Sri Lankan stocks gain slightly on expectation of better earnings

(Reuters) - Sri Lankan stocks rose for a fourth straight session on Thursday to their near three-year closing high on expectation of strong corporate earnings, while declining interest rates and continued foreign buying also buoyed sentiment.

The main stock index ended 0.18 percent, or 12.06 points, firmer at 6,813.90, its highest close since Sept. 20, 2011. It rose 6.82 percent in July, extending the year-to date gain to 15.24 percent.

"Earning hopes are still driving the market. Lower interest rates and foreign buying also help," a stockbroker said on condition of anonymity.

"We still do not see any overheating because there is holding capacity and healthy credit in the system."

Brokers said the market expects better earnings for the June quarter after market heavyweight and bellwether John Keells Holdings' upbeat results.

Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said. Yields on treasury bills edged down further by 7-10 basis points at a weekly auction on Wednesday.

The International Monetary Fund urged Sri Lanka on Wednesday to keep key interest rates on hold for the near term and said a cautious approach is warranted.

Turnover was 1.05 billion rupees ($8.06 million), around this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 112.7 million rupees worth of shares, extending the year-to-date net foreign inflow in shares to around 11 billion rupees.

The index has been in the overbought region since July 3, as local investors moved funds from fixed income to riskier assets because of low interest rates and foreign buying.

Gains were led by insurance firm Union Assurance, which jumped 11.54 percent to 145 rupees after Japan-based Fairfax Financial Holdings Limited announced the signing of a share purchase agreement to acquire 78 percent of the company. 

($1 = 130.2000 Sri Lankan Rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka inflation accelerates to 3.6-pct in July

July 31, 2014 (LBO) - Sri Lanka's consumer prices rose 3.6 percent in the 12 months to July 2014, with inflation accelerating from 2.8 percent in June, official data showed.

July 31, 2014 (LBO) - Sri Lanka's consumer prices rose 3.6 percent in the 12 months to July 2014, with inflation accelerating from 2.8 percent in June, official data showed. During the month the Colombo Consumer Price Index jumped 1.0 percent on top a 1.1 percent rise in June, the state statistics office said.

Since December the index had risen 3.8 percent or higher than the 12 month inflation.

The increase came from food prices which were up 2.1 percent during the month on top of a 2.4 percent rise a month earlier. The food sub-index was up 5.1 percent during the past 12 months.

Non foods however were up only 2.4 percent.

Sri Lanka's credit growth has been slow in the past year with pawning loans in particular shrinking, but the government has been borrowing abroad and excess liquidity has been high in money markets.

Meanwhile speculative activity has also started in the Colombo Stock Exchange.

Sri Lanka's Central Bank wants to keep inflation in mid single digits this year.

The International Monetary Fund said yesterday credit has been slow, but inflation has to be watched and the Central Bank should be prepared to raise rates if necessary.

Sri Lanka stocks close up 0.2-pct

July 31, 2014 (LBO) - Sri Lanka's stocks closed 0.18 percent higher Thursday amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 12.06 points higher at 6,813.90, up 0.18 percent. The S&P SL20 closed 4.33 points higher at 3,772.51, up 0.11 percent.

Turnover was 1.05 billion rupees, up from 973.71 million rupees a day earlier with 97 stocks closed positive against 98 negative.

Access Engineering closed 10 cents lower at 25.50 rupees with an off-market transaction of 218.47 million rupees changing hands at 24.40 rupees per share contributing 21 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 39 percent of the turnover.

Guardian Capital Partners closed 4.70 rupees higher at 43.20 rupees, attracting most number of trades during the day.

Foreign investors bought 202.28 million rupees worth shares while selling 89.63 million rupees worth shares.

Union Assurance closed 15.00 rupees higher at 145.00 rupees and CT Holdings closed 5.30 rupees higher at 144.00 rupees, contributing most to the index gain.

Sri Lanka Telecom closed 50 cents higher at 54.10 rupees and Dialog Axiata closed 10 cents lower at 10.80 rupees.

Ceylon Tobacco Company closed 2.10 rupees lower at 1,148.30 rupees and Distilleries closed 1.80 rupees lower at 203.00 rupees.

Union Assurance to divest a 78% in its General Insurance

http://www.cse.lk/cmt/upload_cse_announcements/1051406775391_.pdf

Haycarb records turnover Rs. 2.4 Billion and PBT of Rs. 170 Million for Q1 2014/15

http://www.cse.lk/cmt/upload_report_file/494_1406775159741.pdf

Capital market gets boost with launch of first-ever Ceylon Dollar Bond Fund

By Shabiya Ali Ahlam / Pix by Upul Abayasekara

* New initiative licensed by SEC to help attract foreign investments into Sri Lanka



The capital market yesterday saw the launch of the first-ever ‘Ceylon Dollar Bond Fund,’ which will further help attract foreign investments into Sri Lanka.

Conceptualised by Ceylon Asset Man-agement (CAM), the dollar bond is the first to be licensed by the Securities and Exchange Commission (SEC). The dollar denominated unit trust has been licensed with the approval of the Central Bank and the Ministry of Finance.

With the launch of such a product considered a giant step towards internationalising the local investment industry, which has thus far been restricted to rupee investments, foreign investors and BOI companies are now able to invest in the high-yielding Sri Lankan dollar bond, avoiding exposure to currency risk. The bond, for which Deutsche Bank AG is the trustee and custodian, is rated by Fitch Ratings.

Regulated by the SEC Act, Unit Trust Code, Regulations Directives and Guidelines issued from time to time, the product offers an attractive US Dollar net return of approximately 4% to 5% per annum, making it attractive for investments is the absence of barriers to entry and repatriation.

The important initiative was launched at a ceremony chaired by SEC Chairman Dr. Nalaka Godahewa as the Chief Guest.

Calling the CDBF a revolutionary product, Dr. Godahewa said: “The SEC has been ambitious about building the capital market but there have been some issues when launching new products. The lack of infrastructure has been a barrier. To overcome such we need innovative products, similar to the CBDF, to be introduced. If we want to make the capital market a game changer in the development in the economy, we need more companies to aggressively look at bringing out innovative products. That is what will help us go forward.”

CAM Managing Director Dulindra Fernando told the ceremony that the bond is for US Dollar investors who wish to achieve capital appreciation, income growth over a period of time and targets foreign institutions along with BOI-approved companies in Sri Lanka and foreign retail investors.

According to him, the open-ended fund allows withdrawal at any given time and investment without the requirement of a Securities Investment Account (SIA). The minimum investment for the fund is $ 1,000.

However, he pointed out that although the product has been packaged to make Sri Lanka look attractive, bringing it up to scale remains a challenge.

The dollar bond fund is expected to assist enhance current investor base of the local unit trust industry and enable benefits of dollar investment scale which was previously limited to Sri Lankan Rupee.

Sharing the benefits the CDBF brings to Sri Lanka, CAM Director Michael Preiss pointed out that while the product will improve access to international capital, it also helps in terms of name recognition for Sri Lankan issuers.

“The CDBF will assist in the improvement of liquidity and yield curve for Sri Lankan bonds on the Singapore Exchange (SGX) and will lower the borrowing cost for future Sri Lankan Dollar issuers. Also to some extent the rupee will benefit from the CDBF as it allows investors from around the world to participate,” he added. Ceylon Asset Management currently manages the Ceylon Income Fund which is rated ‘A-‘, the Ceylon Gilt Edged Fund rated ‘AAA’ by Fitch Ratings, and three equity index funds, Ceylon Index Fund, Ceylon Tourism Fund and Ceylon Financial Sector Fund.
www.ft.lk

Odel reports revenue growth of 13.5 % in first quarter

Odel PLC has reported sales of Rs 1,096 million for the first quarter of 2014-15, an increase of 13.5 per cent over the corresponding quarter of the previous year.

Gross profit for the three months ending 30th June 2014 amounted to Rs 449.5 million, a growth of 12%, the Group said in a filing with the Colombo Stock Exchange. 

However, higher administrative costs mainly due to increased rent and employee costs together with increased finance costs impacted profitability. The bottom line was further impacted with a drop in other investment income in a low interest rate environment resulting in a marginal profit for the quarter. 

In the quarter under review the company made an investment of Rs 800 million to purchase land adjoining its flagship store at Alexandra Place to further strengthen its retail footprint.
http://www.cse.lk/cmt/upload_report_file/960_1406712432763.pdf

Sri Lankan stocks up on expectation of better earnings

(Reuters) - Sri Lankan stocks rose on Wednesday to a near three-year closing high on expectation of strong corporate earnings after market heavyweight John Keells Holdings' upbeat results, while lower interest rates also helped sentiment.

The main stock index ended 0.26 percent, or 17.57 points, higher at 6,801.84, its highest close since Sept. 20, 2011. It has gained 6.6 percent so far this month.

