Japan's Sojitz buys Sri Lanka power producer from AES

ECONOMYNEXT - Japan's Sojitz Corporation has bought a 90 percent stake in AES Kalanitissa (Pvt) Ltd, a 163 MegaWatt independent power producer in Sri Lanka connected to state-run Ceylon Electricity Board.

By taking control of the IPP, Sojitz said it wanted to acquire "management knowhow including on-site operation and maintenance of power plants,"

Sojitz will hedge country risk associated with foreign investment insurance provided by Nippon Export & Investment Insurance (NEXI).

Sojitz is buying out AES, a US power firm. The balance 10 percent of the IPP is held by Sri Lanka-based Hayleys group.

AES Kelanitissa which started operations in 2003 has a 20-year power purchase agreement with the CEB which runs out in 2023.

Sojitz also has a stake in Asia Power, a 51MW thermal power plant. Its 20-year PPA started in 1998.

Sri Lanka's Axiata sounds authorities on possible Airtel take-over

ECONOMYNEXT - Sri Lanka's Dialog Axiata, the largest mobile operator, has sounded out authorities on a take-over of a unit of Bharti Airtel in the island, Telecom Minister Harin Fernando said.

Dialog Axiata did not comment on the deal, but in December the firm said in a stock exchange filing that it had not "reached material certainty" any merger or acquisition.

Last week Malaysia-based Axiata said it will merge with Airtel operations in Bangladesh.

Airtel was the last and fifth operator to enter and country, which led to a price war and cost-cutting by existing operators as competition increased.

Sri Lanka Telecom group, which own Mobitel is also in negotiations to purchase Hutch, the fourth operator in the island. Majority control of Sri Lanka Telecom is in state hands.

Fernando said the deal is with a cabinet subcommittee which has recommended a valuation.

Some analysts have estimated Airtel to be worth around a 100 million US dollars and Hutch less.

In addition to infrastructure, some of which may duplicate existing networks, the firms also have spectrum.

The deal has run into some controversy amid allegations that attempts were being made to purchase Hutch at an inflated price.

Japan’s SG Holdings ups stake in Sri Lanka logistics group

ECONOMYNEXT – Japan’s SG Holdings said it has raised its stake in Expolanka Holdings, a Sri Lankan logistics group, buying 313.8 million shares at 8.30 rupees each.

A stock exchange filing said SG Holdings acquired another 16 percent stake in Expolanka for 2.6 billion rupees.

The Japanese logistics group SG Holdings bought control of Expolanka Holdings in 2014 and has raised its stake to 67 percent.

Losses narrow at Sri Lanka Tea Smallholder Factories

ECONOMYNEXT - Tea Smallholder Factories, which makes black tea from leaves bought from Sri Lankan small farmers, remained in the red in the December 2015 quarter compared with profits a year ago, although losses narrowed from the previous quarter.

The company, in which John Keells Holdings has a 37.62 percent stake, reported a loss of 522,000 rupees in the December 2015 quarter compared with a profit of 15.5 million rupees the year before.

Tea Smallholder Factories’ sales fell by almost a quarter to 447 million rupees during the period, as the firm continue to suffer from the prolonged slump in tea prices, according to unaudited results filed with the Colombo stock exchange.

Basic earnings per share of the firm, whose other two main shareholders are Akbar Brothers Limited with 24.39 percent and Central Finance Company with 22.85 percent, fell to two cents in the December quarter from 52 cents the year before.

In the nine months to 31 December 2015, Tea Smallholder Factories said EPS fell to 45 cents from 1.28 rupees the year before with a 14 million rupee loss compared with 38 million rupees in profit the previous year.

Tea Smallholder Factories said sales fell 28 percent to 1.4 billion rupees in the nine-month period.

The island’s tea small holders in the south, which accounts for the bulk of the tea crop, have been among the worst affected by the commodity price slump.

Sri Lanka 03-month T-bill yield at 7.01-pct

ECONOMYNEXT – Sri Lankan treasury bills yields have risen across the board at this week’s auction with three-month bills yielding 7.01 percent, the central bank’s public debt department said.

