Sri Lanka stocks hit 34-month closing high; banks lead

(Reuters) - Sri Lankan stocks hit a 34-month closing high on Tuesday, led by banking shares as local investors shifted funds from fixed income to riskier assets in view of the low interest rates, brokers said.

The main stock index ended up 0.59 percent, or 39.85 points, at 6,796.37, its highest close since Sept. 20, 2011.

"The market looks positive. If it continues to go up beyond 6,900 points, we may see a correction with profit-taking," said a stockbroker asking not to be named.

The share index has gained 6.55 percent so far this month.

Turnover was 1.42 billion rupees ($10.90 million), more than this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 213.1 million rupees worth of shares on Tuesday, extending the year-to-date net foreign inflow to 10 billion rupees in shares.

Biggest listed lender Commercial Bank of Ceylon Plc rose 2 percent to 144.90 rupees.

The market is on the rise because investors have few options in other instruments as yields of treasury bills and the central bank's key monetary policy rates have fallen to multi-year lows amid continued foreign buying.

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

The index is in the overbought region since July 3. It has risen 14.94 percent so far this year.

Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said.

Analysts said foreigners have been buying risky assets because they see value in them. 

($1 = 130.2500 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)

Sri Lanka stocks close up 0.6-pct

July 22, 2014 (LBO) - Sri Lanka's stocks closed 0.59 percent higher with diversified stocks gaining amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 39.85 points higher at 6,796.37, up 0.59 percent. The S&P SL20 closed 21.00 points higher at 3,789.15, up 0.56 percent.

Turnover was 1.42 billion rupees, up from 904.71 million rupees a day earlier with 136 stocks closed positive against 79 negative.

John Keells Holdings closed 2.20 rupees lower at 244.50 rupees with an off-market transaction of 111.27 million rupees changing hands at 245.00 rupees per share contributing 8 percent of the daily turnover.

JKH’s W0022 warrants closed 1.90 rupees lower at 65.00 rupees and its W0023 warrants closed 1.00 rupee lower at 73.50 rupees.

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

Bukit Darah closed 14.90 rupees higher at 705.00 rupees with market transactions of 289.72 million rupees contributing 20 percent of the turnover.

George Steuart Finance closed 6.80 rupees lower at 39.10 rupees and Richard Pieris Exports closed 12.70 rupees higher at 93.80 rupees, attracting most number of trades during the day.

Foreign investors bought 412.96 million rupees worth shares while selling 199.87 million rupees worth shares.

Carson Cumberbatch closed 22.00 rupees higher at 490.00 rupees, contributing most to the index gain.

Sri Lanka Telecom closed 1.10 rupees higher at 56.40 rupees and Ceylinco Insurance closed 80.00 rupees higher at 1,425.00 rupees.

DSI embarks on new project, buys factory at Baddegama

The DSI Group embarks on a new project of manufacturing PVC pipes for its first time after buying the PVC products factory and assets of Okta PVC Lanka (Pvt) Ltd at Baddegama in Galle.

While commenting on this to adaderanabiz.lk, DSI Group Managing Director Kulathunga Rajapaksha said that the DSI Group had bought all assets belonging to Okta PVC Lanka (Pvt) Ltd for Rs. 137 million.

This manufacturing plant would be refurbished and plans are afoot to produve PVC pipes under the DSI brand name in the near future, Rajapaksha added.

While DSI has finalized this deal through Samson International Limited, over 51 percent shares of Samson International Limited is owned by the DSI Group and its stakeholders and 29 percent of the shares are owned by a prominent personality in the Colombo Stock Exchange, Dr. T. Senthilverl.

Okta PVC Lanka (PVT) Ltd is a company that is manufacturing and selling PVC pipes and allied products and possesses the SLS and ISO certifications for its products.
www.adaderana.lk

Sri Lanka's DDFC to acquire George Steuart Finance

July 22, 2014 (LBO) - George Steuart Finance Deshodaya Development Finance Limited (DDFC), has inked a deal to acquire George Steuart Finance Plc, which valued the licensed finance company at 500 million rupees.

DDFC is a finance company coming under Sri Lanka's Sarvodaya, a charity. It started as a micro-finance firm before becoming licensed finance company.

George Steuart Finance said in a stock exchange filing that a memorandum of understanding had been signed with DDFC, George Steuart & Company Ltd, and Capital Trust Holding Limited.

The company said the acquisition was subject to approval by the Central Bank, the sector regulator and its plan to consolidate finance companies.

According to the firm's March accounts, Capital Trust Holding had a 24.9 percent stake in George Steuart Finance. In April, George Steuart and Company Ltd bought a 50.8 percent stake in the firm for 329 million rupees or 28.80 rupees a share.

The stock closed at 45.90, down 1.80 rupees on Monday.

With the company valued at 500 million rupees for acquisition a share is valued at a little under 23 rupees.

In the year to March, George Steuart Finance reported profits of 4.6 million rupees (45 cents per share) on interest income of 279 million rupees.

But in the standalone March quarter results the firm reported a surge in interest income and profits of 29 million rupees or 1.29 rupees per share.

Shoe maker ups stake in textile maker

Ceylon FT: Ceylon Leather Products PLC yesterday said it increased its stake in South Asia Textile Industries Lanka (Pvt.) Ltd to over 80% with a Rs 306 million deal. In a stock exchange filing, the company said it purchased 3.06 billion shares in South Asia Textile for Rs 306.45 million through a rights issue.

