Monetary Policy Review – August 2016 - Policy rates unchanged

Both headline and core inflation, measured on a year-on-year basis, edged down in July 2016. The normalisation observed in domestic supply conditions as well as the suspension of the revisions made to certain taxes moderated consumer price inflation. However, the underlying upward trend in inflation, as reflected in annual average price changes, appears to have continued thus far during the year.

On the external front, the deficit in the trade account is estimated to have expanded by 2.2 per cent during the first half of 2016, on a year-on-year basis, as external demand remained relatively weak. Earnings from tourism were estimated to have increased by around 16.7 per cent during the period from January to July 2016, with a record number of tourist arrivals during the month of July. Workers’ remittances increased by 3.8 per cent during the first seven months of the year. These inflows, coupled with the renewed foreign interest in investments in government securities and the realisation of medium to long term financial flows to the government, eased the pressure on the balance of payments and the exchange rate. Meanwhile, gross official reserves were estimated to have improved to US dollars 6.5 billion by end July 2016 from US dollars 5.3 billion in end June 2016.

Monetary expansion remained high in the month of June 2016. Credit granted to the private sector by commercial banks continued to increase at a significantly high rate of 28.2 per cent in June 2016, on a year-on-year basis, in comparison to 28.0 per cent recorded in the previous month. A high intake of credit to the Industry and Services sectors together with a substantial growth in personal loans and advances drove the credit expansion during the first half of the year. Reflecting these developments, the growth of broad money (M2b) accelerated to 17.0 per cent in the month of June 2016 from 16.5 per cent recorded in the previous month. According to the available indicators, the high growth of private sector credit and broad money has continued in to the month of July 2016 as well. In the meantime, short term interest rates increased considerably in response to monetary tightening measures adopted by the Central Bank during the first seven months of the year, leading to a sharp upward adjustment in both lending and deposit rates in the financial sector.

The Monetary Board, at its meeting held on 30 August 2016, observed that the impact of the policy measures adopted during the first seven months of the year through increasing policy interest rates and the Statutory Reserve Ratio (SRR) is being transmitted to the economy gradually. As such, the growth in monetary and credit aggregates is likely to decelerate during the remainder of the year to a level supportive of maintaining mid-single digit inflation in the medium term. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 7.00 per cent and 8.50 per cent, respectively.

Fitch affirms Lion Brewery at ‘AA-(lka)’; Outlook Stable

Fitch Ratings has affirmed Sri Lanka-based Lion Brewery (Ceylon) PLC’s (Lion) National Long-Term Rating of ‘AA-(lka)’ with a Stable Outlook.

Fitch has also affirmed the National Long-Term Rating of ‘AA-(lka)’ on Lion’s outstanding senior unsecured debentures. Fitch has maintained a Stable Outlook despite Lion’s weakening credit metrics due to the one-time disruption to production caused by floods in May 2016. Fitch believes the brewery is well-placed to recover from the floods and expects its financial profile to remain consistent with its rating.

Lion’s revenue declined 52% yoy in 1QFY17 due to lost inventory and a temporary manufacturing halt caused by the floods. The company is importing beer until local production recommences in late 2016 to mitigate the loss, but this is limited to its main product categories and may negatively affect margins due to the higher costs of imports. Losses on fixed-assets, stock and business interruption are covered by insurance, but the quantum of the claim or when Lion will receive payment is not yet determined.

www.dailynews/lk

TESS AGRO posts turnover of Rs. 444 mn

TESS AGRO PLC recorded a turnover of Rs. 444 million oppose to Rs. 365 million which is 25% growth in turnover for the 2015/2016 financial year.

However the rise in costs of fish and overseas sourcing of raw materials resulted in a loss of Rs. 49.5 million.

With their annual report being posted to the Colombo Stock Exchange the TESS AGRO has now been taken off the default board.

During the first quarter of 2015/2016 the company has been able to turn around by recording a marginal profit. With the re-opening of the European markets, and the new political climate in the country, the possibility of obtaining GSP plus where all marine products will receive duty free status, will be a huge boost to the exports of the company in the future.The company continues to forge in to capturing new markets.

“The year under review was a year when the company had to face its biggest challenge as the European Union, which was Sri Lanka’s most lucrative market decided to ban Sri Lankan fish imports to the EU,”said Sithy Faika Fernando Chairperson of the Company.

“New opportunities have opened up in Russia as the company has now received approval to export to this area.” (SS)

www.dailynews.lk

Cargills Bank reduces losses by 58%

Cargills Bank has minimized its losses by 58% to Rs 38 million (from Rs 89 million a year ago) in the quarter ended June 2016 according to interim results filed with the stock exchange.

Loans stood at Rs10 billion as at June 30, 2017 while deposits were Rs 6.9 billion. The group also increased its stake in Cargills Bank by making an investment of Rs 3.2 billion. At bank level interest income rose 177% to Rs322 million while interest expenses rose 167% to Rs129 million with net interest income up 184% to Rs 193 million.”

www.dailynews.lk

Sri Lankan stocks close steady ahead of cenbank policy meeting

Reuters: Sri Lankan shares ended steady on Tuesday as investors awaited directions from a key central bank policy meeting later in the day.

The central bank is expected to keep its key interest rates steady at the meeting after raising them by 50 basis points last month, a Reuters poll showed, amid signs of easing inflation and slower private sector credit growth.

The benchmark Colombo stock index ended 0.02 percent up at 6,541.80, after posting its lowest close since Aug. 12 on Monday.

The market moved sideways as investors waited for directions from the policy meeting, said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

Turnover stood at 727.3 million rupees, just below this year's daily average of 753.4 million rupees.

Foreign investors sold a net 225.8 million rupees ($1.55 million) worth of shares, extending the year-to-date net foreign outflow to 3.94 billion rupees worth of equities.

Lanka ORIX Leasing Company Plc rose 2.5 percent, Overseas Realty Ceylon Plc gained 4 percent, while top conglomerate John Keells Holdings Plc fell 0.3 percent. 

($1 = 145.5000 Sri Lankan rupees) 

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

Sri Lankan stocks end lower on profit-taking

Reuters: Sri Lankan shares fell for a second straight session on Monday in moderate volume as investors booked profits.

The increase in excise duty on diesel which dragged on Lanka OIC also pulled down the index, brokers said.

Sri Lanka's finance ministry on Friday said it had increased the excise duty on diesel by 10 rupees with effect from Aug. 20, but there will not be any price increase in diesel at pumps. .

Shares in Lanka IOC ended down 2.12 percent on Monday. They fell 10.58 percent during Friday' session after news of the excise duty hike.

The benchmark Colombo stock index ended 0.16 percent down at 6,540.19, its lowest close since Aug. 12. It hit its highest close since May 20 on Tuesday.

The bourse fell 0.78 percent last week, recording its first weekly fall in four weeks.

"We are experiencing a bit of profit-taking," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

"But the overall investor sentiment is improving continuously with investors bullish on the construction sector as the government is announcing new expressway constructions and other development projects."

Foreign investors bought a net 212.8 million rupees ($1.46 million) worth of shares on Monday, extending the net foreign inflow so far this month to 939.3 million rupees worth of equities, but have been net sellers of 3.71 billion rupees worth of shares so far this year.

Turnover stood at 889.9 million rupees, more than this year's daily average of 753.4 million rupees.

Shares in Dialog Axiata Plc fell 0.88 percent while Vallibel One Plc fell 2.74 percent and Cargills Ceylon Plc fell 1.63 percent. 

($1 = 145.7000 Sri Lankan rupees) 

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

LB Finance declares final dividends in excess of Rs 1 bn

LB Finance PLC declared a first and final dividend of Rs. 7.50 per share (par value of Rs 5.00) to the shareholders for the financial year 2015/16. This is an increase of 50% from the previous year, with a total dividend declaration exceeding Rs. 1 Billion.

This is the highest dividend paid in the company’s history and stands as a testament to the company’s attitude towards providing the highest possible return to the shareholder. Financial year 2015/16 was one of the most successful years in history for LB Finance PLC with a staggering profit after tax of Rs. 3.7 Billion. This was a 70% growth from the Rs. 2.1 Billion achieved in the previous financial year.

During the financial year 2015/16, all key indicators were on the up with Net Interest Income rising to Rs. 8.6 billion, an increase of 12% over the previous year’s Rs. 7.7 Billion. The Total Operating Income grew to Rs. 9.8 Billion compared to 8.8 Billion recorded over the corresponding period, an increase of 12%. Net operating Income rose by 39% to Rs 9.4 billion compared to Rs 6.8 Billion recorded previous year.

A notable reduction in expenses came through reduced impairment charges which recorded a 79% reduction to Rs. 382.4 Million.

Total Assets amassed to Rs 84.5 Billion as at the end of the financial year 2015/16, an increase of 25% over the previous year’s figure of Rs 67.5 Billion. Total Loans and Advances grew by 28% to Rs 71.5 Billion as the company continued to focus on core business activities with 95.95% of the Total Assets being Interest Earning Assets.

“Despite the challenges posed by subdued economic growth and volatile market conditions, the company managed to thrive in the Non-Banking Financial Industry and achieve results well within shareholders’ expectations, owing to our sound business model. Thus we managed to declare a total dividend in excess of Rs. 1 Billion to our shareholders,” says Sumith Adhihetty Managing Director.

www.dailynews.lk

NSB’s PAT increases by 24% to Rs. 4.78 bn

The National Savings Bank’s (NSB) Profit After Tax (PAT) for the first half stood at Rs. 4.78 billion up from Rs. 3.86 billion during the same period last year. This 24% increase is most noteworthy considering several challenges the Bank had to face during this period under review. These challenges included a weak Equities market environment and mark to market losses on account of increases in interest rateson investments in Government securities.

