Sri Lankan shares close lower for 3rd day on firms' ratings downgrade

Reuters: Sri Lankan shares fell for a third straight session on Wednesday as a downgrade by Fitch Ratings of some companies that hold dollar bonds hit investor sentiment, traders said, days after the ratings agency downgraded the country's sovereign rating.

Fitch downgraded the ratings of listed firms such as Sri Lanka Telecom Plc, DFCC Bank Plc, and People's Leasing and Finance Plc, while state-owned Bank of Ceylon, National Savings Bank, Sri Lanka Airlines and Sri Lanka Insurance also were brought down by a notch.

The action followed Fitch's downgrade of Sri Lanka's sovereign rating to B-plus from BB-minus on Monday citing increased refinancing risks, significant debt maturities, and weaker public finances.

"The downgrading of institutions which hold dollar bonds are more in line with the sovereign ratings revision," said Shiran Fernando, an analyst at Colombo-based Frontier Research.

"This means foreign investor confidence will be reduced."

Sri Lanka's benchmark share index closed 0.57 percent lower, or down 34.99 points, at 6,078.41, the lowest close since April 10, 2014.

The index remained in oversold territory for the seventh straight session, with the 14-day relative strength index at 19.741 on Wednesday, compared with Tuesday's 21.663, Thomson Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Yields on treasury bills rose by 42-54 basis points at a weekly auction on Wednesday to a more than two-year high.

Yields on t-bills have risen after the central bank increased key policy rates by 50 basis points last month.

Turnover touched 1.35 billion rupees ($9.34 million) on Wednesday, the highest since Feb. 19 and well above this year's daily average of 721.5 million rupees.

Foreign investors were net buyers for the fourth straight session, purchasing 114.6 million rupees worth of shares on Wednesday.

Shares in conglomerate John Keells Holdings Plc fell 1.65 percent while Carson Cumberbatch Plc fell 4.54 percent and Distilleries Company of Sri Lanka Plc ended 2.27 percent weaker. 

($1 = 144.5000 Sri Lankan rupees) 

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

Overseas Realty maintains Rs 3 bn profit in 2015

Completing another successful financial year, Overseas Realty (Ceylon) PLC recorded a Group Net Profit of Rs 3 Billion for 2015 despite lower revenue.

Revenue from Property Leasing grew by 11% to Rs 1.96 bn in comparison with last year, with high occupancy levels and higher rentals at the World Trade Center (WTC). The company expects to maintain good occupancy levels during 2016. Revenue from Other Services contributed an increase of 98% to Rs 206 mn. However Revenue from Apartment Sales reduced from Rs 4.3 bn to Rs 0.97 bn with the remaining Sales of Phase 2 being recognized during 2015.

Piling works of Havelock City Phase 3 was completed early 2016 and pilling works of Phase 4 is expected to be completed during 2016. The Sales launch of Phase 3 is planned for March 18, comprising two more residential towers with 304 Luxury Apartments.

The Group Net Asset Value per Share as at December 31, 2015 increased by 5% to Rs 32.22 and the Earnings per Share for the year stood at Rs 3.44. In comparison with last year the profit attributable to Equity Holders of the Parent increased marginally by 1% to Rs 2.99 bn. The company announced a dividend of Rs 1.50 per share for 2015 amounting Rs 1.3 bn.
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Ceylinco Life posts Rs 2.060 bn profit

Ceylinco Life has ended 2015 on a characteristically strong note with total income of Rs 19.89 billion, of which premium income accounted for Rs 13.4 billion, keeping the company at the helm of the life insurance industry for the 12th consecutive year.

The life insurance market leader reports that total income for the 12 months ending December 31, 2015 was up 7 per cent over 2014, while Goss Written Premium improved by a noteworthy 12.16 per cent.

The company recorded net profit of Rs 2.060 billion for the year and transferred Rs 1.8 billion to shareholders.

Investment and other income remained flat at Rs 6.74 billion, an unsurprising result given the interest rates in effect, the company said. However, Ceylinco Life’s investment portfolio increased by a robust 17.35 per cent in value terms to Rs 67.1 billion, while total assets grew by a noteworthy Rs 9.1 billion or 12.9 per cent to Rs 80.2 billion for the review period.

The company’s Life Fund posted net growth of Rs 7.99 billion or 13.31 per cent to reach Rs 68.01 billion at the end of 2015. Ceylinco Life was the fastest company in the local life insurance industry to reach a Life Fund of Rs 60 billion, a feat it achieved in 2014.

“We are happy with these results, particularly because they were achieved in a year of unusual challenges, which we were able to overcome without losing our focus on operational performance,” Ceylinco Life’s Managing Director and CEO Rajkumar Renganathan said.

Ceylinco Life sold 170,007 new policies in 2015 averaging 14,166 a month, which is satisfactory in the context of the conditions that prevailed, particularly the continuing pressure on disposable incomes in many of the target policyholder segments, the company said. Sales of retirement plans grew by 30% per cent in the 12 months reviewed.

