Sri Lanka stocks close at over 13-month high; foreign selling weighs

(Reuters) - Sri Lankan stocks hit their highest closing level in more than 13 months on Friday, led by market heavyweight John Keells Holdings PLC despite foreigners selling risky assets.

Foreign investors were net sellers for the first time in nine sessions, offloading 104.7 million rupees ($804,000) worth of shares on Friday, but are net buyers of 9.09 billion rupees so far this year.

The main stock index ended 0.16 percent, or 10.23 points, firmer at 6,477.51, its highest close since May 23, 2013.

Analysts said local investors were active, while the independence day holiday in the United States dented foreign participation in the market.

"We have seen local investors who were on the sidelines coming back. It's a good signal for the market," said a stockbroker asking not to be named.

Turnover was 1.38 billion rupees ($10.60 million), more than this year's daily average of around 1.05 billion rupees.

John Keells shares rose 0.94 percent to 225 rupees, while Sri Lanka Telecom PLC rose 1.85 percent to 49.60 rupees.

Brokers said investors are bullish about the market after they witnessed large state funds actively traded shares on Wednesday.

Analysts said foreigners have been buying risky assets because they see values in them, while falling yield in fixed assets is gradually prompting local investors to shift their funds to equities.

They say foreign buying could continue due to lower inflation after government data showed annual inflation eased to 2.8 percent in June, its lowest since February 2012, down from 3.2 percent a month earlier.

Yields on treasury bills edged down further at a weekly auction on Wednesday.

However, analysts said investors are concerned over the recent ethnic violence and possible implications of a government spokesman saying Sri Lanka bought Iranian crude via third parties.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. 

($1 = 130.2200 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka stocks close up 0.2-pct

July 04, 2014 (LBO) - Sri Lanka's stocks closed 0.16 percent higher ending a week on a positive note with telco and diversified stocks gaining despite net foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 10.23 points higher at 6,477.51, up 0.16 percent. The S&P SL20 closed 2.26 points higher at 3,610.68, up 0.06 percent.

Turnover was 1.38 billion rupees, down from 1.51 billion rupees a day earlier with 102 stocks closed positive against 74 negative.

Aitken Spence Hotel Holdings closed 2.90 rupees higher at 79.90 rupees with three off-market transactions of 166.85 million rupees changing hands at 77.00 rupees per share contributing 12 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 31 percent of the turnover.

Adam Investments closed flat at 5.30 rupees and PCH Holdings closed 80 cents higher at 2.90 rupees, attracting most number of trades during the day.

PC Pharma closed 40 cents higher at 2.30 rupees and PC House closed flat at 40 cents also receiving investor sentiment.

Foreign investors bought 150.35 million rupees worth shares while selling 255.08 million rupees worth shares.

Sri Lanka Telecom closed 90 cents higher at 49.60 rupees and John Keells Holdings closed 2.10 rupees higher at 225.00 rupees.

JKH’s W0022 warrants closed 30 cents higher at 61.30 rupees and its W0023 warrants closed 1.90 rupees higher at 73.00 rupees.

HNB closed 1.90 rupees higher at 163.80 rupees and Sampath Bank closed 3.60 rupees higher at 208.60 rupees.

Nestle Lanka closed 46.90 rupees lower at 1,952.10 rupees and Lion Brewery Ceylon closed 3.00 rupees lower at 457.00 rupees.

Trans Asia Hotels closed 2.60 rupees lower at 95.10 rupees.

Lucky Lanka to boost dairy trade with Rs 300 m IPO

Fizel Jabir jabirfizel@yahoo.com

Sri Lankan dairy giant Lucky Lanka Milk Processing Company Ltd is poised to make huge strides in dairy circles with many innovations and expansions with an Initial Public Offering (IPO) of Rs 300 million opening on July 7, 2014.

Setting off Rs 200 million high cost borrowings, investing Rs 100 million on new projects and expansion of the existing production plant and the setting up of over 1,000 Gedarata Kiri milk bar outlets islandwide are the hallmarks of the Rs 300 million IPO said Chairman Lucky Lanka Milk Processing Lal Keerthi Gunawardhana said at the press conference held in Colombo on Wednesday.

Gunawardhana said his main task will be to increase liquid milk consumption in housholds and would further expedite the Gedarata Kiri project with initially setting up 50 outlets in Colombo. The next move will be to deliver milk to households, he said.

The IPO will consist of 38 million ordinary voting shares at Rs 6 and 24 million ordinary non-voting shares at Rs 3. The shares will be listed on the Diri Savi Board of the Colombo Stock Exchange. Corporate Advisory and Capital Market division of Merchant Bank of Sri Lanka will be Investment Bankers to the issue while and Bank of Ceylon will be the Bankers to the issue.

Out of the proceeds Rs 200 million will settle the high cost borrowings, which in turn is expected to boost the net profits immediately. Rs 75 million will fund the expansion of the existing production plant with new cold room complex with an ammonia refrigeration system, extension to the existing UHT milk processing building and new machinery including conveyer systems and pigging systems. Rs 25 million will be utilized for new projects such as Gedarata Kiri, Milk Bar Outlets and School Canteen.

The company's revenue shows a 15% consistent growth from 440 million to 890 million, said Hijas Suhair of Merchant Bank of Sri Lanka.

