Sri Lanka shares slip for second straight session on blue chips

COLOMBO, Jan 28 (Reuters) - Sri Lankan shares slipped on Tuesday for a second straight session, further retreating from a seven-month high, led by blue chips like John Keells Holdings despite foreigners buying risky assets ahead of a U.S. 

Fed meeting that is expected to reduce its monetary stimulus. 

 The main stock index fell 0.43 percent, or 26.98 points, to 6,218.83, further moving away from its close on Friday which was the highest since June 12. 

 "There is a risk of foreign investors pulling out from the shares," a stockbroker said on condition of anonymity. 

"We have quite significant foreign investments in some blue chips and large caps. So there is a worry of foreign outflow." 

 Foreign investors, however, were net buyers of 267.56 million rupees ($2.05 million) worth of shares, extending the year-to-date net foreign inflow to 1.06 billion rupees. 

They had bought 22.88 billion rupees of stocks last year. Shares in conglomerate John Keells Holdings Plc slipped 2.37 percent to 235.90 rupees. 

 The index has gained 5.2 percent in the last 12 sessions through Friday, including last week's 2 percent gain, which analysts attributed to the central bank's rate cut on Jan. 2 and the recent fall in T-bill yields. 

 The index has been in an overbought region since Jan. 7, Thomson Reuters data showed. 

It has risen 5.2 percent so far this year, following a 4.8 percent gain in 2013, after having fallen in the previous two years. 

 The day's turnover was 1.46 billion rupees ($11.17 million), more than last year's daily average of about 828.4 million rupees. 

($1 = 130.7250 Sri Lanka rupees) 

 (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)
http://www.reuters.com/

Sri Lanka stocks close 0.4-pct lower

Jan 28, 2014 (LBO) – Sri Lanka stocks close 0.43 percent lower Tuesday with diversified stocks losing ground despite net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 26.98points lower at 6,218.83, down 0.43 percent. The S&P SL20 closed 25.88 points lower at 3,435.87, down 0.75 percent.

Turnover was 1.45 billion rupees, up from 872.63 million rupees a day earlier, with stocks of 82 firms closing in the red against 93 gainers.

HNB closed 40 cents lower at 159.00 rupees with three off market transactions of 599.21 million rupees contributing to 41 percent of the turnover.

The Finance Company closed flat at 13.70 rupees, attracting most number of trades during the day.

Foreigners bought 545 million rupees worth shares while selling 278 million rupees of shares.

Ceylon Tobacco Company closed 39.20 rupees lower at 1,301.00 rupees and JKH closed 3.30 rupees lower at 235.90 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 2.20 rupees lower at 75.50 rupees and its W0023 warrants closed 30 cents lower at 80.00 rupees.

Ceylinco Insurance ended 128.00 rupees lower at 1,321.80 rupees and Dialog ended 10 cents lower at 9.40 rupees.

Carson Cumberbatch ended 4.00 rupees lower at 351.00 rupees and Bukit Darah ended 2.80 rupees higher at 614.80 rupees.

Finlays Colombo closed 36.90 rupees higher at 290.00 rupees and Distilleries closed 2.20 rupees higher at 207.70 rupees.

Nestle Lanka ended flat at 2,125.20 rupees and Lion Brewery closed 4.90 rupees lower at 380.10 rupees.

Cargills Ceylon closed 1.60 rupees lower at 150.50 rupees and Commercial Bank closed 90 cents lower at 127.10 rupees.

Lanka Orix Leasing Company ended 1.40 rupees lower at 73.60 rupees.

L B Finance closed 1.00 rupee lower at 101.00 rupees with its interim accounts showing 317.95 million rupees of net profit for the December 2013 quarter, a 17.3 percent decline the same period in the previous year.

Earnings per share dropped to 4.05 rupees from 5.83 rupees, according to accounts filed with the stock exchange.

Textured Jersey closed 40 cents higher at 16.60 rupees with its accounts reporting 301.39 million rupees of net profit for the December quarter, a 17.4 percent decline the same period in the previous year.