"Earning prospects are good and the market will continue to run on earning hopes though some expect a correction," said a stockbroker asking not to be named.

Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said. Yields on treasury bills edged down further by 7-10 basis points at a weekly auction on Wednesday.

The International Monetary Fund urged Sri Lanka on Wednesday to keep key interest rates on hold for the near term and said a cautious approach is warranted.

The global lender said the central bank should be ready to raise policy rates "with economic activity and private credit growth on the rise, while there was also an opportunity for a cut in the rates that might benefit the investment environment and because of the current low inflation of below 5 percent.

Turnover was 973 million rupees ($7.47 million), less than this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 151.2 million rupees worth of shares, extending the year-to-date net foreign inflow in shares to 10.85 billion rupees.

The index has been in the overbought region since July 3, having risen 15.04 percent so far this year as local investors moved funds from fixed income to riskier assets because of low interest rates.

Shares of Ceylon Tobacco Company Plc, which mainly moved up the index, jumped 4.48 percent to 1,150.40 rupees, while Dialog Axiata Plc rose 0.93 percent to 10.90 rupees.

Conglomerate John Keells Holdings Plc, which posted a 35 percent growth in its June-quarter profit, fell 0.42 percent to 237 rupees. Analysts said investors sold the stock, saying it was overheated. 

($1 = 130.2000 Sri Lankan Rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka 6-month Treasuries yield plunge to four decade lows

July 30, 2014 (LBO) - Sri Lanka's three and six month Treasuries yields have dropped below the overnight cash withdrawal policy rate, plunging to levels not seen since the mid 1970s, official data showed.

The 6-month yield dropped 7 basis points to 6.47 percent at Wednesday's auction to three ticks below the 6.5 percent overnight cash withdrawal window rate.

The 3-month rate fell 07 basis points to 6.47 percent. The 3-month auction yield dropped to 6.5 percent on July 02 and to 6.49 percent on July 09, data from the state debt office showed.

The 12-month rate 10 basis points to 6.58 percent.

Excess liquidity from dollar purchases by the Central Bank has driven interest rates lower and but banks can deposit cash overnight at 6.5 percent at the standing 'repo' window of the Central Bank.

According to official Central Bank data the 3-month Treasury bill rate was last seen at 5.0 percent in 1976, when a lender of last resort 'bank rate' was 6.5 percent.

At the time there were no auctions to transmit market signals and most Treasury bills outstanding was bought by the Central Bank leading to forex shortages and the worst exchange controls seen in the country's history.

In 1977 the 3-month yield was raised to 9.0 percent, official records show. Amid heavy deficit spending, oil subsidies, war, money printing and ensuring balance of payments crises, the three months yield then topped 20 percent at time on ensuing years.

But in 2014 weak credit has put upward pressure on the currency and the Central Bank is withdrawing liquidity instead of injecting cash (printing money). The policy rate for injecting money is now at 8.0 percent.

Similar situations were seen after balance of payments crisis in 2001 and 2009, with better budgeting, market priced energy and foreign capital inflows.

Available records show Sri Lanka's Treasuries yields also fell to around 7 percent in 2010 with the 6-month yield at 6.95 percent on September 07.

In 2003 also Treasuries rates touched 7 percent with the 12-month yield dropping to 6.98 percent on November 07.

In 2003 measured consumer inflation was near zero or lower until the Janatha Vimukthi Peramuna, a faction of Sri Lanka's elected ruling class through its 'removing the plug' theorem pushed the country into fuel subsidies and money printing leading to near 20 percent inflation and currency depreciation in 2004.

Sri Lanka shares close up 0.3-pct

July 30, 2014 (LBO) - Sri Lanka's shares closed 0.26 percent higher on Wednesday with Ceylon Tobacco Company gaining amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 17.57 points higher at 6,801.84, up 0.26 percent. The S&P SL20 closed 6.75 points higher at 3,768.18, up 0.18 percent.

Turnover was 973.71 million rupees, up from 493.10 million rupees last Monday with 87 stocks closed positive against 98 negative.

Amana Bank closed flat at 5.70 rupees with two off-market transactions of 160.71 million rupees changing hands at 7.50 rupees per share contributing 16 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 29 percent of the turnover.

Fresh entrant Lucky Lanka Milk Processing non-voting closed 60 cents higher at 3.60 rupees and its ordinary shares closed flat at 6.00 rupees, attracting most number of trades during the day.

Foreign investors bought 254.96 million rupees worth shares while selling 103.80 million rupees worth shares.

Ceylon Tobacco Company closed 49.30 rupees higher at 1,150.40 rupees, contributing most to the index gain.

Dialog Axiata closed 10 cents higher at 10.90 rupees and Sri Lanka Telecom closed 1.00 rupee lower at 53.60 rupees.

Finlays Colombo closed 17.50 rupees lower at 320.90 rupees and John Keells Holdings closed 1.00 rupee lower at 237.00 rupees.

JKH’s W0022 warrants closed flat at 65.00 rupees and its W0023 warrants closed 2.50 rupees lower at 71.50 rupees.

WATA posts highest-ever Q1 profits; PAT of Rs. 230 m

Watawala Plantations PLC reported revenue of Rs. 1.8 b for the quarter ended 30 June 2014 (1QFY15), up 25% YoY. Net profit or PAT for the quarter amounted to Rs. 230 m in 1QFY15 against Rs. 11 m in the same quarter last year.

Management attributes the strong topline growth mainly to its tea segment which saw higher volumes aided by favorable weather and increased quantities of bought crop. Other income also grew in 1QFY15 to Rs. 28 m, up 28.5% YoY.

Palm Oil segment
The Palm Oil segment registered a revenue growth of 5.6% YoY to reach Rs. 377 m in 1QFY15, which accounted for 20.0% of the company’s revenue during the quarter.
The Crude Palm Oil (CPO) production remained flat marginally flat to post 2.08m kg for 1QFY15 from 2.05m kg recorded same quarter last year. This came on the back of better yield as a result of good agri practices, and new fields yielding FFB.

The segment maintained its position as the highest contributor to company profitability, having made a net profit of Rs. 185 m for 1QFY15. WATA continues to be the single biggest CPO producer in Sri Lanka.


Tea segment
The Tea segment, the largest revenue contributor which accounted for over 69.4% of the total revenue, increased 25.1% YoY to Rs. 1.3 b in 1QFY15, mainly on the back of improved volumes. Weather conditions were favorable for tea during 1QFY15, compared to last year which saw high levels of rains and floods.

Own crop was up 18% to 2.01m kg and bought crop increased 95% YoY to 1.43m kg. As a result the company was able to bring its COP down by 8% YoY as a result of fixed costs being absorbed by higher volumes of tea.

Profit from tea stood at Rs. 32 m in 1QFY15 compared to a loss of Rs. 156 m previous year. Given FY15 being a non-wage year, management expected the tea segment to break even during 1QFY15. But due to the impressive yields as a result of favorable weather conditions, the segment was able to make profits, exceeding management expectations.

Rubber segment
The Rubber segment which only accounted for 1% of the total revenue in 1QFY15, experienced a 29.0% YoY drop in revenue to Rs. 22 m, from Rs. 31 m recorded in the same quarter last year due to a decline in production by 16.9% YoY.

NSA for rubber stood at Rs. 276 per kg, compared to Rs. 345 in 1QFY14. The drop in production is primarily due to reduction in the rubber extent by 131 Ha during the current season. The net loss for rubber amounted to Rs. 24 m in 1QFY15against a loss of Rs. 10 m recorded same quarter last year.

Export segment
Export sector recorded a significant improvement in revenue driven by value added teas sold at a higher price, compared to mainly bulk orders in 1QFY14. Enhanced volumes on herbs and black teas have contributed towards revenue growing three folds in 1QFY15.

PAT on export amounted to Rs. 9.5 m in 1QFY15 against Rs. 2.6 m recorded in the same period last year. The profit is mainly from export of the value added tea and herbs to Australia. Further the bulk tea export to Russia, Pakistan, India and UK also contributed for the export profit during the period.

Outlook
With its resilient agri practices and innovation culture, the company is reasonably confident that it will overcome the difficult environment it continues to operate in.
www.ft.lk

Lucky Lanka Milk to debut on CSE today

Lucky Lanka Milk Processing Company Ltd., will debut on the Colombo Stock Exchange today following a successful Initial Public Offering (IPO) in early July.

With a security code LLMP and classified under beverage, food and tobacco sector, the company will be listed on the Diri Savi Board. LLMP will be the 295th listed entity on the CSE.

The company’s IPO was worth Rs. 300 million and received applications worth Rs. 453 million. The final subscription figure reflects an oversubscription of 1.5 times or 66% more. 

