Sri Lanka stocks close up 1.7-pct

Dec 01, 2014 (LBO) - Sri Lanka's stocks closed higher with the price gains of index heavy John Keells Holdings and Commercial Bank amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 121.78 points higher at 7,275.68, up 1.70 percent.

The S&P SL20 closed 69.55 points higher at 4,040.67, up 1.75 percent.

Turnover was 983.57 million rupees, down from 2.08 billion rupees last Friday with 178 stocks closed positive against 29 negative.

The aggregate value of all off-the-floor deals represented 23 percent of the daily turnover.

Asia Asset Finance closed 20 cents higher at 2.00 rupees, attracting most number of trades during the day.

Foreign investors bought 320.98 million rupees worth shares while selling 237.19 million rupees worth shares.

Commercial Bank of Ceylon closed 6.30 rupees higher at 164.90 rupees and John Keells Holdings closed 4.30 rupees higher at 245.10 rupees, contributing most to the index gain.

Nestle Lanka closed 49.80 rupees higher at 2,159.80 rupees and Lanka Orix Leasing Company closed 4.60 rupees higher at 94.50 rupees.

Ceylon Tobacco Company closed 10.50 rupees lower at 1,080.50 rupees.

Fitch withdraws expected rating on NTB debentures

Dec 01,2014 (LBO) –Sri Lanka’s Fitch Ratings has withdrawn the expected rating of 'A(lka)(EXP)' assigned to Nations Trust Bank PLC's proposed senior unsecured debentures of up to three billion rupees as the bank no longer expects to proceed with the debt issue, the rating agency said in a media release.

The expected rating was assigned on 29 October 2014.

NTB's loan growth slowed during first half of 2014 to 4 percent from 12 percent in 2013, although it was still above the sector average.

NTB's exposure to the SME, consumer lending, credit card and lease segments increased to 77 percent of gross loans at end-1H14 from 75 percent at end-2013.

September corporate earnings grow by 53% Y-o-Y

The market dropped significantly this week as profit taking and political developments pushed indices lower. The ASPI lost 3.35% (or 247.72 points) to close at 7153.90 points. The S&P SL 20 Index dropped 156.14 points (or 3.78%) closing at 3971.12 points.

Turnover & Market Capitalization

Access Engineering topped this week’s list of highest contributors to market turnover as the counter accounted for 10.36% (or LKR 817.65mn) of total market turnover. Central Finance made a contribution of LKR 675.89mn (or 8.56%) to the market while JKH contributed LKR 630.57mn (or 7.99%) to total turnover. Total turnover for the week decreased 33.84% W-o-W to LKR 7.89bn compared to last week’s total of LKR 11.93bn.

Daily average turnover value for the week meanwhile, amounted to LKR 1.58bn compared to last week’s average of LKR 2.39bn. Market capitalization too decreased over the week losing LKR 105.20bn (or 3.35%) to close at LKR 3039.20bn compared to last week’s close of LKR 3144.40bn.

Liquidity (in Value Terms)

The Banking & Finance sector was the highest contributor to the week’s total turnover value, accounting for 33.80% (or LKR 2.67bn) of market turnover. Sector turnover was driven primarily by Central Finance, Commercial Bank & Peoples Leasing which cumulatively accounted for 47.17% of the sector’s total contribution. The second highest sectoral contribution stemmed from the Diversified sector, which accounted for 14.82% (or LKR 1.17bn) of turnover. The sector was helped by JKH & Hemas Holdings which cumulatively accounted for 69.43% of the sector’s total turnover value. The Construction & Engineering sector was also amongst the top sectoral contributors to the market, accounting for 11.02% (or LKR 870.07mn) of the week’s total turnover value. The sector was helped by Access Engineering which contributed 93.98% to total sector turnover.

Liquidity (in Volume Terms)

The Banking & Finance sector dominated the market in terms of share volume too, accounting for 28.70% (or 109.96mn shares) of total volume, with a value contribution of LKR 2.67bn. The Diversified sector followed suit as 49.43mn shares (or 12.90%), amounting to LKR 1.17bn changed hands. The Telecom sector meanwhile, contributed 12.00% to the week’s total turnover volume as 45.98mn shares changed hands. The sector’s volume accounted for LKR 602.77mn of total market turnover value.

