Sri Lanka stocks close at more than 11-month high on foreign buying

May 16 (Reuters) - Sri Lanka stocks closed at their highest in more than 11 months on Friday, led by foreign buying in the market heavyweight, John Keells Holdings PLC, and large caps on positive market sentiment buoyed by lower interest rates.

The main stock index rose 0.48 percent, or 30.23 points, to 6,315.19, its highest close since June 10 last year.

The exchange enjoyed a net foreign inflow of 943.8 million rupees on Friday, reversing the year-to-date net foreign outflow to an inflow of 681.5 million.

Top conglomerate John Keells Holdings PLC rose 0.2 percent to 235 rupees, while shares in Commercial bank of Ceylon PLC, rose 0.5 percent to 129.60 rupees. Large cap share Ceylon Tobacco Company PLC rose 1.65 percent to 1,089.50 rupees.

Foreign investors bought a net 3.1 million shares in Keells, which accounted for about 53 percent of the day's turnover of 1.61 billion rupees, exceeding this year's daily average of 1.04 billion.

Positive global investor sentiment on the Indian market, where the Hindu nationalist party of Narendra Modi is leading in vote counting after national polls, could boost sentiment in Sri Lanka, some brokers said.

"Sri Lanka also could get some foreign attraction due to Indian elections," said a stockbroker who asked not to be named. "Investors will look at the region because of India and they may invest in Sri Lanka also."

However, analysts said a landslide election victory for Modi would not have a direct impact on Sri Lanka's stocks, but a new government's approach to the Colombo government's post-war issues will have an indirect impact on investor sentiment.

Analysts still see concerns over sluggish economic growth because of lower credit growth and consumer spending.

Stockbrokers said many investors had been compelled to return to the stock market due to interest rates at multi-year lows that have made fixed income assets less attractive.

It rose 1.43 percent in the last six sessions, while it enjoyed a 8.09 billion Sri Lanka rupee ($62.08 million) ($54.85 million) inflow in the last eight sessions.

Despite a multi-year low interest rate regime, data showed private sector credit grew 4.4 percent in February from a year earlier, the slowest expansion since May 2010, while imports in February fell 6.2 percent on the year. 

($1=130.3250 Sri Lanka Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Clarence Fernandez)

Sri Lanka shares close up 0.5-pct

May 16, 2014 (LBO) - Sri Lanka's stocks closed 0.48 percent higher with strong foreign buying amid Indian stock market moved up more than six percent to a record high on Friday, brokers said.

The Colombo benchmark All Share Price Index closed 30.23 points higher at 6,315.19 up 0.48 percent. The S&P SL20 closed 0.18 points higher at 3,479.17, up 0.01 percent.

Turnover was 1.61 billion rupees, up from 757.85 million rupees last Tuesday with 109 stocks closed positive against 75 negative.

John Keells Holdings closed 50 cents higher at 235.00 rupees with nine off market transactions of 832.67 million rupees contributing 52 percent of the daily turnover.

JKH’s W0022 warrants closed 50 cents lower at 63.00 rupees and its W0023 warrants closed 30 cents higher at 69.80 rupees.

Nestle Lanka closed 41.30 rupees higher at 1,988.80 rupees with an off market transaction of 171.14 million rupees contributing 11 percent of the turnover.

Tokyo Cement closed 90 cents higher at 41.20 rupees, attracting most number of trades during the day.

Foreign investors bought 1.20 billion rupees worth shares while selling 254.41 million rupees worth shares.

Ceylon Tobacco Company closed 17.70 rupees higher at 1,089.50 rupees and Sri Lanka Telecom closed 1.40 rupees higher at 48.00 rupees, contributing most to the index gain by reversing their previous losses even though few shares traded in the exchange.

John Keells Hotels closed 1.00 rupee higher at 15.00 rupees and Trans Asia Hotels closed 4.70 rupees higher at 94.70 rupees.

Bukit Darah closed 80 cents higher at 669.90 rupees and Ceylinco Insurance closed 18.10 rupees higher at 500.00 rupees.

HNB closed 3.00 rupees lower at 155.00 rupees and Union Bank closed 20 cents lower at 20.40 rupees.

