Sri Lankan shares hit over 2-week low

Reuters: Sri Lankan shares extended losses to a fifth straight session on Monday as investors sold blue-chip stocks such as John Keells Holdings Plc after weak first-quarter numbers from the conglomerate dampened sentiment.

Conglomerate John Keels Holdings Plc after market hours on Thursday reported a 26 percent year-on-year fall in quarterly net profit.

The stocks, bond and foreign exchange markets were closed on Friday for a public holiday.

The Colombo stock index ended 0.41 percent weaker at 6,128.95, its lowest close since July 12, extending its year-to-date loss to 3.8 percent.

The index dropped 0.47 percent last week, its first weekly fall in three.

Turnover stood at 169.4 million rupees ($1.06 million), well below of this year’s daily average of 859.4 million rupees.

“The market came down manly on JKH as the earnings came down,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings Plc.

Shares of Keells fell 1.4 percent on Monday.

“Because the blue-chips are showing negative results, most of the investors are on the sidelines.”

Foreign investors bought equities net worth 1.4 million rupees on Monday. But they have been net sellers of 2.5 billion rupees worth of equities so far this year.

A downward revision in economic growth estimate earlier this month by the central bank has hurt sentiment, analysts have said.

Economic growth in 2018 is likely to be between 4 percent and 4.5 percent, falling short of an earlier estimate of 5 percent, Central Bank Governor Indrajit Coomaraswamy said earlier this month.

Shares in Hatton National Bank Plc ended 1.3 percent lower while Caltex Lubricant Lanka Plc closed 5.3 percent down and Sampath Bank Plc fell 1 percent. 

($1 = 159.5500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

Sri Lankan shares fall for fourth straight session

Reuters: Sri Lankan shares extended their losses to a fourth straight session on Thursday as foreign investors sold blue-chip stocks such as John Keells Holdings Plc and Hemas Holdings Plc.

The Colombo stock index ended 0.14 percent weaker at 6,153.99, its lowest close since July 16.

The index dropped 0.47 percent this week, its first weekly fall in three, bringing its year-to-date losses to 3.4 percent.

Turnover stood at 430.8 million rupees ($2.7 million), half of this year’s daily average of 864.5 million rupees.

“The market is slowly coming down on blue-chip selling and is back to its support level of 6,100 again,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings Plc.

Foreign investors sold equities net worth 169.6 million rupees on Thursday, extending the year-to-date net foreign outflows to 2.5 billion rupees.

A downward revision in economic growth estimate earlier this month by the central bank has hurt sentiment, analysts have said.

Economic growth in 2018 is likely to be between 4 percent and 4.5 percent, falling short of an earlier estimate of 5 percent, Central Bank Governor Indrajit Coomaraswamy said earlier this month.

Shares of conglomerate John Keels Holdings Plc fell 1.9 percent, while Hemas Holding Plc ended 3.1 percent lower. Biggest listed lender Commercial Bank of Ceylon closed 1.5 percent down and Sri Lanka Telecom Plc lost 2.9 percent.

The stocks, bond and foreign exchange markets are closed on Friday for a public holiday and will resume trading on Monday. 

($1 = 159.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Amrutha Gayathri)

Sri Lanka's Union Bank June net up 7-pct, weighed down by new tax rules

ECONOMYNEXT - Sri Lanka's listed Union Bank of Colombo said profits grew 7 percent from a year earlier to 134.3 million rupees in the June 2018 quarter on improving interest margins despite a sharp rise in tax costs.

"Profits were adversely impacted due to the changes in the tax regulations subsequent to the New Inland Revenue Act enforcement," the bank said in a statement filed with the stock exchange.

The bank reported earnings of 12 cents a share. Earnings were 25 cents a share for the six months to end June 2018 with net interest income growing 17 percent from a year earlier to 2.2 billion rupees in the six month period, interim results filed with the Colombo Stock Exchange showed.

Union Bank closed 10 cents lower to 12.30 rupees on Tuesday.

Income tax expenses grew 131 percent to 103.6 million rupees.