Total assets of the Bank reached Rs. 875 Billion fuelled by a satisfactory growth in both retail and corporate lending. The total lending portfolio growth of 10.6% for the first half of 2016 was comparable with the previous year.

In another positive development the Bank improved its asset quality considerably with a decrease in NPL ratio to 2% by June 2016 from 3.5% reported end last year. Lower impairment provisioning assisted in enhancing profitability during this first half of the year.Net interest margins declined marginally on account of changes to deposit mix, resulting in a higher cost of funds.

The Bank’s Tier 1 capital adequacy ratio stood at 15.94% while the total capital adequacy for the reviewed quarter was 14.97%. These ratios however, remain well above the regulatory standards for well capitalized banks. Liquidity ratio of the Bank stood at 75.19% by the end of June 2016, which is well above the regulatory requirement of 20%. By the end of June 2016, the branch network of the Bank reached to 250 branches and the Bank has added 5 new branches during the period under review. AAA Rating of the Bank was reaffirmed for the 14th consecutive year by the Fitch Ratings Lanka. NSB is the only local bank to receive AAA rating from Fitch Ratings and maintain the same for 14 years.

www.dailynews.lk

Sri Lankan stocks end at 2-wk low;, diesel duty hike hurts

Reuters: Sri Lankan shares ended at a two-week low on Friday in moderate volume as investors booked profits, while an increase in excise duty on diesel dragged on Lanka OIC, pulling down the overall index.

Sri Lanka's finance ministry on Friday said it had increased the excise duty on diesel by 10 rupees with effect from Aug. 20, but there will not be any price increase in diesel at pumps. .

Shares in Lanka IOC fell 9.8 percent on Friday after the news on excise duty hike reached the market, stockbrokers said.

The benchmark Colombo stock index ended 0.59 percent down at 6,550.91, its lowest close since Aug. 12. It hit its highest close since May 20 on Tuesday.

"Investors have been taking profit and retail investors have been on the sidelines," said Prashan Fernando, COO at Acuity Stockbrokers.

Foreign investors bought a net 12.1 million rupees worth of shares on Friday, but they have been net sellers so far this year of 3.94 billion rupees worth of shares.

Turnover stood at 678.7 million rupees ($4.67 million), below this year's daily average of around 750 million rupees.

Conglomerate John Keells Holdings Plc fell 2.4 percent, while Nestle Lanka closed 1.3 percent down.

($1 = 145.2500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Sri Lanka’s Agalawatte Plantations loss widens in June 2016 quarter

ECONOMYNEXT – Loses at Sri Lanka’s Agalawatte Plantations Plc widened in the June 2016 quarter, with the tea business continuing in the red and lower earnings from oil palm.

The plantation company, whose controversial sale by Mackwoods to Browns is in dispute, reported a loss of Rs166 million in the quarter, up 84 percent from a year ago.

June 2016 quarter sales fell 43 percent to Rs245 million during the period, according to a stock exchange filing.

Agalawatte Plantations’ loss came despite a sharp rise in other income, with finance costs having tripled, the accounts showed.

The firm’s loss per share was Rs6.63 in the June 2016 quarter, up from Rs3.60 the year before.

In the six months to June 2016, the loss per share was Rs7.45, with sales down to Rs698 million.

Sri Lanka plantations say unable to continue to justify large losses to shareholders

ECONOMYNEXT – Sri Lankan plantation companies said they cannot justify large loses to shareholders and remain in business if worker labour unions do not sign a new productivity-linked wage deal agreed upon with government mediation.

The Planters’ Association of Ceylon, representing Regional Plantation Companies (RPCs), said that continuing to resist the revision of the present archaic attendance-based wage as losses increase, without any other viable alternative, is putting the industry in peril.

“At the request of the government and considering the aspirations of the workers, the RPCs provided a daily interim allowance of Rs100 to their workers for June and July 2016 despite being under significant financial pressure, by utilising loans of Rs800 million provided by state banks via the Tea Board,” a statement said.

“The interim allowance was paid for the two months based on the written understanding reached between the RPCs, the government and the trade unions that a productivity-based Collective Agreement will be signed prior to the payment of wages for August 2016.”

Such an agreement “is essential to the put the industry on a more sustainable footing,” the RPCs have pointed out, saying that “they cannot continue to be in business and sustain the large population residing in RPC plantations with the current state of the industry.”

The RPCs said that by continuing to “reject the ground reality by postponing the much-needed revision of the wage structure, the industry is being put in a perilous situation – with RPCs unable to continue to justify large and further accumulating losses to their shareholders”.
(COLOMBO, August 23, 2016)

Sri Lanka Treasuries yields edge up

ECONOMYNEXT - Sri Lanka's 03-month and 01-year Treasuries yields edged up at Wednesday's auction, while 06-month yield was flat, data from the state debt office showed.

The yield on 03-month T-Bills rose 03 basis point to 9.04 percent, while that on 12-month bills rose 10bps to 10.75 percent.

The 06-month bill yield was flat at 9.94 percent.

The debt office got bids worth Rs67.5 billion and sold Rs23.8 billion of bills, mostly 06 and 12 month.

Sri Lanka sells Rs16.8bn in 10-year bonds at auction

ECONOMYNEXT - Sri Lanka has sold Rs16.8 billion rupees of 09 year and 11 month bonds at an auction Wednesday at a weighted average yield of 12.52%, the debt office said in a statement.

It got bids worth almost Rs110 billion for the bonds offered at an annual coupon rate of 11.50%.

The debt office also sold Rs17 billion of 08 year bonds with a yield of 12.24% for which it got bids of Rs59 billion.

It also sold Rs15.5 billion worth 04 year and 06 month bonds at a yield of 11.76% after getting bids of Rs74 billion.

Fitch rates HNB’s debenture at ‘A+(lka)(EXP)

Fitch Ratings has assigned Hatton National Bank’s proposed subordinated debenture issue of Rs 6 bn an expected National LongTerm Rating of ‘A+(lka)(EXP)’.

The debentures, which will have tenors of five and seven years and carry fixed coupons, will be listed on the Colombo Stock Exchange. HNB expects to use the proceeds to strengthen its Tier II capital base.The proposed subordinated debentures are rated one notch below HNB’s National LongTerm

Rating to reflect the subordination to senior unsecured debt.Rating of HNB reflects its strong domestic franchise, satisfactory capitalization and strong performance, which are counterbalanced by a higher risk appetite as seen in the sustained high loan growth that has put pressure on its funding and liquidity profile. The ratings on the proposed debentures will move in tandem with HNB’s National LongTerm Rating.

www.dailynews.lk

MJF Exports invests Rs. 165 m in NDB shares

MJF Exports Ltd. has acquired 1 million shares of NDB for Rs. 165 million last week.

The purchase was disclosed by NDB in view of MJF Exports being a company in which Malik Fernando, the spouse of NDB Director Kimarli Fernando, is a Director and shareholder.

Last week NDB was the most traded stock value-wise with Rs. 1.56 billion or 33% of the market’s total turnover. Around 9.4 million NDB shares changed hands. The biggest buyer was SBI of Japan, which picked up five million shares at Rs. 165 each. The stock closed at Rs. 167.90, up by Rs. 3.10. Foreign holding of NDB declined from 25.8% to 23.2% or by 4.3 million shares with a net outflow of Rs. 721.7 million last week.

www.ft.lk

Dr. T. Senthilverl’s Laxapana Batteries stake tops 10%

High net worth but low-profile investor Dr. T. Senthilverl has increased his stake in Laxpana Batteries Plc to over 10%.

This was following him buying 0.44 million shares at Rs. 11 each on top of the 3.66 million shares he held previously.

E.B. Creasy Group and related parties control over 60% stake in Laxapana Batteries. 

www.ft.lk

LOLC posts Rs 3.2 bn profit in first quarter

LOLC’s dominant financial services sector companies, led the Group to record strong profits in the first three months of 2016/17, a PBT of Rs. 3.2 bn when compared to Rs. 2.7 bn recorded in the same period last year.

The current year’s performance, strengthened by the outstanding performance of the Group in 2015/16 of Rs. 11.9 bn of PBT, is a 45% growth over the last year. The financial services companies which account for 82% of the Group’s PBT, showed a remarkable growth in terms of an increase in the lending portfolio consequent to the aggressive growth in their lending books.

As a result, the total Asset base of the Group reached Rs. 380 bn.The contribution to the high growth was achieved, resulting a portfolio growth of 52% to Rs. 213 bn from Rs.140 bn.

LOLC’s Group Managing Director Kapila Jayawardena said LOLC’s outstanding performance in 2015/16 is mainly derived from the financial services sector, where all companies have recorded exceptional performances. “The robust growth in the lending business, supported by the strong funding line, from both local and foreign sources at attractive terms and conditions, improved the income generating capacity of the sector. The strong collections enabled the Group to achieve a better NPL level and enabled all the companies in this sector to perform exceptionally well,”he said.

The leisure business of the Group led by Browns Hotels and Resorts (BHR), The Eden Resort and Spa in Beruwala, The Paradise Resort and Spa in Dambulla, Dickwella Resort and The Calm Resort and Spa in Pasikudah are generating moderate results despite the challenging environment in which they operate.

However, in comparison to the previous year higher profits are expected in 2016/17. The two hotel properties under construction, The Turtle Beach Resort in Kosgoda and Riverina Resort in Beruwala are progressing as planned.

LOLC, one of the largest conglomerates in Sri Lanka, its core business being financial services, comprises of three finance companies and one leasing company falling under the purview of the Central Bank of Sri Lanka.

The flagship finance company LOLC Finance PLC (LOLC Finance), Commercial Leasing and Finance PLC (CLC) and the newly acquired BRAC Lanka Finance PLC (BRAC) together with LOLC Micro Credit Limited (LOMC) recorded a strong financial performance in the year 2015/16 and continued the momentum during the first three months of the current year accounting for 89% of the Group’s PBT.

