Sri Lankan stocks edge up; political woes weigh

Nov 28 (Reuters) - Sri Lankan stocks ended higher on Friday, recovering from a 12-week low hit in the previous session on last-hour bargain-hunting while investors were cautious about buying risky assets due to political uncertainty ahead of the presidential election.

The main stock index ended up 0.53 percent at 7,153.90, edging up from its lowest since Sept. 5 hit on Thursday.

"The market was in a negative mood and there was no buying interest at all. But suddenly buying interest came from nowhere at the last minute," said Dimantha Mathew manager, research at First Capital Equities (pvt) Ltd.

"Until the last moment market was struggling with no direction. No investor was interested in the market. But during the final hour, things changed significantly and saw a steep upward trend."

Investors expect the market to be volatile over political uncertainty while some investors said prices have fallen to attractive levels.

Eight loyalists from President Mahinda Rajapaksa's United People's Freedom Alliance, including Health Minister Mithripala Sirisena, have defected since Rajapaksa announced a snap poll last week. Sirisena has resigned to contest against Rajapaksa as the consensus candidate of a united opposition.

Speculation over more defections weighed on sentiment, analysts said.

Friday's turnover was 2.08 billion rupees ($15.88 million), exchange data showed, well above this year's daily average of 1.45 billion rupees. Foreign investors bought a net 323.8 million rupees worth of stocks, extending purchases during the year to 20.45 billion rupees, exchange data showed.

Shares in Lanka IOC Plc rose 4.4 percent, leading the overall gain, while fixed-line telephone operator Sri Lanka Telecom Plc rose 1.5 percent.

($1 = 131.0000 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Lion Brewery Debenture oversubscribed

The Listed Debenture Issue of Lion Brewery (Ceylon) PLC was oversubscribed during the early hours of the opening day (28) as per the disclosures made to the CSE by the Registrars to the Debenture Issue.

NDB Investment Bank acted as the Financial Advisors and Managers to the Debenture Issue.

The debenture issue of Lion Brewery (Ceylon) PLC was for Rs. 1.0 billion with a green-shoe option to go up to Rs. 2.0 billion and was rated AA- (lka) by Fitch Ratings Lanka Limited.
www.adaderana.lk

Fitch rates Singer's debenture 'A-(lka)'

Nov 28, 2014 (LBO) – Fitch Ratings has assigned Sri Lanka’s Singer PLC's unsecured redeemable debenture issue of up to 1.5 billion rupees a final National Long-Term rating of 'A-(lka)', the rating agency said in a media statement.

The final rating is the same as the expected rating assigned on 2 July 2014, and follows the receipt of documents conforming to information already received, the statement said.

The debentures are rated in line with Singer's National Long-Term Rating as they represent senior unsecured obligations of the retailer of consumer durables and would rank equally with the company's other senior unsecured debt.

Press Release by Fitch Ratings

KEY RATING DRIVERS

Margin Pressure: Singer's National Long-Term rating reflects Fitch's expectations of margin pressure due to given macroeconomic stresses and the resultant negative impact on demand for consumer durables.

This should be partially offset by recent fiscal measures including a 25% reduction in electricity tariffs on households. In 2013, Singer's margins shrank due to an increase in value-added tax (VAT) at a time when demand for consumer durables was declining.

This is reflected in leverage of 4.8x (annualised) as at end-1H14, up from 3.3x (annualised) as at end-1H13. Leverage at end-2013 and end-2012 stood at 4.7x and 3.4x, respectively.

Strong Market Share: Singer's strong reputation is illustrated by its ability to secure agency for new brands including Beko, Grundig, Sharp, Dell, Sony and Lenovo. It has an extensive retail network of over 1,000 retail points in Sri Lanka. Singer's diversified product portfolio includes its Singer and Sisil in-house brands, which target the mass market and provide Singer with price point diversity.

Well-Managed Consumer Loans: In-house hire purchase facilities, which make products more affordable in line with the mass-market proposition of Singer's in-house brands, financed around 45% of Singer's sales in 2013 (2012: 44%). At end-2013, overdue accounts accounted for just 3.7% of the portfolio (end-2012: 2.3%), supported by average durations of less than a year and strong staff incentives for debt recovery, while write-offs were negligible.

Currency Risk: Singer manufactures and locally procures close to 35% of its products through related companies and local suppliers, thus mitigating foreign currency risk.