Benefits to policyholders totalled Rs 5.9 billion in 2015, a 21.7 per cent improvement over the previous year.

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Singapore Exchange goes live with Millennium PostTrade

MillenniumIT, London Stock Exchange Group’s proprietary technology business, has successfully implemented its Millennium PostTrade platform to support SGX’s Central Depository (CDP) business.

Millennium PostTrade, a highly integrated, real time clearing, settlement and depository platform will initially enhance SGX’s securities clearing and connectivity capabilities and provide a solid technology platform to replace CDP’s settlement and depository systems.

With the clearing system and the Application Programming Interface (API) now live, SGX will work with their broker dealers and participants to migrate away from SGX’s proprietary broker back office system.

Millennium PostTrade will enable CDP to adopt global market practices, real time straight-through-processing and industry messaging standards (including FIXML and ISO20022) to deliver improved functionality, performance, flexibility and scalability. Millennium PostTrade is fully SWIFT compliant and builds on the real time clearing platform that MillenniumIT first introduced in Europe in 2013.

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CSE to create dollar denominated board

For the first time a special US$ dollar denominated board will be set up by the Colombo Stock Exchange (CSE) targeting foreign investors from the region, CSE Chairman Vajira Kulatilaka said.

Speaking after Lanka ORIX Leasing Company PLC (LOLC) rang the opening bell to commence trading at the CSE yesterday Kulatilaka said that this has been actively accepted by Maldivian and Bangladeshi investors.

“We are now awaiting the final approvals to launch this US$ dollar denominated board from the Securities and Exchange Commission.”

He said that as a follow up to this, they will be launching a major two day Road Show in the Maldives end on this month. “Bangladeshi companies too have requested for listing form out CSE.”

Commenting on the country rating downgrade by Fitch he said that it happens all over the world from time to time. “This is a good signal to wake up and bounce back for Sri Lanka”.

Market Opening Ceremonies are conducted by the CSE to serve as a platform to generate exposure for listed companies as they celebrate important milestones in the capital market. “The bell ringing ceremonies too are customary and important and even the London Mayor had requested to ring the CSE bell when he was in Sri Lanka.”

Kulatilaka commended LOLC’s continued commitment to SME and regional development through the company’s Micro Lending facilities and invited the company to showcase its credentials at foreign roadshows organized by the CSE in future. “We thank the LOLC Group for taking part in this market opening ceremony, which marks the first day of trading for the month of March. I’m proud to see how LOLC has excelled in many industries and cemented its position as a true conglomerate”.

“Lanka ORIX Leasing Company is hoping to make even bigger investments overseas to expand their foot print”, LOLC Group Managing Director and CEO Kapila Jayawardena said.

He said that their operations in Myanmar are very successful and the country was similar to Sri Lanka in the 1970 era. It’s a country with a lot of promise and rich with natural resources. “We are now looking for more regional expansion.”

“We will be committed to support the CSE by investing and expanding our presence in the market. LOLC has a strong presence in the CSE through our 12 listed companies and that will only continue to grow as we expand our reach both locally and internationally.”

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Proposed Mobitel-Hutch deal

By Ishara Gamage

Ceylon Finance Today: The government has decided to temporally halt the Mobitel-Hutch deal until a fresh valuation is made, the government three-member tender board head and Power and Energy Ministry Secretary Dr.Suren Batagoda told Ceylon FT .

"We have advised the government Technical evaluation committee to obtain a fresh independent valuation because previous valuations were controversial," he said.

It was learned that the global accounting giant KPMG and Ernst & Young both valued Hutch at between US$ 122.5 to 123 million.

But Sri Lanka Telecom trade unions alleged that Mobitel officials are willing buy Hutch at a much higher price.

Meanwhile, Batagoda said it will take another two or three months to complete this fresh valuation.

Government has already appointed a three-member tender board to oversee the Mobitel-Hutchison deal.

The three-member government tender board is headed by Power and Energy Ministry Secretary Dr.Suren Batagoda, Telecommunication and Digital Infrastructure Ministry Secretary Wasantha Deshapriya and Posts Ministry Secretary Wimalasiri Perera, United Kingdom-based mobile virtual network operator Lycamobile has also offered US$ 123 million to buy Hutchison Telecom Lanka, but there offer was rejected, Telecommunication and Digital Infrastructure Minister Harin Fernando earlier told Ceylon FT.

"Too many operators are bad for the industry, that is why the Telecommunications Regulatory Commission (TRC) rejected the Lycamobile proposal," the Minister said.

But a Lycamobile official said "We were having a memorandum of understanding (MoU) with Hutchison parent company to buy its Sri Lankan operations for US$ 123 million.

Our MoU is still valid and our request for approval from TRC in this regard is still pending without TRC having had made a final decision," one of Lyca mobile's local representatives who previously headed a leading government institution under the former regime told Ceylon FT on conditions of anonymity.

"Depending on this valuation we have bid US$ 123 million for Hutchison Telecom Lanka, If the government is not allowing us to proceed with this deal then we are considering to invest this money in some other country," he said.