The strong performance was enhanced by the high yielding overseas investments made in LOLC Cambodia, PRASAC Micro Finance Company in Cambodia and LOLC Myanmar.

www.dailynews.lk

Sri Lankan stocks end steady; turnover moderate

Reuters: Sri Lankan shares ended steady on Thursday in moderate trading volume as local buying boosted by positive sentiment was offset by foreign outflows and selling for month-end settlement.

Sentiment has been positive after the authorities started to take some bold steps to counter a balance of payments and credit problem.

Sri Lanka's new government is drafting reforms aimed at simplifying taxes, widening the tax base and increasing compliance, Finance Minister Ravi Karunanayake said on Wednesday, two days after his ministry said the country's tax revenue in the first seven months jumped 23 percent to 769.8 billion rupees from a year earlier.

The benchmark Colombo stock index ended 0.02 percent up at 6,589.71, hovering around its highest close since May 20 hit on Tuesday.

"There was some profit-taking due to month-end settling though the market is still on positive sentiment," said Prashan Fernando, COO at Acuity Stockbrokers.

Foreign investors sold a net 78.4 million rupees worth of shares on Thursday, extending the outflow so far this year to 3.94 billion rupees worth of shares. They are, however, net buyers of 714.4 million rupees worth of equities so far this month.

Turnover stood at 624.5 million rupees ($4.30 million), below this year's daily average of around 750 million rupees.

Conglomerate John Keells Holdings Plc edged up 0.4 percent, while private lender Sampath Bank fell 0.6 percent. 

($1 = 145.1000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Sri Lanka corporate earnings growth slows to 6.0-pct in June quarter

ECONOMYNEXT - Sri Lanka's corporate earnings grew 6.6 percent from a year earlier in the June 2016 quarter to Rs50 billion, slowing from 15.9 percent in the March quarter, an equities research report said.

CAL Research, a Colombo-base equities research house, said trailing 12-month earnings grew 5.0 percent to Rs217 billion, compared to a 16.5 percent growth last year.

CAL compared the results of 265 companies for year-on-year data. March quarter data involved 269 firms and the difference was not material, an analyst said.

In 2015, Sri Lanka's economy got an artificial boost as the government deficit spent, hiking state salaries and pensions and the central bank released about Rs300 billion of liquidity and printed outright about another Rs200 billion to drive credit to unsustainable levels and trigger a balance of payments crisis.

This year, credit is expected to be driven by real deposits.

Banks, Finance and Insurance, the largest sector in the Colombo Stock Exchange, showed a 46 percent gain; Beverage, Food and Tobacco gained 15 percent; and Diversified Holdings grew 10 percent.

The biggest individual contributors were Hatton National Bank (6.8 percent), Commercial Bank (6.5 percent), Ceylon Tobacco (6.1 percent) and John Keells Holdings (4.8 percent).

Top growth was shown by Power and Energy (166 percent), and Land and Property (+82 percent). (Colombo/Aug24/2016)

Motor industry records growth due to increase in per capita GDP

The motor industry in Sri Lanka has recorded enormous growth during the post war period in the country, mainly due to the increasing per capita GDP, which resulted in increasing customer affluence and proportionate increase in the spending on transportation.

The robust growth is expected to prevail with overall growth in consumption, development of road infrastructure and poor state of public transportation resulting an increase in demand for passenger vehicles. Also with the expected growth in the construction sector the demand for commercial heavy vehicles are expected to grow.

Over the past five years the tyre industry in Sri Lanka has been growing substantially due to the rise seen in the number of automobiles owing to increase in income levels, low interest rates and the growing infrastructure levels in the country.

Therefore, SC Securities (Pvt) Ltd expects the growth in demand for tyres in to positively benefit the company in the forthcoming period as CEAT Sri Lanka, is the present market leader in the radial and commercial tyre segments in the country.

Sri Lankan tyre manufactures caters to 22 % of the global solid tyre demand, with many manufactures producing specialized tyres to serve the growing technical requirements of the industrial world. Solid rubber tyres are used in forklifts and land mowers and industrial vehicles such as heavy trucks and trailers. Unlike pneumatic tyres, solid tyres are not filled with air and can endure high pressure and weight and are more durable to wear and tear.

At present, CEAT Sri Lanka manufactures half of the countries requirements with a 17 % share in the motorcycle segment in Sri Lanka, 30 % in the radial segment, 51 % in the truck/light segment, 54 % in the three wheel segment and 72 % agriculture tyre segment. Further, the company has a monthly tyre production volume of over 1,450 MT.

www.dailynews.lk

Browns Beach Hotels to raise Rs 1.4 bn

Browns Beach Hotels is to raise Rs. 1.4 billion via a rights issue, the company said in a stock exchange.

The company will issue 54 million new ordinary shares at Rs 25.85 each subject to necessary approvals at an Extraordinary General Meeting of the Company.

The objective of this rights issue would be to re invest it to minimise the existing debt of the company and also to re build the hotel. The new hotel construction work was done under, Negombo Beach Resort (Pvt) Ltd, a fully owned subsidiary of Browns Beach Hotels PLC.

www.dailynews.lk

Distilleries Corp. to be suspended

Shares of Distilleries Corporation of Sri Lanka will be suspended and owners as of September 30 will get four shares of Melstacorp in return, company said in a stock exchange filing.

The trading in shares will be suspended starting from October until the public float in DCSL is restored. Distilleries will then become a 100% owned unit of Meltacorp.

Directors of DCSL recently decided to make Melstacorp limited the ultimate holding company of the group and to obtain a listing from the CSE subject to necessary approvals.

The decision is subject to the special resolution being passed by the shareholders at the EGM convened for 6 September and the Court sanctioning the arrangement on the 7 September being the date fixed for the next hearing.
www.dailynews.lk

Four hotels to be divested: Water’s Edge, Hilton, Grand Hyatt, GOH up for sale

The government will soon offer investment opportunities in Colombo Hilton, Grand Hyatt, Water’s Edge and the Grand Oriental Hotel that will be divested in the private sector, Tourism, Lands and Christian Religious Affairs Minister John Amaratunga said.

Speaking at the Indian Ocean Hospitality Investment Conference at the Colombo Hilton yesterday he said the finalization of the Megalopolis Plan and the new financial city will make Colombo the trading and commercial hub of the Indian Ocean between Dubai on the west and Singapore in the east.

“In addition there is substantial state investment in infrastructure development in identified tourist resorts based on a new master plan being formulated by the Sri Lanka Tourism Development Authority.We are investing on developing domestic air connectivity to get over the road traffic congestion issue. New airports will be opened close to Kalpitiya and Badulla.Another one was recently opened in Batticaloa.”

“With absolute peace in all parts of the country and a stable government that has given priority to the development of the economy, it is the right time to invest in Sri Lanka,” Amaratunge said.

“What is truly encouraging is that tourist arrivals to Sri Lanka hit an all-time high last month. The number of arrivals which reached 209,351, represented a growth of 19.1 percent compared to July last year and is the highest number recorded in a single month since records began in the sixties. The July arrivals figure is higher than even the figure recorded last December which is traditionally Sri Lanka’s highest grossing month. Last December too was a record with 206,114 arrivals but the July performance had eclipsed this mark.

“This will require doubling of our current capacity. Already some of the world’s top hotel brands have begun construction of hotels here. Some of them are Ritz Carlton, Marriot, Grand Hyatt, Shangri-La, Sheraton and ITC.

“With the increasing arrival targets, new hotels and thousands of new rooms we are also aware of the massive manpower requirement and steps are already underway to address this issue. According to estimates over 20,000 new jobs will be added to the hospitality sector each year over the next four years raising the number directly employed in the hospitality trade from 140,000 at present to 240,000 by 2020.”

“We are also very keen to develop the MICE segment in addition to medical, health and wellness tourism, adventure and sports tourism, and especially event based tourism. While our focus will be on attracting the high spending upmarket segment we want Sri Lanka to continue to be a destination for people from all walks of life. We have no problem with the budget travelers and backpackers, and we welcome the hostels and other establishments that are opening up to cater to these segments.”

www.dailynews.lk

Lanka Ventures to raise Rs 900 mn in IPO

Lanka Ventures Chairman Jonathan Alles in company’s annual report 2015/2016 said the company is making efforts to list its subsidiary LVL Energy Fund during the current financial year.

This will be at the Colombo Stock Exchange by way of an initial public offer (IPO) aiming to raise Rs. 900 million. Following the IPO, LEF will have funds in excess of Rs. 1 billion to invest in projects in the energy sector locally and overseas. Meanwhile,in June 2016, LEF raised Rs. 336 million through rights issue of shares issued on the basis of 1 for 10 at an issue price of Rs. 8.00 per share.

The company invested Rs.255 million towards the rights issue and maintained its subsidiary status with 71.8% equity stake in LEF.

www.dailynews.lk

Sri Lankan stocks slip from over 3-mo closing high on month-end settlements

Reuters: Sri Lankan shares ended weaker on Wednesday, slipping from their highest close in more than three-months posted in the previous session, due to month-end settlements, brokers said.

Analysts said turnover was higher on expectations of better economic performance after the government said it would achieve its revenue target for this year.

Sri Lanka's tax revenue in the first seven months jumped 23 percent to 769.8 billion rupees from a year earlier, and Finance Minister Ravi Karunanayake is optimistic about the full-year revenue target, his ministry said on Monday.

Turnover stood at 1.32 billion rupees ($9.08 million), well above this year's daily average of around 753.8 million rupees.

The benchmark Colombo stock index ended 0.23 percent down at 6,588.30, slipping from its highest close since May 20 hit on Tuesday.

"The confidence is returning to the market. We can see that from the turnover levels, but we think the correction will last for another one or two days with the month-end settlements," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

"We are looking at September as a very good month with signs of stability in government policies."

