Sri Lankan shares end down ahead of govt policy statement

Reuters: Sri Lankan shares ended weaker on Monday, from their more than three-week closing high hit in the previous session, as investors turned cautious ahead of the government's policy statement next month.

The bourse touched a three-week high on Friday after investor sentiment was boosted with Sri Lanka raising $1.5 billion in its first sale of dual-tranche eurobonds last week, as over $5.5 billion in offers for the issue showed that global investors were bullish about prospects of the $82 billion economy.

After the bond deal, yields in local T-bill auction fell along with the 364-day T-bill rates at Wednesday's auction for the first time since April 15.

The benchmark Colombo stock index in thin trade ended down 0.11 percent or 6.88 points at 6,415.81, slipping from its highest since June 21 hit on Friday. It gained 0.9 percent last week.

"There was nothing much happening today. Probably, investors were awaiting the Prime minister's policy statement to see the direction," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policies in August, said new central bank chief Indrajith Coomaraswamy last week.

Turnover stood at 357.5 million rupees ($2.46 million), well below this year's daily average of around 738.3 million rupees.

Overseas investors, who were net sellers of shares worth 4.92 billion rupees so far this year, were net buyers of equities worth 134 million rupees on Monday.

Shares in Lanka ORIX Leasing Company Plc fell as much as 2.72 percent while the biggest-listed lender Commercial Bank of Ceylon Plc lost 0.77 percent.

($1 = 145.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

Lotus Renewable to make mandatory offer for Browns Hydro Power

Lotus Renewable Energy (Private) Limited says it will make a mandatory offer
to buy shares of Browns Hydro Power PLC after purchasing 72.13 percent shares in the company.

The company purchased 73,690,212 shares at seven rupees per share on July 13, leading up to the trading floor announcement under Rule 7 of the Company Take-overs and Mergers Code.

Lotus Renewable Energy, incorporated in February this year, said it offers to purchase from the shareholders of Browns Hydro the remaining 30,397,900 issued shares at a price of seven rupees per share.

Dr T. Senthilverl the holder of 13,323,770 shares in Browns Hydro has informed the Company in writing that he would not be accepting any offer to purchase his shares, a statement filed with the Colombo Stock Exchange said.

Last week, LOLC Securities informed the Colombo Stock Exchange that their client Browns Power Holdings (Private) Limited, fully owned by Browns Capital PLC, had purchased 60.3 percent of Agalawatte Plantations PLC on 14th July 2016 from Mackwood Plantations (Pvt) Ltd for 304 million rupees, in a separate transaction.

Sri Lankan shares end at over 3-week closing high in thin trade

Reuters:Sri Lankan shares ended higher on Friday at a more than three-week closing high, with heavyweights such as Ceylon Tobacco Company Plc and John Keells Holdings Plc helping the index gain.

Sentiment was also boosted after Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds earlier this week, as over $5.5 billion in offers for the issue showed global investors were bullish about the prospects of the $82 billion economy.

After the bond deal, yields in local T-bill auction fell along with the 364-day T-bill rates at Wednesday's auction for the first time since April 15.

The benchmark Colombo stock index in a thin-volume trading session ended up 0.32 percent or 20.79 points at 6,422.69, its highest since June 21. It gained 0.9 percent this week.

"Today, the market is up mainly due to domestic investors. In the past few days, the market went up with foreign buying after the sovereign bond was oversubscribed, but now the foreigners are on the sideline," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

"Now investors are getting in to a side and seeing the direction and awaiting to see government policy statement."

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policies in August, new central bank chief, Indrajith Coomaraswamy said last week.

Turnover stood at 555.9 million rupees ($3.82 million), less than this year's daily average of around 741.2 million rupees.

Overseas investors, who were net sellers of shares worth 5.05 billion rupees so far this year, were net buyers of equities worth 24.7 million rupees on Friday.

Shares in Ceylon Tobacco Company Plc rose as much as 0.82 percent while Commercial Leasing and Finance Plc climbed as much as 5.26 percent and conglomerate John Keells Holdings Plc gained as much as 2 percent.

($1 = 145.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

SL’s largest cement producer renews calls for level playing field

The country’s largest cement manufacturer Tokyo Cement Company (Lanka) PLC (TKYO) renewed its calls for the government to create a level playing field for the cement industry, which is being taken advantage of by importers due to unbalanced policies. ‘‘An unequal playing field has been created through the current national policy that imposes price controls on cement, while allowing unlimited, duty-free entry for imported varieties,” TKYO Managing Director S.R. Gnanam said. A maximum retail price of Rs.870 per bag of cement was set by Finance Minister Ravi Karunanayake as a populist policy in the 2015 interim budget when the prevailing prices were around Rs.930-940. He also instructed the state-owned cement factories to sell a bag at Rs.760-770. 

Gnanam noted that with the depreciation of the rupee over the past financial year, the cost of importing clinker and other raw material required to manufacture cement has gone up. “Domestic cement manufacturers could not adjust the retail prices to reflect the cost increase. Imported cements on the other hand, did not face such a contingency as these cements are not manufactured in Sri Lanka and do not face domestic conditions,” he said. 

