Sri Lankan shares close at 5-mth high; turnover hits 2-1/2 mth peak

Sri Lankan shares gained more than 0.7 percent in high turnover on Wednesday, closing at their five-month peak, as expectations of strong corporate earnings and political stability after the Aug. 17 parliamentary polls lifted investor sentiment.

Turnover rose to 3.65 billion rupees ($27.32 million), its highest since May 14 and well above this year's daily average of 1.09 billion rupees, on block deals.

The main stock index ended firmer 0.73 percent, or 52.90 points, at 7,313.97, its highest since Feb. 26.

"Trading was dominated by heavyweights, while block deals pushed the turnover higher," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

"Market is very positive, specially on the earnings. We expect the market to continue the uptrend."

Gains were led by large caps. Ceylon Tobacco Company Plc rose 2.85 percent after it reported a 16.6 percent rise in net profit for the April-June quarter, while conglomerate John Keells Holdings Plc gained 1.69 percent.

Dealers said block deals in Ceylinco Insurance Company Plc , which ended 0.17 percent weaker, boosted turnover and foreign trade.

Foreign investors, who have bought a net 1.4 billion rupees worth of shares so far this year, were net buyers of 1.95 billion rupees on Wednesday.

Analysts expect local companies to post strong results for the April-June quarter.

Expectations of political stability after the Aug. 17 parliament elections also helped sentiment, they said. 

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Piramal Glass Ceylon continues upward momentum in F16 - Q1 Revenue Rs. 1,543 Million & PAT Rs. 147 Million

Grain Elevators could grow revenue by 10.4 pct: SC Securities

(LBO) – Ceylon Grain Elevators PLC (GRAN.N), Sri Lanka’s largest operator in the poultry industry, could grow revenue by 10.4 percent and net profit by 12.2 percent annually in the next four years, according to a research report by SC Securities.

This would give the share a 12-month price target of 70 rupees. The company was trading at 65 rupees, up 4.5 percent, on Wednesday.

According to SC Securities, rising consumer demand due to revised public sector salaries and higher per capita income should drive the top line. The surge in tourist arrivals may also contribute to stronger consumer demand for its products.

“We expect the price ceiling imposed on a Kg of chicken to be lifted in the forth coming period, with this the large scale broiler farms would ramp up the production triggering more demand for feed and DOC,” they said.

Ceylon Grain Elevators and its subsidiaries manufacture feeds under the Prima and Farmer’s Choice brands. They operate poultry breeder farms and engage in processing, packaging and retailing of poultry and other meat products.

One of its subsidiaries is Three Acre Farms PLC (TAFL.N).

Among the downside factors, the stockbroking firm noted that a depreciation of the rupee increases costs as more than 50 percent of raw materials are imported.

The re-banning of food maize importation could also drive maize prices up, while outbreaks of disease could affect its stock of day old chicks.

SC Securities currently has a ‘buy’ recommendation for the stock.

Sri Lanka's DFCC Bank 'B' rating to stay after merger: S&P

ECONOMYNEXT - A 'B' rating on Sri Lanka's DFCC Bank will stay after its merger with subsidiary DFCC Vardhana Bank, Standard and Poor's, a rating agency said.

"Our analysis of DFCC is already based on the consolidated profile of the two entities including their franchise, funding, asset quality, earnings, and capitalization," S&P said in a statement.

"Our ratings on DFCC reflect the bank's satisfactory business position, better capitalization and earnings than domestic peers', limited deposit base and branch network, and exposure to sensitive loan segments."

DFCC owns 99.71 percent of the subsidiary.

S&P said the merger will bring limited cost benefits because the two entities already have operational synergies. Group assets were 211 billion rupees at March 31, 2015.

Sri Lanka cigarette sales up 10-pct amid consumption boom

ECONOMYNEXT - Sales in Sri Lanka have picked up 10 percent in the June 2015 quarter from a year earlier amid higher consumption, the island's cigarette monopoly Ceylon Tobacco Company said as profits rose 20 percent.

Net profits rose 20 percent to 3.0 billion rupees in the quarter, giving earnings of 15.63 rupees per share. In the 6-months to June CTC reported earnings of 29.41 rupees per share on total profits of 5.5 billion rupees, up 21.4 percent from a year earlier.

The stock closed at 915.50 up 15.50 rupees on Tuesday.