Carson Cumberbatch closed 1.80 rupees lower at 400.10 rupees and Distilleries closed 90 cents lower at 205.10 rupees.

Chevron Lubricants Lanka closed 2.20 rupees lower at 272.10 rupees.

Sri Lanka consumer durables seller sees demand pick up

May 16, 2014 (LBO) - Singer (Sri Lanka) Plc, a consumer durables retailer said there was a pick-up in demand in the March 2014 quarter thought economic conditions were still sluggish and installment collections were difficult.

Group net profits fell 26 percent from a year earlier to 129 million rupees in the March 2014 quarter as revenues rose. The group reported earnings of 1.04 rupees for the quarter.

Group revenues rose 7.9 percent to 6.7 billion rupees and expenses rose 8.7 percent to 4.2 billion rupees. Direct interest costs rose 25 percent to 185 million rupees. Gross profits grew 5.2 percent to 2.3 billion rupees.

"Despite the fact that the current business environment is sluggish there is a reason for optimism when we look at the growth of revenue over the last one year," group chief executive Asoka Pieris told shareholders in an interim statement.

"In the 2nd quarter of last year there was a decline of 1 percent in Group revenue followed by a 3 percent decline in the 3rd quarter of last year.

"In the 4th quarter of last year we experienced a 3% growth and in the 1st quarter of 2014, we have experienced an 8 percent growth.

"This leaves us with optimism that there will be a double digit growth in the 2nd quarter of 2014 and onwards."

Net finance costs fell to 275 million rupees from 316 million a year earlier.

Pieris said collections were difficult and the firm was using it call centre and text messages to remind customers to keep arrears under control.

Sanasa Development Bank shows disappointing quarterly results

By J. Kurukulasuriya

Ceylon FT: Sanasa Development Bank PLC, which is 99.98% owned by the public, showed a disappointing result in the quarter ended 31 March 2014, with profits falling 51% over the corresponding previous year’s results, to Rs 57 million after VAT and income tax.

Sanasa is a relatively small bank with 842 employees in 82 branches.

Fee and commission income increased 31% to Rs 33 million, but fee and commission expenses rose by 141% to Rs 5.5 million. Other operating income (net) was up 232%.

Impairment for loans and other losses rose by 149% to Rs 106 million. Personnel expenses rose 46% to Rs 175 million.

The bank’s core capital adequacy ratio as a percentage of risk weighted assets – (minimum requirement for a bank being 5%), stood at 12.87, and the total capital adequacy ratio (as a percentage of risk weighted assets –minimum requirement for a bank being 10%) stood at 12.98.

The bank reported a return on equity of 7.8% after taxes, and statutory liquid asset ratio (minimum requirement, 20%) of 21.4%.

The bank has a stated capital of Rs 2,526 million in ordinary shares, (total No. of Shares 25, 175,322) and relatively low reserves of Rs 914 million.

Its main shareholder is People’s Leasing PLC with 3.9%, followed by CB NY S/A International Finance Corporation (3.57%), and Kegalle Sanasa Share Holders Trust Company Limited (2.65%). H.A. Van Starrex is the biggest individual shareholder with 1.59%.

Of the directors, M.S.Kiriwandeniya holds 1,712 shares and T. Karunasena holds 3,301 shares. The shares traded between Rs 82 and 73.50 in the quarter.
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Renuka Holdings report a record profit

By J. Kurukulasuriya

Ceylon FT: Renuka Holdings PLC’s revenue hit a record high of Rs 7.2 billion for the financial year ended 31 March 2014, and unaudited profits were up 44 % - Rs 397 million as compared to Rs 275 million in 2013.

The total external sales were Rs 7,153 million for the year, and new segments were included in the accounts for better presentation. The major segment was Agri Food - 33%, followed by Consumer Goods -32%, Dairy -18%, Automotive -16%, and Investment and Services, less than 1%.

“The agri-food sector continued to be a key contributor in revenue as well as profitability, and the dairy sector managed to increase its turnover” reports the Executive Director, Shamindra Rajiyah, in his report on the accounts.

