Sri Lankan shares rebound from near 4-wk low; financial stocks lead

Oct 14 (Reuters) - Sri Lankan stocks recovered on Tuesday from a near four-week closing low hit in the previous session, led by shares of financial companies and stockbrokers expect the gaining trend to continue, interspersed by profit-taking from time to time.

The main stock index gained 0.3 percent, or 21.25 points, at 7,205.47, recovering from its lowest close since Sept. 17. It hit a near 3-1/2 year closing high on Oct. 3.

"The market is still on a gaining momentum due to lower interest rates, but we expect slight volatility due to profit taking from time to time," a stockbroker said on condition of anonymity.

The index fell more than 2 percent on Monday, led by bank shares despite foreign buying.

DFCC Bank Plc gained 2.46 percent at 220.70 rupees, while Lanka Orix Leasing Company Plc rose 0.94 percent to 86 rupees.

The day's turnover was 1.6 billion rupees ($12.25 million), more than this year's daily average of more than 1.36 billion rupees.

Foreign investors sold 112.1 million rupees worth of shares on Tuesday. But the bourse has recorded net foreign inflow of 9.34 billion rupees year-to-date, exchange data showed.

($1 = 130.6000 Sri Lankan rupee) 

(Reporting by Shihar Aneez; Editing by Anupama Dwivedi)

Illegal fisheries: green cards for five countries, but red card for Sri Lanka

In its fight against illegal fishing activities worldwide, the European Commission has today proposed to ban imports of fisheries products from Sri Lanka to tackle the commercial benefits stemming from illegal fishing. The move comes after four years of intense dialogue with the country after which it could not demonstrate that it sufficiently addressed illegal, unreported and unregulated (IUU) fishing. In contrast, the Commission today confirmed that Belize, Fiji, Panama, Togo and Vanuatu, which had received warnings at the same time as Sri Lanka, have successfully taken measures to tackle illegal fishing. Consequently, the Commission proposes to lift the trade measures imposed in March this year against Belize.

European Commissioner for Maritime Affairs and Fisheries, Maria Damanaki, said: "Our policy of resolute cooperation is yielding results. Five countries receive today our appreciation for getting serious on illegal fishing. Unfortunately, I cannot say the same for Sri Lanka. I hope that the message we are sending today will be a wake-up call for this country."

Sri Lanka needs to address illegal fishing

According to the Commission's assessment, Sri Lanka has not sufficiently addressed the shortcomings in its fisheries control system identified in November 2012. The main weaknesses include shortcomings in the implementation of control measures, a lack of deterrent sanctions for the high seas fleet, as well as lacking compliance with international and regional fisheries rules.

As a result, the Commission tables a ban on fisheries products caught by Sri Lankan vessels being imported into the EU. In order to avoid disrupting ongoing commercial contracts, the full trade measures will only come into force in mid-January 2015, which is three months after the decision is published in the EU's Official Journal.

Progress confirmed for Belize, Fiji, Panama, Togo and Vanuatu

The Commission has today also proposed to remove Belize from the list of non-cooperating third countries in the fight against illegal fishing and to end the trade measures imposed against the country in March 2014. Belize has demonstrated its commitment to reforming its legal framework and adopting a new set of rules for inspection, control and monitoring of vessel. The Council will take a decision in this respect.

In a similar vein, the Commission also announced the termination of steps against Belize, Fiji, Panama, Togo and Vanuatu who all received a formal warning in November 2012. The countries have taken concrete measures in addressing established shortcomings and shown commitment to complete structural reforms in order to address illegal fishing.

The Commission has prolonged the cooperation with Korea, Curacao and Ghana until January 2015. Despite some progress achieved in these countries, which have received formal warnings in November 2013, more time is needed in these countries to make changes.

Commissioner Damanaki said: "The improvements Belize made as regards its fisheries control system since its 'red card' show that the EU's fight against illegal fishing works. The formalised cooperation with the EU has helped the country to move towards sustainable fisheries. The same goes for Fiji, Panama, Togo and Vanuatu. These countries' positive attitude should serve as a template to other countries in similar situations."

For more information

• MEMO: Question and Answers on the EU's fight against illegal, unreported and unregulated (IUU) fishing (MEMO/14/584)
• Statement by Maria Damanaki, European Commissioner for Maritime Affairs and Fisheries, 14 October 2014 (STATEMENT/14/314)
• Press Release: Commission warns third countries over insufficient action to fight illegal fishing, 15 November 2012 (IP/12/1215)
• Press Release: European Commission intensifies the fight against illegal fishing, 26 November 2013 (IP/13/1162)
• Council Regulation (EC) No 1005/2008 establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing. This key instrument in the fight against illegal fishing aims to allow access to the EU market only to fisheries products that have been certified as legal by the flag state or the exporting state concerned.

