Sri Lanka bourse ends tad weaker; HNB leads

(Reuters) - Sri Lankan stocks slipped on Monday, led by Hatton National Bank PLC, in thin trade as investors waited for directions after the United Nations announced it would probe alleged war crimes by the island nation.

The main stock index ended weaker 0.06 percent - or 3.86 points - at 5,968.31, further moving away from the more-than-five-week high it hit last Thursday.

The UN on Thursday launched an inquiry into war crimes allegedly committed by both Sri Lankan state forces and Tamil rebels during the conflict that ended in 2009, saying the government had failed to investigate properly.

Analysts said the investor sentiments were hit by a U.N. resolution approved an international probe into the island nation's war crimes last week.

"On the retail side, the wait and see approach could continue for some time, while we have not seen any change from foreign side so far," a stockbroker said on condition of anonymity.

Analysts said the outcome of the resolution was expected, but investors sentiment has been dented over concerns it could hurt the country's economy. Several potential buyers of risky assets are awaiting a clear direction.

The bourse suffered 2.77 billion rupees of foreign outflow on Friday, a day after the resolution was passed. But brokers said the foreign selling was not due to the resolution and the relevant foreign fund has been on the selling side since February.

On Monday, the bourse saw a net foreign inflow of 55.8 million rupees worth of shares, but foreign investors have been net sellers of 6.85 billion rupees so far this year.

The days turnover was 464.4 million rupees ($3.55 million), near half of this year's daily average of 907.5 million rupees.

Shares in Hatton National Bank PLC fell 3.91 percent to 150 rupees a share while Nestle Lanka PLC fell 0.60 percent to 1997.90 rupees. 

($1 = 130.7000 Sri Lanka Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Joyjeet Das)

Sri Lanka stocks close flat

Mar 31, 2014 (LBO) - Sri Lanka's stocks close flat Monday with thin foreign activity on the bourse, brokers said.

The Colombo benchmark All Share Price Index closed 3.86 points lower at 5,968.31 down 0.06 percent. The S&P SL20 closed 1.25 points higher at 3,279.92, up 0.04 percent.

Turnover was 464.39 million rupees, down from 3.29 billion rupees last Friday with 74 stocks close positive against 105 negative.

Commercial Bank closed 10 cents higher at 123.00 rupees with market transactions of 48.80 million rupees contributing to 11 percent of the daily turnover.

Foreign investors bought 113.96 million rupees worth shares while selling 58.15 million rupees worth shares.

Hatton National Bank closed 6.10 rupees lower at 150.00 rupees and Sri Lanka Telecom closed 70 cents lower at 46.10 rupees.

Ceylon Tea Services closed 38.90 rupees lower at 660.10 rupees and Nestle Lanka closed 12.10 rupees lower at 1,997.90 rupees.

Lanka Ashok Leyland closed 207.00 rupees lower at 1,292.00 rupees.

Bukit Darah closed 19.90 rupees higher at 590.90 rupees and John Keells Holdings closed 2.00 rupees higher at 227.00 rupees.

JKH’s W0022 warrants closed 2.30 rupees higher at 68.60 rupees and its W0023 warrants closed 70 cents higher at 71.90 rupees.

Ceylinco Insurance closed 79.00 rupees higher at 1,400.00 rupees and Asiri Hospital Holdings closed 50 cents higher at 22.20 rupees.

Sri Lanka's NDB raises US$125mn with IFC backing

Mar 31, 2013 (LBO) - International Finance Corporation, a World Bank unit has helped syndicated a 125 million US dollar loan for Sri Lanka's NDB Bank with a further 70 million US dollars to be provided by June 2014.

IFC itself has provided 20 million US dollars.

Union National Bank, UAE had provided 25 million; HSBC, 25 million, Standard Chartered 20 million; Axis Bank, India 15 million, Doha Bank, Qatar 10 million and Bank Muscat, Oman 10 million dollars, IFC and NDB said in a joint statement.

Another 70 million would come by June 2014 will be raised from international development finance institutions.

NDB chief executive Rajendra Theagarajah said the loan will be used to finance small and medium enterprises.

But the second part of the loan will also be used to finance infrastructure.

"IFC's syndication for NDB demonstrates growing investor confidence in Sri Lanka, and will help NDB expand finance options across the country," Adam Sack, IFC's country manager said.

HSBC was the 'strategic advisor' the syndication, the two firms said.

Sri Lanka tea production drops 10-pct in February

Mar 31, 2014 (LBO) - Sri Lanka's tea production has dropped 10 percent to 22.4 million kilograms in February 2014 from a year earlier, and the March crop is also expected to be fall amid a drought, a tea brokerage has said.

in February the high grown harvest was down 16 percent, the medium grown harvest by 9 percent and the low grown harvest by 8 percent.

John Keells Plc, in its weekly tea market report said most planting districts have seen drier weather in March 2014 coupled with intermittent showers and reports from plantations suggested that the crop will be lower than last year's 32.1 million kilograms.

Up to February 2014 the total crop was down by half a million kilograms or 1.1 percent, the brokerage said.

In the first two months of 2013 tea production surged to 48.4 million kilograms from 43.2 million a year earlier.

2014 is expected to be a so called 'El Nino' year, where droughts are seen in several parts of the year.

In 2014 tea prices have been firmer. The national sales average rose to 481.83 rupees in February 2014 from 422.68 a year earlier.