"The effective tax rate for the June quarter increased significantly in comparison to the previous quarter. This is mainly due to the withdrawal of tax exemptions on profits made out of Sri Lanka Development Bonds and corporate debt instruments invested prior to the tax changes and withdrawal in the notional tax credits," the bank said in a statement accompanying the interim results.

The bank saw interest income grow 17 percent from a year earlier to 3.4 billion rupees in the June quarter with interest expenses growing a slower 14 percent to 2.3 billion rupees, leading to a 22 percent growth in net interest income to 1.1 billion rupees.

"Both net interest margins and spreads depicted an improvement. This was despite the withdrawal of the notional tax credit which bears a direct impact on the interest income earned on the government securities portfolio carried prior to the change in the tax regulations," the bank said.

The bank's interest margin improved to 3.06 percent at end June 2018, up from 2.87 percent at end December.

Net fee and commission income grew 16 percent from a year earlier to 217.9 million rupees in the June 2018 quarter.

Provisioning for bad loans increased 84.5 percent to 109.4 million rupees.

Personnel expenses grew 11 percent to 522.6 million rupees and depreciation charges fell 1 percent to 103.8 million rupees.

Other expenses grew 17 percent to 459.6 million rupees.

The bank reported a loss of 80.9 million rupees from revaluating financial assets, compared to a 350.4 million gain a year earlier.

The bank's loan book expanded 3 percent from a year earlier to 81.2 billion rupees as at end June 2018.

Public deposits fell a marginal 0.18 percent to 76.6 billion rupees.

The bank reported a Basel III Tier 1 Capital Ratio of 18.93 percent at end June 2018, higher than the 7.875 percent minimum regulatory requirement.

Total capital adequacy was 18.93 percent, above the 11.875 percent Basel III minimum requirement.

Gross non-performing loans increased to 3.18 percent of total loans at end June 2018, compared to 2.69 percent at end December 2017.

Sri Lanka's Ceylon Cold Stores June quarter net falls 65-pct

ECONOMYNEXT - Profits of Sri Lanka's listed Ceylon Cold Stores fell 65 percent to 238.9 million rupees in the June 2018 quarter from a year earlier, with a sugar-tax hurting manufacturing sales and falling margins and soaring finance costs hitting profits at its Keells supermarket chain, interim results showed.

The company, which makes fizzy drinks, juices and ice creams under the popular Elephant House and other brands, and operates the Keells supermarket chain of about 80 outlets, reported earnings of 2.51 rupees a share in the quarter, a Colombo Stock Exchange filing showed.

The stock was trading 1 rupee lower at 925 rupees on Wednesday. Ceylon Cold Stores is a unit of listed John Keells Holdings.

In the June quarter, revenue grew 13 percent from a year earlier to 13.9 billion rupees, with cost of sales growing at faster 19 percent to 12.7 billion rupees, resulting in a 25 percent contraction of gross profits to 1.2 billion rupees.

Selling and distribution costs rose 16 percent to 549 million rupees, and administration expenses increased 17 percent to 426 million rupees.

Other operating expenses rose 30 percent to 227.9 million rupees.

Net finance costs rose 236 percent to 40.2 million rupees, as finance income fell 26 percent to 23.4 million rupees and finance costs soared to 63.6 million rupees in the June 2018 quarter, up from 2 million rupees a year earlier.

Outstanding bank overdrafts amounted to 4.97 billion rupees at end June 2018, up 61 percent from the previous March quarter.

Revenue from manufacturing fizzy drinks and ice creams fell 7.8 percent from a year earlier to 3.1 billion rupees. Net finance costs rose 104 percent from a year earlier 742 thousand rupees.

Profits of the manufacturing segment declined 38 percent to 434.3 million rupees.

The Keells supermarket chain saw revenue grow 21 percent from a year earlier to 10.9 billion rupees in the June 2018 quarter. Net Finance costs increased 412 percent from a year earlier to 39.5 million rupees.

Profits of the retail business declined 60 percent to 95.6 million rupees.

The company has been reducing the sugar content of most of its drinks and cold-confectionery goods to meet regulatory standards over the last two years.