The three month bill yielded 6.78 percent at the 15 January 2016 auction.

The central bank said six month t-bill yields went up to 7.40 percent at this week’s auction from 7.19 percent at the 22 January sale.

The one year bill yield rose to 7.87 percent this week, from 7.80 percent at the 22 January sale.

The bank got bids worth 58.97 billion rupees and accepted 28.57 billion rupees worth of bids.

Sri Lankan shares post near 3-wk closing high; Expolanka leads

Reuters: Sri Lankan shares rose for a fourth straight session on Tuesday to close at their highest level in nearly three weeks, led by Expolanka Holdings after a major shareholder bought an additional 16 percent stake in the company.

Japan-based SG Holdings Global Pte Ltd acquired the stake at 8.30 rupees per share.

Expolanka shares rose as much as 6.7 percent, their biggest intraday percentage gain since Jan. 17, 2015, before settling 4 percent higher. The stock accounted for 67 percent of the day's turnover.

Turnover was 3.89 billion rupees ($27.08 million), the highest since Dec. 10 and more than four times this year's daily average of 875.4 million rupees.

The main stock index ended 0.99 percent higher at 6,425.96, its highest close since Jan. 14.

"It was a rebound after the January fall. The market was so bullish with the foreign buying. Most of the blue chips gained," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

The index had fallen 7.7 percent this year through Monday as foreign investors, unnerved by global concerns over China's economy, cut their exposure.

Foreign investors bought a net 2.58 billion rupees worth of shares on Tuesday, erasing most of the year-to-date net foreign outflow, which stood at 191.7 million rupees.

Analysts, however, said a rising trend in local interest rate has been a concern and local stocks could come under further pressure.

Yields on treasury bills rose between seven and 23 basis points at a weekly auction on Tuesday, signalling a further rise in market interest rates, which move in tandem with t-bill yields.

Shares of market heavyweight John Keells Holdings Plc rose 2 percent, while Ceylon Tobacco Company gained 3 percent.



($1 = 143.6500 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Unforeseen reasons delay Cinnamon Life opening till 2019

John Keells Holdings Group profit before tax (PBT) in the third quarter of 2015/16 at Rs.5.30 billion, is 1 per cent below the PBT of Rs.5.37 billion, which included capital gains of Rs.610 million, recorded in the corresponding period of the previous year.

Chairman Susantha Ratnayake said Group profit before tax (PBT) for the first nine months of the financial year 2015/16 at Rs.13.13 billion, is an increase of 9 per cent over the PBT of Rs.12.04 billion, which included capital gains of Rs.999 million, recorded in the same period of the previous financial year.

Excluding the impact of the aforementioned capital gains, the adjusted Group PBT for the quarter and the first nine months are an increase of 11 per cent and 19 per cent, respectively, above the corresponding periods in the previous financial year, Chairman Susantha Ratnayake said.

Though the profit attributable to shareholders for the quarter at Rs.3.90 billion, is a decrease of 10 per cent from the Rs.4.33 billion recorded in the corresponding period in the previous financial year, the profit attributable to shareholders for the first nine months at Rs.9.55 billion is an increase of 5 per cent over the corresponding Rs.9.13 billion recorded in the same period of the previous financial year.

The Property industry group PBT of Rs.558 million in the third quarter of 2015/16 is an increase of 48 per cent over the third quarter of the previous financial year [2014/15 Q3: Rs.376 million]. The improved performance is mainly on account of the revenue recognised, post the final tranches received as at 31 December 2015, at the "7th Sense" residential development project. The construction of Cinnamon Life is in progress with pre-sales of both the residential and commercial space continuing to be encouraging. However, the project has encountered some unforeseen delays and as such, the construction of Cinnamon Life is now expected to be completed in the calendar year 2019.

Excluding the impact of the aforementioned capital gain, the adjusted profit attributable to shareholders for the quarter and the first nine months are an increase of 5 per cent and 17 per cent, respectively, above the corresponding periods in the previous financial year.

www.dailynews.lk

Laugfs begins work on US$ 30 mn pharma facility in Koggala

Laugfs Pharmaceuticals and Premium International have invested over US$ 30 million to introduce the Oral Solid Dosage (OSD) pharmaceutical manufacturing facility at the Koggala Export Processing Zone.

