Sri Lankan shares down marginally; John Keells boosts turnover

(Reuters) - Sri Lankan shares ended a tad weaker on Thursday, hovering near their lowest close in more than three weeks hit on Friday, while conglomerate John Keells Holdings boosted turnover, brokers said.

Analysts said continued foreign buying and expectation that interest rates would come down further will boost market sentiment.

The main stock index ended 0.09 percent, or 5.90 points, weaker at 6,280.16. On Friday, it had closed at its lowest level since May 7.

Turnover was 896.2 million rupees ($6.88 million), less than this year's daily average of 1 billion rupees.

The bourse saw a net foreign inflow for the sixth straight session. Foreign investors bought 514.1 million rupees worth of shares, extending the year-to-date net foreign inflows to 3.88 billion rupees.

Analysts said the market expects a further fall in interest rates after central bank governor Ajith Nivard Cabraal told Reuters on Friday that the central bank is creating room to cut interest rates further.

Cabraal signalled "a lot a space being created for some more dovish action".

Stockbrokers expect the market to gain in the near future due to lower interest rates after the central bank kept key rates at multi-year lows in May for the fourth straight month, as expected.

Shares of Sri Lanka Telecom PLC fell 2.71 percent to 46.70 rupees, while Bukit Darah PLC fell 1.56 percent to 650 rupees.

Conglomerate John Keells Holdings PLC, which accounted for 58.28 percent of the day's turnover, closed flat at 235 rupees. 

($1 = 130.3450 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

Sri Lanka stocks close down 0.1-pct

June 05, 2014 (LBO) - Sri Lanka's stocks closed lower with telco stocks losing ground despite strong foreign buying backed by lower interest rate expectations, brokers said.

The Colombo benchmark All Share Price Index closed 0.09 points lower at 6,280.16, down 0.09 percent. The S&P SL20 closed 1.43 points higher at 3,473.43, up 0.04 percent.

Turnover was 896.19 million rupees, down from 1.02 billion rupees a day earlier with 100 stocks closed positive against 83 negative.

John Keells Holdings closed flat at 235.00 rupees with seven off-market transactions of 500.74 million rupees contributing 56 percent of the turnover.

JKH’s W0022 warrants closed 70 cents higher at 64.00 rupees and its W0023 warrants closed 1.00 rupee higher at 75.00 rupees.

PC Pharma closed 30 cents higher at 1.50 rupees and Laugfs Gas non-voting closed 2.30 rupees lower at 27.60 rupees, attracting most number of trades during the day.

Foreign investors bought 580.36 million rupees worth shares while selling 66.22 million rupees worth shares.

Sri Lanka Telecom closed 1.30 rupees lower at 46.70 rupees, contributing most to the index drop.

Bukit Darah closed 10.30 rupees lower at 650.00 rupees and Ceylon Tobacco Company closed 5.00 rupees lower at 1,050.00 rupees.

Cargills Ceylon closed 3.30 rupees lower at 143.20 rupees and Distilleries closed 2.00 rupees lower at 206.00 rupees.

Commercial Bank of Ceylon closed 1.00 rupee higher at 131.00 rupees and NDB closed 2.80 rupees higher at 197.00 rupees.

Nestle Lanka closed 28.70 rupees higher at 1,948.30 rupees.

Sri Lanka court orders Touchwood liquidation; appeal planned: report

June 05, 2014 (LBO) - Sri Lanka's courts have ordered the liquidation of Touchwood, a controversial forestry investment company, but a appeal of the decision is planned, a media report said.

Adaderanabiz.lk, a Colombo based business news portal quoted Touchwood chief executive Lanka Kewlegedera as saying that they firm planned to appeal the liquidation order.

Court has ordered a liquidator to be appointed by July 14, he was quoted as saying.

Touchwood ran a forestry investment scheme where investors were promised high returns from mahogany and other plantations.

Several investors however went to court asking it to be liquidated.

Meanwhile recent media reports said trees in some forestry plantations and some investors were attempting to prevent it.