“The firm recorded a net profit of 804.96 million rupees for the nine months, up 16.0 percent over the previous year supported by strong growth in turnover.” the textile company said in a stock exchange filing.

Chairman's Review Textured Jersey Lanka PLC

Textured Jersey Lanka PLC (TJL) recorded net profit of Rs. 805mn for the nine month period ended 31st December 2013, up 16.0% year on year supported by strong growth in turnover. Net profit for the quarter ended 31st December 2013 (3Q FY2013/14) was Rs. 301mn, representing a decline of 17.4% year on year, compared to the above average corresponding quarter last year. 3Q results in the previous year were significantly above average due to benefits from lower yarn prices, depreciation of the  Sri Lankan rupee and a reversal in stock provisions.

During the quarter under review, TJL continued to record higher sales volumes as compared to the previous year. This resulted in sales for 3Q FY2013/14 reaching Rs. 3.4bn, 16.7% higher than that of last year, placing the FY2013/14 nine month period cumulative sales figure at Rs. 9.5bn, up 19.7% year on year.

TJL’s gross profit for the nine month period ended 31st December 2013 was at Rs. 1.1bn, a healthy 15.0% increase over the corresponding period last year. The reported gross margin for 3Q FY2013/14 slid to 10.6% due to an increase in outsourced business. While outsourced business generates incremental value, it impacts the overall profit margin due to a lower level of in-house value addition. The gross margin excluding outsourced business is 11.9%, which is on par with the FY2012/13 average gross margin of 11.6%. It must be noted that due to one off gains from lower yarn prices, depreciation in the Sri Lankan rupee and reversal in stock provisions, gross margin in 3Q last year experienced a temporary spike to 15.7%.

Continuous enforcement of strict cost controls enabled TJL to maintain its 3Q FY2013/14 distribution and administrative expenses at Rs. 19mn and Rs. 82mn, respectively, the same level as the corresponding quarter last year. The cumulative operating profit for the nine months ended 31st December 2013 was Rs. 766mn, an increase of 14.7% year over year.

Owing to a near debt-free balance sheet and a healthy cash position throughout the period, TJL was able to record Rs. 22mn in net finance income for 3Q FY2013/14, representing a substantial 95.1% growth year on year. As at 31st December 2013, the company had no borrowings and a strong cash position of Rs. 2.3bn.

TJL recorded a net profit of Rs. 301mn for 3Q FY2013/14, down 17.4% year over year. Net profit for the nine month period ended 31st December 2013 remained strong at Rs. 805mn, up 16.0% compared to the corresponding period last year. TJL’s order book for the fourth quarter remains healthy and the management is confident of surpassing last year’s bottom line milestone of Rs. 1.0bn, despite the above average performance last year.

TJL management has kicked off a few key strategic initiatives in order to enter the next phase of growth. The capacity expansion and modernization project is currently underway and is expected to be completed in March 2014. The initiative is aimed at increasing capacity by 10-12%, which will enable TJL to reduce its outsourced orders and improve margins, as well as take on new customer orders which are currently refused due to capacity constraints. In addition, the construction of TJL’s multi-fuel boiler plant is progressing with amendments to timelines compared to the original plan. The plant is expected to reduce TJL’s energy cost substantially when commissioned and reduce dependency on the national grid.

TJL entered into a Technical Service and Management Agreement with Ocean India Private Ltd, a knit fabric manufacturer located in India. This arrangement is expected to provide TJL with knowledge and experience in regional markets. Given the above factors, TJL management remains confident of maintaining growth and delivering value to shareholders on a continuous basis.

SLT denies and then confirms negotiations to acquire Hutch

Ceylon FT: State-owned Sri Lanka Telecom (SLT), the country's largest telecommunication provider, has submitted two contradictory disclosures to the Colombo Stock Exchange on the ongoing Hutch deal.

SLT in its stock market filing yesterday (27) said that its fully owned subsidiary Mobitel, was negotiating with Hutchison Asia Telecom about a possible acquisition of its... Sri Lanka operation, Hutchison Telecommunication Lanka.