The revenue for 2014 marked Rs 896.5 million compared to Rs 841.8 million in 2013 with an asset base over Rs 750 million.

Lucky began in1991 as a domestic business with the excess milk of the household cows. Gunawardhana then at 20 started this business with the support of his family members. Today, it operates in Kamburupitiya with a factory capacity of 20,000 liters per day. At a national level enterprise with more than 5,000 farmers and seven milk extraction centers located in Bandarawela, Baddegama, Pannegamuwa, Wellawaya, Embilipitiya, Matara and Welimada.
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ComBank in world's top 1000 banks

Commercial Bank of Ceylon has been ranked among the Top 1000 Banks of the World for a fourth successive year in 2014, becoming the only Sri Lankan bank to achieve this feat.

This ranking published annually by 'The Banker' magazine of the UK, is an important endorsement of the consistent growth and key performance indicators achieved by Sri Lanka's largest private bank.

The Top 1000 World Banks ranking is compiled from a database of over 5,000 of the world's biggest banks and is acknowledged by the global financial community as the definitive guide to bank rankings and analysis.

Begun in 1970, the ranking is widely used all year round by senior bankers, corporate treasurers, corporate financiers, the professional services community and many others in their day to day decisions relating to banking. "Making the Top 1000 list is a noteworthy achievement by itself, but staying there for four years in a row despite the challenging conditions we operate in, reflects well on the strength and stability of the Bank," said Jegan Durairatnam, Chief Operating Officer of Commercial Bank.
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BOC to float Rs. 8 b debenture, Fitch rates ‘AA (EXP)’

Fitch Ratings Lanka has assigned Bank of Ceylon’s (BOC; BB-/Stable) proposed subordinated debentures of up to Rs. 8 b an expected National Long-Term Rating of ‘AA(lka)(EXP)’.

The debentures, which have tenors of five and eight years and carry fixed and floating coupons, are to be listed on the Colombo Stock Exchange. BOC expects to use the proceeds to strengthen the bank’s regulatory Tier 2 capital base and reduce asset and liability maturity mismatches.

The final rating is subject to the receipt of final documentation conforming to information already received.

BOC’s National Long-Term Rating reflects the Government of Sri Lanka’s (BB-/Stable) high propensity but moderate ability to provide support to the bank under extraordinary situations. The State’s high propensity stems from BOC’s high systemic importance as the largest bank in Sri Lanka, its quasi-sovereign status, its role as a key lender to the Government and full Government ownership. The State’s moderate ability to provide support is reflected in the sovereign rating.

The proposed debentures are rated one notch below BOC’s National Long-Term Rating to reflect their subordination to senior unsecured creditors and gone-concern loss-absorption quality in the event of liquidation, in line with Fitch’s criteria for rating such securities.

Any change in Sri Lanka’s sovereign rating or the perception of State support to BOC could result in a change in BOC’s National Long-Term rating and issue ratings. Visible demonstration of preferential support for BOC in the form of an explicit guarantee will be instrumental to an upgrade of its National Long-Term Rating.

A full list of BOC’s ratings
Long-Term Foreign Currency IDR: ‘BB-’; Outlook Stable
Long-Term Local Currency IDR: ‘BB-’; Outlook Stable
Short-Term Foreign Currency IDR: ‘B’
Viability Rating: ‘b+’
Support Rating:’3’
Support Rating Floor: ‘BB-’
US dollar senior unsecured notes: ‘BB-’
National Long-Term Rating: ‘AA+(lka)’; Outlook Stable
Outstanding Sri Lanka rupee-denominated subordinated debentures: ‘AA(lka)’
Proposed Sri Lanka rupee-denominated subordinated debentures: ‘AA(lka)(EXP)’
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George Steuart Finance ends FY 14 with strong final quarter

George Steuart Finance PLC said yesterday it has recorded an excellent fourth quarter in the company’s bottom line by posting a profit of Rs. 26 million in the final quarter of FY 2013/14 to close the year at a profit after tax of Rs. 6.9 million.

The company also expanded its deposit base by 52% over the last year to reach Rs. 1.065 billion by focusing heavily on retail deposits and also the launch of the savings product in 2013.

Under the new leadership of veteran banker Eastman Narangoda, in January 2014 the company altered its strategic focus onto its core competencies to gain significant advantages despite being a small player in a crowded and competitive market. During the last year the company also adopted stringent and meticulous risk mitigation and provisioning policies to increase its resilience to any market changes.

Commenting on the performance of the company, CEO Uditha Ranaweera said: “I am confident that this growth momentum will continue with the launch of new hybrid products and also due to measures implemented to differentiate the company’s product portfolio to cater to niche markets while maintaining liquidity and offering stability to its deposit holders. Growing a healthy un-concentrated deposit base is an essential element of growth and expansion.”

In the process of wealth creation, George Steuart Finance PLC has pledged to be committed to meet the expectations of all its stakeholders while exploring seamless opportunities offering handsome returns.

Furthermore, the company also followed robust provisioning and cleaned up its portfolios while concentrating on better quality products with an appropriate mix in an effort to maintain its high yield on advances. Paramount emphasis was placed on developing systems and structures while complying with all regulatory requirements. Industry best practices were adopted in order to minimise both foreseen and unforeseen risks.
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