Sri Lankan shares at 2-week low despite foreign buying

COLOMBO, Feb 5 (Reuters) - Sri Lankan shares fell to a two-week low on Wednesday, led by declines in diversified and banking shares despite foreign buying, though stockbrokers expect the bourse to gain due to a lower interest-rate regime. 

The main stock index fell 0.70 percent, or 43.71 points, to 6,175.63, its lowest level since Jan. 21. 

"Signals are good for the market, but investors are awaiting quarterly earnings and what might happen in the upcoming UNHRC session in March," said a stockbroker asking not to be named. 

Some stockbrokers said investors will shrug off political risks from renewed pressure by the U.S. to bring a fresh resolution against Sri Lanka at a U.N. Human Rights Council meeting in March, because the market had been expecting the worst. 

Foreign investors were net buyers of 63.8 million rupees ($488,400) worth of shares on Tuesday, extending year-to-date net foreign inflows to 1.39 billion rupees. 

They bought 22.88 billion rupees worth of stocks last year. Shares of conglomerate John Keells Holdings PLC fell 1.10 percent to 232.20 rupees, while Commercial Bank of Ceylon PLC, the biggest listed lender on the bourse, fell 5.20 percent to 120.40 rupees. 

Stockbrokers said retail and institutional investors were active in the market after interest rates on treasury bills eased at a weekly auction on Wednesday to multi-year lows, making fixed-income assets unattractive. 

The index has risen 4.45 percent so far this year, following a 4.8 percent gain in 2013. It fell in the previous two years. 

The day's turnover was 1.17 billion rupees, more than last year's daily average of about 828.4 million rupees. 

($1 = 130.6350 Sri Lanka rupees) 

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

Piramal Glass Ceylon announces dip of 18% in domestic sales and 7% in operating profits

Press Release

Decline attributed to domestic market and increase in input costs

Colombo, January 30, 2014: Piramal Glass Ceylon PLC (PGC) has announced its 3rd
Quarter results for the Financial Year 2013-14 with a dip in both the Turnover and the operating profitability for the Quarter as well as for the year.

The sales were at Rs. 3,864 million as against Rs. 4,156 million in the 1st nine months of previous year and the PBT from operations was at Rs. 130 million as against Rs. 636 million whilst the company reported an overall Profit before Tax of Rs. 783Mn which includes the profit from the sale of land.

The YTD sale saw a drop of 7% which was contributed with a decline of 11% in the domestic market from Rs.3,107Mn in F 2013 to Rs.2,755Mn in F 2014and growth of 5% in the export market from Rs.1,049Mn in the first nine months of F2013 to Rs.1,109Mn in the similar period of F 2014.

The company achieved a sale of Rs. 1,389 million in Q3 F2014 as compared to Rs. 1,525 million in Q3 of F2013. The domestic sale fell by 18% from Rs. 1,107 million to Rs. 967 million. The main sectors affected in the domestic market were the Aerated Water & the Beer segments. The export sale remained in par with that of previous year during the quarter at Rs.422Mn.

The operating Profits for the Quarter fell from 19% of Q3 in F2013 to 7% in Q3 of F2014.

Also the YTD operating profit was at 8% as against 20% of the previous year similar period. 

The domestic sales drop coupled together with the ever increasing cost factors from all sides has impacted the year’s profitability ratios very badly.

All costs including Raw Material, Packing Material, Energy and other direct and indirect costs have seen a substantial increase during the year which is well reflected in the company’s profit figures.

The export volumes bailed out the company amidst the drastic domestic sales decrease.

Yet these additional export volumes which were done on mass International market did not fetch realisations as high as the present niche market exports thus affecting the profit figures as against last year. Yet these sales helped PGC ensure utilisation of capacity of the furnace which would have otherwise further increased the product cost.

In the present economic environment it seems imperative that the domestic bottle prices would have to be revised to absorb the high cost increase. PGC has absorbed the major portion of these costs during the year which has affected the company’s performance and continuation of same would affect the company in the long run rather adversely.

The Profit after Tax as at 31st December 2013 was Rs. 773 million, which included Rs. 652 million of Land sale profit. Thus, the Operational PAT was Rs. 121 million as against the PAT of Rs. 616 million in FY13.

About Piramal Glass:
Piramal Glass Ceylon (Formerly Ceylon Glass Company) is the only Glass Bottle Manufacturing plant in Sri Lanka. It had the opportunity of coming under the Umbrella of Piramal Group in 1999. Presently Located in Horana, it has been in existence for over 55 years. The company originally at Rathmalana was relocated at Horana in 2007 as a BOI venture under the auspices of “300 factory programme of Mahinda Chintana”.

PGC at its 250 Tonne Capacity Manufacturing Facility has the capability to offer glass containers in different shapes and colours for multiple industries such as Food, Liquor, Pharmaceutical, Agro chemical & Soft drinks.

About Piramal Group:
The Piramal Group led by Ajay G. Piramal is one of India’s foremost business conglomerates. Driven by the core values of Knowledge Action Care, the Piramal Group has a formidable presence in healthcare, drug discovery & research, glass, real estate and financial services. The Piramal Group also pursues sustained community activities in healthcare, education, emergency medical services, and heritage restoration.