The IPO was for 38 million ordinary voting shares at Rs. 6 per share (Rs. 228 million) and 24 million ordinary non-voting shares at Rs. 3 per share (Rs. 72 million). Managers and registrars to the IPO Merchant Bank of Sri Lank (MBSL) said there were 1,341 applications requesting 38 million shares worth Rs. 228 million for the ordinary voting shares issued at Rs. 6 each.

For the non-voting shares on offer at Rs. 3 each, there were 1,681 applications requesting for 75 million shares worth Rs. 224.7 million. The IPO had its official opening on 7 July and was closed on 11 July.

Out of the proceeds, Rs. 200 million will settle high-cost borrowings, and Rs. 75 million will fund the expansion of the existing production plant with new cold room complex including an ammonia refrigeration system, extension to the existing UHT milk processing building and new machinery including conveyer systems and pigging systems. The remaining Rs. 25 million will be utilised for new projects such as ‘Gedarata Kiri’ milk bar outlets and school canteens.
www.ft.lk

Dunamis Capital successfully raises Rs. 1 b

The Rs. 1 billion debenture issue of Dunamis Capital PLC was successfully oversubscribed on its official opening day itself on 28 July. The basis of allotment and final status of total applications received will be disclosed shortly. Rated ‘BBB’ by RAM Ratings Lanka Ltd., the issue was for 10 million rated, senior, unsecured redeemable debentures of Rs. 100 each.

The fundraiser was to increase the long-term funding base of Dunamis Capital PLC, the holding company of First Capital, Kelsey Homes and Premier Synthetic Leather.

The five-year debentures which will be listed on the Colombo Stock Exchange (CSE), offered a fixed interest rate of 12.5 % per annum, payable annually until the maturity of the debenture at the end of five years.

In FY14, Dunamis Capital PLC reported profit after tax of Rs. 121.5 million with its financial services business recording net profit of Rs. 340 million, and property development converting a net loss of Rs. 55 million in 2012-13 into net profit of Rs. 148.6 million.

During the year the company invested Rs. 600 million in Kelsey Homes to fund the purchase of a six-acre property in Mount Lavinia and Rs. 200 million in Premier Synthetic Leather, the only synthetic leather manufacturer in Sri Lanka.

Of the funds raised by the debenture issue, Rs. 500 million is to be utilised to settle short-term commercial papers and loans currently of a tenure less than three months and costing approximately 12%, the company has disclosed. Rs. 250 million is to be invested in listed equities with a medium term-view, and Rs. 250 million will be retained as a reserve to fund future acquisitions and investments.
www.ft.lk

Indian company to buy Asia Asset Finance for Rs 1B York Street Partners to buy Asia Securities for Rs 600M

By Ravi Ladduwahetty

Ceylon FT: An Indian financed company is planning to buy a Sri Lankan finance company for Rs 1 billion sources said.

One of India's largest finance companies, Muthott Finance, which has over 1,000 braches scattered over the subcontinent was tipped to buy Asia Asset Finance Co. Ltd., a subsidiary of the Asia Capital PLC Group for over Rs 1 billion at Rs 2 per share, sources said.

They have also a stated capital of 945.1 million shares, which comprise 559.4 million voting shares. However, the board of directors of Asia Asset Finance announced on 17 July that it will further increase the stated capital by another Rs 447 million with a Rights Issue for one share for every two shares held at Rs 1.60 per share. The total number of shares that will be issued with the Rights would be 279.7 million shares.

It would also mean that the Indian acquisition would be after the Rights Issue.

Meanwhile, York Street Partners, a corporate outfit, which has been set up four young corporate executives and funded by the cofounders and now divested Expo Lanka Group, are to buy Asia Securities for Rs 600 million, market sources told Ceylon FT.

York Street Partners comprises Sujendra Mather, Nayana Mawilamada and Jayamin Pelpola who have all worked at international levels with J.P. Morgan and Goldman Sachs. York Street Partners are funded by the Osman Kassim family who founded the Expo Lanka Holdings PLC Group and who divested 30% of the Group to Japan's Sagawa Group for Rs 6 billion. It is also leant that the Asia Securities acquisition is also coming from the proceeds of the sale of Expo Lanka.

Asia Securities, has been operating at a profit from 2012 and the owners are wanting to sell it from that time due to the cash rich nature of the company.

However, Asia Securities CEO and Acting Chairman Stephan Abeysinghe and former Expo Lanka CEO Hanif Yusuf were not available for comment despite repeated attempts to contact them.
www.ceylontoday.lk

Sri Lanka eco-friendly hotel in Sigiriya

July 29, 2014 (LBO) - A 650 million rupees eco-friendly hotel will be build in Sigiriya in central Sri Lanka by Union Resorts and Spa Ltd, the state investment promotion agency said.

The hotel branded Water Gardens will have 30 luxury villas will us renewable resources and be eco-friendly, with a reduced 'carbon footprint' the Board of Investment of Sri Lanka which gives tax breaks to new projects, said.

The hotel is designed by Channa Daswatte, a protégé of famed Sri Lankan architect Geoffrey Bawa.

Sigiriya in Central Sri Lanka is located on the so-called 'cultural triangle' area which is dotted with ancient ruins.

Sigiriya itself is a UNESCO world heritage site with ruins of an ancient structure built on and around a rock standing out from a plain. The rock itself is surrounded by water gardens.

Sri Lankan stocks steady ahead of holiday

(Reuters) - Sri Lankan stocks ended little-changed on Monday in thin trade ahead of a holiday, but sentiment was still positive on expectations of strong corporate earnings after market heavyweight John Keells Holdings' upbeat earnings.

The main stock index ended 0.01 percent, or 0.63 points, higher at 6,784.27. It has gained 6.4 percent so far this month.

The bourse and the foreign exchange markets will be closed on Tuesday for the Muslim Eid festival and normal trading will resume on Wednesday.

"Bit of a dull day because it is in between two holidays," said Dimantha Mathew, manager of research at First Capital Equities (Pvt) Ltd in Colombo.

Turnover was 493 million rupees ($3.8 million), the lowest since June 26 and well below this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 118.4 million rupees worth of shares on Monday, extending the year-to-date net foreign inflow in shares to 10.71 billion rupees.

Analysts said profit-taking could be seen as some shares are overheated but expect corporate earnings to be better.

The index has been in the overbought region since July 3, having risen 14.74 percent so far this year as local investors moved funds from fixed income to riskier assets because of low interest rates.

Shares of Good Hope Plc, which moved up the index, jumped 24.67 percent to 1,870 rupees on just two trades, while Cargills (Ceylon) Plc rose 3.20 percent to 154.80 rupees.

Conglomerate John Keells Holdings Plc, which posted a 35 percent growth in its June quarter profit, fell 0.29 percent to 238 rupees. Analysts said investors sold the stock, saying it was overheated. 

($1 = 130.1800 Sri Lankan Rupees) 

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

Sri Lanka shares close higher

July 28, 2014 (LBO) - Sri Lanka's shares closed higher on Monday with oil palm firms gaining amid weak foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 0.63 points higher at 6,784.27, up 0.01 percent. The S&P SL20 closed 3.47 points lower at 3,761.43, down 0.09 percent.

Turnover was 493.10 million rupees, down from 1.23 billion rupees last Friday with 101 stocks closed positive against 88 negative.

F L C Holdings closed 10 cents higher at 2.20 rupees, attracting most number of trades during the day.

Foreign investors bought 136.65 million rupees worth shares while selling 18.23 million rupees worth shares.

Carson Cumberbatch’s oil palm firms Good Hope closed 370.00 rupees higher at 1,870.00 rupees and Shalimar (Malay) closed 144.20 rupees higher at 2,000.00 rupees, contributing most to the index gain.

Cargills Ceylon closed 4.80 rupees higher at 154.80 rupees and Ceylon Tobacco Company closed 28.40 rupees lower at 1,101.10 rupees.

John Keells Holdings closed 70 cents lower at 238.00 rupees.

JKH’s W0022 warrants closed 1.00 rupee higher at 65.00 rupees and its W0023 warrants closed 2.20 rupees higher at 74.00 rupees.

Sri Lanka Chevron Lubricants net up 20-pct

July 28, 2014 (LBO) - Sri Lanka's Chevron Lubricants said profits rose 20 percent to 675 million rupees in the June 2014 quarter from a year earlier helped by wider margins.

The firm reported earnings of 5.63 rupees per share for the quarter. For the six months to June the company reported earnings of 11.99 rupees on total profits of 1.43 billion rupees, which were up 8 percent.

Chief executive Kishu Gomes said profits were up on wider gross margins.

Revenues rose 12 percent to 2.7 billion rupees and cost of sales rose at a slower 3 percent to 1.55 billion rupees, allowing gross margins to grow 26 percent to 1.15 billion rupees.

World oil prices have been stable over the past year and the firm hiked prices in January. Up to the March quarter however, the firm saw revenues fall as Sri Lanka recovered slowly from a balance of payments crisis, triggered by credit funded energy subsidies.

