NAMAL acuity value fund declares Rs. 2.50 dividend

The NAMAL Acuity Value Fund (NAVF) managed by National Asset Management Ltd. 

(NAMAL), the only unit trust listed on the Colombo Stock Exchange, declared a dividend of Rs. 2.50 for FY14, up from Rs. 0.50 in the previous year.

This is resulting from a sharp increase in earnings for the 12 months ending 31 March 2014, where the fund’s gross income rose by 89.1% YoY to Rs. 202.2 m and total net earnings were at Rs. 173.9 m.

NAMAL Executive Director and Chief Investment Officer Avancka Heart stated that NAVF was able to report significant income growth due to the timely portfolio reallocation to equities.

As of 31 March 2014, the Fund’s equity exposure was at 88.3% with 11.7% invested in debentures, fixed deposits and cash equivalents. The Fund’s top five equity holdings were Asiri Hospitals Holdings, Commercial Bank of Ceylon, Sampath Bank, Nations Trust Bank and Ceylon Hospitals during the same period.

NAVF has outperformed the Colombo Stock Exchange’s benchmark All Share Price Index (ASPI) by 4.62% with a year-to-date return of 23.6% (August 2014).
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LOLC Leisure rebranded as Browns Hotels and Resorts

Browns Investments Plc today announced the rebranding of LOLC Leisure to Browns Hotels and Resorts.

In March this year, Browns Investments acquired sole shareholder status of LOLC Leisure. BI previously held a minority interest of 30% in LOLC Leisure. The investment in the hotel sector was made jointly along with BI’s parent company, LOLC.

As part of its consolidation efforts, LOLC divested its direct exposure in leisure to BI, giving the company the opportunity to focus on nurturing and growing this sector. LOLC continues to be the holding company for the Browns Group.



Hotels under in the group include the Eden Resort and Spa, the Dickwella Resort and Spa and Green Paradise, Dambulla. The company also announced the construction of a 71-room four star hotel in Passikudah, which is scheduled to be opened later this year.

The company’s current portfolio holds 308 keys, with plans to increase it to around 1000 within the next few years.

“Browns Investments has expanded its footprint in the leisure sector and made a number of significant acquisitions. This increased interest will lead us to soon be one of the largest hotel operators in Sri Lanka. This is extremely timely, considering the country’s increased focus on tourism,” Browns Investments PLC Managing Director/ Chief Executive Officer Rimoe Saldin stated.

A 363-roomed, 25-acre property located along the golden mile of Beruwala, currently under construction and scheduled to be completed in 2016, will be included in the portfolio of hotels, as will a 172-roomed five-star property already under construction in Kosgoda which will be completed during the first half of 2015.




The company also owns properties in Nilwella and Trincomalee, and is looking at options for a new city hotel.

Browns Hotels and Resorts Sales and Marketing Head Adrian Jansz added: “This is an exciting year for us, with our current properties being upgraded to suit the demands of the modern tourist. Our current portfolio includes a number of landmark properties, with the promise of more exquisite properties earmarked. The changes taking effect have made us step back and re-evaluate our offerings, and has led us to draw parallels between the emotional connect of our customers and their satisfaction. This is the promise of Browns Hotels and Resorts.”

Browns Investments PLC is a subsidiary of the legendary 135+ year old Brown & Company PLC, with its ultimate parent company being LOLC. Browns Investments operates in fast-growing sectors of the economy such as leisure, agriculture and plantations, construction, marine and manufacturing and power generation.
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Sri Lanka stocks end steady despite foreign outflows

(Reuters) - Sri Lankan stocks edged higher on Monday, led by banking shares, but profit-taking in blue-chips and foreign selling in risky assets kept the gains in check.

Stockbrokers expect the rising streak to continue due to lower interest rates and growth optimism.

The main stock index ended up 0.06 percent, or 4.45 points, at 7,238.16, hovering near a more than three-year high close hit on Tuesday.

Foreign outflows were at 1.89 billion rupees, the worst performance since Aug. 19. However, foreign investors have been net buyers of 8.75 billion rupees in stocks this year.