Week’s Top Gainers & Losers



Despite one share been traded for the week, Office Equipment topped the list as the highest price gainer. The counter gained 21.74% from LKR 2,800.00 to close at LKR 2,300.00. Shalimar gained 10.76% W-o-W to close at LKR 1,987.00. Anilana Hotels meanwhile, gained 9.86% W-o-W to close at LKR 7.80. Good Hope and Hemas Power were also amongst the week’s top price gainers with W-o-W gains of 5.54% and 4.05%, respectively. Lanka Cement was the week’s highest price loser as the stock declined 58.33% W-o-W to close at LKR 4.00, relative to LKR 9.60 last week. Orient Garments recorded a W-o-W price decline of 25.77% to close at LKR 14.40 while SMB Leasing (NV) closed at LKR 0.40, representing a W-o-W decline of 20.00.

Foreign investors closed the week in a net buying position as total net inflows amounted to LKR 1.15bn, relative to total net inflows of LKR 1.24bn last week (-7.16% W-o-W).

Total foreign purchases increased 16.61% W-o-W to LKR 1.88bn from LKR 1.61bn recorded last week, while total foreign sales amounted to LKR 0.73bn, relative to LKR 0.37bn recorded last week (+95.38% W-o-W). In terms of volume, Dialog Axiata and Access Engineering led foreign purchases, while Anilana Hotels and Textured Jersey Lanka led foreign sales. In terms of value too, Dialog Axiata and Access Engineering led foreign purchases too, while JKH and Textured Jersey Lanka led foreign sales.

Point of View

Negative investor sentiment and profit-taking dominated markets this week with the ASPI hitting an 11-week low, as muted retail activity dragged both indices lower. Despite market activity picking up on Friday, the 38.01point gain in the benchmark ASPI failed to offset the W-o- W decline of 247.72 points. Volumes too, were notably thin with weekly turnover value declining approx. 33% (cf. last week’s weekly average) as turnover value hit a 4-week low of LKR 1.08bn on Tuesday.

Robust foreign inflows and HNI interest however, helped support some buying activity and foreign flows to equities extended its positive run for the 7th successive week as foreigners remained net buyers on five consecutive days. Crossings meanwhile contributed approx.

45.7% to total turnover value - amid strong HNI interest in Access Engineering and Dialog – increasing significantly from last week’s contribution of 27.8%. Markets in the week ahead are likely to remain largely unchanged as investors begin to close year-end positions.

September Corporate Earnings Grow 53%

Total market earnings1 of the recently concluded earnings season indicated a significant rebound; with earnings for the quarter rising 52.4% Y-o-Y to LKR 50.6Bn (cf. LKR 33.2Bn in September 2013). Corporate earnings for the cumulative 6 months2 of the year were also robust, gaining 33.0% Y-o-Y to LKR 87.7Bn relative to LKR 65.9Bn in 6M 2013 and LKR 72.7Bn in 6M 2012.

Gains were led by the Diversified (+55% Y-o-Y), Financial Services (+39% Y-o-Y) and Manufacturing (+23% Y-o-Y) sectors and supported by strong rebounds in the Oil Palms, Plantations, Investment Trust, and Services sectors. Growth in September quarter earnings meanwhile too were driven largely by the Diversified, Financial Services and Manufacturing sectors which cumulatively accounted for approx. 59% of total market earnings in September cf. approx. 55% and 53% of total market earnings in June 14 and September 2013 respectively. 
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Progress in NBFI consolidation

Further progress has been made by banks and finance companies and leasing companies (NBFIs) on the financial sector consolidation process during November 2014.

The proposed amalgamation of the Merchant Bank of Sri Lanka PLC, MCSL Financial Services Ltd and MBSL Savings Bank Ltd has reached the final stage of completion. The necessary shareholder approvals were obtained and the merged entity will operate as a licensed finance company from 2015.

The Act to facilitate the proposed merger of the three banks, viz., DFCC Bank, National Development Bank PLC and the DFCC Vardhana Bank PLC, was enacted.

The Ministry of Finance has made arrangements to issue the Gazette Notification in relation to exemption of Stamp duty for issue of share certificates for mergers and acquisitions under the financial sector consolidation process. One-to-one meetings chaired by the Governor of the Central Bank were held with the foreign banks to discuss the progress made on their expected contribution under the financial sector consolidation process. Several regional representatives of foreign banks were also present at these meetings.

Foreign banks in Sri Lanka are expected to demonstrate a greater participation in economic activities and to make significant contribution to the economy.

Consolidation process of seven NBFIs has been completed and another 22 NBFIs and four banks are in progress for completion in due course. 
www.dailynews.lk

SLTDA receives 44 project proposals 31 hotels get greenlight

By Mario Andree

Ceylon Finance Today: Sri Lanka Tourism Development Authority (SLTDA) has received 44 investment proposals for hotel projects during this year which would add more than 2,618 rooms to the existing room capacity of the country.

According to the Central Bank final approval was given to 31 project proposals during the first nine months of this year.

Fifteen new hotel projects commenced commercial operations during the first three quarters adding 999 rooms to address the growing demand.