Finance income fell 75 percent to 20 million rupees as cash reserves were used to relocate its plant.

DFCC Bank Rs. 5 b Debenture Issue to open on 7 Aug.

DFCC Bank has announced its listed Debenture Issue to raise Rs 3 billion with an option to issue up to Rs 5 billion, carrying a tenor of 3 years.

The Colombo Stock Exchange has approved the listing of the debt securities on the main board and the issue will open to the public on the 7th of August.

Rated AA- by Fitch Ratings (Lanka) Limited, this public issue is attractively structured giving investors the opportunity to select between three options for receiving interest: 8.50% payable annually; 8.33% payable semi annually and 8.24% payable quarterly.

Speaking on the Debenture Issue, Arjun Fernando, CEO, DFCC Bank said, ‘The decision to go public with this Issue is to provide retail and institutional investors with an alternative investment opportunity to earn a fixed rate of interest at their chosen frequency of payment.

The funds raised from this Issue will be utilized for the medium to long term lending activities of the Bank, whilst mitigating DFCC’s interest rate risk by reducing maturity mismatches. In addition it will supplement the diversification of the borrowing base and further strengthen the SME loan portfolio through the ability to offer fixed rates of interest.’

A total of 30,000,000 senior, unsecured, redeemable debentures with a face value of Rs 100 will be on offer with an option to issue a further 20,000,000 if the issue is over-subscribed. The minimum subscription will be Rs 10,000.

The issue is structured by the Long Term Funding and Capital Markets Division of the Bank and managed by Capital Alliance Partners Limited, while the Registrar to the issue is SSP Corporate Services (Private) Limited.
www.ft.lk

Overseas Realty posts Rs. 1.5 b profit in first half 2014

Overseas Realty (Ceylon) PLC continued its earnings growth in the first six months of 2014 with a 58% increase in group profit after tax, (excluding fair value gains on Investment property)to reach Rs 1,028 mn.

The Group Revenue increased by 57%to Rs 2,603 mn fronted by healthy growth in Property Leasing, Trading and Service segments. Group profit after tax, including fair value gains, grew by 37% to Rs 1,529 mn.

Growth in group profit was driven by strong performance from leasing of office space at the World Trade Center,Colombo (WTC). Property leasing revenue of Rs 858 mn rose by 19% over the corresponding period, with leased occupancy at the WTC being maintained at98%. Growth in group profit was also supported by revenue and profitability of apartment sales at Havelock City.

The revenue recognised from Property Trading increased by 85 % to Rs 1,686 mn for the six months. The group earnings per share for the six months and net asset value per share as at June 30,2014 stood at Rs1.65 and Rs 28.84 respectively.

The group expects to maintain high occupancy levels throughout the year at the WTC and continue its robust sale of apartments.

The Havelock City Phase 2 Residential Development had achieved 97% completion as at end June 2014 and had sold 89% of the condominiums.

www.dailynews.lk

SEC uses moral suasion to bring down rates

Ceylon FT: The country's capital market watchdog, the Securities and Exchange Commission (SEC) is following the Central Bank's lead and is now resorting to moral suasion to bring down interest rates relating to margin trading and credit extensions provided by stockbrokers.

With the State sector borrowing heavily from the domestic banking sector since 2012, loose monetary policy has seen a significant reduction in interest rates on loans taken by the government and affluent borrowers. Ordinary borrowers have seen their interest rates on loans reduce much slowly whereas deposit rates have fallen sharply, eroding incomes.

The Central Bank has been using moral suasion to convince lending institutions to reduce market lending rates. The SEC has issued letters to stockbrokers and margin providers asking them to reduce interest rates as well.

"It is evident that the stock market has demonstrated a greater stability depicting a positive momentum with the benchmark All Share Price Index recently surpassing the 6,700 mark together with a larger participation of investors in the market and increased level of turnover," the letters, signed by SEC Officer-in-Charge/ Deputy Director General, Dhammika Perera, said.

"It has been observed the average weighted prime lending rate (AWPR) of the Central Bank of Sri Lanka has declined considerably in the recent past and the lending rates on credit extension of certain stockbrokers and rates on margin trading of certain margin providers, have not been adjusted accordingly transferring the benefit of declined rates to clients."

"Hence, the SEC is of the view that it is essential for the lending rates on credit extension be aligned with the policy rates prescribed by the CBSL.

"While thanking those who have already adjusted their lending rates, we urge all stockbrokers and margin providers to act accordingly so that the lending rates of credit extension would be bought to a justifiable level, in line with the prevalent policy rates of the country. All stockbrokers and margin providers are expected to ensure responding forthwith to the above request made by the SEC in a positive manner," the SEC said.

AWPR of the Commercial Banking Sector is an indicative rate compiled by the Central Bank and applies to high net-worth and well-connected borrowers and not ordinary businesses or individuals. The AWPR reached 8.17% in May, down 458 basis points from a year ago.

In May 2014, the average weighted lending rate of the commercial banking sector, which covers AWPR and other borrowing rates, stood at 14.01%, down a mere 225 basis points from a year ago.
The average weighted deposit rate stood at 7.74%, down 300 basis points from a year ago and the fixed deposit rate stood at 9.45%, down 445n basis points from a year ago.

The one year fixed deposit rate at state-owned National Savings Bank was 8%, down 450 basis points from a year ago.
The 12-month benchmark Treasury bill yield was 7.02%, down 384 basis points from a year ago.
www.ceylontoday.lk

Dhammika mulls Rs 2.8B deal

By Ravi Ladduwahetty

Ceylon FT: High net worth investor Dhammika Perera has offered to buy a 51% stake of Free Lanka Capital Holdings PLC for Rs. 2.8 billion, sources said. It is a transaction worth Rs 2,790 million for 697 million shares of the 1,368 million shares which constitutes the issued capital at Rs 4 per share, market sources told Ceylon FT yesterday. One of the reasons for the divestiture of the company...

is that the Free Lanka Capital Holdings was heading in different directions in the aftermath of the demise of the founder Kattar Aloysius and with the second and the third generations pulling the group in different directions and the staggering overnight drop in the post tax profits in a single year, they said.

Of the key shareholders of the company are Free Lanka Joint Venture Company (Pvt) Ltd which owns 54.68% of 767.6 million shares while Browns Investments PLC and Perpetual Holdings (Pvt) Ltd own 43 million shares each. One of the further salient points of the group's performance is that the turnover for the year ended 31 March, 2014 was increased to 4.6 billion from the Rs 4.2 billion a year ago, but the post tax profits between the years had nosedived from a billion rupees to Rs 25.6 million.

One of the key attractions of the Free Lanka Group is that it owns Maturata Plantations and partly owns Pussellawa Plantations and it is one of the largest wine importers in the country. They also said that the deal was going to be sealed by Ernst and Young, Chartered Accountants.

However, Dhammika and Free Lanka Capital Holdings PLC CEO Goddfrey Aloysius was not available for comment despite repeated attempts to contact them and all the call back messages. Dhammika's business partner Nimal Perera denied any knowledge of the proposed acquisition.
www.ceylontoday.lk

Tess Group to boost local canned fish production

By P. Krishnaswamy

The Tess Group of Companies launched a fully Sri Lankan canned fish product 'Oliver's Pride' at a ceremony at the Cinnamon Lakeside on Thursday.

Fisheries and Aquatic Resources Development Minister Dr. Rajitha Senaratne was the chief guest.CEO and Director, Tess Group of Companies, Shiran Fernando said that the project became a success due to the encouragement and assistance provided by Minister Senaratne.

He said that the company will, in the course of time, meet the national need of 125,000 cans per day while at present they only produced one fourth of it. Although Sri Lanka is surrounded by ocean on all sides, the fish resources in the North and the East could not be harvested for many decades but the situation has now changed and they are getting fish from all coastal areas, he said.The brand has been named after his enterprising father, Oliver Fernando, who had been in business for over 35 years, he said.

The Minister lauded the indomitable spirit, courage and entrepreneurship of the CEO and Director, Shiran Fernando and other stakeholders of the company for the successful launch of the product amidst insurmountable obstruction and harassment by multinational companies in the industry.

From the early 70s, since the time of the then Prime Minister S.W.R.D. Bandaranaike, repeated efforts made by the Government, in collaboration with large companies, to launch a fish canning industry in Sri Lanka were unsuccessful because of obstruction by the multinational companies, the Minister said.

The efforts of the Tess group of companies, under its own initiative, to launch a joint venture with the Plaza, Japan, also became futile after the tsunami that hit Japan destroyed everything owned by Plaza, the Minister said.

Tess has now offered for the first time an innovative, quality product made of ‘virgin coconut oil and tuna’ at a low price, he said.

