Sri Lanka shares edge up, but down 12 pct in March quarter

Reuters: Sri Lankan shares firmed up on Thursday led by large caps on fiscal year-end buying, but closed nearly 12 percent lower in the March quarter as rising interest rates dented investor appetite for risk assets, brokers said.

The benchmark share index ended 0.51 percent higher, or up 30.89 points at 6,071.88. It fell 11.9 percent in the quarter ended Thursday.

"The market is up on year-end buying," said Reshan Kurukulasuriya, Chief Operating Officer at Richard Pieris Securities Pvt Ltd, referring to the end of financial year for many listed firms including banks.

"It was due to window-dressing for the end of the financial year, and we don't expect much activities in April due to the festival holidays."

Yields on treasury bills increased between 47 and 74 basis points at the weekly auction on Wednesday despite the central bank keeping key rates steady at its policy review on Tuesday.

Investors are likely to shift investments to fixed assets if market interest rates continue to rise, brokers said.

Shares in Carson Cumberbatch Plc climbed 7.06 percent, while Commercial Bank of Ceylon Plc gained 1.62 percent and Ceylon Tobacco Company Plc rose 0.71 percent.

Turnover was 690.9 million rupees ($4.76 million), less than this year's daily average of 773.4 million rupees.

Foreign investors sold a net 38.99 million rupees ($268,434) worth of shares on Thursday, extending the year to date net foreign outflow to 1.99 billion rupees worth shares. 

($1 = 145.2500 Sri Lankan rupees) 

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

Sri Lanka bank selling rate for US dollar breaches 150.50 rupees

ECONOMYNEXT - The selling rate for US dollar telegraphic transfers by banks in Colombo fell to 154.54 rupees on Wednesday, down from 149.54 a day earlier, breaching 150 rupees for retail buyers.

Central Bank data showed that banks were buying TT dollar for 146.52 rupees, a spread of 4 rupees, according to central bank data, indicative of the uncertainty in markets.

Banks typically charge another 1 percent fee to process bank drafts or notes.

In the kerb market the spread is narrower.

Sri Lanka's central bank began to undermine the rupee with a rate cut in April and monetized large volumes of debt to drive up private credit as budgets deteriorated.

In the interbank market spot-next dollars (settlement three days later) was 149.30/40 to the US dollar by mid-day.

Sri Lanka in talks with Japan for 1200MW cleaner coal plant

ECONOMYNEXT - Sri Lanka is in talks with Japan to finance and build a 1,200 MegaWatt coal ireed power plant in Trincomalee in the north east of the island, a media report said.

Sri Lanka's Daily Mirror newspaper quoted Power Minister Ranjith Siyambalapitya as saying that Japan International Co-operation Agency has expressed willingness to finance the project.

CEB it its most recent long term generation report said the Japanese funded plant would be a high efficiency eco-friendly coal plant.

A pre-feasibility had already been completed New Energy and Industrial Technology Development Organization (NEDO) and Electric Power Development Co., Ltd (J-POWER) of Japan.

Sri Lanka built a 900MW coal plant in Norochcholai with Chinese finance. Though the plant has given some problems and is not the cleanest, it has kept the country supplied and also reduced costs.

Minister Siyambalapitiya told parliament this month that work on a 500MW coal plant with India's National Thermal Power Corporation will be accelerated.

The project is delayed and it is expected that other plants would now have to substitute for it.

Sri Lanka's Capital Alliance closes sale of Fentons Ltd to Hayleys

ECONOMYNEXT - Sri Lanka's Capital Alliance (CAL), an investment bank said it was the sell-side advisor to the sale of Fentons Ltd, a family-owned engineering services company to Hayleys Ltd, a diversified listed business group.

The sale, where Fentons shareholders, the Abhyaratne family, sold a 75 percent stake, valued the company at 960 million rupees.

"Our objective at CAL is to build strong partnerships with our clients based on an intimate knowledge of their needs," Deshan Pushparajah – Head of Investment Banking, CAL said in a statement.

"The company was unique in that it had a rich heritage of almost 100 years carefully nurtured with strong family values.

"As the Abhyaratne family wished to remain as stakeholders in the company post the sale, securing this transaction included a stringent screening process to ensure that the new owner’s value system would seamlessly integrate with that of the family."

CAL said the needs of multiple Fentons shareholders had to be met in finding a match.

Sri Lanka 12-month Treasuries yield up 74pb

ECONOMYNEXT - Sri Lanka's 12-month Treasuries yield rose 74 basis points to 10.64 percent at Wednesday's auction a day after the Central Bank held policy rates unchanged, but fears of monetization remain.

The 3-month yield rose 60 basis points to 8.90 percent and the 6-month yield rose 47 basis points to 9.76 percent.

The debt office, which is a unit of the Central Bank sold 1.75 billion rupees in 3-month bills, 978 million rupees in 6-month bills and 4.35 billion rupees in 12-month bills, totally 7.0 billion rupees.

The debt office offered 21 billion rupees of bills for sale, in a week where an estimated 29 billion rupees of bills were maturing.

On Tuesday banks borrowed about 20 billion rupees in overnight printed money from the central bank to make up for liquidity shortages coming from defending a progressively weakening dollar peg.

If money is printed to repay bills, the overnight borrowing will be permanently accommodated (forex intervention fully sterilized) allowing banks to give more credit without first raising deposits to cover the liquidity short.

Sri Lanka's central bank generates balance of payments crisis by repaying Treasury bills with printed money.

Singhe Hospital revenue up by 31%

Singhe Hospital Rathnapura showed an exceptionally speedy growth in popularity and financial viability in Sri Lanka's health sector with a revenue of Rs. 75.7 Million as at the end of December 2015.

