Taprobane buys 9 percent of PABC

High net worth investor Ajith Devasurendra led Tabrobane Holdings yesterday bought a 9.1 percent stake in Pan Asia Banking Corporation PLC (PABC), of which business leader Dhammika Perera is the main shareholder.

The market today saw the crossing of 26, 868, 815 PABC shares at Rs.20 per share.

The seller is believed to be high net worth investor Dr.T.Senthilverl who held 26, 895, 935 PABC shares at at March 31, 2014 through a margin facility obtained from Seylan Bank PLC.

Dr.Senthilverl recently bought 10 percent stakes in Adam Investments PLC and Sunshine Holdings PLC.

Dhammika Perara held 29.99 percent stake in PABC as at March 31, 2014 while Japan's Bansei Securities Co. Ltd held a 15 percent stake.

For the first quarter ended March 31, 2014, PABC saw its net profit deteriorating 43 percent year-on-year to Rs.81.6 million amid higher impairments on loans and other losses.
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Sri Lanka stocks at 33-month high despite foreign outflows

(Reuters) - Sri Lankan stocks rose for a sixth straight session on Wednesday to their highest closing level in 33 months as lower interest rates prompted investors across the board to buy risky assets despite foreign selling, stockbrokers said.

The gains were led by diversified shares like conglomerate John Keells Holdings PLC and telecom shares like Sri Lanka Telecom PLC.

The main stock index ended up 0.73 percent, or 48.03 points, at 6,613.84, its highest close since Oct. 10, 2011.

Shares in Sri Lanka Telecom, which led the index gain, rose 3.84 percent to 51.40 rupees, while John Keells Holdings rose 1.28 percent to 237.60 rupees.

"Local investors are increasingly participating in the market and local retailers are also coming in because of the low interest rates," said a stockbroker asking not to be named.

"But sustainability is depending on the earnings."

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

Turnover was 2.89 billion rupees ($22.19 million), around thrice this year's daily average of around 1.07 billion rupees.

Foreign investors were net sellers of 278.6 million rupees worth of shares on Wednesday, but have been net buyers of 8.94 billion rupees worth of shares so far this year.

Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates and has risen 11.86 percent so far this year.

($1 = 130.2300 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka shares close up 0.7-pct

July 09, 2014 (LBO) - Sri Lanka's shares closed 0.73 higher on Wednesday crossing the 6,600 mark despite net foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 48.03 points higher at 6,613.84, up 0.73 percent. The S&P SL20 closed 29.95 points higher at 3,706.06, up 0.81 percent.

Turnover was 2.89 billion rupees, down from 1.74 billion rupees a day earlier with 153 stocks closed positive against 67 negative.

Pan Asia Banking Corporation closed 50 cents higher at 19.00 rupees with an off-market transaction of 537.38 million rupees changing hands at 20.00 rupees per share contributing 19 percent of the daily turnover.

Bukit Darah closed 5.50 rupees higher at 637.50 rupees with market transactions of 232.82 million rupees contributing 8 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 36 percent of the turnover.

PCH Holdings closed 40 cents lower at 3.20 rupees and HVA Foods closed 50 cents higher at 10.20 rupees, attracting most number of trades during the day.

Foreign investors bought 269.09 million rupees worth shares while selling 547.66 million rupees worth shares.

Sri Lanka Telecom closed 1.90 rupees higher at 51.40 rupees and John Keells Holdings closed 3.00 rupees higher at 237.60 rupees, contributing most to the index gain.

JKH’s W0022 warrants closed 20 cents higher at 65.00 rupees and its W0023 warrants closed 60 cents higher at 76.00 rupees.

Ceylon Tobacco Company closed 33.30 rupees lower at 1,066.70 rupees and Nestle Lanka closed 13.40 rupees lower at 2,081.60 rupees.

The CSE said it had approved an application by Dunamis Capital to offer 10 million debentures of 100 rupees each.

Subscriptions will open on July 28 with First Capital is managing the debt issue.

Unit trust funds grow 75% in 2013

Sri Lanka’s unit trust industry grew 75 percent in 2013 to Rs.54.3 billion but the number of unit holders have increased by a mere 6 percent to just under 30,000 investors, in a country with a 20 million population, according to the capital market regulator, the Securities and Exchange Commission (SEC).

The Net Assets Value (NAV) of unit trusts which stood at a paltry Rs.6.8 billion just before the end of the war, rose to Rs.31 billion by the end of 2012, and has made a quantum leap to Rs.54.3 billion end of 2013. While the SEC would like to attribute the recent growth in the unit trust industry to concessions given by the budget 2013, the president of the unit trust association of Sri Lanka P. Asokan said it was due to a combination of factors not limited to budget concessions.

The budget 2013 simplified the process of investing in unit trusts for foreigners and Sri Lankans living overseas, and the tax applicable to the profit and income of unit trust management companies was reduced to 10 percent.

“The industry alone evolved from just 17 funds managed by 5 companies (in 2008) to 50 funds managed by 13 fund management companies. In an industry where only equity funds were available, now has diversified into debt funds and further into multiple funds under them, meeting the different needs of the investors,” Asokan said.
He further said that the biggest impediment to the progress of the industry is the lack of awareness among general public about the benefits of investing in unit trusts.
However the industry is such that any single player cannot afford a big marketing budget given the meager margins enjoyed by the fund management firms.

A firm charges only 2 percent margin (or management fee) per annum on the NAV of the equity fund while the fee is as low as 25 basis points and 75 basis points for debt funds.

Hence, the industry will join the other capital market participants in an island wide awareness campaign starting next month.

