Sri Lanka shares steady in lower volume; seen gaining on results

Feb 13 (Reuters) - Sri Lankan stocks ended steady on Friday as gains led by banks offset losses in telecom shares, though investors expect the index to continue its upward trend due to better earnings.

The main stock index, which fell 0.18 percent in early trade, ended up 0.06 percent at 7,335.51, hovering near its highest close since Jan. 29 hit on Feb. 11.

"There won't be big gains, but the slight upward trend will continue," said a stockbroker, adding that better quarterly earnings have lifted sentiment.

Shares in Hemas Holdings Plc rose 2.93 percent, while Commercial Leasing & Finance Plc advanced 4.65 percent.

John Keells Holdings Plc fell 1.06 percent and Dialog Axiata Plc lost 1.59 percent.

Foreign investors sold a net 42.33 million rupees ($318,750) worth of shares on Friday, but they have been net buyers of 1.54 billion rupees worth of shares so far this year. The bourse had net foreign inflows of 22.07 billion rupees in 2014.

Friday's turnover was 945.9 million rupees, much less than this year's daily average of 1.5 billion rupees. 

($1 = 132.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Textured Jersey eyes takeover of knit fabric manufacturer in India

Textured Jersey Lanka Plc, in which apparel giant Brandix owns 30%, is exploring prospects to acquire an Indian knit fabric manufacturer based in Visakhapatnam. In a filing to the Colombo Stock Exchange, Textured Jersey Lanka Plc (TJL) said it has decided to initiate an independent valuation and due diligence study for the purpose of looking at the feasibility of acquiring controlling stakes in Ocean India Ltd. and Quenby Lanka Prints Ltd.

This is in pursuance of TJL’s ongoing regional expansion and capability enhancement strategy. The decision to proceed with the acquisitions will be subject to findings of the study and ensuing negotiatioins between all parties concerned.

Brandix Lanka also has equity stakes in both Ocean India and Quenby Lanka. In this context TJL said, a board sub committee consisting of TJL Chairman Bill Lam, two independent directors Amitha Gooneratne and Prof. Malik Ranasinghe and Managing Director Sriyan de Silva Wijeyeratne, have been appointed to overseas the progress of the transaction.

The independent valuation will be conducted by Ernst & Young. Upon the conclusion of the study, if an agreement between all parties is successfully reached, further details including consideration and payment method will be disclosed to the market, the TJL filing to CSE said.

It also said completion of the transaction is also subject to approvals from the Board of Investment and shareholders of TJL.

Currently TJL has a technical services agreement with Ocean India that has allowed TJL’s management to familiarise itself with the operations of Ocean India since October 2013.

Quenby Lanka is a leading fabric printer based in Sri Lanka and is currently a strategic vendor to TJL and is located in Seethwaka Industrial Park in close proximity to TJL production facility. It has also developed a strong working relationship with TJL.

“Provided the decision is made to proceed with the two acquisitions the strong working relationship already established should help speed up the business integration process and potentially launch TJL to the next level of solution provision, innovation and regional growth thereby adding significant long-term value to its shareholders and reinforcing its leadership within the fabric industry,” TJL filing to the CSE added.
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Odel shines in 3Q; Ashok announces new plans

Odel PLC has reported a quarterly (3QFY15) turnover of Rs. 1.4 b from Rs. 1.38 b last year, taking the cumulative turnover to Rs. 3.7 b for the nine months as against Rs. 3.5 b in the comparative period.

Chairman Ashok Pathirage said a notable improvement in gross profit margins took place during the quarter to 40.2% from 36.5% in 3QFY14.

A decline in operational cost margins was also noted during 3QFY15 to 31.5% from 34.2% in the comparative quarter which consequently improved operating profit margins to 10.1% from 6.3%. cumulative operating profit (excluding other operating income) improved by 30.8% to Rs. 158.7 m whilst the same for the quarter reached Rs. 122.5 m from Rs. 31.5 m in the comparative quarter.

PAT for the nine-month period reached Rs. 144 m (Rs. 183.7 m in 1-3QFY15). However the quarter achieved a PAT growth of 130.7% to Rs. 106.2 m from Rs. 46.0 m in the comparative period.

“The most pressing objective right now is to extract the maximum pathway to synergise Softlogic Retail’s operations with Odel to boost efficiencies and bottom line performance,” Pathirage said.

“We are in the phase of reducing the overheads by synergising and consolidating our retail base by eliminating any cost-duplication or excess resources. Accomplishing this is seen as a key driver to deliver better EBITDA. The increase in activity levels and cost-sharing approach post consolidation has absorbed and mitigated fixed costs,” the Chairman added.

He said Odel has always been a favourite shopping centre for local as well as foreign customers. Odel attracts customers from both middle and high income categories selling a good mix of exclusive as well affordable quality range of products. Odel houses its own international apparel section. Mothercare and Dockers in addition to existing brands such as Nike and Levis were also placed at Odel in December 2014.

The company is keen to make available Mango, Charles & Keith and Giordano at Odel in the near future.

“We would also house many other leading local brands such as Avirate, Yoland Collections and Linen & Life. A detailed strategic redesigning of Odel’s interior is in progress. The new look will also enhance the recent premier brand additions at Odel retail points,” Pathirage said.

The Chairman said the company would also be constructing a premier shopping mall at Odel’s flagship store at Alexander Place, Colombo 7. The present Odel store would continue its operations with the mall being planned targeting most of the underutilised land base there.

“Top German designers and architects are developing the blue print of this mall. This mall will feature an extensive retail space to house some of the best known brands both locally and internationally to cater to local demands and international tourists,” Pathirage added.
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