However, falling sales due to a sugar tax has resulted in the company deferring investments on a new bottling plant, with the current facility operating under capacity, the company said.

The sugar tax resulted in an average 33 percent increase in prices of its portfolio in 2017/18.

Ceylon Cold Stores is going ahead with 4.2 billion ice cream manufacturing plant, hoping to achieve better margins from impulse buying by consumers.

The company is also rebranding its supermarkets to Keells and refurbishing all outlets. It's investing in a 225,000 square foot centralized distribution centre.

Sri Lankan shares fall for third straight session in dull trade

Reuters: Sri Lankan shares extended fall for a third straight session on Wednesday as investors sold blue-chip shares, but foreign buying helped limit losses.

The Colombo stock index ended 0.34 percent weaker at 6,162.49. The index, which is down nearly 3 percent in the year so far, had on Friday recorded its highest close since June 29.

Turnover stood at 161.4 million Sri Lankan rupees ($1.01 million), less than a third of this year’s daily average of 873.1 million rupees.

“Today the market came down on blue-chip selling in dull trade,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings Plc.

“Investors are waiting to see the direction and the good sign is we are seeing net foreign buying for the fifth straight day.”

Foreign investors bought equities worth net 4.3 million rupees ($26,959.25) on Wednesday, but they have been net sellers of stocks worth 2.4 billion rupees so far in the year.

A downward revision in economic growth estimate earlier this month by the central bank has hurt sentiment, analysts have said.

Economic growth in 2018 is likely to be between 4 percent and 4.5 percent, falling short of an earlier estimate of 5 percent, Central Bank Governor Indrajit Coomaraswamy said earlier this month.

Shares in Ceylon Tobacco Company Plc fell 9.5 percent, while conglomerate John Keels Holdings Plc ended 0.9 percent down, biggest listed lender Commercial Bank of Ceylon closed 1.0 percent down, Dialog Axiata Plc lost 0.1 percent and Hemas Holding Plc ended 1.3 percent lower. 

($1 = 159.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

Multi Finance to top up capital with Rs200mn private placement

LBO - Central Bank of Sri Lanka (CBSL) registered finance company Multi Finance is to increase its capital base by way of private placement.

The Colombo Stock Exchange listed company is to raise Rs200mn at Rs13/share which is approximately the net asset value of the company. The shares will be placed with controlling shareholder Fairway Holdings. Fairway is one of the largest property developers in Sri Lanka controlled by lawyer cum property developer Hemaka De Alwis.

In a stock exchange announcement released today, the purpose of the capital raise is to: ” meet the core capital requirement of Rs1bn in terms of section 3.2 of Finance Companies Direction No.1 of 2013 to comply with the Finance Companies minimum core capital direction No.2 of 2017.”

The issue is subject to approval by the CSE, SEC and shareholders at a general meeting.

Multi Finance finished last year close to breakeven and is supporting a small balance sheet of just 2 times equity. Deposits are a relatively small Rs650mn, however this is up 75% from 12 months prior.

Nation Lanka Finance squeaks out a profit in the June quarter, deposits at Rs7.7bn

LBO - Colombo Stock Exchange listed company Nation Lanka Finance PLC (CSF) has turned a profit in the quarter ended June 30, 2018. The Central Bank of Sri Lanka (CBSL) registered finance company is the first listed finance company to report earnings for the quarter ended 20 days ago.

The company reported a profit of Rs19mn for the June 2018 quarter vs. a loss of Rs53mn in the same quarter in 2017.

The group maintains a significant balance sheet of Rs9.7bn in assets on a relatively small Rs619mn in equity. Total deposits from customers are relatively large at Rs7.7bn, up Rs300mn from the prior year quarter.

The company has reported all regulatory capital and regulatory liquidity levels above the required minimums, however non performing loans are high at 14%.

The share price of the company last traded close to its net asset value of Rs80 cents per share, a much higher valuation that high quality companies in the sector.

Registered finance companies in Sri Lanka have had a troubled history with many institutions going bust and deposit holders holding the bag. As the quarterly listed finance company results are reported, LBO will aim to highlight for the public how these companies are performing, and any red flags that may appear.