Meanwhile, Mirror Business learns that a new unit trust fund management company is entering the industry as end of this week.

Currently, Sri Lanka’s unit trust industry operates with 13 players where NDB Aviva leading the market with 28.8 percent share followed by Ceybank (22.3 percent) and Namal (18.5 percent).

Meanwhile, regulatory support on the industry was seen throughout last year where SEC issued directives on prescribing a minimum number of unit holders for each unit trust and also on daily valuation methods of fixed income instruments.

On-sight visits and monitoring of the performance of the funds and the financial health of the firms were also conducted on a regular basis.
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Global giant Carlyle positive on SL, looking for qualifying firms

By Shabiya Ali Ahlam
A top global asset management firm yesterday expressed willingness to set foot in Sri Lanka, provided that companies meet its required minimum investment value.
The US-based The Carlyle Group, which specialises in private equity, pointed out it will enter the Sri Lankan market if companies are capable of fulfilling its criteria.

“We would like to invest in Sri Lanka. It is not that we have shied away from it. It’s just that we have criteria to fulfil from our side. The current size of our Asia fund is about $ 20 billion, so we look for entities which match our investment criteria,” said The Carlyle Group Indonesia Managing Director Rajiv Louis yesterday during a panel discussion at a symposium hosted by the Securities and Exchange Commission (SEC).

The senior official, visiting Sri Lanka on an invitation extended by the SEC to address its symposium on ‘The Role of Independent Directors’, shared as an example that before entering a market the global company require entities to have a minimum investment of $ 150 million for a stake of 10%.

“We look at the size, and there are not many companies of that size in Sri Lanka,” he emphasised at the event that was addressed by SEC Chairman Dr. Nalaka Godahewa, SEC Director Corporate Affairs Harshana Sur-iyapperuma, President’s Counsel Dr. Harsha Cabral and Bombay Stock Exchange (BSE) Chief Regulatory Officer Nehal Vora.

However, Louis noted that The Carlyle Group is looking at investing in Sri Lanka and is taking active steps towards it.

Hinting a possible visit from its heads to Sri Lanka in the future, Louis said: “The overall outlook we have for Sri Lanka is positive. But the only challenge is the minimum requirement from our end where we require the criteria to be met.”

To increase foreign investor participation, the SEC shared that it has and continues to reach out to large investment funds to look at local market and one such initiative is The Carlyle Group.

The SEC told the Daily FT that having reached out to the group, whose private equity business has been one of the largest investors in leveraged buyout transactions over the last decade; its response has so far been a positive one.

Founded in 1987 in Washington DC, The Carlyle Group has grown to become one of the world’s largest and most successful investment firms.

The Group has $ 199 billion in assets under management across 120 funds and 133 fund vehicles. In Asia-Pacific alone, The Carlyle Group has invested $ 20 billion, which is approximately the entire market capitalisation of the CSE.
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United Motors Group records Rs. 1.6 b profit after tax

Despite the auto industry shrinking by 26%, the UML Group demonstrated a relatively strong performance in the face of market challenges and also made headway in new growth segments that presented opportunities.

While the year ended 31 March 2014 was very challenging for the automobile industry the company net profit reached Rs. 1.5 billion, a decrease of 21% compared to last year while the UML Group was able to record a profit after tax of Rs. 1.6 billion, a drop of 20% from the previous year.

The Group’s earnings per share for the year under review was Rs. 23.90, which was a 20% drop from Rs. 29.92 achieved last year. The strong balance sheet UML Group has is reflected in the Rs. 120.37 NAV per share achieved as at 31 March 2014.

Chief Executive Officer/Executive Director Chanaka Yatawara mentioned that given the unpredictability and limited growth opportunities within the market for new vehicles, United Motors adopted a two-pronged strategy of targeting new and emerging market segments and the growing market for after sales services for existing vehicles.

The company strengthened its presence in the emerging eco-friendly automobile market. In the previous year the company introduced the Mitsubishi Mirage which had much lower emission levels and fuel consumption than traditional petrol vehicles.

During the current year the company introduced a similar eco- friendly sedan named Attrage providing customers with two cost effective and environmentally friendly vehicle options from Mitsubishi. The company is making plans to expand its environmentally friendly line of products during the new financial year.

The company also entered the heavy truck segment for the first time with the new range of Fuso trucks ranging from nine to 25 tons, manufactured with German and Japanese expertise, each of these models have endured extensive testing including over nine million km of driving to ensure high standards and optimum loading while maximising fuel efficiency.

Further the Group entered the luxury car category, with the legendary MG expanding the Group’s range of vehicle brands even further. It is the first all-new MG to be launched in 16 years and also the 21st century incarnation of a 90-year-old brand that was once a byword for speed, open-topped and carefree about British sports cars.

The decision to assemble vehicles within the country has also helped to reduce the impact of unpredictability of import taxes of the cost of vehicles.

The Group’s priority now is to further strengthen its commitment to the highest levels of service excellence, noting that its branch network expansions around the island had made service facilities more accessible and as a result captured otherwise lost after sales income. The primary workshop made a significant contribution in terms of both financial value and ensuring that customers receive industry best after sales services.

United Motors Group is looking ahead to exciting new possibilities in the year ahead with launches of several new products during the course of the year. It has partnerships with some of the world renowned brands, including Mitsubishi passenger and Fuso commercial vehicles from Japan, Perodua compact cars from Malaysia, MG cars, JMC commercial vehicles, DFSK mini trucks and Zotye compact SUVs from China, Yokohama tyres from Japan, JK tyres and Mak lubricants from India, Valvoline lubricants and Eagle One car care products from the US, and TVS motorcycles and three-wheelers from India.
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