Sri Lankan stocks slip from more than 3-1/2 year high on profit-taking

Nov 19 (Reuters) - Sri Lankan stocks ended a six-day gaining streak on Wednesday after hitting a more than 3-1/2 year high earlier in the session as investors booked profits in diversified and telecommunications stocks.

But continued foreign buying, low interest rates and hopes of better corporate earnings prevented further falls, traders said.

The main stock index fell 0.31 percent, or 23.13 points, to 7,525.10 after hitting a high of 7,562.52, the highest since April 18, 2011.

"The market is down on profit-taking and uncertainty ahead of the election announcement, said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Analysts said investors were awaiting to see the direction of market after Sri Lankan President Mahinda Rajapaksa declared a snap election in January, aiming for an unprecedented third term.

The market has been in the overbought region since Nov. 13. The relative strength index, a momentum indicator tracked by chartists, was at 71.784 on Wednesday above the upper neutral range of 70, but slipping from Tuesday's 76.644, Thomson Reuters data showed.

The Central Bank of Sri Lanka kept key policy rates steady at record lows for a 10th straight month, and said stable inflation and steady credit expansion should help the economy grow by around 8 percent over this year and next.

Turnover was 1.83 billion Sri Lankan rupees ($13.97 million), exchange data showed, more than this year's daily average of 1.44 billion rupees.

Foreign investors were net buyers of 144.2 million rupees worth of shares, extending net foreign buying so far this year to 18.57 billion rupees, exchange data showed.

Shares in Ceylon Tobacco Company Plc fell 1.57 percent to 1,131 rupees, leading overall fall, while Dialog Axial Plc fell 0.80 percent. 

($1 = 131.0000 Sri Lankan rupee) 

(Reporting by Ranga Sirilal; Editing by Anand Basu)

Sri Lanka Treasury bill yields frozen

Nov 19, 2014 (LBO) – Sri Lanka's Treasury bill yields were flat at Wednesday's auction with the 12-month yield unchanged at 6.00 percent, data from the state debt office showed.

The debt office offered 10.00 billion rupees of maturing debt for roll-over and sold 11.08 billion rupees in bills.

The debt office which is part of the island's central bank said 3-month and 6-month short term bills were not offered for the auction.

Sri Lanka stocks close down 0.3-pct

Nov 19, 2014 (LBO) - Sri Lanka's stocks closed 0.31 percent lower with telco, tobacco and diversified stocks losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 23.13 points lower at 7,525.10, down 0.31 percent.

The S&P SL20 closed 16.06 points lower at 4,188.81, down 0.38 percent.

Turnover was 1.83 billion rupees, down from 3.83 billion rupees a day earlier with 76 stocks closed positive against 134 negative.

Access Engineering closed 40 cents lower at 41.10 rupees with off market transactions of 246.00 million rupees changing hands at 41.00 rupees per share contributing 13 percent of the turnover while attracting most number of trades during the session.

The aggregate value of all off-the-floor deals represented 24 percent of the daily turnover.

Foreign investors bought 220.62 million rupees worth shares while selling 76.44 million rupees worth shares.

Carson Cumberbatch closed 18.90 rupees lower at 456.00 rupees and Ceylon Tobacco Company closed 18.00 rupees lower at 1,131.00 rupees, contributing most to the index drop.

Dialog Axiata closed 20 cents lower at 13.80 rupees.

JKH exits Access Engineering at Rs. 600 m profit

John Keells Holdings Plc (JKH) yesterday exited Access Engineering Plc (AEL) at a profit, with Captains family among buyers.

AEL saw 46 million of its shares or slightly over 4% traded for Rs. 1.86 billion.

JKH sold 40 million shares at Rs. 40.10 each via 17 crossings, and booked around Rs. 600 million in capital gain. JKH was among investors who took up AEL shares during the pre-
IPO private placement at Rs. 25 each.

The Daily FT learns Captains had bought around 20 million AEL shares. Among other buyers were institutional investors in financial services. Deals on AEL accounted for 42% of yesterday’s turnover.

Captains had five million shares (0.5%) as at end June 2014 but had sold it subsequently and didn’t figure in the Top 20 shareholders list in September 2014.

LOLC Securities Research yesterday recommended AEL as buy. “We assume a cost of equity of 14% taking the current market conditions into account. Applying our forecasts, which includes an average 16% long-term NP margin target and a terminal free cash flow growth rate of 5%, our FCFE model values the share at LKR 47.20. At the current value the share is traded at a forward PE of 12.78 X and a forward PBV of 2.25X,” LOLC Securities said.

“We forecast the post-war construction boom to prevail for another 10-15 years in Sri Lanka and thus we expect Access Engineering PLC (AEL) to reap substantially from the opportunity, given its high expertise and credentials over its peers. AEL’s well-diversified business portfolio consisting motor sector and commercial property also reduces the risk, while the group is in a safe position to further expand backed by its strong balance sheet,” it added.
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