Contacts : Helene Banner (+32 2 295 24 07) Lone Mikkelsen (+32 2 296 05 67) For the public: Europe Direct by phone 00 800 6 7 8 9 10 11 or by e­mail http://europa.eu/rapid/press-release_IP-14-1132_en.htm

Stock Market Review – 14th Oct 2014

Colombo equities swung between gains & losses on Tuesday and closed with mixed returns. Benchmark All share price index gained 21.25 points or 0.30% to end at 7,205.47 while S&P SL 20 index lost 2.80 points or 0.07% to end at 4,011.75.

Price appreciation in counters such as Sri Lanka Telecom (closed at LKR 51.20, +2%), DFCC Bank (closed at LKR 221.00, +2.6%) and Central Finance (closed at LKR 252.00, +5.1%) contributed positively to the core index performance whereas price declines in blue chips such as John Keells Holdings (closed at LKR 247.00, -0.9%), Ceylon Tobacco (closed at LKR 1,140.00, -0.6%) and Dialog Axiata (closed at LKR 12.20, -1.6%) contributed negatively to the 20- script S&P SL index performance.

Positive movements in sectors such as Footwear & Textiles, Chemicals & Pharmaceuticals and Land & Property affected favorably to the market performance.

Daily market turnover was LKR 1.6bn. Several Crossings were recorded in Central Finance (0.3mn shares at LKR 252.00 per share), Commercial Bank (0.2mn shares at LKR 156.00 per share), Chevron Lubricants (0.2mn shares at LKR 340.00 per share) and Softlogic Capital (50mn shares at LKR 7.00 per share). Total crossings accounted for 30% of the total market turnover.

Accordingly Softlogic Capital emerged as the top contributor to the market turnover with LKR 357mn followed by Central Finance (LKR 162mn) and John Keells Holdings (LKR 121mn).

Shares of First Capital Holdings, Access Engineering and Trade Finance & Investments were traded heavily during the session.

Foreign investors were net sellers with net outflow of LKR 114mn. Foreign participation was 14%. Net foreign outflows were seen in Commercial Bank - nonvoting (LKR 78mn), John Keells Holdings (LKR 32mn) and Textured Jersey (LKR 17mn) while net foreign inflow was mainly seen in Laugfs Gas (LKR 10mn).

Meanwhile several disclosures were made relating to Hemas Power (HPWR). ACL Cables together with NDB Capital Holdings and Trydan Partners (Pvt) Ltd has entered in to a share sale and purchase agreement with Hemas Holdings for the sale & purchase of 93.9mn shares (75% of the issued capital) in HPWR. The shares of HPWR are to be sold for a total consideration of LKR 1.7bn (at LKR 17.90 per share).

Additionally in accordance with the terms of the above agreement, HPWR entered into a share sale & purchase agreement for the sale of 60mn shares (50% of the issued capital) of Heladhanavi Limited to Lakdhanavi Limited at a total consideration of LKR 532mn. HPWR share closed at LKR 16.80 while Hemas Holdings share closed at LKR 60.50 (+1%).

Source: Lanka Securities

Merchant Bank of Sri Lanka to become Merchant Bank of Sri Lanka & Finance PLC

MCSL Financial Services Limited and MBSL Savings Bank Limited are to be amalgamated with the Merchant Bank of Sri Lanka.

Accordingly, the name of the Merchant Bank of Sri Lanka PLC would be changed to Merchant Bank of Sri Lanka & Finance PLC after due registration with the Registrar of Companies.

www.adaderana.lk

Ashok Pathirage gains full control of ODEL in Sri Lanka

Softlogic Group has increased its shares in Sri Lanka’s leading fashion retail chain ODEL to 93.2 percent.

Recently, the Softlogic Group led by prominent Sri Lankan businessman Ashok Pathirage bought 45.16 percent of shares in ODEL from its pioneer Otara Gunawardene and her family members for Rs. 2.7 billion. Following this, the company’s subsidiaries Softlogic Holdings and Softlogic Retail Private Limited issued a joint mandatory offer to acquire the remaining shares of ODEL.

This mandatory offer expired yesterday (13 October) and Softlogic said under this offer a further 130.7 million or 48.04 percent of the ODEL shares had been acquired.

Accordingly, Softlogic Group currently owns 93.2 percent ODEL shares.

Parkson Retail Asia Limited of Malaysia, the major stakeholder in ODEL recently agreed to sell all its shares to Softlogic Group for nearly Rs. 2.8 billion.

While informing this decision to the Malaysian Stock Exchange, Parkson Retail Asia which already owned the major 47.46 percent shares in ODEL revealed that it had accepted the recent Mandatory Offer by Softlogic Holdings PLC and Softlogic Retail Private Limited of the Softlogic Group.