Foreign investors, however, sold a net 236.34 million rupees worth of shares on Wednesday, extending the outflow so far this year to 3.86 billion rupees worth of shares.

They are, however, net buyers of 792.8 million rupees worth of equities so far this month.

Shares of Ceylon Cold Store Plc fell 3.09 percent, while conglomerate John Keells Holdings Plc fell 1.60 percent, dragging the overall index down. 

($1 = 145.3000 Sri Lankan rupees) 

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

Sri Lankan stocks post 3-month closing high in high turnover

Reuters: Sri Lankan shares ended marginally higher on Tuesday and posted their highest close in three months, led by financials while turnover hit a 4-1/2-month high on expectations of better economic performance after the government said it would achieve its revenue target for this year.

Tax revenue in the first seven months jumped 23 percent to 769.8 billion rupees from a year earlier, and Finance Minister Ravi Karunanayake is optimistic about the full-year revenue target, his ministry said on Monday.

The benchmark Colombo stock index ended 0.14 percent, or 9.17 points, firmer at 6,603.76, its highest close since May 20.

"Today, it was mostly retail-driven, but the market has slowed down in the last few days with the month-end settlements," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Turnover stood at 1.81 billion rupees ($12.45 million), its highest since April 1, and well above this year's daily average of around 750.1 million rupees.

Foreign investors sold a net 402.4 million rupees worth of shares, the highest outflow since May 27, and extending the outflow so far this year to 3.62 billion rupees worth of shares.

They are, however, net buyers of 1.03 billion rupees worth of equities so far this month.

Shares of Ceylinco Insurance Plc rose 0.81 percent, while Asiri Hospital Holdings Plc gained 3.55 percent and Cargills (Ceylon) Plc added 0.11 percent. 

($1 = 145.4000 Sri Lankan rupees) 

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

Sri Lankan shares slip from 3-month closing high

Reuters: Sri Lankan shares closed slightly weaker on Monday after posting a three-month closing high in the previous session as investors booked profit in beverage and telecom stocks.

The benchmark Colombo stock index ended 0.12 percent, or 7.65 points, weaker at 6,594.59, after adding 1.23 percent last week in its third straight weekly gain.

"The market came down on a bit of profit-taking," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd, adding that the market might continue to be bullish with no big risks of huge downturn.

Turnover stood at 643.9 million rupees ($4.43 million), less than this year's daily average of around 743.2 million rupees.

Foreign investors bought a net 48.6 million rupees worth of shares, extending the net foreign inflow so far this month to 1.43 billion rupees worth of equities.

They are, however, net sellers of 3.22 billion rupees worth of shares so far this year.

Shares of Ceylon Tobacco Company Plc fell 1.96 percent, while Ceylon Cold Stores Plc dropped 1.38 percent and Distilleries Company of Sri Lanka Plc declined 1.10 percent.

Shares in Dialog Axiata Plc fell 0.86 percent. 

($1 = 145.5000 Sri Lankan rupees) 

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

Sri Lankan stocks hit 3-mth closing high led by banks, construction shares

Reuters: Sri Lankan shares hit a three-month closing high on Friday as investors bought banking and construction stocks, brokers said.

Construction shares have been rising ever since the government gave its consent to restart a $1.4 billion port city deal on hopes the sector would see a boom, brokers said.

Sri Lanka's government on Aug.12 agreed on a new version of its $1.4 billion real estate agreement with China after changing the terms and blocking the outright sale of land - part of a project covering a square mile right next to the capital's port.

The benchmark Colombo stock index ended 0.14 percent higher, or 8.99 points, at 6,602.24, its highest close since May 20.

The index rose 1.23 percent this week, its third straight week of gains.

"Today the market is up on the bullish buying interest in the construction sector," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

"There could be some profit-taking but we don't see huge downside, with investor confidence improving on the overall economy."

Turnover stood at 1.45 billion rupees ($9.97 million), nearly double this year's daily average of around 743.8 million rupees.

Foreign investors net sold 265.9 million rupees worth of shares on Friday, extending the year to date net foreign outflow to 3.27 billion ($20.63 million) worth equities.

They have however net bought 1.38 billion rupees worth of shares so far this month.

Shares of Dialog Axiata Plc jumped 2.65 percent, while Access Engineering Plc rose 2.81 percent and DFCC Bank Plc climbed 2.26 percent. 

($1 = 145.4500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Fitch downgrades NDB, affirms 8 banks, revises outlook on DFCC, Sampath

(Correction: This announcement replaces the version published on 22 June 2016 to correct the Support Rating of DFCC Bank PLC to ‘5’ instead of ‘4’ and the rating action on the Support Rating to “downgrade” instead of “affirmed”)

Aug 19, 2016 (LBO) – Fitch Ratings says it has downgraded Sri Lanka’s National Development Bank PLC’s (NDB) National Long-Term Rating to ‘A+(lka)’ from ‘AA-(lka)’.

The ratings on eight other Sri Lanka banks have been affirmed. The agency also revised the Outlook on DFCC Bank PLC’s (DFCC) and Sampath Bank PLC’s (Sampath) National Long-Term Ratings to Negative.

The rating actions follow Fitch’s periodic review of the large banks peer group. Fitch has downgraded its assessment of Sri Lankan banks’ operating environment to ‘b+’ from ‘bb-‘ and assigned a negative outlook.

“Fitch believes operating conditions have become more challenging – as signaled by the downgrade of the sovereign rating to ‘B+’ from ‘BB-‘ in February 2016 – and expects increased volatility to add pressure on the banks’ credit metrics,” a statement said.

However, Fitch said it maintains a stable outlook for the Sri Lankan banking sector for 2016, as a material deterioration in the sector’s credit profile is not expected in the short-term.

Fitch believes the underlying operating conditions supporting sector performance are likely to remain intact and pressure on the economic environment is likely to be contained through tighter monetary policy.

The full statement is below:

Fitch Ratings-Singapore/Colombo-18 August 2016: This announcement replaces the version published on 22 June 2016 to correct the Support Rating of DFCC Bank PLC to ‘5’ instead of ‘4’ and the rating action on the Support Rating to “downgrade” instead of “affirmed”.

Fitch Ratings has downgraded National Development Bank PLC’s (NDB) National Long-Term Rating to ‘A+(lka)’ from ‘AA-(lka)’. The ratings on eight other Sri Lanka banks have been affirmed. The agency also revised the Outlook on DFCC Bank PLC’s (DFCC) and Sampath Bank PLC’s (Sampath) National Long-Term Ratings to Negative.

The Long-Term Issuer Default Ratings (IDRs) on National Savings Bank (NSB) and Bank of Ceylon (Bank of Ceylon) have been affirmed at ‘B+’ and their National Long-Term Ratings have been affirmed at ‘AAA(lka)’ and ‘AA+(lka)’, respectively. The Outlooks on the IDRs of NSB and Bank of Ceylon have been maintained at Negative while the Outlooks on their National Long-Term Ratings have been maintained at Stable. Fitch has also affirmed the National Long-Term Rating of People’s Bank (Sri Lanka) (People’s Bank) at ‘AA+(lka)’ with a Stable Outlook.

Furthermore, Fitch has affirmed the National Long-Term Rating of Commercial Bank of Ceylon PLC (CB) at ‘AA(lka)’, Hatton National Bank PLC (HNB) at ‘AA-(lka)’, and Seylan Bank PLC (Seylan) at ‘A-(lka)’.

DFCC’s Support Rating Floor (SRF) was revised to ‘B-‘ from ‘B’.

A full list of rating actions is included at the end of this rating action commentary.

KEY RATING DRIVERS

IDRS, NATIONAL RATINGS AND SENIOR DEBT

The rating actions follow Fitch’s periodic review of the large banks peer group.

Fitch downgraded its assessment of Sri Lankan banks’ operating environment to ‘b+’ from ‘bb-‘ and assigned a negative outlook. Fitch believes operating conditions have become more challenging – as signalled by the downgrade of the sovereign rating to ‘B+’ from ‘BB-‘ in February 2016 – and expects increased volatility to add pressure on the banks’ credit metrics.

However, Fitch maintains a stable outlook for the Sri Lankan banking sector for 2016, as a material deterioration in the sector’s credit profile is not expected in the short-term. Fitch believes the underlying operating conditions supporting sector performance are likely to remain intact and pressure on the economic environment is likely to be contained through tighter monetary policy.

The operating environment is a key rating driver for the Sri Lankan banking sector. It constrains the Viability Rating (VR) of some banks, as it is rare for a VR to be assigned significantly above the sovereign rating, however well banks score on other factors.

Banks With Long-Term Ratings Driven by Sovereign-Support

The IDRs and National Long-Term Ratings of NSB and Bank of Ceylon, and the National Long-Term Rating of People’s Bank, reflect Fitch’s expectation of extraordinary support from the sovereign (B+/Negative).

Fitch believes state support for NSB stems from its policy mandate of mobilising retail savings and primarily investing them in government securities. The National Savings Bank Act contains an explicit deposit guarantee and Fitch is of the view that the authorities would support, in case of need, the bank’s depositors and senior unsecured creditors to maintain confidence and systemic stability. Fitch has not assigned a VR to NSB, as it is considered to be a policy bank.

Fitch expects support for Bank of Ceylon and People’s Bank to stem from their high systemic importance, quasi-sovereign status, role as key lenders to the government and full state-ownership.

The Negative Outlook on Bank of Ceylon’s and NSB’s IDRs reflect the Negative Outlook on the sovereign’s rating. The Outlook on Bank of Ceylon’s, NSB’s and People’s Bank’s National Long-Term Ratings is Stable as their national ratings reflect the banks’ creditworthiness relative to the best credit in Sri Lanka. The ratings of Bank of Ceylon, NSB and People’s Bank are unlikely to be affected unless Fitch’s expectations of sovereign support change.