When he took over the Ministry of Fisheries and Aquatic Resources Development, it was in debt to the tune of Rs.123 million but all that has been overcome and the Ministry is now on the right track promoting local aquatic products, he said.
www.sundayobserver.lk

Declining rubber prices hurt Kegalle bottom line

Kegalle Plantations PLC, a member of the Richard Pieris group and the country’s single largest rubber producer, had seen a dip in both turnover and profits in the year ended March 31, 2014 but has increased capital expenditure, the company’s annual report reveals.

Turnover was down 6.7% to Rs.2.4 billion while the profit after-tax was down 26.9% to Rs.346 million. Capital expenditure increased 16% to Rs.294.5 million.

The company’s Chairman, Dr. Sena Yaddehige, has told shareholders in the annual report that despite challenges, positive results have been achieved.

Kegalle with a 5,326 ha of rubber in its portfolio is the largest natural rubber producer in the country. Despite adverse weather, the company posted production of slightly over 4,000 mt of rubber almost par with production the previous year.

"This amounts to over 3% of the national rubber production in Sri Lanka. The average sale price of rubber declined this year to Rs.353.16 per kg compared with Rs.415.1 per kg in 2013," Yaddehige said.

High rubber prices in recent years enabled Kegalle to do very well but this has now reversed with Yaddehige saying that the company, which also manages over 1,370 ha of tea, had suffered from depressed rubber prices.

He said that they strictly adhered to the best agricultural practices with greater attention given to process and productivity improvements.

The year under review had seen the profits from rubber decreasing to Rs.322 million from Rs.607 million the previous year.

Revenue from tea was up to Rs.882 million from Rs.805 million the previous year while the revenue from rubber declined to Rs.1.39 billion from the previous year’s Rs.1.63 billion.

There had been a marginal decrease in revenue from coconut from Rs.55 million the previous year to Rs.45 million.

Yaddehige reported that the company had invested Rs.294 million capital expenditure replanting and maintaining 247 ha of rubber at a cost of Rs.226 million while 19 ha of tea was replanted and maintained at a cost of Rs.49 million.

Discussing the future, Yaddehige said that low cost borrowing opportunities that have now arisen have made them optimistic about the future. This would enable expansion of the plantation sector.

"The company is also looking forward to create and build important investment relationships with foreign partners in order to expand our plantations sector and we have even commenced discussions with the relevant regulatory bodies in these countries," he said.

While tea remained less volatile at present price levels, the forecast for rubber remained weak due to sluggish demand in the emerging countries and the availability of surplus stocks.

Given that the cost of tea production here is the highest in the world, he expected the current year to be a challenging one for the company.

Kegalle has a stated capital of Rs.250 million, a general reserve of Rs.225 million and retained earnings of Rs.2.9 billion. Total assets ran at Rs.6.9 billion and total liabilities at Rs.3.6 billion.

RPC Plantation Management Services with 76.62% is the major shareholder of the company followed by J.B. Cocoshell (2.45%). All other shareholders own less than one percent.

Net assets per share have grown marginally to Rs.33.70 from Rs.33.48 the previous year. The Kegalle share traded at a high of Rs.121.90 and a low of Rs.90 during the year under review compared to a high of Rs.119.50 and a low of Rs.86.20 a year earlier.

The directors of the company are: Dr. Sena Yaddehige (Chairman), Mr. J.H.P. Ratnayeke (Deputy Chairman), Mr. S.S. Poholiyadde (CEO), Prof. R.C.W.M.R.A. Nugawela and Dr. S.S.B.D.G. Jayawardena.
www.island.lk

SUBWAY® poised to enter the Sri Lankan Market

SUBWAY® restaurant chain, the largest submarine sandwich chain with a presence of over 42,000 restaurants in 107 countries, is poised to launch its debut restaurant in Sri Lanka at R A De Mel Mawatha, Colombo.

The leading Quick Service Restaurant (QSR) brand once it enters will be committed to a rapid growth in the island nation and plans to open restaurants across the country, giving legions of local entrepreneurs the opportunity to own and operate their own business.

Mr. Nathan Wills, Franchise-Owner and Chairman, Subway Development Pvt. Ltd. Sri Lanka said, "People here are appreciative of fresh, flavourful offerings and like experimenting with international tastes. Subway is just the right kind of opportunity to grow and expand in the restaurant business while serving people with high quality products at value-for-money prices."

All things related to Subway including The SUBWAY® mascot, SubMan will be present at the debut Restaurant, which is poised to open soon, where the chain is 100 percent committed to provide the best possible customer experience to the Sri Lankan market.

Celebrated for their inherent values of freshness, choice and customization, all SUBWAY® sandwiches will be served on a variety of gourmet breads that are baked fresh each day. SUBWAY® lovers can create their own sandwiches by choosing from a variety of lean meats, fresh vegetables, cheeses and low-fat condiments while relishing the experience of the delicious meal being made right in front of them.

Talking about the menu that will be on offer, Mr. Savanth Sebastian, Co-Franchise-Owner, said, "The menu will be an eclectic mix of international and local flavours of popular Subway sandwiches and salads. We intend to adapt our international best-selling sandwiches to local tastes by producing local fresh produce and sauces."

A foot long delicious Subway Sandwich.

Nathan Wills, Franchise-Owner and Chairman, Subway Development Pvt. Ltd. Sri Lanka addressing the gathering.
www.island.lk

Bank of Ceylon – Sri Lanka’s No. 1 Bank

Ranked once again above all Sri Lankan Banks; Among the Top 1,000 Global Banks

Sri Lanka’s leading Bank with 75 years of strength, trust and stability, the Bank of Ceylon is proud to receive global recognition once again as one of the top 1,000 banks in the world, from the world’s premier banking and finance Magazine, "The Banker". The Top 1,000 banks were selected in recognition of their achievements as global leaders in the industry. The rankings are one of the industry’s most widely used indexes of global banking, and are internationally recognized as the definitive guide to the soundness, strength and profitability of banks. The Banker Magazine, first published in January 1926 in UK and currently circulated over 180 countries, is the key source of data and analysis for the industry in international finance affairs.

BOC possesses the strength and the diversity of resources to offer a complete range of financial solutions to its customers. Our multi-faceted offering is one of our greatest strengths. From the children’s savings account to corporate credit, from the state sector to private companies, we serve at every level. The bank has the strength and the diversity of resources to offer its customers a range of financial solutions; such as Corporate Banking, Personal Banking, Islamic Banking, Investment Banking, Off-shore Banking, Development Banking, International and Treasury operations and Trade Financing services, through its widely spread network of 618 branches covering all parts of the country. The clear-cut market leader in banking, BOC now boasts over 1000 customer touch points and over 10 million account holders and offers the full range of banking services through its overseas branches in Chennai, Male, Seychelles and Banking operations in London.

The Bank also laid claim to a unique position as the only Sri Lankan brand recognized as one of Asia’s Best Brands in 2013 by the Chief Marketing Officer’s Council (CMO Council) based in Mumbai, India. Brand Finance Lanka ranked Bank of Ceylon as the No.1 Brand in Sri Lanka for the last six consecutive years. The Bank of Ceylon recorded yet another hat-trick in 2013 at the National Business Excellence awards ceremony organized by the National Chamber of Commerce. Focusing on the Banks achievements, Fitch Rating Lanka ranked the Bank of Ceylon at AA+(lka) which is the highest rating awarded to a local commercial bank.

On the 1st of August 2014, Bank of Ceylon will celebrate its 75th Anniversary –a unique milestone in a journey of dedicated service and of continuous growth in strength, geographic reach, expertise and capability. Leading the banking and financial sector in Sri Lanka since 1939, BOC has constantly succeeded in contributing to the growth of our nation and continues to assist the development of the country and guiding entrepreneurs to reach greater heights which makes Bank of Ceylon ,truly, the "bankers to the nation". We thank our loyal customers for the trust and confidence placed in us.
www.island.lk

Palm oil keeps Watawala buoyant, tea and rubber loses

Watawala Plantations PLC, a diversified plantations company with 12,441 ha cultivated with palm oil, tea and rubber in 19 estates has turned in what its Chairman, Mr. Sunil Wijesinha called "a commendable performance" in the year ended March 31, 2014 with a profit of Rs.434 million maintaining its position as the regional plantation company (RPC) with the highest profit in the plantation sector.

However, this was below the Rs.681.9 million earned the previous year.

Wijesinha said in the company’s annual report that Watawala had recorded the highest tea production among the RPCs. The company which is also a significant oil palm producer operating one of the two oil palm mills in the country had done well with this crop during the year contributing 23% of the company’s revenue and the major share of its profits.

"Tea recorded a loss of LKR 276 million after tax and other comprehensive income, significantly impacting the overall profitability of the company despite our leading position as the highest tea producer among the regional plantation companies," Wijesinha said.

"This reflects underlying structural issues that need industry wide consensus and action to resolve."

He said that torrential rains in the first half of the financial year had resulted in two factories being flooded with the consequential loss of harvest and production.