Lanak Century Investments PLC, the controlling shareholder of Ceylon Leather, also bought 480.7 million shares of South Asia Textile for Rs 48.07 million, increasing its stake to 12.61%.

South Asia Textile produces weft knitted fabric and specializes in knitting, dyeing, finishing, printing, brushing, sueding and anti pill micro/polar fleece fabric.
Its factory is located in Pugoda with a 700,000Kg monthly capacity.

Its buyers include global heavy weights, Puma, PC Penney, Old Navy, Wal-Mart, Victoria's Secret, Next, Reebok, Mother Care, Gap, Marks and Spencer and Levi's.

Operating an industrial tannery, Ceylon Leather manufactures bags, accessories and shoes and operates several outlets branded DI Leather Boutique.

It reported an Rs 135.68 million net profit for the year ended 31 March 2014, up 40% from a year ago.
www.ceylontoday.lk

Rs 500M acquisition announced

Ceylon FT: In keeping with the financial sector consolidation programme of the Central Bank a Rs 500 million acquisition was announced yesterday (21).

Deshodaya Development Finance Limited has entered in to a memorandum of understanding for the purchase the majority shareholding of George Steuart Finance PLC.

"The Principal Shareholders of George Steuart Finance PLC, George Steuart & Company Limited and Capital Trust Holdings Limited will divest their shareholding for a company valuation of Rs 500 million for this transaction, which also has been endorsed by the Central Bank of Sri Lanka," George Steuart said in a statement.

Deshodaya Development Finance Limited, a micro finance provider, intends to expand its outreach and diversify its existing product portfolio by amalgamating the businesses whilst keeping in line with regulatory asset and capital enhancement requirements. www.ceylontoday.lk

Capital Alliance records increase in profits of 17%

Capital Alliance Ltd. (CALT), a primary dealer in Government securities recorded an impressive profit after tax of Rs. 331.9 million for the financial year of 2013/2014.

This year’s financial performance showed a 17% increase in profitability from the previous financial year which helped CALT maintain its position as a dynamic leader in the trading sphere. CALT’s ability to refocus business and management strategies and maximise on opportunities in an extremely active trading climate resulted in the company achieving higher capital gains and momentous growth.

The company’s total assets were valued at Rs. 5.13 billion, an 8% rise from the previous financial year. Earnings per share were recorded at Rs. 22.12 and increased by 17%. Total shareholder’s funds were recorded at Rs. 1 billion with an increase of 27% over the previous financial year. Due to a turbulent financial year and the challenges of QE tapering, markets were in shock and only recently recovered. Despite a tough economic climate and various ongoing challenges, CALT delivered a consistent financial performance that exceeded expectations.

CALT Chief Executive Officer Gehan Hemachandra completed his first tenure as CEO of the company this year. Some of the key changes he implemented included revising the company’s strategic focus and developing CALT’s dynamic marketing and dealing teams.

Commenting on the measures taken to strengthen CALT’s operational prowess, he stated: “People are at the core of CALT’s business operations and the company invested in recruiting high performing professionals to head our marketing and treasury divisions. We developed a new marketing team from scratch and recruited senior management to ensure the growth and development of the division. Thereafter, both our marketing and dealing teams performed exceptionally and their efforts contributed significantly to our high financial performance this year.”

Under new rules created by the Colombo Stock Exchange (CSE) the company became the first-ever primary dealer to obtain a debt-broker license from CSE, the new license has enabled CALT to significantly diversify income revenues.

CALT was initially focusing on the government securities market and is now applying the same model in the corporate debt space. Corporate debt trading is a market that is still in its infant stages and although it will face many challenges, it also has great potential for growth. Due to a burst of activity in corporate debt, aided by interest rate fluctuations, CALT is now developing corporate debt trading into a vibrant secondary market.

Capital Alliance commenced operations in 2000 and began dealing in fixed income securities and corporate finance advisory services. The company has become a dominant force in trading and developing financial services and has acquired an impressive client portfolio.

In 2003, CALT was issued with a primary dealer license from the Central Bank of Sri Lanka (CBSL). Thereafter in 2013, the company was appointed as Sri Lanka’s first registered debt dealer in the primary dealer category. With an innovative and assertive approach to trading, CALT continuously capitalises on market trends and developments to secure high returns for its diverse client base.

As one of the six non-bank licensed primary dealers in the country, CALT is authorised to distribute fixed income securities to all investor categories including individual, corporate and institutional investors in Sri Lanka.

CALT has gradually evolved into a multi-faced organisation offering a sophisticated selection of structured government debt-based instruments including Treasury bills, 

Treasury bonds, agreements and reverse purchase agreements, corporate debt, leveraging and interest rate swaps. As the company looks ahead to the future, it remains committed to delivering excellence and maintaining its position as the leading secondary market dealer in the country.

Capital Alliance Ltd. is part of the CAL Group which also includes Capital Alliance Partners (CALP, the company’s corporate finance arm which specialises in investment banking, fund management and securities broking).

The group also includes Capital Alliance Securities (an equity brokerage firm), Capital Alliance Investments (a fund management firm), Capital Alliance Finance PLC (a leasing company) and the Ceylon Tea Brokers PLC.

All CAL business units leverage the strength of the group to deliver integrated and customised solutions for diverse clientele. The CAL Group comprises a dynamic team of individuals with extensive local and international market experience. Since its inception in 2000, the CAL Group has built a reputation for itself as a market leader, capable of continuously meeting client expectations and delivering excellence in research, ethical dealing, confidentiality and product innovation.
www.ft.lk