CTC, a unit of British American Tobacco, said gross revenues rose 19.8 percent in the June 2014 quarter from a year earlier to 26.952 billion rupees due to a combined 10 percent rise in volumes and a price increase coming with a tax hike in October 2014.

CTC told shareholders than volume increase came from "a higher level of consumer confidence and an increase in disposable income."

In the March 2015 quarter also CTC reported an 11 percent volume gain.

Sri Lanka's credit growth picked up in the last quarter of 2014 and in January the state gave a steep credit funded salary increase to state workers and other subsidies, driving the recurrent expenditure and the budget deficit up.

Excise taxes rose 21 percent to 20.4 billion rupees in the quarter, with value added tax consolidated into excise this year, under the steady destruction of the value added tax system seen in the country over several years.

CTC said it is now carrying 80 percent pictorial warnings on their packs after a new law was passed by the new administration.

CTC went to court against the then health minister Maithripala Sirisena repeating tactics deployed BAT and other tobacco giants in other countries to prevent greater awareness that smoking causes cancer, erectile dysfunction and heart attacks.

However the former health minister made it part of his campaign for election as President and promptly requested parliament to pass a law to impose 80 percent pictorial health warnings on pack.

Cigarette and military hardware have the rare distinction of being two products that kill when used as directed by the manufacturer. Most other consumer goods cause death when mis-used, over-used.

Sri Lanka’s Asian Hotels & Properties June quarter profit down 10-pct

ECONOMYNEXT – Sri Lanka’s Asian Hotels & Properties said group net profit fell 10 percent to 302 million rupees in the June 2015 quarter from a year ago as competition from new hotels hit business at its city hotels.

The firm, part of John Keells Holdings, said in a stock exchange filing that sales in the June quarter fell six percent to 1.67 billion rupees.

Earnings per share for the quarter were 68 cents compared with 76 cents the year before.

The company operates two five star city hotels - Cinnamon Lakeside Colombo and Cinnamon Grand Colombo - under the brand ‘Cinnamon Hotels and Resorts’ while its property development division runs the Crescat Boulevard shipping mall.

The June 2015 quarter downturn came from its hotels business where sales and profits fell.

Asian Hotels & Properties has said it had a 46 percent market share among Colombo’s five-star city hotels in 2014 although business fell owing to intensifying competition that restricted growth in average room rates.

Google to cover Lanka with 3G floating balloons

Hiran H.Senewiratne (hsenewiratne@gmail.com)

The Information and Communication Technology Agency of Sri Lanka (ICTA) has partnered with Google to cover the entire country with 3G internet under the 'Google Loon project'.

The agreement was signed with Google and ICTA at the Prime Minister's official residence yesterday.

"The next government's five year economic development plan will enable Sri Lanka to become a knowledge based, highly competitive market in the region, which will be able to compete with Singapore and Malaysia, Deputy Policy Planning and Economic Affairs Minister Dr Harsha de Silva said.

"To achieve economic target, the government intends to make new technology more affordable and accessible to the people and iron out the gap between rural and urban and have and have-nots in the country," Dr de Silva said at the signing ceremony at Temple Trees yesterday.

He said that when they come to power after the election they will canvass a lot of investments for established colleges of technology improve the knowledge of youth to be more knowledgeable to face the future competitive world.

Dr de Silva also said setting up colleges of technology will help the younger generation to become future innovators, business leaders' and entrepreneurs Sri Lanka is the first country in the world to have Internet access covering the whole country with the government support, Google Vice President and Project Leader on GoogleX Project Loon Mike Cassidy said.

"Project Loon is the latest moonshot from Google[x]: balloon-powered Internet access," which is an important day for Sri Lanka to become the first country to launch covering the whole country, "he said

It is a network of balloons travelling on the edge of space, designed to connect people in rural and remote areas, help fill in coverage gaps and bring people back online after disasters, Cassidy said.

He said it is expected to place 13 balloons above Sri Lanka over the next few months and internet service providers will have to connect this network through these 'floating towers' which will ultimately reduce their transmission costs.

ICTA Managing Director and CEO Muhunthan Canagey said that with this new project the whole country will become universally connected through the Wi-Fi system. Under this system they will be linking to 3500 government buildings to enhance relationship with the government and people, he said.

"Matara covered or Jaffna covered is now history. In a few months we will be able to say Sri Lanka covered," addressing the signing ceremony Foreign Minister Mangala Samaraweera said.

The project is handled by ICTA with the collaboration of former Facebook executive Chamath Palihapitiya who represents Lotus Flare.
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