The source said that Lycamobile intention is to bring some foreign direct investments to Sri Lanka and Hutchison is their worldwide telecoms partner.

www.ceylontoday.lk

CT Properties acquires Keppel CT Developments for Rs550mn

(LBO) – CT Properties, a subsidiary of CT holdings has acquired Keppel C T Developments Private Limited (KCT) for 550 million rupees from Edmonton Private Limited, the company said in a stock exchange filing.

CT Properties held a 40 percent shareholding prior to this acquisition, the company said.

It has also obtained the approval of the Companies Registrar to change the name of KCT back to CT Properties GS Private Limited.

The Colombo based KCT was formerly known as C T Properties G S and changed its name to Keppel C T Developments in December 2012.

KCT operated as a subsidiary of Edmonton Private Limited which is a subsidiary of Keppel Land Ltd, Singapore.

CT Holdings, which was incorporated in 1928 to engage in the movie exhibition business, has over the years diversified its business interests in key growth sectors of the country.

Today its subsidiaries are in retail and fast moving consumer goods, real estate, industrial goods, plantations, financial services and the entertainment industry.

Sri Lanka’s NTB December net up 21-pct, bond losses curb annual profit

ECONOMYNEXT – Sri Lanka’s Nations Trust Bank said December 2015 quarter net profit rose 21 percent to 675 million rupees from a year ago mainly owing to lower impairment charges while losses on its bonds portfolio curbed group annual profit growth.

Net interest income was stagnant at 2.3 billion rupees for the quarter with interest expenses growing three percent to two billion rupees while interest income rose just one percent to 4.37 billion rupees.

Earnings per share were 2.93 rupees for the quarter, according to interim accounts filed with the stock exchange.

EPS for the year ending 31 December 2015 rose three percent to 11.34 rupees with net profit at 2.6 billion rupees.

Annual interest income fell five percent to 166 billion rupees and interest expenses fell 12 percent to 7.5 billion rupees.

Net interest income went up only two percent to 9.1 billion rupees owing to declining yields in several business lines amid rising cost of funds and intensified competitive pressures, a statement said.

“Profit for the year was unfavourabley impacted due to marked to market losses made on the FIS (fixed income securities) portfolio and the one off provision booked for specific facilities in the first quarter,” the statement said.

“Excluding these, the bank’s core business performed commendably with a post tax profit growth of 16 percent underpinned by strong volume growth in loans and advances together with a reduction in impairment charges which somewhat offset the impact of narrowing NIMs.”

The statement said NTB’s credit growth was subdued during the first half of 2015, recovering only towards the latter part of the year as sentiment improved.

NTB’s loan book grew 23 percent to 121 billion rupees as at 31 December 2015 with deposits growing 16 percent to 129 billion rupees during the year.

Nestlé to expand Sri Lanka milk procurement network

ECONOMYNEXT – Nestlé’s Sri Lanka unit said the company plans to expand its milk procurement network in the north this year and develop the potential of the region, which accounts for 22 percent of the country’s cattle.

The Swiss food multinational said it paid 3.6 billion rupees in 2015 to almost 20,000 local farmers as payment for fresh milk to manufacture its products like Nespray, Milo and Milkmaid.

“The company hopes to not only increase the supply and quality of milk but also provide local farmers a livelihood that is sustainable,” a statement said.

The firm said it is Sri Lanka’s largest private sector collector of fresh milk and had opened a new milk chilling centre in the north-eastern town of Vaddakkachchi, which will help farmers keep their milk fresh at a temperature of 4 degrees Celsius.

“Previously, facilities for storing fresh milk in the area were inadequate; resulting in low quality and wastage,” the statement said.

It quoted Ariyputhiran Krishnaseelan, a dairy farmer from Vaddakkachchi, as saying the new facility will help revive the town’s dairy industry.

“This is the first milk chilling centre in our town. We usually have a lot of excess milk, even after using it in our own homes and selling it to neighbours and others in the community. This facility will now help us sell this milk and earn a larger income.”

Each Nestlé chilling centre is equipped with testing equipment and farmers are paid for the quality of milk they provide – the higher the quality, the higher the price they receive, Nestlé said.

Sri Lanka’s Central Bank to sell USD200mn worth development bonds

(LBO) – The Central Bank will issue 200 million US dollars of development bonds with a tenor of 3 months, 5 months, 1 Year and 2 Years 1 month to local and foreign investors.

The Debt Department said the subscription will be at a floating rate of 6 month LIBOR for USD plus a margin through competitive bidding or at a fixed rate to be determined through competitive bidding.

Minimum investment is 100,000 US dollars with additional investments in multiples of 10,000 US dollars.

The issue will be open for subscription from 3 to 9 March and has a date of settlement of 11 March 2016.

Development bonds are to be issued by the Public Debt Department of Central Bank and exempted from income tax paid in Sri Lanka.

Foreign citizens and entities, non resident Sri Lankans, Sri Lankan dual citizens, authorized dealers in foreign exchange, primary dealers in government securities, BOI specified companies and specified insurance companies are eligible investors.