The US Dollar senior unsecured notes issued by NSB and Bank of Ceylon are rated at the same level as the banks’ Long-Term Foreign-Currency IDRs, as the notes rank equally with other senior unsecured obligations. The notes have a Recovery Rating of ‘RR4’.

Bank of Ceylon’s VR reflects its thin capitalisation and weak asset quality. This is counterbalanced by its strong domestic funding franchise, which is underpinned by its state linkages. Fitch considers state support as Bank of Ceylon’s primary rating driver, even though its VR is at the same level as its SRF.

The National Long-Term Rating of Seylan reflects Fitch’s expectation of state support due to its state shareholding, which came about in the aftermath of the bank’s crisis in December 2008, and higher share of banking sector deposits relative to some peers. Seylan has a lower support-driven rating due to its smaller market share compared with larger peers. Fitch believes Seylan’s standalone financial strength has improved, reaching the same level as it support-driven rating.

Seylan’s senior debt is rated at the same level as its National Long-Term Rating, as the debentures rank equally with other senior unsecured obligations.

Banks With Long-Term Ratings Driven by Intrinsic Strength

The downgrade of NDB’s National Long-Term Rating reflects the decline in its capitalisation alongside continued strong loan growth, and weaker profitability. Fitch’s expectation that the bank’s higher risk appetite could dilute the benefit of a capital infusion has been incorporated in the rating action. NDB’s ratings reflect its satisfactory asset quality, weaker franchise and lower capitalisation relative to higher-rated peers.

The Outlook on DFCC’s National Long-Term Rating has been revised to Negative to reflect weakening capital buffers that stem from weaker asset quality metrics, increased loan growth and below-average internal capital generation. The Negative Outlook on DFCC’s IDR reflects Fitch’s approach of generally capping bank ratings at the sovereign rating level. This is because of the likely adverse impact on the bank’s credit profile from the sovereign’s deteriorating credit profile and increasing risks in the domestic operating environment. DFCC’s VR captures its developing commercial banking franchise and still-high capitalisation. Its weaker asset quality compared with better-rated peers weighs on its rating.

DFCC’s US dollar notes are rated at the same level as its Long-Term Foreign-Currency IDR. The notes have a Recovery Rating of ‘RR4′. DFCC’s Sri Lanka rupee-denominated senior debt is rated at the same level as its National Long-Term Rating, as the debentures rank equally with other senior unsecured obligations.

Sampath’s Outlook has been revised to Negative as Fitch expects the bank’s capitalisation to worsen beyond previous expectations. Fitch does not believe Sampath can sustain its capitalisation purely through retained earnings. The bank’s ratings reflect its lower capitalisation and higher risk appetite relative to peers, which counterbalance its satisfactory asset quality and improving franchise. The bank’s regulatory Tier 1 capital-adequacy ratio continued to deteriorate and stood at 7.6% by end-March 2016 (end-2015: 8%; end-2014: 9%).

The National Long-Term Rating of CB reflects its measured risk appetite relative to peers, strong funding profile, solid domestic franchise and sound performance. The ratings reflect Fitch’s expectation that its non-domestic operations will remain small.

The National Long-Term Rating of HNB reflects its strong domestic franchise, satisfactory capitalisation and strong performance, counterbalanced by a higher risk appetite as seen through sustained high loan growth that has put pressure on its funding and liquidity profile. HNB’s senior debentures carry the same rating, as they rank equal with other unsecured obligations.

SUPPORT RATING AND SUPPORT RATING FLOOR

The SRs and SRFs of privately owned DFCC reflect its relative lower systemic importance, in Fitch’s view.

The SR and SRFs of NSB and Bank of Ceylon reflect the state’s ability and propensity to provide support to the banks given their high importance to the government and high systemic importance.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

NDB’s, DFCC’s, Sampath’s, Bank of Ceylon’s, Seylan’s, CB’s and HNB’s old-style Basel II Sri Lanka rupee-denominated subordinated debt is rated one notch below their National Long-Term Ratings to reflect the subordination to senior unsecured creditors.

RATING SENSITIVITIES

IDRS, NATIONAL RATINGS AND SENIOR DEBT

The banks’ credit profiles are sensitive to changes in the operating environment. Fitch may take negative rating action if the banks’ appetite for risk-taking and pressure on key credit metrics increases amid challenging operating conditions that raises capital impairment risks which are not counterbalanced through adequate capital buffers. Fitch may take positive rating action if stronger risk management and higher capital buffers enhance the resilience of the banks’ balance sheets, but this is only likely to happen in the medium term.

Banks With Long-Term Ratings Driven by Sovereign Support

Any change in the sovereign rating or perception of state support to NSB, Bank of Ceylon and People’s Bank could result in a change in their SRFs. Fitch may downgrade NSB’s National Long-Term Rating if there is a reduced expectation of state support through, for instance, the removal of preferential support, or a substantial change in its policy role or deviation from mandated core activities indicating its reduced importance to the government. A downgrade of Bank of Ceylon’s IDRs will only result from a downgrade of its VR and SRF. Visible demonstration of preferential support for Bank of Ceylon and People’s Bank in the form of an explicit guarantee may be instrumental to an upgrade of their National Long-Term Ratings.

NSB’s and Bank of Ceylon’s senior debt ratings are sensitive to changes in the banks’ Long-Term IDRs. The Recovery Ratings of NSB and Bank of Ceylon are sensitive to Fitch’s assessment of potential recoveries for creditors in case of default or non-performance.

Bank of Ceylon’s VR may come under pressure if there is a continued decline in capitalisation through a surge in lending or further decline in asset quality alongside high dividend payouts. Further deterioration in the operating environment reflected in a decline in Bank of Ceylon’s key credit metrics could negatively affect its VR.

A downgrade of Seylan’s rating could result from a reassessment of state support and a material reversal in recent improvements to its asset quality, together with a weakening financial profile. In the absence of changes to Fitch’s support assessment, an upgrade of Seylan’s rating would be contingent on further improvements in its standalone profile through improved asset quality and provisioning, mainly stemming from recovery of legacy NPLs. Seylan should also maintain other credit metrics in line with higher-rated peers to warrant an upgrade.

Seylan’s senior debt ratings will move in tandem with its National Long-Term Rating.

Banks with Long-Term Ratings Driven by Intrinsic Strength

NDB’s National Long-Term Rating may be downgraded if the bank is not able to sustain its capitalisation at a level commensurate with its risk profile. Drivers for an upgrade are the quantum of a potential capital injection and its sensible deployment alongside the sustainability of a sufficient capital buffer to counterbalance weaknesses in NDB’s credit profile. Fitch does not see upside potential for NDB’s ratings in the near term, as the bank is likely to face difficulty sustaining a capital buffer in line with higher-rated peers due to its higher risk appetite and operating environment-related risks.

The Outlook on DFCC’s National Long-Term Rating may be revised to Stable if the bank can sustain capital buffers to sufficiently cushion its weaker asset quality amid higher operating environment-related risks and counterbalance its developing franchise relative to more established peers. Fitch expects project finance to remain integral to the bank’s business and, as such, expects the bank to maintain higher capitalisation to offset the higher risk of this business.

DFCC’s IDRs and National Long-Term Rating could be downgraded if there is a sustained deterioration in its capitalisation or further weakening of the operating environment. DFCC’s RR is sensitive to Fitch’s assessment of potential recoveries for creditors in case of default or non-performance.

A downgrade of Sampath’s National Long-Term Rating could result from a sustained decline in capitalisation, further increase in risk-taking or a sharp decline in asset quality. Fitch would revise Sampath’s Outlook to Stable if there is a capital infusion and the bank maintains sufficient capital buffers commensurate with its risk profile and operating environment-related risks.

Enhanced resilience against a volatile operating environment could be positive for CB’s National Long-Term rating. The bank’s ratings could be downgraded if its ability to withstand cyclical asset-quality deterioration declines due to lower earnings and capitalisation. In addition, any marked weakening in its deposit franchise and deviation from its measured risk appetite, both viewed by Fitch as key factors that differentiate CB from its lower-rated peers, would be negative.

An upgrade of HNB’s National Long-Term Rating is contingent on the bank achieving sustained improvements in its financial profile, in particular in terms of its funding, and a moderation of its risk appetite. A rating downgrade could result from a significant increase in risk-taking and operating environment-related risks, unless sufficiently mitigated through capital and financial performance. Further weakening of HNB’s liquidity position could also negatively affect its rating.

SUPPORT RATING AND SUPPORT RATING FLOOR

Reduced propensity of the government to support systemically important banks could result in a downgrade in the assigned SRs and SRFs, but Fitch sees this to be unlikely in the medium-term. A change in the sovereign’s ratings could also lead to a change in the SRs and SRFs of the banks.

SUBORDINATED DEBT

Subordinated debt ratings will move in tandem with the banks’ National Long-Term Ratings.