During the period, Renuka Agri Foods PLC disposed its 100% owned subsidiary Renuka Teas (Ceylon) (Pvt) Ltd., to Renuka Shaw Wallace PLC for a consideration of Rs 96,875,000. The initiatives taken for the purchase of its own shares by Renuka Developments Ltd., was withheld and Renuka Organics (Pvt) Ltd., has disposed 50% stake in Renuka Developments Ltd., to Renuka Shaw Wallace PLC for a consideration of Rs 450,000,000.The company’s fully owned subsidiary Renuka Consumer Foods Ltd., has sold 21.12% of the stake in Shaw Wallace Ceylon Ltd., to Eagle View Management Limited for a consideration of Rs 211,209,261 and further 21.12% of the stake in Shaw Wallace Ceylon Ltd., has been sold to CJ Patel and Company Limited for a consideration of Rs 211,209,251.

Renuka Organics (Pvt) Ltd., redeemed 2,500,000 debentures issued to Renuka Agri Foods PLC. Renuka Consumer Foods Ltd., redeemed 6,900,000 debentures issued to Renuka Shaw Wallace PLC during the financial year.

The stated capital of the group is Rs 175 million with healthy accumulated reserves of Rs 2,268 million. The stated capital consists of 44,517,313 voting and 6,428,415 non-voting shares. The ordinary shares traded between Rs 35 and Rs 28.50 and non-voting shares between Rs 20.50 and Rs 24.90.

The major shareholder is Renuka Group Ltd (51%), The NSB holds 6%, and Insurance Corporation 5%. Dr. S.R. Rajiyah & Mrs. I.R. Rajiyah (Jointly) hold 5%.

The percentage of ordinary shares held by the public as at 31March 2014 was 42.94% and non-voting was 94.61%.
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The Kingsbury gets out of the red

By J. Kurukulasuriya

Ceylon FT: The Kingsbury PLC, a part of the Hayleys PLC group, reported increases in administrative expenses by 170%, marketing expenses by 149% and finance expenses by 235% in the year ended 31March 2014; but a 994% increase in turnover to Rs 2,213 million, enabled the company to record a profit of Rs 32 million, getting out of the red following a loss of Rs 449 million in the previous year, as per unaudited accounts released recently.

The company acquired property, plant and equipment for Rs 451 million.

The company has a stated capital of Rs 836 million in ordinary shares (increased from Rs 176 million in 2013, due to a Rs 660 million rights Issue of shares at a price of Rs 10 each in September). Share issue expenses were Rs 4.4 million.

Kingsbury Managing Director L. T. Samarwickrama, is an internationally qualified hotelier and specialist in hotel design and development. He was the first Sri Lankan manager to be appointed by the Beaufort International Chain and is associated with Amaya Leisure PLC Ltd., and Hunas Falls Hotels PLC.Hayleys PLC is the major shareholder ( 46%), and K. Dhammika Perera holds 48.38% directly and indirectly of the total issued shares of Hayleys PLC, which holds 112,307,057 shares in the hotel. Carbotels Pvt Ltd., holds 13% and the EPF holds 10.5%, Bank of Ceylon 3% and National Savings Bank 1%, Renuka Hotels Ltd., holds 0.98% and Renuka City Hotels holds 0.93%.

The percentage of public holding as at 31.03.2014 was 39.83%.

The shares traded at a price of between Rs 12 and Rs 14.10 during the quarter.
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Union Bank profits plunge

Ceylon FT: Union Bank of Colombo PLC reported a net profit of Rs 23.15 million at group level for the first quarter ended 31 March 2014, down 56% from Rs 53.13 million a year ago, interim financial results showed.

At bank level, net profits fell 88% to Rs 7.65 million, down from Rs 62.69 million a year ago.
The bank reported a group net interest income of Rs 384.07 million, up 8% from a year ago, with total operating income growing 16% to Rs 564.99 million.

Individual loan impairment costs grew 870% to Rs 9.4 million and collective impairment costs grew 269% to Rs 66.06 million. Loan write offs amounted to Rs 4.36 million.

Personnel expenses grew 25% to Rs 185.47 million, depreciation and amortization grew 27% to Rs 55.9 million and ‘other’ expenses grew 30% to Rs 199.95 million.

The group’s deposit base grew 5% from the end of December 2013 to Rs 30.92 billion as at end March 2014, and the loan book expanded 8% to Rs 27.4 billion.
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