Bourse ends flat; turnover up on foreign buying

Reuters: Shares hovered near their lowest close in more than three weeks and ended little changed on Wednesday, while turnover rose on buying from foreign investors and expectation that interest rates would come down further, brokers said.

The main stock index ended 0.04 points up at 6,286.06. On Friday, it had closed at its lowest level since 7 May.

Turnover was Rs. 1.02 billion ($ 7.82 million) on Wednesday, the highest since 30 May and slightly more than this year’s daily average of Rs. 1 billion.

The Bourse saw a net foreign inflow for a fifth straight session. Foreign investors bought Rs. 479.7 million worth of shares, extending the year-to-date net foreign inflows to Rs. 3.37 billion.

Analysts said the market expects a further fall in interest rates after Central Bank Governor Ajith Nivard Cabraal told Reuters on Friday that the Central Bank is creating room to cut interest rates further.

Cabraal signalled “a lot a space being created for some more dovish action”.

Stockbrokers expect the market to gain in the near future due to lower interest rates after the Central Bank kept key rates at multi-year lows in May for the fourth straight month, as expected.

Shares of Dialog Axiata PLC rose 1.02% to Rs. 9.90.

Conglomerate John Keells Holdings PLC, which accounted for 50.57% of the day’s turnover, closed flat at Rs. 235.
www.ft.lk

LOLC posts gross income of Rs. 45 b, 22% growth in profits

The LOLC Group has completed a year of consolidation and steady growth in profits recording a Profit before Tax (PBT) of Rs. 4.5 b, a 22% growth over last year.

The profits of the Group are mainly derived from its core business of financial services, complemented by the rest of the businesses. To achieve the 22% growth profits, the Group made a Rs. 45 b gross income and interest income of Rs. 28 b, 20% growth over last year.

The year 2013/14 was considered a year of consolidation for the Group with strategies taking shape in all sectors to gear for growth and long term profitability. The operating environment was full of challenges for the financial services business as well as for other sectors. The lowering interest rates in the latter part of the year was welcome as the Group believes that this positive move will trigger an increase in SME lending which will positively impact the Group’s lending business.

LOLC continued in its strategy of deleveraging itself which is now fully converted into a holding company. LOLC was the pioneering leasing company in the country and in 2011 the Company opted to move out of the leasing business gradually transferring its lending and borrowing book to its flagship finance company Lanka ORIX Finance PLC (LOFC). The Company embarked on diversification in 2009 and entered into potential growth sectors, leisure, manufacturing and trading, construction, renewable energy, agriculture and plantations.

LOLC’s financial services businesses experienced a 20% increase in interest income in line with the expansion of the portfolio. Finance costs too increased by 13% to reach Rs. 16.4 b from 14.5 b recorded in the previous year mainly due to the higher quantum of borrowing required for the lending business of LOFC, Commercial Leasing and Finance PLC (CLC) and LOLC Micro Credit Ltd (LOMC).

However the growth in interest costs slowed down due to the lowering of interest rates on short term borrowing and SWAP costs. The two listed finance companies and the leasing company recorded steady growth in profits despite provisions made on bad and doubtful debts required as a result of the pressure on collection ratios experienced by the financial services industry.

LOFC increased its profit signature by 45% which is remarkable despite higher provisions made during the year on possible defaults. The Company’s deposits grew by 33% clearly demonstrating the confidence placed by the public on LOFC’s financial stability.

CLC recorded Rs. 1.2 b as profits and continues to be strong in its business sector and is experiencing a positive impact from reducing interest rates even as the quantum of borrowing is increasing to support the growth in the portfolio.

LOMC remains strong in its profits signature contributing well to the Group. The Company’s micro business is performing well despite the clients facing two years of bad weather impacting the agriculture business affecting collections. The Company posts strong results despite these challenges and also seeing benefits from the reducing interest rates and SWAP costs. The Company continues to source 100% of its borrowing from the bilateral and multilateral funding partners who have lined up further funding for the Company’s next phase of growth. LOMC’s profit contribution to the Group was Rs. 1 b.

LOLC Insurance Company which completed its third year of operation shows great potential in profits contribution to the Group with both the life and general businesses performing well in growing the book. The Company contributed Rs. 82 m as profits to the Group.