Rubber too had performed disappointingly, similarly affected by adverse weather conditions resulting in the reduction of the number of tapping days which contributed to a decrease in production and a net loss of Rs.28 million in the rubber segment.

However, Wijesinha saw promise in diversifying into timber and exports showing potential for the future.

Watawala’s board had unanimously consented to mutually terminate the agreement for management services and payment of management fees between itself and its major shareholder, Estate Management Services (Pvt) Limited.

This agreement which was valid for a period of five years from July 1, 2013, resulting in a big slice of the company’s earnings being paid as management fees to its main shareholder, has been discontinued with the Watawala board agreeing to take over expenses related with the provisions of management services.

Watawala is a subsidiary of Estate Management Services (Pvt) Limited, a joint venture between Sunshine Holdings, Tata Global Beverages and Pyramid Wilmar Plantations (Pvt) Limited which is a partner of Wilmar International.

Tata Global Beverages is the world’s second largest tea company with a brand presence in over 40 countries and interests in tea and coffee.

Wilmar International is Asia’s largest agribusiness group with headquarters in Singapore.

"The joint ventures with two giants in our major areas of interest provide Watawala Plantations with unparalleled access to markets, technology and knowledge providing a strong launching pad for our future growth as we week to take a differentiated path raising the bar on our own performance," the report said.

Of the company’s total land extent, 4,451 ha (36%) is planted in tea, 701 ha (6%) in rubber and 2,921 ha (23%) in oil palm. The remaining extent of 4,367 comprises timber and fuel wood plantations, extents in conservation forestry, spices, vegetable cultivation, jungle and patana, buildings, roads etc.

54,505 people live on Watawala estates which provide livelihoods for over 11,000.

Watawala has also invested in dairy farming and timber planting as well as energy management with none of their factories burning fossil fuel. They have invested in a turbine burning the waste of oil palm milling to generate 500 KWH of electricity and also briquettes from waste of tea factories, the company’s Managing Director, Mr. Vish Govindasamy said in the report.

Watawala has a stated capital of Rs.460 million, retained earnings and other reserves of Rs.3.76 billion and total assets of Rs.7.06 billion. Total liabilities for the group ran at Rs.2.84 billion and for the company Rs.2.83 billion.

The major shareholders of the company are Estate Management Services (75.65%), Ceybank Unit Trust (4.43%) and Aureos South Asia Fund (1.90%).

The directors of the company are: Messrs. Sunil Wijesinha (Chairman), G. Sathasivam (Alternate S.G. Sathasivam), V. Govindasamy (MD), D.V. Seevaratnam (CEO), H.R. Bhat, K. Venkataramanan, A.N. Fernando, M.S. Mawzoon, L. Ramanayake, C.P. Thomas and B.A. Hulangamuwa.
www.island.lk

LAL to assemble Light trucks for India

Shirajiv Sirimane shirajivs@gmail.com

Lanka Ashok Leyland (LAL) is looking at assembling light commercial vehicles in Sri Lanka from end of September. LAL CEO Umesh Gautham said this will be mainly to be exported to the Indian market.

Speaking to ‘Daily News Business’ he said there is a demand from India to manufacture ‘small trucks’ (DOST) and they have also received orders from India. “We had sent three samples to India and they had approved one and sent to us and this will be the model we will be developing in Sri Lanka.”

“We will be importing some of the material for this operation and will be offering sub contracts to Sri Lankan entrepreuners to manufacture most on the other material. These include rubber bushes, fuel tanks, seats, batteries and some other plastic items.

He said they will be doing the manufacturing process in their factory in Homagama. He said they have also come to an agreement with the government to obtain tax concessions for some of the machines they will be importing.

Lanka Ashok Leyland was incorporated in 1982 as a Public Limited Liability Company and began operations in 1983 as a Joint venture between Lanka Leyland Ltd (a wholly owned company of Government of Sri Lanka) and Ashok Leyland Ltd India, to carry out the business of importation of Ashok Leyland commercial vehicles in knocked down condition or fully built and carry out assembly operations, repair and service, body building on chassis and other developments to progressively develop ancillary industries locally. 

Commenting on their partnership with the Transport Minister, he said they are now keen to build more luxury buses to feed to the public transport sector. “Sri Lankan is now seeing a massive development and there is also a lot tourist arrivals and the transport sector too is undergoing a mass transformation with more luxury buses being tasked to their government fleet.”

LAL has also introduced a special easy payment scheme the both the private and government sector when purchasing their buses for transport.
www.dailynews.lk

Capital Alliance profits up by 17%

Capital Alliance Ltd (CALT), a primary dealer in government securities recorded an impressive profit after tax of Rs. 331.9 million for the financial year of 2013/2014. This year's financial performance showed a 17 percent increase in profitability from the previous financial year which helped CALT maintain its position as a dynamic leader in the trading sphere.

CALT's ability to refocus business and management strategies and maximize on opportunities in an extremely active trading climate resulted in the company achieving higher capital gains and momentous growth. The company's total assets were valued at Rs. 5.13 billion, an eight percent rise from the previous financial year. Earnings per share were recorded at Rs. 22.12 and increased by 17 percent. Total shareholder's funds were recorded at Rs 1 billion with an increase of 27 percent over the previous financial year.

Due to a turbulent financial year and the challenges of QE tapering, markets were in shock and only recently recovered. Despite a tough economic climate and various ongoing challenges, CALT delivered a consistent financial performance that exceeded expectations.

Gehan Hemachandra, Chief Executive Officer, CALT completed his first tenure as CEO of the company this year. Some of the key changes he implemented included revising the company's strategic focus and developing CALT's dynamic marketing and dealing teams. Commenting on the measures taken to strengthen CALT's operational prowess, he said,"People are at the core of CALT's business operations and the company invested in recruiting high performing professionals to head our marketing and treasury divisions. We developed a new marketing team from scratch and recruited senior management to ensure the growth and development of the division. Thereafter, both our marketing and dealing teams performed exceptionally and their efforts contributed significantly to our high financial performance this year."

Under new rules created by the Colombo Stock Exchange (CSE) the company became the first-ever primary dealer to obtain a debt-broker license from CSE, the new license has enabled CALT to significantly diversify income revenues. CALT was initially focusing on the government securities market and is now applying the same model in the corporate debt space. Corporate debt trading is a market that is still in its infant stages and although it will face many challenges, it also has great potential for growth. Due to a burst of activity in corporate debt, aided by interest rate fluctuations, CALT is now developing corporate debt trading into a vibrant secondary market.

Capital Alliance Ltd (CALT) commenced operations in 2000 and began dealing in fixed income securities and corporate finance advisory services. The company has become a dominant force in trading and developing financial services and has acquired an impressive client portfolio. In 2003, CALT was issued with a primary dealer license from the Central Bank of Sri Lanka (CBSL). Thereafter in 2013, the company was appointed as Sri Lanka's first registered debt dealer in the primary dealer category.

Capital Alliance Ltd is part of the CAL Group which also includes Capital Alliance Partners (CALP), the company's corporate finance arm which specializes in investment banking, fund management and securities broking.
www.dailynews.lk

Ceylon Guardian posts Rs.2.12 b PAT in 2013/14

Ceylon Guardian Investment Trust PLC, the investment group of Carson Cumberbatch, recorded a profit after tax of Rs. 2.12 billion for the FY 2013/14, an encouraging performance amidst somewhat subdued market conditions the previous year. Ceylon Guardian’s above average performance was attributed to booking of profits on selected overvalued stocks, capturing market anomaly and booking substantial capital gains despite subdued market conditions.

Ceylon Guardian’s portfolio as at end March is reported to be Rs.24.2 bn. The portfolio is managed by an in house professional team attached to Guardian Fund Management Limited, a fund management company licensed by the Securities and Exchange Commission of Sri Lanka.

Although Ceylon Guardian’s total portfolio including strategic investments decreased to Rs. 24.20 bn, from Rs. 26.03 bn a year earlier, the actively managed component of the Guardian portfolio amounting to Rs.12.12.bn has grown 4.4% in comparison with the ASPI growth of4% and S&P SL20 depreciation of 0.4%. On medium term performance, five year compound annual portfolio growth rate of the actively managed portfolio was 35.8% on market value basis, vis à-vis an All Share Index growth of 29.5%.

The long term track record of Ceylon Guardian is driven by its investment philosophy of selective bottom up investing, where the focus is on stock selection and acquisition at advantageous prices to enhance returns.

The intrinsic value per share of the company is Rs. 228.70 on a market price based net asset valuation of the portfolio, since the balance sheet is now stated at market value taking into account IFRS methodology. Based on the market price at end March of Rs. 177.90, it trades at a discount of 22% from the intrinsic value.
www.dailynews.lk

Orient Finance reaches Rs 2 billion mark in deposits

‘Orient Finance PLC surpassed the Rs. 2 billion threshold in their deposits during the 1st week of July. Having reached Rs. 1 billion in deposits a mere 06 months ago, doubling the deposit base to trigger 1 billion within a remarkably short span is indeed commendable.