RATING SENSITIVITIES

Negative: Future developments that may, individually or collectively, lead to a negative rating action include:

- A sustained increase in Singer's leverage (measured as adjusted net debt/EBITDAR excluding Singer Finance) to over 5.5x

- EBITDA margin sustained below 7% (2013: 8%)

- A material weakening in Singer's (company-level) liquidity profile

- A material weakening of the credit profile of Singer's 80% subsidiary, Singer Finance (BBB+(lka)/Stable), given strong linkages between the entities Positive: Future developments that may individually or collectively lead to a positive rating action include:

- Singer's leverage falling below 4.5x on a sustained basis

- EBITDA margin sustained above 10%

Whiff of Maithri win will see bourse go through roof Rs 176B shareholder wealth lost due to political turbulence

By Paneetha Ameresekere

Ceylon Finance Today: The bourse continued to tumble due to the turbulent political situation in the country, with the benchmark ASPI falling by 0.89% to 7,115.89 points and the more sensitive.

S&P SL 20 Index by 1.39% to 3,968.58 points on a Rs 1.32 billion turnover at yesterday's trading.

The bourse, since former UPFA Minister and SLFP General Secretary Maithripala Sirisena, with the backing of the market friendly opposition UNP, announced his presidential candidature on Friday, has seen the ASPI fall by 5.5% and the S&P by 5.3%, while shareholder wealth lost has been Rs 176 billion.

"If, however, the market feels that Sirisena will win the 8 January poll, the bourse will go through the roof," market sources told Ceylon FT.

Losers outnumbered gainers by a ratio of 36:184.

Nevertheless, even a sharper fall of the bourse was prevented yesterday due to spurious trades of just three high flying stocks which are also captured in the S&P, revealing the flippancy of the Colombo Stock Exchange.

Those were the bourse's 8th largest capitalized stock Bukit Darah and 21st and 22nd largest stocks Cargills and Asian Hotels, gaining in price by 1.28%, 0.07% and 1.49% to Rs 714, Rs 150.10 and Rs 68 a share on share volumes (SVs) of 146, 10 and 228, whilst contributing meagre turnover figures of Rs 101,561; Rs 1,501 and Rs 15,472 respectively.

Total number of shares traded yesterday declined by 21% to 73,084,843.

Meanwhile, the biggest contributor to yesterday's turnover was the 19th largest capitalized stock Access with Rs 235.8 million on a 6.4 million SV. Access closed, down 3.25% a share to Rs 35.70; while the 2nd biggest was the 5th largest capitalized stock Dialog with Rs 128.4 million on a 9.8 million SV. Dialog closed flat at Rs 13.10 a share.

The bourse however received a Rs 320.1 million net foreign inflow (NFI), taking NFIs in the year-to date to Rs 20.4 billion. NFIs were led by Access (Rs 193.1 million) and Dialog (Rs 124.8 million).

Market capitalization fell by 0.89% to Rs 3.023 trillion.
www.ceylontoday.lk

Unenthusiastic response to Blue Diamonds Rights Loss making company seeks infusion of capital

By J. Kurukulasuriya

Ceylon Finance Today: Blue Diamonds Jewellery Worldwide, which initially announced its Rights Issue of shares on 16 October have announced the details and proportions of the issue today — Wednesday. Voting shares will be sold to shareholders at a price of Rs 1.30 per share and non-voting shares at 75 cents each.

The share traded at Rs 1.80 per voting share and 80 cents per non-voting share, today. However, leading share brokers whom Ceylon Today spoke to were unenthusiastic about the prospects of the share. "It is not an actively traded share, furthermore there are many shares on the market with much better fundamentals", one broker said.


During the six months ended 30 September the company made a loss of Rs 28 million, up by 385% from the loss of 6 million sustained in the previous corresponding period. The balance sheet carries an accumulated loss of Rs 124 million.

The company had a close relationship with Fior Drissage Jewellers Ltd- FDJ — to whom they have loaned approximately Rs 4.2 million as at 30 September. But the company has passed a board resolution "to cease the identification of investment in FDJ as an investment in an associate, due to fall in percentage of investment in FDJ and non availability of factors to exercise significant influence over the operations & business affairs of FDJ".

The company is hoping to raise a sum of Rs 134 million in the form of ordinary voting as well as another Rs 115 million in the form of ordinary non-voting shares, a total of approximately Rs 250 million. They will be issued to existing shareholders in the ratio of one new share for every one existing share. In effect the company is seeking to double its share capital.