The hospital reflected an increase in revenue by 31% in comparison to the performance for the previous year. Singhe Hospital in the four years of operation since its inception has shown favorable growth in all aspects of the hospital's services. Efficient financial management together with excellent marketing strategy and service implementation in all its services have contributed greatly towards this success.

"First and foremost, I wish to thank all our clients for their confidence placed in our health services. Presently Singhe Hospital is growing in popularity at a rapid rate. Due to our success, we were able to open clinics in Homagama and Negombo for the convenience of our clientele" stated Singhe Hospital's chairman A. M. Weerasinghe.

Due to the high standards in health services offered, Singhe Hospital, Rathnapura has a range of 15,000 to 20,000 patients per month using the various services of the hospital. A 24 hour service is available in all areas of health services together with clinic facilities offering services such as CT scan facilities, X-ray, ultra-sound scanning, dental services, modular theatres, ICU, maternity and labour care unit and pharmacy which offer a total care to all its patients. - Singhe Hospitalwww.island.lk

Sri Lanka will recover with fiscal reforms - ADB

Sri Lanka's economic growth is projected to recover in 2016 as private sector investment will pick up once fiscal reforms are committed to. Growth will rise further in 2017 as the global environment improves, the Asian Development Bank (ADB) said yesterday.

ADB's flagship annual economic publication, Asian Development Outlook (ADO) 2016, forecasts gross domestic product (GDP) growth to rise to 5.3% in 2016 before recovering further to 5.8% in 2017.

"Fiscal consolidation is to be put back on track by a revision of the 2016 budget," ADB's Sri Lanka Resident Mission Senior Country Economist Tadateru Hayashi said . "IMF support, once agreed, will protect against expected pressures from external imbalances as it builds international confidence and facilitates fiscal consolidation and tax reform. A national development strategy will facilitate investment, both domestic and foreign,"he said. Inflation is expected to increase moderately under monetary tightening, picking up to 4.5% in 2016, and further to 5.0% in 2017 as growth picks up.

Though domestic demand remains restrained, the depreciation of the rupee will exert upward pressure on import prices. In addition, dissipation of the base effect of several energy price cuts in 2015 will add to the upward movement in inflation in 2016.

Balance of payments will continue to be under pressure with weak exports as a result of the global slowdown and slack workers' remittances from the Middle East affected by low oil prices.

The expected renewal of GSP+ concessions from the European Union in 2016 is a positive factor for exports, with receipts from tourism also growing, following the trend since the end of the conflict.

This would help maintain the current account balance at -2.0% in 2016, and see it improve to -1.8% in 2017 as exports pick up.

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People's Bank Group posts Rs 24.1 bn PBT

People's Bank posted phenomenal financial results by end 2015, posting 13.3% YoY growth in the highest ever Profit Before Tax of Rs 19.5 bn.

Group PBT also experienced 11.5% growth, notching Rs 24.1 Bn in 2015, compared to Rs 21.6 bn in 2014. Profit After Tax for 2015, notched at Rs 12.6 bn.

People's Bank continued its formidable status of having the Second largest deposit base in the country, observing a growth of 13.3% in its total deposit portfolio amounting to Rs 899.2 Bn, of which the local currency savings deposit base saw an incline of 17.1% to a total of Rs 356.7 Bn. Aligned with this, the CASA ratio increased to a notable 47.8%.

The commendable results are further compounded with the Bank's Net Interest Income increasing to Rs 43.7 bn from Rs 30.1 bn in 2014, with a YoY growth of an impressive 45%, while Total Loans also gained significant upward momentum to Rs 829.2 bn, increasing by 21%. The Bank expanded its balance sheet by Rs 150 bn to reach Rs 1.2 Tn with a percentage of 14.6, reiterating its focused strategies in the results-oriented culture it has mooted.

Having always remained cognizant in adhering to a stringent risk management framework, the best practices infused into the Bank's astute management of credit risk is well reflected in the overall improvement observed in asset quality and the gross NPL ratio of 2.4%, positioned well below industry average of 3.2%. ROA is 1.8 % ROE is 27.1 %. affirming the Bank's well managed strategies that form the foundation for a strong, stable and sustainable custodian of public funds. There however, has been a palpable change in the way People's Bank has been doing business from 2015, which Chairman Hemasiri Fernando states is the reason for the impressive financial results the Bank he helms, has reported. 

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Fitch upgrades Hemas Holdings to ‘AA-(lka)’

Fitch Ratings has upgraded Hemas Holdings’ National Long-Term Rating to ‘AA-(lka)’ from ‘A+(lka)’. The Outlook is Stable.

It has also upgraded the National Long-Term Rating on Hemas’s senior unsecured debentures to ‘AA-(lka) from ‘A+ (lka)’.

The upgrade reflects the company’s improved business risk profile, which is aided by its strong presence in the defensive healthcare and fast moving consumer good (FMCG) sectors. It also reflects its increased focus on the high growth leisure sector and its conservative expansion strategy.

The rating also takes in to account the stronger balance sheet after a rights issue in 2015, which provides strong support for Hemas’s growth strategy.

The acquisition of JL Morison (JLM) has significantly strengthened Hemas’s local drug manufacturing capabilities, which is poised to benefit from the expansion of a government programme to purchase drugs from local manufacturers.

Hemas also aims to expand its hospital chain to take advantage of a rapidly aging population, higher income levels and increasing occurrences of non-communicable diseases.

Hemas will have 705 rooms by the end of the financial year to 31 March 2017(FY17) with the opening of two five-star hotels in collaboration with Minor Group under the Anantara brand.
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