Sri Lanka rupee to face intermittent bout of depreciation pressure in 2014: Deutsche

Sri Lankan rupee will face intermittent bout of depreciation pressure during 2014, as and when global risk aversion increases, says Deutsche bank in a new study conducted to assess the risks to the rupee.

The Bank says, it is plausible for the rupee to test its all-time lows (134 vs the USD) if the Emerging Market currency turmoil gains momentum and persists for a longer period.

“Even if the EM currency turmoil abates in the next few weeks, there could be pressure on the Sri Lankan rupee, due to the Fed’s tapering actions,” added Deutsche on its new report.

However, the Bank says risk of a large, disorderly depreciation of the rupee (as was seen in 2012) remains low in the near-term, given that the BOP dynamic remains positive for the current year.

It also says this will also be coupled to the fact that the Sri Lankan rupee has already depreciated 15% since 2012.

“We think rupee will remain range bound in 2014, with 130 likely to be the floor,” it added.

Starting from 2012, the Sri Lankan rupee has depreciated by 15% till date, which is comparable to the currency trend of the other South-Asian current account deficit countries such as India (-14.9%) and Pakistan (-14.7%) during the comparable period.

“So bulk of the currency adjustment has also occurred in Sri Lanka’s case, which reduces the risk of a disorderly depreciation of the rupee in the immediate near term”, adds the bank

“It is unlikely that the rupee will go for a free fall, as was seen in 2012, in light of the ongoing improvement on the macro front” it points out.

The Deutsche bank says the trade deficit, current account deficit, credit growth, inflation and FX reserves of the country has improved.

“Bulk of the adjustment has already occurred on the currency front,” announced the Bank.

However the Bank remain concerned about the rupee’s medium term outlook, due to factors such as easy monetary policy stance and rapid increase in short-term external debt.
www.news360.lk

Sri Lanka stocks close down 0.7-pct

Feb 05, 2014 (LBO) – Sri Lanka stocks close lower Wednesday with banking and diversified stocks losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 43.71 points lower at 6,175.63, down 0.70 percent. The S&P SL20 closed 48.40 points lower at 3,382.82, down 1.41 percent.

Turnover was 1.16 billion rupees, down from 1.33 billion rupees last Monday, with stocks of 133 firms closing in the red against 53 gainers.

Commercial Bank topped the turnover contribution with 329.21 million rupees of market transactions contributing to 28 percent of the turnover.

The aggregate value of off market deals only accounted for 8.8 percent of the daily market turnover.

Touchwood Investments closed 30 cents higher at 3.40 rupees and S M B Leasing closed 20 cents lower at 1.30 rupees, attracting most number of trades during the day.

Foreigners bought 434 million rupees worth shares while selling 370 million rupees of shares.

Commercial Bank closed 6.60 rupees lower at 120.40 rupees and JKH closed 2.80 rupees lower at 232.20 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 2.90 rupees lower at 70.00 rupees and its W0023 warrants closed 2.20 rupees lower at 75.30 rupees.

Ceylon Tobacco Company closed 7.40 rupees lower at 1,276.20 rupees and Cargills Ceylon closed 4.90 rupees lower at 149.00 rupees.

Lanka IOC closed 1.20 rupees higher at 38.80 rupees and Nestle Lanka ended 5.00 rupees higher at 2,180.00 rupees.

Carson Cumberbatch ended 2.40 rupees lower at 347.00 rupees and Distilleries closed flat at 211.10 rupees.

Bukit Darah ended 30 cents lower at 612.00 rupees and LOLC closed flat at 75.00 rupees.

Sri Lanka Treasuries bids rejected

Feb 05, 2014 (LBO) - Bids for 3 and 6 month tenors at a weekly Treasury bills auction was rejected Wednesday, but the 12-month yield fell 04 basis points to 7.10 percent.

The state debt office said 15.4 billion rupees of bids were accepted for 12-month bills after offering 12.0 billion rupees of bills for auction.

Sri Lanka Dimo profits higher

Feb 05, 2014 (LBO) - Profits at Sri Lanka's Diesel and Motor Engineering Plc rose to 110 million rupees in the December 2014 quarter from 4.5 million rupees a year earlier helped by better margins and lower interest costs, interim accounts showed.

Dimo has the agency for Mercedes and Tata in Sri Lanka.

The firm reported earnings of 12.47 rupees per share for the quarter. For the nine months to December DIMO reported earnings of 21.09 rupees per share on total profits of 187 million rupees, which were down 60 percent.

Dimo said revenues fell 13 percent to 5.6 billion rupees in the December 2014 quarter from a year earlier, but costs also fell 13 percent to 5.5 billion rupees, and it grew gross profits 20 percent to 1.09 billion rupees.

Interest costs also fell 21 percent to 107 million rupees.

Sri Lanka's motor companies have been hit after the state raised taxes on cars used by ordinary citizens, especially small ones, while the elected ruling class gets tax free cars and state workers get tax slashed cars.

State workers have also been selling their tax free 'permits' to ordinary citizens allowing the richer people to import luxury vehicles.