Further, the SLTDA has initiated three new tourism resort projects in Kalpitiya, Kuchchaweli and Yala themed 'Island Resort', 'Beach Resort' and 'Wildlife Resort'.

The Authority developed and marketed several locations such as, Passikudah, Kuchchaweli and Kalpitiya as tourism zones for investments.

All land plots in Passikudah were taken up by investors according to the authority, while Kuchchaveli and Kalpitiya have yet to be taken up fully.

The Board of Investment of Sri Lanka has been actively promoting several mixed development projects as well as resorts to address the growing demand of lodging. Since 2009 the government actively signed several agreements and handed over blocks of land to foreign investors for hotel and mixed development projects.

Sri Lanka during the first 10 months of this year received 1,228,754, up 21.5% from 1,011,255 tourists according to SLTDA data.

Earnings from tourism recorded a healthy growth of 31.4% according to the Central Bank to US$ 1.6 billion during the first three quarters of this year.
www.ft.lk

DIMO revalues property by Rs 818 million

By J. Kurukulasuriya

Ceylon Finance Today: Diesel and Motor Engineering PLC, (DIMO), General Sales Agents for premium brands – Mercedes Benz, Tata and Bosch, has reported a group profit of Rs. 67 million for six months 30 ending September, down 12% against the corresponding 2013 period.

The capital reserves of the company were substantially boosted by the land revaluation done on 15 September 2014, by an independent valuer. The result of the revaluation was incorporated in the quarterly financial statements. Revaluation surplus amounting to Rs 818.5 million was transferred to revaluation reserve.

During the three months up to 30 September, group profits fell 22% as against its corresponding 2013 period. Although the group showed a loss, the company made an improved profit of Rs 46 million, up 130% from the 20 million of the previous year.

The company has five main business segments - 1. Vehicle sales — sale of brand new passenger and commercial vehicles, agri machinery, and second hand vehicles. 2. Vehicle after services — repair and service of vehicles including sale of vehicle spare parts, accessories and components. 3. Marketing — the sale of power tools and accessories, Lamps, Lighting Fittings, tyres and retreaded tyres. 4. Construction & Material Handling Equipment — sales and services of earth moving machinery, forklifts, and car parking systems and so on, and lastly 5. electro-mechanical, bio medical and marine engineering — sale, installation, commissioning and maintenance of medical equipment, generating sets, diesel engines for marine propulsion and, fluid management systems, industrial refrigeration systems and related items.

Of the total segment revenue of Rs 12,677 million the largest segment or 59% was the sale of Mercedes Benz and other vehicles – Rs 7,501 million.

The stated capital of Rs 425 million consists of 8,876,437 ordinary shares. The share traded at between Rs 510 and Rs 730 during the quarter which was an improvement in the price range of Rs 450 to 530 during the corresponding last year's quarter. The company has a stated capital of Rs 425 million with reserves of Rs 7,666 million.

The Employees Provident Fund (EPF) is DIMO's largest shareholder, with 18% of the shares, Director - A. R. Pandithage has 11% while J. C. Pandithage has 10%. A. R. Pandithage and his spouse together hold 21%.

The contingent liabilities as at 30 September 2014, on guarantees given by the company in respect of bid bonds, performance bonds and advance payments amounted to Rs 855.8 million.

Capital expenditure contracted by the company for which provision has not been made in the accounts amounts to Rs 908.6 million.
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Glennie Street Waterfront Property rewrites Lanka's corporate history JKH goes for US $ 445 million syndicated loan

By Ravi Ladduwahetty

Ceylon Finance Today: Sri Lanka's premier diversified blue chip corporate conglomerate John Keells Holdings PLC will shortly go in for a US $ 445 million syndicated loan for its Glennie Street, Colombo 2 Waterfront Properties (Pvt) Ltd project, rewriting Sri Lanka's corporate history.

Waterfront Properties ( Pvt) Ltd which will be the JKH member company which will be handling the project, will have an integrated Resort will be a multi-faceted development consisting of a luxury hotel, convention centre, entertainment facilities, international standards shopping mall, luxury condominiums, serviced apartments and office space, billed to be completed in 2018/2019.

This will be the largest and the highest international borrowing that any Sri Lankan corporate entity would be raising from the international market of all time after national carrier SriLankan Airlines (US $ 150 million) and the National Development Bank (125 million) raised syndicated loans earlier this year. Reports indicate that no Sri Lankan corporate has raised over US $ 200 million.

The previous highest international funding which has been raised, has been US $ 336 million in 2007 which has been offered by the Japan Bank for International Cooperation (JBIC) for greater Colombo economic development water supply and sanitation and rural development.

