Sri Lanka shares steady in lower volume; seen gaining on results

Feb 13 (Reuters) - Sri Lankan stocks ended steady on Friday as gains led by banks offset losses in telecom shares, though investors expect the index to continue its upward trend due to better earnings.

The main stock index, which fell 0.18 percent in early trade, ended up 0.06 percent at 7,335.51, hovering near its highest close since Jan. 29 hit on Feb. 11.

"There won't be big gains, but the slight upward trend will continue," said a stockbroker, adding that better quarterly earnings have lifted sentiment.

Shares in Hemas Holdings Plc rose 2.93 percent, while Commercial Leasing & Finance Plc advanced 4.65 percent.

John Keells Holdings Plc fell 1.06 percent and Dialog Axiata Plc lost 1.59 percent.

Foreign investors sold a net 42.33 million rupees ($318,750) worth of shares on Friday, but they have been net buyers of 1.54 billion rupees worth of shares so far this year. The bourse had net foreign inflows of 22.07 billion rupees in 2014.

Friday's turnover was 945.9 million rupees, much less than this year's daily average of 1.5 billion rupees. 

($1 = 132.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Textured Jersey eyes takeover of knit fabric manufacturer in India

Textured Jersey Lanka Plc, in which apparel giant Brandix owns 30%, is exploring prospects to acquire an Indian knit fabric manufacturer based in Visakhapatnam. In a filing to the Colombo Stock Exchange, Textured Jersey Lanka Plc (TJL) said it has decided to initiate an independent valuation and due diligence study for the purpose of looking at the feasibility of acquiring controlling stakes in Ocean India Ltd. and Quenby Lanka Prints Ltd.

This is in pursuance of TJL’s ongoing regional expansion and capability enhancement strategy. The decision to proceed with the acquisitions will be subject to findings of the study and ensuing negotiatioins between all parties concerned.

Brandix Lanka also has equity stakes in both Ocean India and Quenby Lanka. In this context TJL said, a board sub committee consisting of TJL Chairman Bill Lam, two independent directors Amitha Gooneratne and Prof. Malik Ranasinghe and Managing Director Sriyan de Silva Wijeyeratne, have been appointed to overseas the progress of the transaction.

The independent valuation will be conducted by Ernst & Young. Upon the conclusion of the study, if an agreement between all parties is successfully reached, further details including consideration and payment method will be disclosed to the market, the TJL filing to CSE said.

It also said completion of the transaction is also subject to approvals from the Board of Investment and shareholders of TJL.

Currently TJL has a technical services agreement with Ocean India that has allowed TJL’s management to familiarise itself with the operations of Ocean India since October 2013.

Quenby Lanka is a leading fabric printer based in Sri Lanka and is currently a strategic vendor to TJL and is located in Seethwaka Industrial Park in close proximity to TJL production facility. It has also developed a strong working relationship with TJL.

“Provided the decision is made to proceed with the two acquisitions the strong working relationship already established should help speed up the business integration process and potentially launch TJL to the next level of solution provision, innovation and regional growth thereby adding significant long-term value to its shareholders and reinforcing its leadership within the fabric industry,” TJL filing to the CSE added.
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Odel shines in 3Q; Ashok announces new plans

Odel PLC has reported a quarterly (3QFY15) turnover of Rs. 1.4 b from Rs. 1.38 b last year, taking the cumulative turnover to Rs. 3.7 b for the nine months as against Rs. 3.5 b in the comparative period.

Chairman Ashok Pathirage said a notable improvement in gross profit margins took place during the quarter to 40.2% from 36.5% in 3QFY14.

A decline in operational cost margins was also noted during 3QFY15 to 31.5% from 34.2% in the comparative quarter which consequently improved operating profit margins to 10.1% from 6.3%. cumulative operating profit (excluding other operating income) improved by 30.8% to Rs. 158.7 m whilst the same for the quarter reached Rs. 122.5 m from Rs. 31.5 m in the comparative quarter.