Sri Lanka has a habit of subsidizing energy with bank and central bank credit, which triggers even more imports, a balance of payments crisis and currency depreciation.

Policy makers then raise taxes on identified imports like cars, imagining that it will help cure currency pressure, which is a monetary problem needing higher interest rates and a halt of liquidity injections (printing money) in to the banking system.

First Capital Holdings profits grow 15%

Ceylon FT: First Capital Holdings PLC reported a group net profit of Rs 263 million for the nine months ended December 2013, up 15% from a year ago, interim financial results showed.

Turnover grew 15% to Rs 1.33 billion with net trading income amounting to Rs 398 million, up 23% from a year ago.

Earnings per share amounted to Rs 2.46, up from Rs 2.10 a year ago.

The gain in profits was largely due to 'higher gains on sale of trading securities, partly offsetting higher administrative expenses', an official of the company said.

"First Capital Treasuries Limited, the group's primary dealer arm was again the primary source of revenue, taking advantage of interest rate movements and exceeding targets. 

Other business segments like structuring and placement of corporate debt securities and investment management (Corporate Debt Securities) also contributed to the results, although performance was below expectations," First Capital Holdings PLC CEO/Director Jehaan Ismail told shareholders.

"We were able to hold strategic trading positions in the primary dealer business and benefited through the continuous reduction of policy rates made by the Central Bank of Sri Lanka (CBSL). Both the Standing Deposit Facility Rate (Repurchase) and Standing Lending Facility Rate (Reverse Repurchase) were reduced by 1% and 1.5% respectively during the period under review. Currently the Standing Deposit Facility Rate and Standing Lending Facility Rate stand at 6.50% and 8.00% respectively.

"In the light of relaxation of governing protocols relating to primary dealer operations and the issue of new licences, the competition is now more intense.

We have taken steps to protect our human resource base and to aggressively maintain and build on our client relationships.

"First Capital Limited continues to seek mandates in the listed corporate debt market and we expect to close some mandates in the last quarter of 2013/14. First Capital Asset Management Limited has been undertaking many sales calls across a wide range of personal and institutional clients and we expect to keep growing our assets under management, especially in the unit trust business.

"There was muted activity in the stock market and we struggled to make both brokerage and margin trading revenues. However, we have seen a minor bounce back in January 2014 and we hope this will continue and increase during the rest of the year.

"The group continues to explore other business opportunities, especially in the corporate advisory space and will also remain committed to managing risk effectively and being fully compliant with regulations at all times. 

We are thus confident that we are well on the way towards becoming a full-fledged investment bank,"Ismail said. 

The group's assets stood at Rs 15.5 billion as at end December 2013, compared with Rs 13.9 billion a year ago, with financial investment held for trading amounting to Rs 12.2 billion, up from Rs 7 billion a year ago.
www.ceylontoday.lk

PLC profits up 2.4%

Ceylon FT: People's Leasing and Finance PLC (PLC) saw group net profits grow 2.4% year-on-year to Rs 2.3 billion for the nine months ended December 2013, interim financial results showed.

Interest income grew 15% to Rs 14.77 billion during the nine-month period and interest expenses grew 11.3% to Rs 8.36 billion, leading to a net interest income of Rs 6.38 billion, up 20.1% from a year ago.

Impairment charges for loans and receivables grew 86.3% to 1.12 billion.

Total operating expenses grew 14.1% to Rs 4.17 billion.

Earnings per share amounted to Rs 1.46, up marginally from 1.42 a year ago.

The group's asset base increased 12.2% to Rs 113.44 billion. Net asset per share amounted to Rs 11.76, up six cents from a year ago.

Its loan book grew 4.4% to Rs 92.2 billion as at end December 2013. 

Lease and advances, insurance and other business lines showed growth in earnings. State-owned People's Bank has a 75% stake in the company followed by the Employees' Provident Fund with a 4.77% stake and state-owned National Savings Bank with 3.75% and Distilleries Company of Sri Lanka with 1.55%.

www.ceylontoday.lk

John Keells Hotels profits grow

Ceylon FT: John Keells Hotels PLC, which operates luxury resorts in Sri Lanka and the Maldives, reported a net profit of Rs 599.4 million for the nine months ended December 2013, up 59% from a year ago, interim financial results filed with stock exchange showed.

Revenue grew 20% during the nine-month period to Rs 7.5 billion with gross profit amounting to Rs 4.8 billion, up 18% from a year ago.

Administrative expenses grew 9% to Rs 2.5 billion and other operating expenses grew 21% to Rs 1 billion.

Net finance costs fell 17% to Rs 273.7 million.

Earnings per share stood at 41 cents, compared with 26 cents a year ago. Net assets per share amounted to Rs 7.03, up from Rs 6.79 a year ago.

The company operates several hotels under the cinnamon and Chaaya brands in Sri Lanka and the Maldives.

John Keells Holdings PLC holds an 80.32% stake in the company, followed by the Employees' Provident Fund at 5.39% and Sri Lanka Insurance Corporation Ltd - Life Fund at 5%.

www.ceylontoday.lk