Gnanam noted that the importers do not have any capital investment costs or manufacturing, environmental and labour standards imposed on domestic manufacturers, which further worsen the problem. However, the cement price control may have contributed to a sharp increase in household construction. 

“The demand for cement maintained an upward trajectory on the back of private sector demand for concrete in the Western Province and the cement demand by households in the regions, contributed directly towards our top line growth,” Gnanam said. He noted that there was a 7-10 percent increase in demand for the household sector, even from the North and East. He added that the demand for cement reached six million tonnes in 2015/16 compared to 5.4 million tonnes in 2014/15. However, Gnanam reiterated the need to reintroduce market forces. “Given the large inflows of imports, supply shortages are unlikely in the future. 

Therefore, the market forces should be allowed to set cement prices and not be artificially propped up to benefit foreign manufacturers that are not accountable under national regulations,” he said. The current government has been highlighting the need to empower local industries. Further, while most other industries benefit from protectionism, a policy which the current regime had promised to remove but had failed to do, the cement industry seems to be a victim of the other extreme of the trading spectrum. - See more at: http:/

www.dailymirror.lk

Daya Group in takeover bid on Blue Diamonds?

In an interesting development, the Colombo bourse was yesterday informed of the purchase of shares in Blue Diamonds Jewellery Worldwide PLC (BLUE) in excess of 10 percent by Promodya Manjaree Kilittuwa Gamage, who is believed to be the daughter of Primary Industries Minister Daya Gamage. A stock market filing by SC Securities said its client P.M.K. Gamage as at July 12, 2016, controlled 22,395,344 shares of BLUE, which represents 10.8 percent of the issued shares of the company. However, market sources said P.M.K. Gamage, who is believed to be acting in concert with Bimputh Finance PLC—a Daya Group company— may have held more than 15 percent of Blue Diamonds as at yesterday (July 14). As at March 31, 2016, P.M.K. Gamage held 2.77 percent of BLUE as the fourth single largest shareholder of BLUE and featured as the seventh largest shareholder of Bimputh Finance PLC with a stake of 7.57 percent. 

The Securities and Exchange Commission has currently launched an investigation into Blue Diamonds of possible misappropriation of shareholder funds. BLUE currently doesn’t have a controlling shareholder, which makes it an open candidate for acquisitions. Chinese national Xia Liqiang, who currently functions as BLUE Chairman, holds 15.46 percent stake as the single largest shareholder of the company. He also holds another 10.56 percent stake through V.V.S. Lanka Holdings. Informed market sources said Daya Group has recently shown interest towards investing in a gem-cutting venture.

www.dailymirror.lk

Hayleys Fibre to dispose 6-acre property for Rs.420mn to Alumex

Hayleys Fibre PLC, a unit of the Hayleys group, has decided to dispose of its six-acre freehold property in Ekala for a consideration of Rs.420 million to Alumex PLC, another Hayleys group company, a disclosure made by the company to the Colombo Stock Exchange (CSE) said. For this purpose, the company has called for an Extraordinary General Meeting on July 27 to obtain the approval from the shareholders as the transaction value exceeds 50 percent of the total value of the assets of the company – a major transaction under the Companies Act. Further, the CSE listing rules also require the shareholder nod for the transaction as its value exceeds one-third of total assets. As of March 31, 2016, Hayleys Fibre had an asset base of Rs.583.9 million. 

The related party transaction will result in a thumping Rs.233.1 million profit as the carrying value of the said property in the books of Hayleys Fibre is Rs.186.9 million. The land, which in full extent, six acres, one rood and 7.9 perches, situated on the Minuwangoda Road, Ekala Road, Ja-Ela, had not been utilized for the company’s core business and rented out to third parties. Hayleys Fibre, a manufacturer and exporter of traditional coir products, said it would invest the sales proceeds in its core business to generate adequate returns. 

For the year ended March 31, 2016, the company made a net profit of Rs.16.4 million with an earnings per share of Rs.2.05. “The company is currently reviewing opportunities in business integration and consolidation thereof,” the disclosure said. The Hayleys Fibre share was trading at Rs.91.70, up Rs.2.90 or 3.27 percent yesterday. The buyer, Alumex PLC on the other hand, will use the property for its business expansion. As of March 31, 2016, Hayleys PLC had a 65 percent stake in Hayleys Fibre and 51 percent in Alumex PLC. www.dailymirror.lk

Fitch rates Sri Lanka’s USD Bond ‘B+(EXP)’

(LBO) – Fitch Ratings has assigned Sri Lanka’s upcoming US dollar-denominated bonds an expected rating of ‘B+(EXP)’.

The ratings agency said the expected rating is in line with Sri Lanka’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B+’ with a Negative Outlook.

“The rating would be sensitive to any changes in Sri Lanka’s Long-Term Foreign-Currency IDR,” Fitch Ratings said.

“In February 2016, Fitch downgraded Sri Lanka’s Long-Term Foreign-Currency IDR and Local-Currency IDR to ‘B+’ with a Negative Outlook.”