"There might be some profit-taking. But investors don't have any alternative to park their money due to low interest rates. So the market will continue its upward momentum with some profit-taking," said Reshan Wediwardana, research analyst at First Capital Equities (Pvt) Ltd.

The day's turnover was 3.46 billion rupees ($26.5 million), the highest since Sept. 11 and well above this year's daily average of over 1.29 billion rupees. Stockbrokers cited block deals for the day's turnover boost.

People's Leasing & Finance Plc rose 3.65 percent to 19.90 rupees. But profit-taking in Aitken Spence and Co Plc and market heavyweight John Keells Holdings Plc weighed on the index.

Aitken Spence fell 1.8 percent to 109.30 rupees, while Keells edged down 0.08 percent to 251 rupees.

($1 = 130.4000 Sri Lankan rupee) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close higher

Sep 29, 2014 (LBO) - Sri Lanka's stocks closed higher with the turnover crossing 3.4 billion rupees mark despite strong foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 4.45 points higher at 7,238.16, up 0.06 percent. The S&P SL20 closed 10.58 points higher at 4,019.00, up 0.26 percent.

Turnover was 3.46 billion rupees, up from 2.73 billion rupees last Friday with 86 stocks closed positive against 118 negative.

John Keells Holdings closed 20 cents lower at 251.00 rupees with seven massive off-market transactions of 1.38 billion rupees changing hands at 251.00 rupees per share contributing 40 percent of the turnover.

The aggregate value of all off-the-floor deals represented 45 percent of the daily turnover.

Dunamis Capital closed 7.00 rupees higher at 38.90 rupees, First Capital Holdings closed 6.80 rupees higher at 56.30 rupees and Janashakthi Insurance closed 1.60 rupees higher at 24.10 rupees, attracting most number of trades during the day.

Foreign investors bought 375.47 million rupees worth shares while selling 2.27 billion rupees worth shares.

Lion Brewery Ceylon closed 14.50 rupees higher at 630.10 rupees and People’s Leasing and Finance closed 70 cents higher at 19.90 rupees, contributing most to the index gain.

DFCC Bank closed 3.60 rupees higher at 199.90 rupees and HNB closed 2.60 rupees higher at 186.00 rupees.

Fitch rates Central Finance 'A+(lka)'

Fitch Ratings Lanka has affirmed Central Finance Company Plc's (CF) National Long-Term Rating at 'A+(lka)' with a stable outlook. Fitch has also affirmed CF's senior secured and senior unsecured debt at 'A+(lka) and its subordinated debt at 'A(lka)'.CF's rating reflects its strong capitalization, which is supported by robust profitability and high profit retention. Counterbalancing these strengths are the pressure on loan quality and its low provisioning levels compared with its peers'. The rating also captures CF's high margins, which are supported by the company's strength in raising funds at relatively low rates through the solid franchise developed over a long operating history.

CF has historically maintained strong capitalization. The regulatory reported Tier 1 capital ratio was 24.92x at end-June 2014 and the Fitch core capital (FCC) ratio was higher at around 40x. The FCC is higher because it captures the revaluation reserves, while the consolidated equity position and the balance sheet equity used are higher due to lower loan impairment charges that are in line with international accounting rules.

CF's asset quality continued to be under pressure, with its regulatory non-performing loans (loans overdue by six months or more) increasing to 3.8% at end-June 2014 from 2.45% at end-June 2013. This was due to a slowing macroeconomic environment and the company's exposure to the agricultural sector, which has been adversely affected by unfavourable weather conditions. The regulatory non-performing loans (including interest in suspense) increased by 46% in the financial year ended 31 March 2014 (FY14) and by 18% in 1Q15. The ratio of impairment reserves to gross loans increased to 1.3% at end-June 2014 from 1.0% three months earlier. This is still low compared to peers and implies a lower provisioning coverage.