This notification issued by Parkson Retail Asia Ltd Chief Executive Officer Toh Peng Koon stated that the entire 129.1 million shares that the company holds in ODEL would be sold at Rs. 22 each under this Mandatory Offer.

Softlogic Group earlier acquired 45.16 percent shares in ODEL owned by its founder Otara Gunawardene and her family members for Rs. 2.7 billion at Rs. 21.80 and Rs. 22.00 per share.

The Mandatory Offer by Softlogic to acquire the balance shares of ODEL stated that it was prepared to buy the remaining 54.84 percent shares of ODEL at Rs. 22.00 each.

The Malaysian Stock Exchange was informed that Parkson Retail Asia Ltd had bought the ODEL shares in July 2012 and that the company stood to gain a capital profit by selling them back to Softlogic Group.

Chairman of Softlogic Group, Asoka Kariyawasam Pathirage took over as Executive Director/Chairman of ODEL with effect from 22 September while Dr. Sivakumar Selliah and Haresh Kumar Kaimal were appointed Non-Executive Directors.

Below is the disclosure to the Malaysian Stock Exchange by Parkson Retail Asia Ltd:

www.adaderana.lk

Debenture Issue by Sri Lanka’s Mercantile Investments & Finance

Mercantile Investments & Finance PLC is preparing for a Debenture Issue to raise Rs. 200 million.

The Colombo Stock Exchange has approved the company’s application to list its debt securities. Accordingly, 02 million senior, unsecured, redeemable, rated debentures are to be issued at Rs. 100 each.

The issue opens on 30 October and the managers to the issue are Kenanga Investment Corporation Ltd and the registrars to the issue are SSP Corporate Services Private Limited.
www.adaderana.lk

JKH’s Waterfront to put SL on world map: Balmond

By Shabiya Ali Ahlam
World-renowned designer and architect Cecil Balmond expressed confidence in the Waterfront, Sri Lanka’s largest private sector investment, as being an icon for the region and one that would put the nation on the world map.

In an exclusive interview with the Daily FT, Balmond, designer of the newest project by John Keells Holdings (JKH) said: “The Waterfront is very unique. It will be a big icon for the region and not just Sri Lanka. From an architecture and design point of view it will be a composition of several forms. It will be like nothing Sri Lanka has ever seen.” Balmond, who has been the hand behind the designs of some the most popular buildings in the world, such as the ArcelorMittal Orbit in London, highlighted the Waterfront is certainly a different project for the country as it would be a mini city within a city.

The project is said to include an 850-bed hotel, a retail centre, conference facilities, 400 apartment units and many more components.

Balmond Studious is responsible for project management, all design and site supervision of the Waterfront.

With JHK having wanted an iconic project, one that is “special” for their largest investment of $ 650 million, he revealed that the architectural form of the Waterfront best expresses the ambition of JKH, to which there is no limit with the aim of being the biggest.

“Behind the commercial project of JKH is the story of an icon for Sri Lanka. It is a narrative of success, which is that Sri Lanka is emerging big from the war. It is a world statement. The construction alone is just $ 650 million but it is major by any standard in the world. My own personal ambition is to put Sri Lanka on the world map, and the Waterfront gives me that opportunity,” he expressed.

While the project is the first-of-its-kind in Sri Lanka, Balmond pointed out the key challenge is the scale.

“Sri Lankan ability is good but they have never been exposed to a multi-scale project where all is happening at one time. Here there are three towers, with a hotel that is as big as the three towers, a retail centre with a curved roof, something that has never been built in Sri Lanka. That is why we had some of the finest talent from our UK office come here during the initial stages,” observed Balmond.

The time set for the project is six years, of which two years is for designing and four years for construction.

www.ft.lk

Renuka Holdings to enter property development with Rs. 1 b Rights

Renuka Holdings Plc has announced a one for one Rights Issue to raise Rs. 1 billion to finance investment in a property development project in Colombo 3.

The Board resolved yesterday to issue 44.517 million ordinary voting shares at Rs. 21 each and 6.43 million nonvoting shares at Rs. 15 each. The Company’s current stated capital is Rs. 175 million represented by 44.5 million voting shares and 6.4 nonvoting shares.

The foray into property development reflects diversification. The Group has interests in agri business, dairy, consumer and automotive apart from investment and services sector.

The Company’s voting share traded at Rs. 39.50, down by one rupee yesterday. Net Asset Per share at Company level is Rs. 11 and at Group level is Rs. 47 as at June 2014.

Renuka Group and related parties hold a 55% stake. Other major shareholders of voting stakes include NSB (6%), Sri Lanka Insurance Corporation (3.4%) and ETF (3.2%). The largest non voting shareholder is K.C. Vignarajah with a 4.7% stake.