‘Established as a specialised leasing company in 2003 with Leasing, Hire Purchase and Debt Factoring as its core businesses, the company broadened its product range to include Fixed Deposits and Gold Loans, subsequent to being licensed by the Central Bank as a Finance Company under the Finance Business Act No 42 of 2011, in June 2012. Thus, the full product suite of the company now consists of Leasing and Hire Purchase, Debt Factoring, Gold Loans, and acceptance of Fixed Deposits.  The company is also listed on the Diri Savi Board of the Colombo Stock Exchange, with a BBB- (stable outlook) investor grade rating from Lanka Rating Agency, a press release said.

It adds: ‘Functioning in the capacity of Assistant General Manager – Fund Mobilisation, Ms. Geethika Wickramasinghe who has been in charge of the Unit since its inception attributes this success to the commitment of the Deposit Mobilising unit, aptly supported by Regional Managers as well as Branch Managers and the stability that the company has established over a decade of service. Further, she believes that this achievement is a reflection of the confidence the depositors have placed in the stability of the Company.

‘OFP operates 23 fully fledged branches & customer convenience centres located in Ampara, Anuradhapura, Avissawella, Colombo, Galle, Gampaha, Kalutara, Kandy, Kegalle, Kochchikade, Kurunegala, Matara, Welisara, Jaffna, Killinochchi, Vavuniya, Batticaloa, Horana, Ratnapura, Negombo, Nugegoda, Chilaw and Avissawella.
www.island.lk

Stable Outlooks for nine Sri Lankan banks

Fitch Ratings has affirmed ratings on nine Sri Lankan banks, all with Stable Outlooks.

The Long-Term Issuer Default Ratings (IDRs) on National Savings Bank and Bank of Ceylon (BOC) have been affirmed at ‘BB-’ and their National Long-Term Ratings have been affirmed at ‘AAA (lka)’ and ‘AA+(lka)’, respectively. Fitch has also affirmed the National Long-Term Rating of People’s Bank at ‘AA+(lka)’.

At the same time, Fitch has affirmed the Long-Term IDRS of DFCC Bank and National Development Bank PLC (NDB) at ‘B+’ and their National Long-Term Ratings at ‘AA-(lka)’.

The National Long-Term Ratings of Commercial Bank of Ceylon PLC (Commercial Bank) have been affirmed at ‘AA(lka)’. The National Long-Term Ratings of Hatton National Bank PLC (HNB), Sampath Bank PLC and DFCC Vardhana Bank Ltd. have been affirmed at ‘AA-(lka)’.

The operating environment, which remains potentially volatile, is a key rating driver for the Sri Lankan banking sector. This is a challenge for banks, notwithstanding the current high real GDP growth, which Fitch expects to continue.

While private-sector credit demand is currently muted, the potential for high growth exists given the low overall levels of credit to GDP.

The Support Ratings (SRs) and Support Rating Floors (SRFs) of state-owned National Savings Bank, BOC, and People’s Bank reflect their high importance to the government and high systemic importance. The SRs and SRFs of privately-owned DFCC and NDB reflect their lower systemic importance.

The Sri Lanka rupee-denominated subordinated debt of BOC, DFCC, DFCC Vardhana Bank, NDB, Commercial Bank, HNB, and Sampath Bank are rated one notch below their National Long-Term Ratings to reflect the subordination to senior unsecured creditors
www.island.lk

Sri Lankan stocks end little changed

(Reuters) - Sri Lankan stocks ended little changed on Friday amid expectation of strong corporate earnings after market heavyweight John Keells Holdings' upbeat results.

The main stock index ended 0.03 percent, or 2.24 points, higher at 6,783.64, gaining 6.35 percent so far this month. On Tuesday, the index marked its highest close since Sept. 20, 2011.

"The market is still not steady as some shares are overheated. But corporate earnings are expected to show improvements and we expect more local investors to come back to the bourse," said a stock broker asking not to be named.

The index has been in the overbought region since July 3, having risen 14.73 percent so far this year as local investors moved funds from fixed income to riskier assets in view of the low interest rate.

Turnover was 1.23 billion rupees ($9.44 million), more than this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 217.4 million rupees worth of shares on Friday, extending the year-to-date net foreign inflow in shares to 10.59 billion rupees.

Shares of Distillers Sri Lanka Plc rose 1.53 percent to 206 rupees, while Dipped Products Plc rose 5.46 percent to 127.40 rupees.

Conglomerate John Keells Holdings Plc, which posted a 35 percent growth in its June quarter profit, fell 0.46 percent to 238.70 rupees. Analysts said investors sold the stock citing it was overheated. 

($1 = 130.2500 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka shares close higher

July 25, 2014 (LBO) - Sri Lanka's shares closed 0.03 percent higher Friday amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 2.24 points higher at 6,783.64, up 0.03 percent. The S&P SL20 closed 2.30 points lower at 3,764.90, down 0.06 percent.

Turnover was 1.23 billion rupees, up from 950.21 million rupees a day earlier with 92 stocks closed positive against 89 negative.

Chevron Lubricants Lanka closed 70 cents higher at 310.00 rupees with two off-market transactions of 93.00 million rupees changing hands at the same rupees per share contributing 8 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 19 percent of the turnover.

PCH Holdings closed 40 cents lower at 2.80 rupees with market transactions of 325.61 million rupees contributing 26 percent of the turnover while attracting most number of trades during the day.

Ceylon and Foreign Trades closed 1.40 rupees higher at 8.30 rupees, also drawing trades.

Foreign investors bought 271.61 million rupees worth shares while selling 54.26 million rupees worth shares.

Distilleries closed 3.10 rupees higher at 206.00 rupees and Ceylon Cold Stores closed 5.60 rupees higher at 200.10 rupees.

Commercial Leasing and Finance closed 10 cents higher at 4.40 rupees and Ceylinco Insurance closed 33.80 rupees lower at 1,352.50 rupees. Carson Cumberbatch closed 10.00 rupees lower at 470.00 rupees and John Keells Holdings closed 1.10 rupees lower at 238.70 rupees. JKH’s W0022 warrants closed 80 cents lower at 64.00 rupees and its W0023 warrants closed 10 cents higher at 71.80 rupees.

DFCC Bank to offer Debenture Issue

The DFCC Bank is to offer 30 million Senior Unsecured Redeemable Rated Debentures at an issue price of Rs. 100 each, with an option to issue up to a further 20 million Debentures in the event the initial 30 million Debentures are oversubscribed.

Subscriptions open on 07 August 2014.

Managers to the issue are Capital Alliance Partners Limited while the Registrars are SSP Corporate Services (Private) Limited.

The Prospectus would be delivered to Member Firms/Trading Members on 20 July 2014.

www.adaderana.lk

Sri Lanka shares slip on profit taking; foreigners buy

(Reuters) - Sri Lankan stocks slipped on Thursday for a second straight session, moving further away from Tuesday's 34-month closing high as investors booked profits, brokers said.

The main stock index ended 0.04 percent, or 2.58 points lower at 6,781.40, slipping further away from the highest close since Sept. 20, 2011, hit on Tuesday. It has gained 6.35 percent so far this month.

The index has been in the overbought region since July 3, having risen 14.73 percent so far this year as local investors moved funds from fixed income to riskier assets in view of the low interest rates.

"Profit-taking continued today also. We might see a bit of profit-taking," said a stock broker asking not to be named.

Turnover was 950 million rupees ($7.30 million), less than this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 55.8 million rupees worth of shares on Thursday, extending the year-to-date net foreign inflow in shares to 10.37 billion rupees.

Shares of conglomerate John Keells Holdings Plc fell 0.04 percent to 239.80 rupees while Carsons Cumberbatch Plc fell 1.96 percent to 480 rupees.

Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said.

Yields on treasury bills edged down further at a weekly auction on Wednesday.

Foreigners have been buying risky assets because they see value in them, analysts said. 

($1 = 130.2000 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)

Sri Lanka shares close lower

July 24, 2014 (LBO) - Sri Lanka's shares closed 0.04 percent lower on Thursday with index heavy stocks losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 2.58 points lower at 6,781.40, down 0.04 percent. The S&P SL20 closed 7.94 points lower at 3,767.20, down 0.21 percent.

Turnover was 950.21 million rupees, down from 1.03 billion rupees a day earlier with 106 stocks closed positive against 96 negative.

Commercial Bank closed 40 cents higher at 144.90 rupees with an off-market transaction of 43.50 million rupees changing hands at 145.00 rupees per share contributing 5 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 7 percent of the turnover.

Lanka Century Investments closed 10 cents higher at 11.40 rupees, attracting most number of trades during the day.