FULL LIST OF RATING ACTIONS

The rating actions are as follows:

National Development Bank PLC:

National Long-Term Rating downgraded to ‘A+(lka)’ from ‘AA-(lka)’; Stable Outlook
Basel II compliant subordinated debentures downgraded to ‘A(lka)’ from ‘A+(lka)’

DFCC Bank PLC:

Long-Term Foreign-Currency IDR affirmed at ‘B+’; Negative Outlook
Long-Term Local-Currency IDR affirmed at ‘B+’; Negative Outlook
Short-Term Foreign-Currency IDR affirmed at ‘B’
National Long-Term Rating affirmed at ‘AA-(lka)’; Outlook revised to Negative from Stable
Viability Rating affirmed at ‘b+’
Support Rating downgraded to ‘5’ from ‘4’
Support Rating Floor revised to ‘B-‘ from ‘B’
US dollar senior, unsecured notes affirmed at ‘B+’; Recovery Rating at ‘RR4’
Sri Lanka rupee-denominated senior unsecured debentures affirmed at ‘AA-(lka)’
Basel II compliant Sri Lanka rupee-denominated subordinated debentures affirmed at ‘A+(lka)’

Sampath Bank PLC:

National Long-Term Rating affirmed at ‘A+(lka)’; Outlook revised to Negative from Stable
Basel II compliant outstanding subordinated debentures affirmed at ‘A(lka)’

National Savings Bank:

Long-Term Foreign-Currency IDR affirmed at ‘B+’; Negative Outlook
Long-Term Local Currency IDR affirmed at ‘B+’; Negative Outlook
Short-Term Foreign-Currency IDR affirmed at ‘B’
National Long-Term Rating affirmed at ‘AAA(lka)’; Stable Outlook
Support Rating affirmed at ‘4’
Support Rating Floor affirmed at ‘B+’
US dollar senior unsecured notes affirmed at ‘B+’; Recovery Rating at ‘RR4’

Bank of Ceylon:

Long-Term Foreign-Currency IDR affirmed at ‘B+’; Negative Outlook
Long-Term Local-Currency IDR affirmed at ‘B+’; Negative Outlook
Short-Term Foreign-Currency IDR affirmed at ‘B’
National Long-Term Rating affirmed at ‘AA+(lka)’; Stable Outlook
Viability Rating affirmed at ‘b+’
Support Rating affirmed at ‘4’
Support Rating Floor affirmed at ‘B+’
US dollar senior unsecured notes affirmed at ‘B+’; Recovery Rating at ‘RR4’
Basel II compliant Sri Lanka rupee-denominated subordinated debentures affirmed at ‘AA(lka)’

People’s Bank (Sri Lanka):

National Long-Term Rating affirmed at ‘AA+(lka)’; Outlook Stable

Seylan Bank PLC:

National Long-Term Rating affirmed at ‘A-(lka)’; Stable Outlook
Sri Lanka rupee-denominated senior unsecured debentures affirmed at ‘A-(lka)’
Basel II compliant subordinated debentures affirmed at ‘BBB+(lka)’

Commercial Bank of Ceylon PLC:

National Long-Term Rating affirmed at ‘AA(lka)’; Stable Outlook
Basel II compliant outstanding subordinated debentures affirmed at ‘AA-(lka)’

Hatton National Bank PLC:

National Long-Term Rating affirmed at ‘AA-(lka)’; Stable Outlook
Sri Lanka rupee-denominated senior unsecured debentures affirmed at ‘AA-(lka)’
Basel II compliant outstanding subordinated debentures affirmed at ‘A+(lka)’

Sri Lankan shares post 3-mth closing high, led by blue chips

Reuters: Sri Lankan shares posted a three-month closing high on Thursday, led by gains in blue chips such as John Keells Holdings Plc and Ceylon Tobacco Company Plc, while foreign investor buying also boosted sentiment.

The benchmark Colombo stock index ended 0.23 percent, or 15.30 points, firmer at 6,593.25, its highest close since May 20.

Foreign investors, who have been net sellers of 3 billion rupees ($20.63 million) of shares this year, bought a net 343.2 million rupees in their highest purchase since Aug. 1, extending the net foreign inflow in the past 16 sessions to 1.8 billion rupees worth of equities.

"Investors are more focused on blue chips such as John Keells," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd, adding profit-taking had dried up.

Turnover got a boost as a foreign investor sold shares of National Development Bank Plc to other foreign investors, Mathew said.

Turnover stood at 1.78 billion rupees, well above this year's daily average of around 739.1 million rupees.

Shares of John Keells Holdings rose 0.96 percent, while Ceylon Tobacco Company gained 1.09 percent.

Commercial Bank of Ceylon Plc, the country's biggest listed lender, rose 1.46 percent, while National Development Bank ended 0.12 percent weaker. 

($1 = 145.4000 Sri Lankan rupees) 

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

Sri Lanka Insurance revenue up by Rs 2 bn

Sri Lanka Insurance (SLIC) reported a promising year during 2015 with growth in performance in almost all areas of business.

The growth for the year was robust at 18.65%, a significant improvement over 2014. The total revenue of the organisation grew to Rs. 31 billion in 2015 from Rs 29 billion in the previous year.

Meanwhile, Gross Written Premium (GWP) increased to Rs. 24.5 billion from Rs. 20.6 billion while Net Earned Premium increased to Rs 20 billion from Rs 17.8 billion the previous year. The GWP for life insurance grew by 29 percent to Rs 10.5 billion from Rs 8 billion in 2014, resulting in notable gains in market share, while the General Insurance GWP increased by 12 percent to Rs. 14 billion from Rs 12.5 billion. As a percentage of the total market share, SLIC’s GWP for Life and Non-life stood at 23 and 21 percent respectively.

SLIC saw its Profit Before Tax grow to Rs. 4.8 billion last year from Rs 4.3 billion over the previous year while Profit After Tax grew to Rs 3.4 billion from Rs 3.2 billion in 2014. The company reported one of the largest asset bases in the industry, at Rs 167 billion which had grown steadily over the Rs 162 billion asset base in 2014.

The General Insurance Fund increased to almost Rs 15 billion in 2015 over the Rs 13 billion in 2014 while the Life Insurance Fund grew to Rs 77 billion from Rs 74 billion over the same period, which is the highest ever in the industry. Its shareholders’ fund was also the highest at Rs 63.7 billion. The largest ever bonus, at Rs 5.4 billion, was also paid to Life policyholders during 2015.

Backed by these strong financial credentials, Sri Lanka Insurance also partners with some of the top re-insurance organisations in the world.

The many measures the organisation had implemented to develop its systems infrastructure such as the integrated finance system known as SAP, had borne fruit with these new systems offering solutions for most financial reporting and backend control issues.

An area which will come under the increasing focus of SLIC is the improvement of insurance penetration in the island. It has been found that only 12 percent of the local population and 29 per cent of the employed population have obtained Life policies.

SLIC has led the motor insurance market for the sixth consecutive year in 2015 and in 2016, it hopes to carry this momentum forward while positioning itself as the ‘National Motor Insurance Brand’.
www.dailynews.lk

Market conditions hamper Dunamis, First Capital margins

Dunamis Capital PLC Group revenues increased marginally during the 2015/2016 year to Rs.2.9 bn. Revenue erosion in the Financial Services segment was more than off-set by combined revenues of the Real Estate Development and Manufacturing segments.

The Group cost of sales rose to Rs. 2.2 bn in 2015/16 relative to Rs. 1.3 bn in the previous year, attributable mainly to the development activities of the Kelsey Group, Chairperson Manjula Mathews said.

“We reported a consolidated after-tax loss of Rs. 414 mn during 2015/16 in comparison to a profit after tax of Rs. 570 mn in the preceding year.

The bottom line was negatively impacted by the decrease in First Capital Group’s profitability due to adverse market conditions,” Mathews said.

A total of Rs. 123 mn was paid in dividends to shareholders, with Rs. 51 mn paid to shareholders with non-controlling interest.

The First Capital Group recorded a net trading income of Rs. 504 mn reflecting a 67% decrease YoY. Results were severely impacted due to the Fixed Income business comprising mainly primary dealing underperforming in prevailing market conditions.

First Capital Group’s consolidated net profit amounted to Rs. 47 mn reflecting a 95% decrease YoY from Rs. 985 mn in 2014/15 which included a one-off gain of Rs. 233 mn resulting from the deemed disposal of an equity investment.

The sale of 45 residential units of the Templer’s Square development in Mount Lavinia drove the Kelsey Group’s revenues up to Rs. 1 bn in 2015/16 up markedly from Rs.103 mn in 2014/15.

Realised contribution from Templer’s Square for the year amounted to Rs. 128 mn.

In 2015/16 Primo revenues grew to Rs. 395 Mn from Rs. 141 Mn in the previous year.

Revenue growth however has not been sufficient at this early stage to cover fixed costs, resulting in a net loss of Rs. 132 Mn for the year under consideration.
www.dailynews.lk

Abans Finance 1Q profits grow by 31%

Abans Finance, a member of the Abans Group, has registered a pre-tax profit of Rs. 51.5 million for the quarter ended June 30, compared to Rs. 36.3 million recorded in the corresponding period of 2015, achieving a year-on-year growth of 41.86 %.

The post–tax profit of the company for the quarter under review has also improved by 31.1%, from Rs. 26.12 million in Q1 2015 to Rs. 34.24 million in Q1 2016. The company has continued to increase its profitability amidst external challenges such as increasing interest rates and slow down in consumption.

Nevertheless, NII of the company recorded a remarkable increase of Rs. 58.8 million or 37.7 % during the period under review from Rs. 155.9 million in Q1 2015 to Rs. 214.7 million in Q1 2016, aided by the significant expansion of the asset-base of the company since Q1 2015, coupled with prudent liability management strategies.

Non fund based income (NFBI) which mostly comprises of fees, commissions and other fee based income decreased to Rs.12.9 million as opposed to Rs.15.0 million earned for the first three months of the year 2015, reflecting a decline of 13.8%.

A 380.1% growth was recorded in other operating income for the period under review as compared to the corresponding period in 2015. Other operating income earned during the first quarter of 2016 amounted to Rs. 4.5 million whereas Q1 2015 was only Rs.0.95 million.Operating expenses of the company which stood at Rs. 82.4 million for the first quarter in 2015, increased to Rs.109.5 million during the same period in 2016, reflecting a YoY increase of 32.8%. This increase was mainly due to the increase in personnel costs. However, the Cost to income ratio without VAT and NBT on financial services in Q1 2016 has improved to 47.1% from 47.8% recorded in the first quarter of the previous year.

