bank of Ceylon and the ETF individually own less than 5%.

The directors of the company are: Messrs. Upali Madanayake (chairman), Suren Madanayake (deputy chairman), Mrs. NC Madanayake, Dr. Bandula Perera, Dr. Ranjith Cabral and Mahinda Saranapala (CEO).

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Piramal Glass Sri Lanka unit June net down, floods hit sales

ECONOMYNEXT – Piramal Glass Ceylon PLC said June 2017 quarter net profit fell 3.7% to Rs105 million from a year ago with sales slumping after floods triggered by heavy rains.

Total sales of the firm, a unit of India’s Piramal Glass, fell 17% to Rs1,403 million over the same period, according to interim results filed with the stock exchange.

Earnings per share were 11 cents.

“Amidst the adverse sales impact the company showed marked improvement in its profitability indicators,” a statement said.

The Gross Profit margin during the June 2017 quarter was 25% as compared to 18% in the same quarter a year ago with operating profit up to 15% from 9% the previous year.

“The incremental operational profit margin improvement was possible due to the reduction of trading sales,” the statement said.

Piramal Glass Ceylon’s relined furnace and expanded production line is now well stabilised and the domestic market is being supplied mainly with in house manufactured bottles which has replaced imported bottles, the company said.

Last year due to capacity constraints when the furnace was shut for renovation a considerable portion of the domestic sale was done through imports.

Even though the operating profit has increased the net profit after tax was subdued and pre-tax profit was affected due to the high interest cost resulting from the long term loan of Rs 3 billion borrowed for the funding of the project, the statement said.

“The operations during the quarter were impacted by the heavy floods which occurred during the latter part of May,” it said.

“Though the company premises itself was not affected access roads went under water hampering transportation of raw material and energy and the despatch of bottles.

“Several customers’ premises and operations were also affected due to the floods.”

Domestic sales stood at Rs. 1,084 million as against Rs. 1,346 million in the previous year, reflecting a fall of 19%.

“A dip in the overall domestic market was experienced which impacted the sales in all segments,” the company said.

Export sales for the quarter were at Rs. 319 million as against Rs. 338 million the previous year.

“The major decline in the export market was from export to India due to the changes in the tax structure with the announcement of GST implementation country wide,” the statement said.

“All other geographical locations namely Australia, USA and Canada have showed positive growth figures during the period under review.”

Piramal Glass Ceylon said it remained concerned the Ceylon Petroleum Corporation has not revised the rates of furnace oil for past four years although crude oil prices, which hit US$ 120 a barrel in 2011 had fallen below US$50, a more than 50% reduction in the price.

“Yet the corresponding furnace oil prices has not been addressed accordingly,” it said. “This state of affairs is affecting our competitiveness in the international market. The company has been requesting the government to introduce a formulae pricing based on international crude oil price which will be a fair transparent pricing mechanism.”

Sri Lanka Treasuries yields fall sharply across maturities

ECONOMYNEXT – Yields on Sri Lankan Treasury Bills fell across the board at an auction Wednesday with the 03-month bill yield down 12 basis points to 9.44 percent from 9.56 percent last week, the Central Banks public debt department said.

The yield on the 06-month bill fell 30 basis points to 9.71 percent at the auction from 10.01 percent last week, it said in a statement.

The one-year bill yield fell 19 basis points to 9.99 percent from 10.18 percent last week.

The debt office said it got bids worth Rs1.4.5 billion and accepted bids worth Rs27.3 billion.