Low rates push Sri Lanka stocks to over 33-month high

(Reuters) - Sri Lankan stocks hit more than 33-month highs on Wednesday, as investors bought into the island nation's risky assets after yields in risk free treasury bills further fell after the central bank kept policy rates at multi-year lows.

Continued foreign buying also boosted sentiment.

The main stock index rose 0.22 percent, or 14.77 points, to 6,742.56, its highest close since Oct. 3, 2011.

Yields in treasury bills fell further at the Wednesday's weekly auction.

"Though we don't see a galloping market, it will be stable and positive," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

The central bank on Monday kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2-year low.

The index is in the overbought region since July 3 as it has gained 5.71 percent so far this month, Thomson Reuters data showed.

Analysts said the profit-taking in the mid cap shares and penny stocks was overshadowed by the gains in large cap shares.

Turnover was 1.21 billion rupees ($16.82 million), more than this year's daily average of about 1.09 billion rupees. Foreign investors accounted for 37.4 percent of the day's turnover.

Foreign investors were net buyers of 326.3 million rupees worth of shares on Wednesday, extending net foreign inflows in stocks to 9.79 billion rupees so far this year.

Tuesday's gains were led by Carson Cumberbatch, which rose 2.27 percent to 460.20 rupees and Bukit Darah Plc , which gained 3.75 percent to 700 rupees.

Shares in the market heavyweight John Keells Holdings gained 1.03 percent to close at 244.90 rupees.

Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.

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. 

($1 = 130.1800 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lanka shares close up 0.2-pct

July 16, 2014 (LBO) - Sri Lanka's shares closed 0.22 percent higher on Wednesday with continued foreign inflows extending gains further, brokers said.

The Colombo benchmark All Share Price Index closed 14.77 points higher at 6,742.56, up 0.22 percent. The S&P SL20 closed 10.79 points higher at 3,761.05, up 0.29 percent.

Turnover was 1.21 billion rupees, down from 2.19 billion rupees a day earlier with 105 stocks closed positive against 98 negative.

Distilleries closed 1.20 rupees lower at 203.80 rupees with an off-market transaction of 81.60 million rupees changing hands at 204.00 rupees per share contributing 7 percent of the turnover.

John Keells Holdings closed 2.50 rupees higher at 244.90 rupees with market transactions of 374.35 million rupees contributing 31 percent of the turnover.

JKH’s W0022 warrants closed 50 cents higher at 64.70 rupees and its W0023 warrants closed 60 cents lower at 74.10 rupees.

The aggregate value of all off-the-floor deals represented 14 percent of the turnover.

PC Pharma closed 10 cents higher at 3.20 rupees and E-Channelling closed 2.10 rupees higher at 15.70 rupees, attracting most number of trades during the day.

Foreign investors bought 452.04 million rupees worth shares while selling 125.62 million rupees worth shares.

Bukit Darah closed 25.30 rupees higher at 700.00 rupees, contributing most to the index gain.

Carson Cumberbatch closed 10.20 rupees higher at 460.20 rupees and Lion Brewery Ceylon closed 21.70 rupees higher at 673.80 rupees.

Piramal Glass posts Rs. 86 m PAT in 1Q

Piramal Glass Ceylon PLC has announced its results for the first quarter of FY 2015 with Rs. 1,245 million of revenue and Rs. 86 million profit after tax (PAT) showing a growth of 13% at operating profit and 41% growth at PAT level when compared with the profitability of FY2013 (excluding profit from land sale).

The total revenue generated during the quarter under review stood at as Rs. 1,245 mn as against Rs.1,233 mn depicting a 2% overall growth.

"We were happy to note that the domestic sales in Q1 showed positive signs with a growth of 8% by achieving Rs.994 mn during the current quarter as against Rs. 916 mn of the previous year similar quarter.

The Export Market sale was Rs. 251 mn as against Rs. 307 million of the previous year saw a decline of 18%. The Exports to Indian market which was effected during the past few quarters due to the currency fluctuation in India has recovered to some extent and the company was able to achieve its expected sales in India.

The Gross Profit saw a marginal decrease from 22% in Q1 F2014 to 21% in Q1 F2015, while the operating profit increased from 10% in first quarter of F2014 to 11% during the quarter under review.

The company saw a substantial increase in the direct and indirect costs during the quarter.The main increases were seen in Raw Material and Packing Material costs which has directly impacted the production costand the gross profit margins.

The Finance Cost too showed a 41% reduction from Rs. 54 mn in the 1st quarter of F 2014 to Rs. 32 mn in the first Quarter of F 2015 due to decline of interest rates and as most of the long term loan debts are now settled.
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LB Finance mulls Vallibel merger

H.D.H Senewiratne (hsenewiratne@gmail.com)

Sri Lanka's third largest finance company LB Finance is exploring options of merging with Vallibel Finance as part of the Central Bank directive to create strong financial sector in the country, market sources said.

LB Finance's major loan impairment came down last year in the gold loan business due to the gold price slash. This year with the rise in gold prices, low bank interest rates and high GDP growth, its position has improved and is expected to improve in the coming year, Research Manager First Capital Research Dimantha Mathew told the Daily News Business.

At present there are 58 financial companies in the country. Under the Central Bank of Sri Lanka ruling the number is to be reduced to 20 financial entities as part of the consolidation programme.

Mathew said that these two entities are looking at the option of merging with Vallibel Finance Plc. However, Vallibel Finance is owned by Vallibel investment. The entities high performance it has the largest deposit base out of all the finance companies with a deposit base of Rs 46 billion in financial year 2014 and to Rs 51 billion in next year, he said. Mathew also said that total asset base of the entity was Rs 60 billion in financial year 2014, while its asset base to reach Rs 69 billion next year with these new development in the company.

Further the company's current profitability has topped Rs 2 billion and it will increase 49 percent growth or Rs 2.3 billion for the financial year 2016.

LB Finance was incorporated in May 1971 as a private limited liability company and subsequently converted to a public limited liability company in 1982. The Company was listed on the Colombo Stock Exchange in 1998 and was re-registered in June 2008 under the new Companies Act No. 7 of 2007.

At the beginning, the majority shareholding was held by Lewis Brown and Company Limited. In 1994, Vanik Incorporation Limited acquired the controlling interest of the Company. Dhammika Perera,took over the company in 2003 and turned it around to be the vibrant and leading finance company that it is today.

LBF is a company in the Group of Vallibel One which is a diversified holding Company with strategic investments in financial services, tile and sanitary ware manufacturing and leisure. 

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