Impairment charge on Loan and Receivables for the first quarter of the year 2016 amounted to Rs.60.2 million which is an increase of Rs.10.4 million as compared to Rs.49.7 million impairment charges recorded for the first quarter of the previous year. Despite these challenges, the company’s total asset base grew by 2.53% during the quarter (annualized 10.13%) and stood at Rs.6, 304.37 million as at 30 June 2016.

www.dailynews.lk

Softlogic Holdings Group 1Q revenue up to Rs. 14.8 bn

The first quarter financial results of FY2016/17 reflected mixed fortunes for Softlogic Holdings PLC.

The floods and landslides that affected Sri Lanka in May, had taken its toll on some parts of the economy dampening the business sentiment further.

Healthcare Services reported a top line of Rs. 2.4 Bn, a 4.6% increase, during 1QFY17 with sector’s operating profit reaching Rs. 428.3 Mn, down by 14.1% to conclude quarterly PAT at Rs. 296.0.

The introduction of VAT to the healthcare sector resulted in some services being viewed by the public as too expensive to bear, which adversely affected the quarter results of this sector. However, with the suspension of VAT subsequently, sector’s performance has been restored. Nonetheless, Group revenue increased a strong 13.3% to Rs. 14.8 Bn for the quarter. Group turnover was primarily dominated by its fully owned sectors – Retail (32.1%) and ICT (30.6%). Financial Services improved its contribution to Group revenue to 17.2% whilst Healthcare Services sustained its turnover contribution at 16.4%. Automobiles continued with a marginal contribution as plans are underway to improve the sector performance in the periods to come.

Gross Profit registered a marginal improvement of 4.2% to Rs. 4.5 Bn during the first three months of the financial year. Despite increasing business activities, operational cost margins were optimized at 24% during the period with operational expenses increasing 14.5% to Rs. 3.5 Bn. Distribution costs increased 30.3% to Rs. 853.0 Mn whilst administrative costs registered an increase of 10.2% to Rs. 2.7 Bn during the quarter. Other operating income, primarily composing of fees received for new loans at Softlogic Finance PLC increased 53.9% to Rs. 298.4 Mn. Subsequently, results from operating activities reached Rs. 1.3 Bn for the quarter under review.

Finance Income continued to contract on the back of unrealized fair value gains at Asian Alliance Insurance PLC’s investment portfolio with increasing interest rates affecting its bond portfolio. ICT revenue was up 19.6% to Rs. 4.5 Bn for the quarter. ‘Samsung’ operations led the sector performance followed by ‘’Microsoft’ and ‘HTC’.

Movenpick hotel fit-out is at final stages with testing and commissioning work expected to start in October so that the hotel will be operational by January 2017. This would be the country’s first five-star hotel in three decades.

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Sri Lanka vehicle registrations fall further in July: JB Securities

(LBO) – Sri Lanka vehicle registrations in July fell in almost every category compared with June, JB Securities said in a research note. Buses and heavy truck registrations however showed an increase over the previous month.

Motor car registrations in the July were 2,489 units, down from 3,026 units the previous month, and significantly lower than high of 14,544 units registered in September, after the government took steps to curb imports.

Brand new segment recorded 1,331 units in the month down from 1,490 units the previous month.

Maruti recorded 663 units (Alto – 474, Celerio – 178 units) slightly up from 633 units the previous month. Micro recorded 169 units, Hyundai Eon 88 units followed by Renault Kwid with 72 units.

Maruti that had a total dominant market in the less than 1,000 cc segment is seeing high competition from the relatively new arrivals backed by major brands – Hyundai Eon and Renault Kwid.

Preowned car registrations recorded 1,158 units in July down from 1,436 units the previous month and significantly down from 3,963 units 12 months ago. Toyota recorded 423 units (Axio – 175, Aqua – 173) – this is the lowest number for the year, Suzuki recorded 431 units (Wagon R – 403) and Honda recorded 210 units (Grace – 78, Fit – 67). Financing share was 65.5 percent in line with its normal average.

Premium brands registrations were 87 in the month up from 64 the previous month and slightly down from 99 units 12 months ago. Mercedes recorded 36 new cars (C-class 7, E-class 28 – a new version was launched in June, S-class 1) and 13 preowned (C-class 9), BMW recorded 15 (5-series 14 units) and Audi recorded 14 units (A6 – 10 units).

Electric cars registrations recorded 64 units in the month down from 71 units the previous month and significantly down from 284 units 12 months ago. Nissan Leaf accounted for 59 units.

SUV registrations recorded 414 units in July down from 631 units the previous month and significantly down from 776 units 12 months ago. Toyota recorded 52 units (Prado 32), Honda recorded 100 units (Vezal 96 – most of these vehicles are NOT 4W), Nissan 82 units (X-trail hybrid 76 units) and DFSK Glory 330 with 62 (this is a locally assembled vehicle).

Hybrid registrations recorded 1,276 units in July down from 1,695 in June and significantly down from 4,077 units 12 months ago. In the motor car segment Toyota accounted for 397 units (Aqua 173, Axio 172, Prius 47), Suzuki accounted for 403 Wagon R units and Honda accounted for 207 units.

Under premium brands Mercedes Hybrids recorded 12 numbers (C350 sport hybrid – 8). Financing share was 66.1 percent. The hybrid SUV segment recorded 205 units – Nissan X-trail 76, Honda Vezel 96 and Mitsubishi Outlander 20.

Van registrations recorded 242 units in the month down from 297 units in June and significantly down from 1,189 units 12 months ago. Toyota recorded 83 units (25 units were new through the agent), Nissan recorded 19 (8 units were new through the agent), Suzuki 28 and Tata Winger 67 (Indian ambulances). June records show 42 Mercedes Benz VITO panel vans – presume they are the yellow DHL vans one sees in the city.

3-wheelers registrations recorded a low 3,678 units in July significantly down from 6,995 units in June and massively down from 12,248 units 12 months ago. In Feb registrations hit a 5 year low of 2,938 units but since then momentum was increasing until last month when it has almost halved from the previous month. Bajaj claimed a share of 87.1 percent followed by TVS with 9.2 percent and Piaggio with 3.6 percent. Financing share was 86.1 percent.

2-wheelers registrations recorded 24,994 units last month down from 29,264 units the previous month and significantly down from the election fueled figure recorded 12 months ago of 33,722 units. Bajaj has reclaimed market leadership recording a market share of 30.7 percent sans a scooter closely followed by Honda with 29 percent, Hero recorded 15.2 percent steadily dropping share closely followed by TVS with 14.1 percent. Financing share was 65.4 percent.

Pickup truck registrations recorded 280 units in July down from 348 units in June and also down from 374 units 12 months ago. Toyota Hilux recorded 70 units similar to last month but is showing stronger performance upping its share to 25 percent, Tata yet remains the market leader claiming a share of 53.2 percent followed by Mahindra with 6.4 percent. Financing share was 67.9 percent.

Mini truck registration recorded 1,148 units in July down from 1,425 units in June and 1,569 units 12 months ago. Tata is the market leader in this category claiming a share of 59.5 percent followed by Mahindra with 33.3 percent. Financing share was 90.9 percent.

Lite truck registrations recorded 533 units in the month down from 648 units the previous month and 696 units 12 months ago. Mahindra is the market leader with 67.9 percent share followed by DFSK with 16.8 percent. Financing share is 86 percent.

Medium truck registrations recorded 160 units in July similar to 161 units in June but down from 219 units 12 months ago. Isuzu is the market leader with a share of 33.1 percent. Finance share was 78.8 percent.

Heavy truck registrations recorded 134 units in July slightly higher than 126 units recorded in June but lower than 173 units recorded 12 months ago. Lanka Ashok Leyland remains the market leader with a share of 47.4 percent followed by Tata with 33.1 percent and Eicher with 9.8 percent. Financing share was 82.1 percent.

Bus registrations recorded 179 units in July slightly higher than 176 units in June but lower than 214 units recorded 12 months ago. Lanka Ashok Leyland continues to be the market leader with a share of 54.8 percent. Financing share was 89.9 percent.

Sri Lanka’s LOLC June net up 26-pct amid growing incomes

(LBO) – Sri Lanka’s LOLC group, which has interests in financial services, insurance, plantations, trading and leisure, said net profit for the June quarter rose 26 percent to 2.3 billion rupees.

The group reported basic earnings of 4.92 rupees per share for the quarter up from 3.89 from a year earlier, on a share price of 88 rupees.

The group reported interest income of 12 billion rupees for the quarter, up 45 percent, and interest expenses rose at a faster 75 percent to 6.7 billion rupees, resulting in net interest income growing at 18 percent to 5.1 billion rupees.

Interest income represents the income receivable for the period on all contracts, rentals on operating leases, income on factoring of client debtors, earned premium on insurance contracts and IT service fees.

Revenues rose 24 percent to 5.1 billion rupees and cost of sales rose at a faster 44 percent to 3.1 billion rupees making gross profits to rise at 1 percent to 1.9 billion rupees.

Revenue includes revenue from trading, manufacturing, plantation and other activities of the group.

Net impairment charges rose 20 percent to 675 million rupees while personnel costs rose 17 percent to 2.9 billion rupees.

Direct expenses excluding finance costs rose 70 percent to 1.1 billion rupees while other operating expenses fell 3 percent to 1.9 billion rupees.

In the segmental analysis, financial services sector profits for the quarter rose to 2.8 billion rupees, up from 2.3 billion rupees in the previous year.

Manufacturing and trading sector reported a loss of 130 million rupees while leisure and entertainment segment posted a loss of 263 million rupees.

The public shareholding at the end of June was 15.49 percent comprising of 3,050 shareholders.

LSE Group to open technology hub in Sri Lankan capital

ECONOMYNEXT – London Stock Exchange Group’s Business Services division (LSEG BSL) in Sri Lanka will soon open its new headquarters in the Sri Lankan capital Colombo occupying 26,000 square feet, a statement said.

“The new Business Services division in Sri Lanka will provide support to the Group’s operating entities across the globe,” it said.