LOLC’s strategy to expand its business in the region brings strong profits from its associate PRASAC Micro Finance Company in Cambodia and the Group’s total associate company profit share was Rs. 1.5 b for the year.

Despite the challenging market conditions in the consumer durable market and the agriculture equipment market, the trading sector with Brown& Company contributed a profit of Rs. 541 m. The leisure sector recorded a loss of Rs. 334 m though the operating hotel – Eden Resort and Spa – contributed profits to the Group. The loss mainly comes from the hotels which are being constructed. Two hotels of the group are expected to be commissioned in the first and the second quarter of 2014 and the resort construction in Beruwala is estimated to be completed in 2016. With the completion of these projects LOLC will have one of the largest numbers of keys in the country’s leisure business.

LOLC Group is currently positioned to strengthen its presence in each of the business sectors while positioning its long term strategies to derive profitability and leadership in each sector.

Group Managing Director/CEO Kapila Jayawardena stated: “The Group has performed up to the expectations and all segments are showing a healthy growth trend. A strong balance sheet and P&L will improve the long term potential of the Group.”
www.ft.lk

Hemas buys 7% extra stake in Serendib Hotels for Rs. 164 m

Ricky Mendis sells down from 10% holding enjoying capital gain

In an apparent show of confidence in the booming leisure sector, Hemas Holdings Plc yesterday bought a further 7% stake in Serendib Hotels Plc (SHOT) for Rs. 164 million.

Hemas was already directly holding 21.8% and with yesterday’s acquisition the stake is estimated to be just above 29%. A related party, Leisure Asia Investments, is the other major shareholder of SHOT with a stake of 28.14%.

The deal was done at Rs. 30 per share at which price the counter closed up by 50 cents. Overall 5.85 million SHOT traded for Rs. 175.5 million.

The major seller yesterday via a crossing of 5.4 million shares was F.G.N. (Ricky) Mendis who as at 31 March 2014 was holding a 10% stake. Mendis first bought into SHOT in September 2012 with an 8% stake at Rs. 23 per share and later paid Rs. 28 for the balance.

Analysts expect Mendis to sell the remainder of his stake as well though this couldn’t be confirmed.

SHOT’s highest price in the quarter ended 31 March 2014 was Rs. 32 and closed the period at Rs. 28.

Trading on SHOT normal share saw its non voting share gain by 80 cents to Rs. 19.90 though on this volume.

The Serendib Leisure Hotels Group comprises of Serendib Hotels PLC and its subsidiaries Dolphin Hotels PLC, Sigiriya Hotels PLC and Serendib Leisure Management Ltd. The Group currently manages Avani Bentota Resort and Spa, Avani Kalutara Resort, Club Hotel Dolphin and Hotel Sigiriya with a consolidated inventory of 410 keys.

Serendib Hotels Group recorded revenue of Rs. 568 million for the fourth quarter of 2013/14 financial year, which was an increase of 14% over the corresponding period in 2012/13. This was mainly due to a 17% increase in the average Group ADR while further, the financial year closed with a revenue of Rs. 1.3 billion, which was only a 12% decrease over the previous year despite Club Hotel Dolphin and Hotel Sigiriya being closed for refurbishment for six months and three months respectively. The resultant decrease of room nights by 25% was however partially compensated by an average increase of 32% in room rates over the financial year.

During the year under review, SHOT successfully completed the refurbishment of Club Hotel Dolphin and renovated Hotel Sigiriya within the planned timelines and approved investment plans.

The Group earned a Profit Before Tax (PBT) of Rs. 240 m for the fourth quarter and closed the financial year with a PBT of Rs. 237 m, exceeding forecast, despite the closures for refurbishment mainly due to the better than expected pick-up in performance at Club Hotel Dolphin after the re-opening in November 2013 and the positive effect of hedging foreign currency loans.

All hotels in the Group recorded occupancies of over 80% in the fourth quarter except Hotel Sigiriya which exceeded the forecast, recording occupancy of 78%. The overall Group occupancy for the financial year was 76%.www.ft.lk