The syndicated loan will be for US $ 445 million and Standard Chartered Bank has already been appointed as the Lead Managers to the loan and they have already commenced raising the funds, top corporate sources told Ceylon FT yesterday.

These sources also said that JKH Group Chairman Susantha Ratnayake was expected to play a huge role in this project in terms of providing the leadership to the project in not only getting the requisite approvals but also countering other red tape, both political and operational.

Anticipated employment generation would be 3,000 at capacity out of which the majority will be skilled. The Project Company is M/s Waterfront Properties (Pvt) Ltd in which M/s John Keells Holdings PLC and/ its subsidiaries will be the majority investors.

The project is approved under the Strategic Development Projects Act No. 14 of 2008. The concessions granted for this project is similar to the other projects in tourism related. approved under SDP Act. Exemption of Corporate Income Tax is for a period of ten years In an earlier Colombo Stock Exchange filing, John Keells Holdings PLC said that JKH and its member company- Ceylon Cold Stores PLC have invested Rs 5.3 billion and Rs 1.9 billion respectively in the new company, Waterfront Properties (Pvt) Ltd.

The total cost of the project is US$ 650 million to be invested within the period of 60 months and the project implementation period will be 60 months. Dividend Tax exemption will be during the tax exemption period and one year thereafter. Exemption of Value Added Tax will be as per the provisions of the present law within the project implementation period of five years.

Exemption of Port and Airport Development Levy (PAL) will be as per the provisions of the present law within the project implementation period of five years.

Exemption of Construction Industry Guarantee Fund Levy , for the contractors under the Finance Act No. 5 of 2005 in relation to the project.

The project company will be exempted from the deduction of Withholding Tax on payments on interest on foreign loans taken for capital expenditure and technical fees.

The project company will be exempted from the deduction of Withholding Tax on payment on management fees, royalty payments and marketing fees provided the fees are at three per centum (3%) of gross operating revenues by way of basic management fees / royalties, marketing fees at one point five per centum (1.5%) of gross operating revenue and at ten per centum (10%) of gross operating profits by way of incentive management fees.

Exemption of PAYE Tax will be for maximum number of 20 employees. This concession shall be applicable for a period of Five years.

Exemptions from Exchange Control Regulations : The project company will be exempted from the provisions of Part, I, IA, II, III, IV, V and VI of the Exchange Control Act and this exemption will be solely applicable to the approved business activity of the project.

The project company is entitled to open and operate a Foreign Currency Banking Unit (FCBU) in any commercial Bank of Sri Lanka for the purpose of the project.
Other Applicable Taxes, Levies and Fees: The project company is liable to pay all other applicable taxes, fees and levies applicable under the normal laws of the country.

The company shall be required to comply with the following conditions: The effective date of the project implementation period will be from the effective date of the BOI Agreement. With regard to employment, prevailing Labour Laws of the country will be applicable.

The environmental and other clearances under the provisions of the relevant authorities have to operate the project within the premises subject to compliance of environmental regulations.
www.ceylontoday.lk

Arpico Insurance in Rs. 79.5 m IPO

Arpico Insurance Ltd., will list on the Colombo Stock Exchange with a Rs. 79.5 million IPO, up for grabs from tomorrow.

The Company will issue 6.63 million shares at Rs. 12 each.

The CSE has approved in principle for the listing of Company shares on the Diri Savi Board. 

Official opening is 11 December whilst public can begin subscription from 2 December. 

Managers to the issue are Arpico Ataraxia Asset management. Once the IPO is completed it will be the 294th listed firm.
www.ft.lk

Foreign banks to step up support: CB

The Central Bank said yesterday that foreign banks in Sri Lanka are expected to demonstrate greater participation in economic activities and make a significant contribution to the economy.

“Foreign banks expressed their commitment to operate as intermediaries of their entire international branch network to channel funds and expertise to several sectors of the economy,” the Central Bank said in a statement.

This commitment from foreign banks was expressed during the Central Bank’s one-to-one meetings chaired by the Governor with the foreign banks to discuss the progress made on their expected contribution under the financial sector consolidation process.

Several regional representatives of foreign banks were also present at these meetings, the Central Bank said.

There are 12 foreign banks and two leaders last week reported improved lending. In the first nine months of 2014, HSBC Sri Lanka’s lending has increased by 20.5% to Rs. 155.56 billion from Rs. 129 billion as at end 2013. Standard Chartered Bank lending had increased by 12% to Rs. 55.6 billion from Rs. 49.5 billion.

By end August 29014, total banking sector loans and advances grew by 5% year on year to Rs. 3.50 trillion. By end 2013 the figure was Rs. 3.42 trillion.
www.ft.lk