PAT for the nine-month period reached Rs. 144 m (Rs. 183.7 m in 1-3QFY15). However the quarter achieved a PAT growth of 130.7% to Rs. 106.2 m from Rs. 46.0 m in the comparative period.

“The most pressing objective right now is to extract the maximum pathway to synergise Softlogic Retail’s operations with Odel to boost efficiencies and bottom line performance,” Pathirage said.

“We are in the phase of reducing the overheads by synergising and consolidating our retail base by eliminating any cost-duplication or excess resources. Accomplishing this is seen as a key driver to deliver better EBITDA. The increase in activity levels and cost-sharing approach post consolidation has absorbed and mitigated fixed costs,” the Chairman added.

He said Odel has always been a favourite shopping centre for local as well as foreign customers. Odel attracts customers from both middle and high income categories selling a good mix of exclusive as well affordable quality range of products. Odel houses its own international apparel section. Mothercare and Dockers in addition to existing brands such as Nike and Levis were also placed at Odel in December 2014.

The company is keen to make available Mango, Charles & Keith and Giordano at Odel in the near future.

“We would also house many other leading local brands such as Avirate, Yoland Collections and Linen & Life. A detailed strategic redesigning of Odel’s interior is in progress. The new look will also enhance the recent premier brand additions at Odel retail points,” Pathirage said.

The Chairman said the company would also be constructing a premier shopping mall at Odel’s flagship store at Alexander Place, Colombo 7. The present Odel store would continue its operations with the mall being planned targeting most of the underutilised land base there.

“Top German designers and architects are developing the blue print of this mall. This mall will feature an extensive retail space to house some of the best known brands both locally and internationally to cater to local demands and international tourists,” Pathirage added.
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Sri Lanka shares down on profit-taking after rally

Feb 12 (Reuters) - Sri Lankan shares slipped from a near two-week high on Thursday, snapping a five-day winning streak, on profit-taking in large caps and blue chips.

The main stock index, which fell 0.65 percent in the early trade, ended 0.38 percent, or 28.02 points, weaker at 7,331.39, slipping from its highest close since Jan. 29.

"There was some profit-taking and negative impact also came from the Lanka IOC's bad results," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"Today's selling came in lower volumes and there was not much selling pressure. The buyers were on the watch, trying to get better price," Mathew said.

Lanka IOC Plc posted a 51.4 percent drop in its third-quarter net profit. The stock ended 8.48 percent weaker on Thursday.

Foreign investors bought a net 28.3 million rupees ($213,102) worth of shares on Thursday, extending net foreign inflows so far this year to 1.58 billion rupees. The bourse had net foreign inflows of 22.07 billion rupees in 2014.

Thursday's turnover was 1.03 billion rupees, less than this year's daily average of 1.52 billion rupees.

Shares in Ceylon Tobacco Co Plc fell 2.8 percent, while conglomerate John Keells Holdings Plc lost 1.05 percent. 

($1 = 132.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Aberdeen buys 15.3% stake in Vidullanka

Vidullanka Plc, a specialized company in the designing and construction of mini-hydro power projects has sold Rs. 73.3 million worth shares to Aberdeen Holdings at six rupees per share.

This transaction provides Aberdeen Holdings, a private family owned group of business, a share of 15.3%.The Colombo Stock Exchange filing stated that the shares were sold by T. Senthilverl on February 9.
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Aussie billionaire Packer in Sri Lanka's list of unwelcome people

By Esther Tanquitic-Misa

James Packer, Australia's fourth billionaire according to a list by Forbes, has been included in a list of unwelcome personalities in Sri Lanka, after he decided to quit plans of setting up a casino in the South Asian country.

Crown Resorts Ltd., the Australian casino company controlled by Packer, in a 2013 regulatory statement, had proposed to construct a five-star resort in the tropical island nation. It will have 450 hotel rooms and suites, gaming areas and restaurants. It will be located at Beira Lake in the centre of Colombo.