Laugfs Holdings Managing Director, Thilak De Silva speaking at the launch last Friday said Sri Lanka still largely depends on imported products which accounts for 90% of the country's requirement.

"Compared to our neighbouring countries, Sri Lanka's dependency on pharmaceutical imports is extremely high with only 10% of the requirement manufactured locally,"he said.

"The facility, which is expected to complete constructions in 16 months, will manufacture various types of tablets, capsules and dry powder suspensions both of the beta lactam(penicillin based) and non-beta lactam varieties", he said.

De Silva added that with this venture the local market will benefit with high quality and affordable pharmaceutical products and help Sri Lanka to save a large sum of foreign exchange annually spent to import pharmaceuticals.

"We look forward in strengthening the rupee over the other currencies by exporting to the UK, European Union as well as the African continent, and to become a significant contributor to our country's export revenue.

Laugfs Chairman, W.K.H. Wegapitiya said Bangladesh's domestic pharmaceutical market is thrice the value of our own which meets 97% of the domestic requirement through local manufacturing and Pakistan caters to around 70% of domestic demand of finished medicine through their local production.".

According to a recent report by the IMS Institute for Healthcare Informatics, global spending on medicine is expected on to reach $1.17 trillion by 2017, due to the rising demand for healthcare and medications worldwide.

"The opportunities available have been well exploited by India, Bangladesh and Pakistan, by becoming net exporters of pharmaceutical products"."Regional sales of pharmaceuticals in Asia have more than doubled from $97 billion in 2001 to $214.2 billion in 2010, with sales expected to reach $386 billion by 2016".

Wegapitiyasaid the launch of the largest pharmaceutical manufacturing private factory in Asia constructed in Sri Lanka assures substantial investments and new employment opportunities.

The project will create 400 direct employment where local professionals will gain hands-on training and exposure to international industry standards.

Premium Pharmaceuticals Project Director ,Sujeewa Sumanasena said the facility is expected to meet and comply with international industry standards including the UK's Medicines and Healthcare Products Regulatory Agency (MHRA), the EU's Good Manufacturing Practice (GMP) and World Health Organisation.

"All components and systems will be designed and commissioned according to superior international standards, including GEP, GAMP and ASME."

www.dailynews.lk

Aitken Spence facilitates 'Ms Europa 2' call

For the first time in Sri Lanka a cruise ship has made calls on the four main ports of Sri Lanka. The luxury cruise ship Ms Europa 2 owned by German Operator Hapag-Lloyd Kreuzfahrten called on the Ports of Galle, Colombo, Hambantota and will arrive at the Trincomalee Port today.

Hapag-Lloyd Lanka which is a subsidiary of Aitken Spence is the local agent for Hapag-Lloyd. The local agent Hapag-Lloyd Lanka carried out a full passenger turnaround in Colombo which included, embarking and disembarking a total of 740 passengers.Ms Europa 2 is a newly designed luxury cruise ship, which is considered as one of the most spacious cruise ships on the market. Every year the Ms Europa 2 sets sail on its journey around the world to visit ports that are unreachable by other ships due to its size.

www.dailynews.lk

Fitch affirms SriLankan Airlines’ Bonds at ‘BB-’

Fitch Ratings has affirmed the rating on SriLankan Airlines Limited’s (SLA) US dollar-denominated government guaranteed bonds at ‘BB-’.

The national carrier’s bonds are rated at the same level as SLA’s parent, the state of Sri Lanka, due to the unconditional and irrevocable guarantee of principal and interest of the notes provided by government. The state held 99.5% of SLA through direct and indirect holdings at end-2015. SLA is the national airline of Sri Lanka, and has a 72% share of the total airline seating capacity of the country.

The government has identified tourism as a key economic growth driver in the medium term; and the company is well positioned to capture the benefits of this trend as the leading airline in Sri Lanka.

Tourist arrivals to Sri Lanka rose to 1.8 million in 2015 from 1.0 million in 2012.

www.dailynews.lk