Carson Cumberbatch closed 9.60 rupees lower at 480.00 rupees and Good Hope closed 440.00 rupees lower at 1,500.00 rupees, contributing most to the index drop.

Sri Lanka Telecom closed 80 cents lower at 55.20 rupees and Dialog Axiata closed 10 cents lower at 10.80 rupees.

Lion Brewery Ceylon closed 21.80 rupees lower at 641.30 rupees and Ceylon Tobacco Company closed 29.30 rupees higher at 1,129.50 rupees.

Sri Lanka's John Keells Holdings net up 35-pct

July 24, 2014 (LBO) - Profits at Sri Lanka's John Keells Holdings rose 35 percent to 2.14 billion rupees, in the June 2014 from a year earlier helped by 1.9 billion rupees in net interest income, interim accounts showed.

The firm reported earnings of 2.12 rupees per share for the quarter.

Revenues rose 7 percent to 21.2 billion rupees, cost of sales rose 8 percent to 15.9 billion rupees allowing gross profits to grow 12 percent to 1.5 billion rupees.

Transportation which has containers and bunkering reported earnings of 484 million rupees in the quarter down from 703 million rupees, profits from leisure rose to 582 million rupees up from 394 million rupees.

Property brought in 199 million rupees, up from 125 million rupees and profits from consumer foods and retail rose 337 million rupees up from 184 million rupees.

Mercantile Investments and Finance tops Rs. 10 b deposits base

Mercantile Investments and Finance plc has dedicated itself to being a versatile and trusted financial service provider in the country and celebrates 50 years in business this June. Today, MI looks to increase its current branch network of 25 to 28 facilities within the next couple of months, namely in Kegalle, Kotahena and in Moratuwa.

Director – Credit and Marketing (non-board member) Dhanushka Fonseka said, despite being in a highly competitive sector, the company was able to increase business volumes substantially. The company has increased its lending portfolio by 17% and has reached a deposit base of over 10 billion with a growth of 36% in the 2013/14 financial year. Further the loan book increased to 16 billion during the period under review. The non – performing ratio of MI stood at a very low figure of 3.69%. MI further recorded a profit before tax of Rs. 824 million and a profit after tax of 675 million for the financial year.

As the company reached the milestone of 50 years, MI was recognised as one of the best places to work in the country by the Great Place to Work Institute, an internationally recognised organisation. Dhanushka stated that the unique style of management upholds a clear open door policy that encourages a free flow of information to pass down from management to staff and vice a versa. He further stated that the main objective of the company is to be recognised and rated as the number one finance company in terms of the service that is extended to the client and to draw strength and support from their customers and the community.

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The Kingsbury enjoys first year of success; readies for more

The Kingsbury, which set a new benchmark in luxury hospitality, has completed its first year of success and the company said it was gearing for greater excellence amidst upcoming new competition including from global brands.
Chairman Mohan Pandithage told shareholders in the company’s 2013/14 Annual Report: “The year under review marked the successful completion of the first year of operations of the hotel under its new brand ‘The Kingsbury’.”
“Our efforts in positioning the hotel as a luxury city hotel in Colombo were acknowledged by the World Luxury Awards, where ‘The Kingsbury’ was bestowed with the title ‘Best Luxury City Hotel in the Indian Ocean Continent’ for the year 2013. Global recognition in the hotel’s first year of operations after refurbishment and expansion is indeed noteworthy,” he added.

Impressive revenue

The Kingsbury spa

The Kingsbury has posted an impressive revenue of Rs. 2.2 b in 2013/14, the highest-ever in its history. Operating profit for the year was Rs. 303 m. However, Profit After Tax for the year was Rs. 33 m, largely due to the significant finance costs amounting to Rs. 282 m. The hotel also successfully completed a rights issue, raising Rs. 660 m as equity during the year under review.
Pandithage said in 2013/14 the company focused on investing in people, training them in internationally accredited institutions, to keep them abreast with new trends in delivering world class service. “Throughout the year we have continually upgraded our product to consistently exceed the expectations of our international and local clientele,” he added.
Commenting on the industry performance, The Kingsbury Chairman said the Government’s strategic initiatives of targeting 2.5 million tourist arrivals per annum by 2016, with plans of doubling hotel room capacity to 45,000, augurs well for the industry.
Sri Lanka witnessed a surge in tourism this year, with 1.27 m arrivals in 2013, a growth of 26.7%. Earnings from tourism also increased, reaching $ 1.7 billion.
“Along with traditional markets in Western Europe, we are encouraged by the growth in emerging tourism sources such as South and East Asia and the Middle East. As the middle class in these economies continues to expand, the prospects for Sri Lankan tourism will be enhanced.
“The Com-monwealth Head of Government Meeting (CHO-GM), which was held in November 2013, received wide international media coverage on our beautiful country. As hosts to the international delegates, we take pride in partnering in this historical event, where Sri Lanka took over the Commonwealth Chair-in-Office amongst its 53 member states for a two year period.”

Important recommendations

Pandithage in his Chairman’s Review however did make some important recommendations.
“Whilst the industry continues to hold plenty of promise, there are still issues that need to be ironed out to ensure the realisation of this promise. Access to skilled labour in this industry is a constant challenge and it requires a concerted effort by all stakeholders to address this,” Kingsbury Chief said.
“The continued development of transportation infrastructure is essential, particularly to connect tourism hot spots in the Eastern Province along with the development of domestic air transportation,” he added. Pandithage also said the forthcoming entry of a number of international hotel chains into Sri Lanka is a reflection of the promise this industry holds. Whilst this would increase the level of competition in the market, these world renowned brands will also raise the overall profile of the Sri Lankan tourism product, which will enhance the size of the market for all players.
The ‘Port City’ that is taking shape just across the road from the hotel is looked upon as an opportunity, as the Kingsbury would be well located at the gateway to this new and exciting development.
“We are also strengthening our international marketing efforts in emerging markets in the Asian region, particularly China and India, catering to their growing affluent middleclass,” Pandithage said.

Rapid strides

The Kingsbury Managing Director MD Lalin Samarawickrama in his review in 2013/14 Annual Report also said the performance of the company has taken rapid strides during its first full year of operation, subsequent to its branding as ‘The Kingsbury’.
“Although the company succeeded in making only a nominal profit during the year, it was a remarkable recovery considering the heavy losses incurred during the previous year, mainly due to the establishment being shut down for refurbishment,” he added.
Samarawickrama said due to an accelerated strategic marketing and sales program, The Kingsbury succeeded in achieving the targeted occupancy levels during the year and the outlet facilities which includes the talk of the town Sky Lounge, the Harbour Court buffet brunch, the seafood specialty The Ocean Restaurant and the authentic Chinese Yue Chuan Restaurant attracted many a client and made considerable contributions toward the revenue of the hotel. The newly-designed banquet halls attracted many weddings and other functions.
“Overall, it is our intention to improve the standards and facilities of the hotel, meet the  ever-increasing demands of the modern day traveller and ensure The Kingsbury rating to  be at the highest possible level,” the MD added.
The Kingsbury being nominated as one of the world’s best luxury hotels and receiving the award of The Best Luxury City Hotel within the entire Indian Ocean continent has given strength to the entire management team, he said.
Samarawickrama also said extensive training programs for employees conducted by internationally renowned training companies have been able to develop the skills of the management team and staff to bring them up to the level required of a luxury hotel. Special emphasis has been made to maintain the best of health and hygiene conditions within the entire hotel premises. This too has enabled the hotel to win many accolades from local organisations.

Sunil Dissanayake bids adieu to Hayleys, Kingsbury    Sunil Dissanayake Veteran professional Sunil Dissanayake is bidding adieu to Hayleys Plc as well as The Kingsbury Plc, by end August 2014. Sunil whilst he was Hayleys Group Human Resources Head was appointed as the General Manager of The Kingsbury on 7 May 2013 whilst he was serving the Board as a Director since April 2010 when the Company was functioning as Hotel Services (Ceylon) Ltd. As General Manager and Director he played an important role during the transition of the hotel to a luxury five star and its subsequent progress. Having joined Hayleys Plc in July 2007, Sunil was appointed to the Group Management Committee in the same month. He was also responsible for Group Human Resources, Corporate Communications/Sustainability and Group Security. A Graduate in Hotel Management, Sunil as awarded the Lifetime Gold Award in 2011 and Honorary Membership in 2004 by the Institute of Personnel Management. Prior to joining Hayleys, he held several senior management positions in large private sector entities in Sri Lanka and abroad in Human Resources management and in Hotel Management. He is a former President of the Ceylon Hotel School Graduates Association and a former Member of the Hotel Classification Committee of Sri Lanka Tourism Development Authority. He is a member of the Ceylon Chamber of Commerce Steering Committee for HR and Education and is also a Steering Committee Member of the Lanka Business Coalition (LBCH) for prevention of AIDS.

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