Alumex to debut on CSE today

Industry leader Alumex Ltd. will be the latest manufacturing company to debut on the Colobo Stock Exchange (CSE) today.

Following a successful IPO raising Rs. 838 million, Alumex’s 299.3 million shares bearing ALUM-N-0000 security code will be listed on the Diri Savi Board.

The IPO involved 59.9 million Ordinary Voting Shares at Rs. 14 per share. It drew 840 applications requesting 69 million shares worth Rs. 966 million. There was heavy retail interest for the IPO.

A leader in the aluminium extrusions industry, Alumex was the 10th subsidiary of Hayleys Group to be listed in 22 years.

Of the funds raised, Rs. 250 million goes for the company’s expansion and Rs. 588 million to existing major shareholders (via offer for sale of vendor shares). The latter will continue to own 76% post-IPO.

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RAM assigns AA- to RPC ‘s proposed Rs 3.5 b debenture

RAM Ratings Lanka has reaffirmed respective long- and short-term corporate credit ratings of AA- and P1 to Richard Pieris and Company (RPC). Concurrently, the long-term AA- rating has been assigned to the Company’s proposed LKR 3.5 billion listed unsecured redeemable debentures (2014/2019).

Both the long-term ratings carry a stable outlook. Richard Pieris is a diversified conglomerate with wide ranging business interests including retail, plantations, rubber, tyre, plastics and services.

The ratings are upheld by the Group’s diversified business interests. Having started operations in rubber related operations over 80 years ago, the Group has diversified largely via organic growth. Richard Pieris is currently one of the largest conglomerates in Sri Lanka, involved in a wide range of industries that include retail, plantations, rubber, tyre, plastics and other services. Notably, diversification has limited the Group’s overall revenue volatility over the years. Further, the ratings are also upheld by the Group’s strong market positions in key businesses.

The Group enjoys strong market positions in several of its key businesses. The Group is the market leader in plastics, tyre and plantation industries while having significant presence in retail which are the core business segments of the Group.

The Group is able to leverage on its retail brand name “Arpico” which is well known locally. In addition, the Group’s debt-protection metrics are also deemed above average despite high gearing levels. Despite a higher gearing levels of 1.09 times by 9M FY March 2014 (FY Mar 2013: 0.94 times), its funds from operations (“FFO”) debt coverage clocked in at 0.29 times at 9M FY Mar 2014 declining from FY Mar 2013’s levels of 0.43 times. Meanwhile, the Group’s operating cash flow to debt coverage improved to 0.42 times as at end-December 2013.

While the Group’s planned capital expenditure is mainly driven by plantations and retail segments which is expected to increase the gearing levels going forward, the Group’s FFO debt coverage levels are expected to improve to 0.35 times. Short-term debts accounted for 58% of the Group’s borrowings as at 9M FY Mar 2014, whereas the ratio of its cash and cash equivalents to short-term debts only up to 0.82 times, which mitigates our concerns on the gearing levels of the Group.
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Outflow from equities, securities tops Rs 14.25B

Ceylon FT: The net foreign outflow from the country’s equity and government securities market topped Rs 14.25 billion last week after foreigners sold shares worth Rs 2.77 billion during the week, official data showed. 

Net inflows to the government securities market continued to improve reaching Rs 871 million last week, but the heavy foreign selling in the stock market took the total net outflow from the equities and securities markets to Rs 14.25 billion since the first week of February 2013 when the US Fed trimmed down its stimulus programme and prompted outflows from emerging markets.

The lackluster earnings performance of listed companies in 2013 and sluggish private sector credit growth also lowered foreign sentiments, market analysts told Ceylon FT.

Economists said the strong 7.3% growth rate for 2013 was driven mostly by construction and government spending, and was not sustainable.

“We are not seeing private sector led growth and healthy exports growth. Foreign direct investments have been below potential as well, which means the environment is not yet conducive to drive sustainable real economic growth,” a dealer said not wanting to be named.
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Japanese investors to take 16% Asia Cap stake for Rs. 384 m

Two Japanese investors are to take a 16% stake in Asia Capital Plc for Rs. 383 million via a private placement.

Asia Capital’s Board last week resolved to issue 21.329 million shares at Rs. 18 each. The shares amount to 16.3% stake post-private placement.

The two Japanese investors are Y. Watanabe (11.54 million shares) and E. Watanabe (9.79 million shares).

Asia Capital will use the funds raised via private placement to settle outstanding liabilities and for working capital purpose. The move is subject to shareholder and regulatory approval. At present S. Vijayeswarana holds 85% stake in Asia Capital.

ACAP’s net asset per share at company level was Rs. 6.77 as at 31 December 2013 down from Rs. 9.67 from end 31 March 2013. At Group level it was Rs. 2.67 down from Rs. 7.

The highest price in the quarter ended on 31 December 2013 was Rs. 21.80 whilst the lowest and closing price was Rs. 17. On Friday the share closed at Rs. 16.10.

Loss-making ACAP had Rs. 452 million in short-term interest bearing borrowings and Rs. 239 million in overdraft. Long-term loans amounted to Rs. 1.25 billion.

For the nine months ended 31 December 2013, net loss for equity holders of ACAP was Rs. 444.8 million, up from Rs. 386 million a year earlier.
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