It said that the discussions were in the preliminary stages, and the final decision would depend on completion of confirmatory due diligence and both parties agreeing on terms and conditions of the transaction and thereafter, obtaining necessary regulatory approvals.

SLT assured to keep shareholders and the public informed after a definite decision on the transaction.

Last Friday (24) the company informed the Colombo Stock Exchange that Sri Lanka Telecom has 'not negotiated to purchase Hutch'.

http://ceylontoday.lk/22-54185-news-detail-slt-denies-and-then-confirms-negotiations-to-acquire-hutch.html

Mobitel to buy Hutch

Mobitel (Pvt) Ltd, national mobile telecommunications service provider and a fully owned subsidiary of Sri Lanka Telecom, has launched negotiations to purchase Hutch Sri Lanka, informed sources said.

The purchase is considered advisable in view of the fact that both Mobitel and Hutch are in the same principal line of business, being mobile phone service providers of repute. 

Besides, Hutch enjoys an extensive subscriber base of around one million, the sources added.

http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=96706

Vallibel Finance in Rs 250M debt issue

Ceylon FT: Vallibel Finance PLC is planning to raise Rs 250 million via a debenture issue next month, hoping to double the take upon over subscription.

In a statement to the market, the Colombo Stock Exchange... ... said the Dhammika Perera controlled Vallibel Finance would issue 2.5 million unsecured, subordinated, redeemable debentures at Rs 100 each, with an option to double the issue.

The debenture issue opens on 11 February 2014.

According to latest available data, the company reported a net profit of Rs 135.8 million during the six months ended June 2013, up 5.6% from a year ago.

http://ceylontoday.lk/22-54188-news-detail-vallibel-finance-in-rs-250m-debt-issue.html

Keells Food in the red

Ceylon FT: Keells Food Products PLC saw net profits fall 192% during the nine months ended December 2013, from Rs 64.14 million a year earlier, to a loss of Rs 58.7 million, interim financial results showed.

Revenue grew 3% to Rs 1.73 billion during the period.

A voluntary retirement scheme saw an additional expense of Rs 139 million being reported during the period from a year ago.

Net finance income dipped 11% to Rs 23.6 million.

http://ceylontoday.lk/22-54192-news-detail-keells-food-in-the-red.html

Sathosa Motors profits up 86%

Ceylon FT: Sathosa Motors PLC reported an 86% growth in net profits to Rs 244.1 million during the nine months ended December 2013, interim financial results showed.

Turnover grew 24% to Rs 2.19 billion and other operating income grew 209% to Rs 102.34 million.

Administrative expenses grew 123% to Rs 218.3 million and selling and distribution expenses grew 390% to 58.27 million.

Access Engineering PLC has an 84.4% stake in the company as at the balance sheet date. 

The company is agents for Japan's Isuzu and Germany's Opel and operates workshops for a range of vehicles under these brands from cars to heavy construction vehicles.
http://ceylontoday.lk/22-54190-news-detail-sathosa-motors-profits-up-86.html

LB Finance profits down 30%

Ceylon FT: LB Finance saw net profits fall 30% year-on-year to Rs 796.9 million during the nine months ending December 2013, interim financial results showed.

Net interest income grew 26% year-on-year to Rs 4.12 billion; interest income grew 25% to Rs 9.51 billion and interest expenses grew 25% to 5.38 billion.

Auction losses saw net operating income decline by 11% to Rs 3.17 billion.

Personnel expenses grew 28% to Rs 979.5 million, depreciation charges grew 6% to Rs 244.69 million and other operating expenses grew 10% to Rs 751.6 million.

Loans and receivables stood at Rs 17.5 billion as at end December 2013, against Rs 16.45 billion as at end March 2013. Lease rentals and stock out on hire stood at Rs 29.99 billion, from Rs 28.2 billion in March.

Customer deposits stood at Rs 45.2 billion as at end December 2013, up from Rs 38.7 billion as at end March 2013.

http://ceylontoday.lk/22-54186-news-detail-lb-finance-profits-down-30.html