But Packer's Crown Group abandoned the $400 million development plan after the new government of Prime Minister Ranil Wickremesinghe removed the $1 billion tax concessions in 10-year tax breaks that were so generously extended by the previous regime which had envisioned Colombo turning into a regional gaming hub someday. "We need only good investors ... we don't want an economy relying on casinos," Wickremesinghe said in a statement released by his office. Wickremesinghe was appointed prime minister in January following the election of Maithripala Sirisena as president.

"Packer says he will not come. Who asked you to come?" the Sri Lankan prime minister added. "Please don't come — not in this lifetime."

The previous 10-year regime of Mahinda Rajapaksa had planned to put in casinos and hotel projects in Colombo to rejuvenate the economy of Sri Lanka, thus the grant of tax concessions to Packer's Crown Group. But Sirisena, Sri Lanka's new President dubbed the casino developments as "antisocial business concerns" and vowed to cancel whatever licences the previous administration had given.

Apart from the planned 450-room property of Packer's Crown Group, a $700 million complex developed by Sri Lanka's largest conglomerate by revenue, John Keells Holdings, was likewise affected.

The latter had announced it will proceed only with the hotel, not with the casino. 

Packer's project had been approved in December 2013. Construction however has yet to commence. "Crown Resorts respects the decision and on that basis the project would not be going ahead," a spokesperson for Packer's casino conglomerate said in a statement. (International Business Times Australia)
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First Capital’s 9-month after tax profit tops Rs. 1 b mark

First Capital Holdings PLC has recorded a profit after tax of Rs. 1.09 b for the nine months ended 31 December 2014, indicating a stable growth trajectory.

The company, which offers a range of investment banking products and services across the financial spectrum, saw an increase in profit after tax, in comparison to Rs. 262.9 m reported for the same period last year.

Commenting on the Group’s performance over the period under review, First Capital Holdings PLC Chief Executive Officer Dilshan Wirasekara said: “Strategic decisions and concentrated growth initiatives have enabled us to capture areas of advancement and build on our business footprint. We are both pleased and grateful that we have grown to gain the support and trust of our investor base.”

Leveraging on favourable macro-economic conditions, a decline in secondary market interest rates and research-based decision making, First Capital Treasuries, the Group’s Primary Dealer Unit, cemented its position as a frontrunner in the Non-Banking Primary Dealer segment. First Capital Treasuries realised trading gains of Rs. 905 m during the period under review – driving an increase from Rs. 145 m reported during 2013/14.

Funds under management saw a four-fold increase to Rs. 4.2 b, bearing testament to the unit’s progression during the period. The period under review concluded with the First Capital Wealth Fund establishing itself as the best performing fixed income Unit Trust fund in Sri Lanka. The Stock Broking and Margin Trading units also contributed positively towards the Group’s results during the period under review.

The Corporate Debt Unit mobilised Rs. 19 b in corporate debt securities, including the structuring and placement of Rs. 9.4 b listed debenture issues, earning a corresponding fee income of Rs. 112 m (2013/14 – Rs. 26 m). First Capital surpassed competitors to become the leading listed debenture manager as well as the leading intermediary in the secondary market for listed debentures via the DEX.

First Capital Treasuries poised itself to take advantage of the dynamic financial environment by issuing a listed debenture of Rs. 500 m in January 2015, improving its long term capital base (Tier II). The group’s stockbroking arm, First Capital Equities, became a fully owned subsidiary in November 2014.

Reaffirming the group’s commitment to its client base and long-term strategic priorities, Wirasekara concluded: “Our results confirm that our development initiatives and decision making have been a success. We hope to make the most of our current position by strengthening the company in order to attain our vision of becoming Sri Lanka’s leading investment bank. We are ideally placed to sharpen our competitive edge further and deliver consistent value for our clients.”

For nearly 30 years, First Capital Holdings PLC has been a leading investment bank operating in Colombo, Matara and Kandy. The company offers a full range of investment banking products and services. First Capital Holdings PLC has a credit rating of A-.
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