"The purpose for which the proceeds of the issue are to be utilized are for the establishment of a research & development unit, establishment of a global design centre, investment in new machinery, marketing, and international trade fair participation, and for investment in inventory", states the company's interim financial report as at 30 September.

Xia Liqiang is the largest shareholder of the company with 15.51% of the shares or 16,023,215 shares. Sri Lanka Insurance Corporation Ltd – General Fund holds 10.22% of shares. The public holding as defined by the CSE is 89.20%.

The company announced that the general meeting for the approval of this issue and provisional allotment of shares will take place on 16 December, and the rights will commence trading on 30 December.
www.ceylontoday.lk

Dialog Axiata launches Digital Holdings Lanka

Dialog Axiata made an announcement to CSE regarding an incorporation of a wholly owned subsidiary of Dialog Axiata under the name of Digital Holdings Lanka (Private) Limited.

This company will operate as Dialog Group's investments holding company and would look at new business areas.

Colombo bourse extended the losses on Thursday as core index lost 63.83 points (-0.89%) to end at 7,115.89. S&P SL 20 index lost 47.55 points (-1.18%) to end at a nearly one month low of 3,977.15. All share price index declined by 285.73 or -3.9% so far during the week while S&P SL 20 index declined by 150.11 points or -3.6%. Price depreciation in counters such as Commercial Bank (closed at 160.10, -4.7%), Sri Lanka Telecom (closed at LKR 47.00, -3.1%) and Hatton National Bank (closed at 191.50, -2.3%) contributed negatively to the market performance. Further sectors such as Information Technology, Footwear & Textiles and Construction & Engineering slumped during the session.

Daily market turnover was LKR 1.3bn. Access Engineering topped the turnover list with LKR 236mn supported by several crossing where 4.4mn shares changed hands at LKR 37.00 per share. Aggregate value of Access Engineering crossings represented 12% of the total market turnover.

Accordingly Dialog Axiata (LKR 128mn) and John Keells Holdings (LKR 74mn) recorded next best contributions to the market turnover.

Other crossings were recorded in Hatton National Bank non-voting as 0.3mn shares traded at LKR 144.00 per share. Total crossings represented 16% of the market turnover.

Losers surpassed the gainers 191 to 43, while 46 equities remained unchanged. 20 counters touched 52wk low prices while only Pan Asia Power reached 52wk high price level. Cash map declined to 46% from 50%.

Shares of Lanka Cement continued to attract heavy investor interest during the session followed by Lanka IOC and Access Engineering.

All the banking sector counters declined during yesterday's trading session. Amana Bank closed at LKR 4.90, -3.9%, National Development Bank closed at LKR 234.00, -3.6%, DFCC Bank closed at LKR 210.60, -0.2%, Sampath Bank closed at LKR 229.90, -0.1%), Nations Trust closed at LKR 91.00, -4.1%, HDFC Bank closed at LKR 61.50, -2.4%, Union Bank closed at LKR 23.30, -3.3%, Sanasa Development Bank closed at LKR 86.00, -2.9%, Seylan Bank closed at LKR 90.50, -6.6% and Pan Asia Bank closed at LKR 23.50, -4.1%.

Foreign investors were net buyers for the 16th consecutive day with net inflow of LKR 320mn. Foreign participation was 22%. Year to date net foreign inflows passed the LKR 20bn mark to record LKR 20.1bn.

Net foreign inflows were seen in counters such as Access Engineering (LKR 193mn), Dialog Axiata (LKR 125mn) and Hemas Holdings (LKR 49mn) while net foreign outflow was mainly seen in John Keells Holdings (LKR 16mn).

Further Sampath Bank announced that the bank obtained the approval of CSE for listing the 70mn rated unsecured redeemable subordinated debentures at LKR 100.00 each.
www.dailynews.lk

SEC lifts mandatory offer suspension on Adam Investments

The Securities and Exchange Commission has granted approval to lift the suspension imposed on Adam Investments Ltd. on the mandatory offer made to remaining shareholders of PCH Holdings Plc.

With this move, AIN’s mandatory offer on PCHH at a revised offer price of Rs. 2.50 per share (as opposed to the original price of Rs. 2) will be continued and kept open for 21 days from 27 November to 18 December.

SEC in August suspended the mandatory offer until the final determination of a case in Commercial High Court. This was settled in November.

The code was triggered when AINV on 2 July acquired 83 million shares at Rs. 2 per share, thereby increasing its stake PCHH to 43%.
www.ft.lk