The company has sufficient unutilized credit lines to fund its maturity mismatches. CF's well-established deposit franchise supports liquidity. Customer deposits funded about 50% of CF's assets and were fairly granular with 88% of loan contracts being for loans under LKR1m (USD7,700) at 1Q15.

CF's senior unsecured debentures are rated in line with CF's National Long-Term Rating of 'A+(lka)' as they constitute unsecured and unsubordinated obligations of the company.

The senior secured debentures, which are secured by a primary mortgage over receivables from identified hire-purchase and lease agreements, are also rated in line with CF's National Long-Term Rating. There is no rating uplift for the collateralization as the note's recovery prospects are assessed to be. average and comparable with those of the unsecured notes in a developing legal system.

The subordinated debentures are rated one notch below CF's National Long-Term Rating to reflect their subordination to senior unsecured creditors.

Greater product diversity, together with improved funding flexibility commensurate with higher-rated peers, could lead to an upgrade. However, taking into account the current pressure on its asset quality, Fitch does not see an upgrade as likely in the medium term.

CF's rating could be downgraded if it is not able to provide a buffer against further loan quality deterioration through profit, which would lead to an increase in unprovided NPLs relative to equity.

The debt ratings will move in tandem with CF's National Long-Term Rating.

CF is a Licensed Finance Company established in 1957. Its 22.6% held by the Wijenaike family, the founders of the company, 16.1% owned by Corporate Services (Pvt) Ltd, and the rest is publicly held. The company's lending portfolio consists largely of vehicle financing.
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Fitch affirms AMW Capital Leasing at 'BB-(lka)'

Fitch Ratings Lanka affirmed Sri Lanka-based AMW Capital Leasing and Finance PLC's (AMCL) National Long-Term Rating at 'BB-(lka)'. The Outlook is Stable.

The rating reflects AMCL's relatively weak deposit franchise among finance companies, modest capitalization and better asset quality metrics. AMCL's rating is a reflection of its stand-alone financial strength, and as such already factors in ordinary support from parent Associated Motorways Limited (AMW).

Fitch believes that AMCL may be under pressure to increase its asset base by 27% to LKR8bn from an asset base of Rs 6.3 billion as at end-June 2014 before the end of this year. This is in line with the government's master plan to consolidate the financial system, according to which the consolidation in the non-bank financial institution segment is based on the asset and capital bases of the players. A rush to expand amid a weak economy could raise AMCL's credit risk profile. The company's assets rose 14% in 1H14 from Rs 5.5 billion as at end-2013 (2013: 15% and 2012: 31%).

AMCL continues to have access to local wholesale funding, and it has unutilized credit lines that are sufficient to cover gaps arising from the mismatches in the maturities of its assets and liabilities. AMCL's external borrowings and borrowings channelled through .its parent accounted for 64% and 10% respectively of total assets at end-1H14 (end-2013: 37% and 33%). The high proportion of borrowings could lead to liquidity pressure in the event AMCL is unable to source such funding directly or through the parent. Fitch's view is that liquidity can erode rapidly in times of stress.

AMCL's deposit base of Rs 657 million accounted only for 14% of its total funding at end-1H14 (end-2013: 6.5%; end-2012: 0.1%) and has a relatively high deposit concentration. Fitch does not expect the share of deposit funding to increase given AMCL's management intends to continue to rely on wholesale funding.

AMCL's reported regulatory gross NPL ratio stood at 2.1% at end-2013, better than the industry average of 6.7%. However, Fitch expects the NPL ratio to increase due to the challenging operating environment and as the loan book seasons. The company has been shifting towards providing financing for more non-AMW brand vehicles as it seeks to expand its loan book while increasing its market share of AMW products. AMW brand vehicles remain a significant part of its loan portfolio as at December 2013.

Fitch expects AMCL's capitalization to continue to decline due to its expanding operations but to remain at a satisfactory level for its current rating. Fitch may take positive rating action if AMCL develops its franchise, both in funding and lending, while maintaining its financial profile relative to higher-rated peers.

Deterioration in the company's liquidity profile, asset quality, or capitalization to levels below its peers would place downward pressure on AMCL's rating.
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