The Group’s total revenue stood at Rs. 1.9 billion for the first quarter of FY15, up by 22% from an year earlier and total comprehensive income amounted to Rs. 88 million, up by 24%. Net profit attributable to equity shareholders was Rs. 50 million, up by 31%
www.ft.lk

Shangri-La to invest US$ 250M ona third project Colombo property to be completed in 2017

By Mario Andree

Ceylon Finance Today: Hong Kong based leisure firm, Shangri-La, which purchased 10 acres outright in 2010, has planned for a third project in Sri Lanka with an investment of US$ 250 million for an apartment complex in the heart of Colombo.

Minister of Investment Promotion Lakshman Yapa Abeywardena told journalists that the Hong Kong based leisure giant, which had almost completed its Hambantota project, had submitted a third project for approval.

However, according to Minister Abeywardena, the project location was still unknown as the company was looking at a few lands and the Valuation Department had to complete its task for the project to go ahead.

Shangri-La entered Sri Lanka in 2010 purchasing 10 acres facing the Galle face, previously occupied by the Ministry of Defence for US$ 125 million, for a US$ 500 million seven star hotel project.

The company purchased the 10 acre land with an initial payment of US$ 75 million for six acres, and a second payment of US$ 50 million in April 2011 for the balance four acres.

According to Minister Abeywardena, despite much criticism, the Shangri-La Colombo project was intact, and would be completed by end 2017.

Shangri-La Colombo was supposed to be completed by end next year; but according to the Minister the project size and the investment had increased to US$ 650 million. He said, there were several delays on the part of the government which halted the project for two years, and that an extension was given considering these delays.
www.ceylontoday.lk

Rs 85.8B shareholder wealth lost in two days

By Paneetha Ameresekere

Ceylon Finance Today: Envisaged poor earnings in the quarter ended 30 September 2014, coupled with the 'bona fides of the bourse' being questionable, continued to dog the stock market for the second consecutive market day yesterday, with the ASPI losing steam by 1.87% to close the day at 7,184.22 points and the S&P SL 20 Index by 2.32% to 4,014.55 points on a Rs 2 billion turnover, market sources told Ceylon FT.


The bourse, in the last two working days up to yesterday has seen the ASPI fall by 2.7% to 7,184.22 points and the S&PSL 20 Index by 3.3% to 4,014.55 points. Yesterday saw a mere 26 gainers, while losers were nine times that figure at 233.

In the review period, Rs 85.8 billion worth of shareholder wealth has been lost, with market capitalization (market cap) in the last two market days up to yesterday having had declined by 2.7% to Rs 3.055 trillion, data showed.

The market's fall yesterday would have had been steeper, if not for the performances of two highly capitalized stocks, which saw steep gains on their share prices on nominal turnovers and volumes, an analysis of data further showed.

Stocks such as CTC and Bukit Darah, because of their high influence on overall market cap, ipso facto, also do have relatively high impacts on market indices as well, even if their individual shares were uplifted on nominal values, as was the case yesterday.

CTC, which cigarette prices were raised by between Rs 1-2 a stick last week, surprisingly saw its share price increase by 1.96% to Rs 1,147 a share on a nominal share volume (SV) of 222 yesterday. Meanwhile Bukit too was similarly uplifted, where its share price gained a steep 1.31% to Rs 710 a share, on a nominal SV of 222 and on a miserly Rs 158,916 turnover.

Total number of shares traded yesterday was 128,673,847, a decline of 31.8% over its previous day's volumes.

The performances of market indices are intrinsically connected to the stock market's market cap. Higher the overall market cap, higher will be the market indices, while the reverse is also true.

The two high value stocks in question, CTC and Bukit are the market's second and eighth largest capitalized respectively. The bourse has some 288 listed companies on its role. CTC's market cap was equivalent to 7.43% of overall market cap as at yesterday. In the case of Bukit, it was 2.5%.

Nevertheless, the silver lining is that foreign buying getting the better of foreign selling at yesterday's trading, sources said yesterday saw a net foreign inflow (NFI) of Rs 284.1 million, taking NFIs in the year to date to Rs 9.7 billion. NFIs yesterday were led by People's Leasing (Rs 80.3 million) and Hemas Holdings (Rs 78 million).

Meanwhile, the biggest contributor to yesterday's turnover was Chevron, with Rs 264.5 million on a SV of 777,978. Chevron closed, down 0.32% to Rs 340 a share. Chevron's contribution to overall market cap yesterday was 1.41%.

The second highest contributor to yesterday's turnover was JKH, the market's largest capitalized stock with Rs 236.3 million on a SV of 944,974. JKH closed, down 0.64% to Rs 249.30 a share. JKH's contribution to overall market cap yesterday was 8.55%.
www.ceylontoday.lk