“The venture will provide the best and brightest technology talent in the country with the opportunity to be a part of an ever-expanding, innovative knowledge hub.”

The new headquarters will be in the historic Expert City precinct, formerly known as Tripoli Market.

The proposed new 26,000 sq ft premises would complement LSEG BSL’s current incubation hub, which is also housed at Expert City.

The new LSEG facility will directly employ 400 personnel in high-technology jobs, with an additional 1,200 employed indirectly, the company said.

“These employees will be tasked with providing technical support services that are central to the Group's global network,” it said.

“LSEG's investment and recruitment drive in Sri Lanka will also provide an immediate boost for the IT sector of the country.”

Murali Subrahmanyan, Head of Business Services Colombo, LSEG said the firm’s plans to establish the facility in Colombo reaffirms its commitment to the technology sector of Sri Lanka.

“Our new facility at Expert City will house some of the best talent in the industry, and it is important to us that all our facilities reflect these high standards. The launch of this new technology centre represents an exciting opportunity for the local population to join a truly global organisation.”

Sri Lanka Telecom net down 38-pct

ECOOMYNEXT - Profits at Sri Lanka Telecom, which has wireline and mobile, fell 38 percent to Rs1.09 billion in the June 2016 quarter with fixed access revenues flat, interim accounts showed.

The group reported earnings of 61 cents per share for the quarter. During the six months to June, the group reported earnings of Rs.56 per share, on total profits of Rs2.9 billion, which was down 13 percent.

At the core, wireline firm revenues in the June quarter rose 4.8 percent to Rs10.506 billion from a year earlier, but were down 2.3 percent from Rs10.8 billion reported in the March quarter.

Revenue was driven by its mobile unit.

Sri Lanka has seen a decline in fixed line voice business, with fixed wireless connections being discontinued. However, wireline access is now driven by data.

Borrowings reduce Sri Lanka’s Laugfs Gas June profits

ECONOMYNEXT – Sri Lanka’s Laugfs Gas PLC said June 2016 net profit fell 92 percent to Rs26 million from a year ago as finances rose sharply owing to borrowings to diversify business in the island and overseas.

Sales rose 45 percent to Rs3.9 billion during the period, according to interim accounts filed with the stock exchange.

June 2016 quarter earnings per share fell to 07 cents from 84 cents a year ago.

The company was hit by the recent floods, virtually paralysing all its operations for nearly two weeks, making heavy impacts of the revenue and profitability of the company, a statement said.

Laugfs Gas Chairman and Chief Executive W. K. H. Wegapitiya said the firm, which started by supplying liquid petroleum gas, has diversified investments rapidly in recent months.

“The company’s profit for the period, took a momentary dip during the period ended due to the cost of borrowings made largely to finance the investments,” he said.

“The company is very confident that the returns are imminent in the medium to long term out of the judicious investment made.”

Laufgs has invested in LPG distribution in Bangladesh, an LPG terminal in Hambantota port, a new gas carrier, a solar power plant and a hotel.

Sri Lanka 06, 12-month Treasuries yields rise

ECONOMYNEXT - Sri Lanka's 03-month Treasuries yields were flat at Tuesday's auction, while 06-month and 12-month bill yields rose slightly, data from the state debt office showed.

The yield on 12-month T-Bills rose 02 basis points to 10.74 percent, while that on 06-month bills rose 02 bps to 9.94 percent.

The three month bill yield was flat at 9.01 percent.

The debt office offered Rs67.5 billion of bills and sold Rs14.5 billion of bills, mostly 06 and 12 month.

Sri Lanka's CT Holdings June quarter net profit up 45-pct

ECONOMYNEXT - Sri Lanka's CT Holdings group (CTH) said net profit rose 45% to Rs 537 million rupees in the June 2016 quarter from a year ago with strong growth in the retail and fast moving consumer goods (FMCG) sectors.

Sales rose 22% to Rs21 billion during the period, according to interim accounts filed with the stock exchange.

Earnings per share for the June 2016 quarter were Rs2.93 against Rs2.02 a year ago.

“Again the retail and FMCG sectors led the way with growth of 123.15% and 29.82% respectively,” CT Holdings said in a statement accompanying the accounts.

“The restaurants sector also recorded a growth of 5 times the previous year, albeit on a smaller base figure. The restaurant sector results also includes the TGI Fridays, which is yet to achieve its optimum operational level.”

CT Holdings said the sales growth momentum has been sustained during the period through volume growth, primarily in the retail sector.

Turnover of the retail sector grew by 23.8% over the corresponding period of the previous year.

“The Retail management takes the view that strong growth prospects are assured for this sector,” the statement said.

The FMCG sector, presently the second largest sector of operation, grew 13.50% despite the Confectionaries subsector lagging behind in its operational performance.

“Further efforts are being concentrated in the Confectionaries sub sector with a view to improving product offering, volume and market coverage.”

All other sectors with the exception of the entertainment business recorded a growth exceeding 10%.

Sri Lankan shares edge down on profit-taking

Reuters: Sri Lankan shares closed slightly lower on Tuesday after posting a more than 11-week closing high in the previous session, as investors booked profits in beverage stocks and foreign investors trimmed their holdings.

Foreign investors offloaded a net 89.85 million rupees ($617,950.48) worth of shares in their first selling in three sessions, extending the net foreign outflow so far this year to 3.35 billion rupees worth of equities.

The fall seems to be a small downturn with some profit-taking after the recent uptrend, said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"The overall investor sentiment is quite bullish and it is getting better day by day."

Investors expected the country's economic fundamentals to improve after the central bank on July 28 surprised the markets with a 50-basis point hike in its main interest rates aimed at curbing stubbornly high credit growth.

The benchmark Colombo stock index ended 0.07 percent, or 4.65 points, weaker at 6,577.95.

Turnover stood at 851.7 million rupees, more than this year's daily average of around 732.1 million rupees.

Shares of Ceylon Tea Services Plc fell 12.56 percent, while Carson Cumberbatch Plc dropped 1.37 percent.

Analysts said investors also largely shrugged off a Supreme Court order asking the parliament to stop considering a bill to raise the value-added tax as the draft had not followed due process.

The move could put in jeopardy the government's ambitious fiscal consolidation plan to reduce the budget deficit to 5.4 percent of gross domestic product from last year's 7.4 percent. 

($1 = 145.4000 Sri Lankan rupees) 

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

Sri Lankan shares hits more than 11-wk high

Reuters: Sri Lankan shares ended at more than 11-week high on Monday as investors bought beverage and banking shares amid foreign buying into the island nation's risk assets boosted sentiment.

The benchmark Colombo stock index ended up 0.93 percent, or 60.46 points, at 6,582.60, its highest close since May 25.

"The market moved up on thin volumes, but the market is looking better and better with the more stability coming into the market," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Investors hoped that the economic fundamentals would improve after the central bank on July 28 surprised the markets with a 50-basis points raise in its main interest rates aimed at curbing stubbornly high credit growth.

Foreign investors net bought 62.59 million rupees ($430,172) worth of shares, extending the net foreign inflow to 1.55 billion rupees worth of equities in the last 14 sessions.

However, they have sold 3.26 billion rupees worth of shares so far this year.

Turnover stood at 675.1 million rupees, less than this year's daily average of around 731.3 million rupees.

Shares in Nestle Lanka Plc jumped 10.25 percent while Ceylon Tobacco Company Plc gained 1.9 percent and Cylon Cold Store Plc rose 4.96 percent.

Shares in biggest listed lender Commercial Bank of Ceylon Plc rose 0.96 percent.

Analysts said investors also shrugged off a Supreme Court order asking the parliament to stop considering a bill to raise the value-added tax as the draft had not followed due process.

The move could put in jeopardy the government's ambitious fiscal consolidation plan to reduce the budget deficit to 5.4 percent of gross domestic product from last year's 7.4 percent. 

($1 = 145.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Gopakumar Warrier)

Sri Lanka Dockyard makes modest recovery in June 2016 quarter

ECONOMYNEXT – Sri Lankan shipbuilder Colombo Dockyard said it made a net profit of Rs55 million in the June 2016 quarter as it recovered from losses caused by the cancellation of contracts owing to the oil price slump.

The yard, majority owned by Japan’s Onomichi Dockyard, had suffered a loss of Rs77 million in the March 2016 quarter after it was forced to cancel a new building order and lower prices for new ships ordered by clients serving the oil industry.

Colombo Dockyard had made a profit of Rs182 million in the June 2015 quarter.

Interim results filed with the stock exchange showed June 2016 quarter sales fell 29% to Rs2.6 billion from a year ago.

Earnings per share for the June 2016 quarter were 76 cents against Rs2.53 the year before.

For the six months ending June 2016, Colombo Dockyard reported a loss per share of 30 cents against EPS of Rs4.41 a year ago.

Sri Lanka's brewery makes Rs500mn loss after floods

ECONOMYNEXT - Sri Lanka's Ceylon Beverage holdings, brewer for Lion and Carlsberg in Sri Lanka lost 501 million rupees in the June quarter as a floods disrupted production, interim accounts filed with the Colombo Stock Exchange showed.

Revenues fell 36 percent to 5.93 billion rupees in the June 2016 quarter from a year earlier.

Sri Lanka experienced severe flooding in a low lying area near the capital Colombo where the factory is located.

Production is expected to resume later this year.

Lion Brewery said its brands will be made in breweries owned by its partner Carlsberg group.

The government has reduced duty on the firm's imports to allow it to import and sell beer.

Sri Lanka's The Sunday Times newspaper said customs duty for beer with alcohol of less than 5 percent has been cut to Rs129 per litre from Rs500 and for beer with over 5 percent alcohol to Rs246 from Rs500.

The firm will also pay taxes such as port and airport levy.

The import levies paid by the firm is expected to be broadly the similar to the excise duties it would have paid on domestically produced beer.