Sri Lankan shares end at over 3-week closing high in thin trade

Reuters:Sri Lankan shares ended higher on Friday at a more than three-week closing high, with heavyweights such as Ceylon Tobacco Company Plc and John Keells Holdings Plc helping the index gain.

Sentiment was also boosted after Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds earlier this week, as over $5.5 billion in offers for the issue showed global investors were bullish about the prospects of the $82 billion economy.

After the bond deal, yields in local T-bill auction fell along with the 364-day T-bill rates at Wednesday's auction for the first time since April 15.

The benchmark Colombo stock index in a thin-volume trading session ended up 0.32 percent or 20.79 points at 6,422.69, its highest since June 21. It gained 0.9 percent this week.

"Today, the market is up mainly due to domestic investors. In the past few days, the market went up with foreign buying after the sovereign bond was oversubscribed, but now the foreigners are on the sideline," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

"Now investors are getting in to a side and seeing the direction and awaiting to see government policy statement."

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policies in August, new central bank chief, Indrajith Coomaraswamy said last week.

Turnover stood at 555.9 million rupees ($3.82 million), less than this year's daily average of around 741.2 million rupees.

Overseas investors, who were net sellers of shares worth 5.05 billion rupees so far this year, were net buyers of equities worth 24.7 million rupees on Friday.

Shares in Ceylon Tobacco Company Plc rose as much as 0.82 percent while Commercial Leasing and Finance Plc climbed as much as 5.26 percent and conglomerate John Keells Holdings Plc gained as much as 2 percent.

($1 = 145.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

SL’s largest cement producer renews calls for level playing field

The country’s largest cement manufacturer Tokyo Cement Company (Lanka) PLC (TKYO) renewed its calls for the government to create a level playing field for the cement industry, which is being taken advantage of by importers due to unbalanced policies. ‘‘An unequal playing field has been created through the current national policy that imposes price controls on cement, while allowing unlimited, duty-free entry for imported varieties,” TKYO Managing Director S.R. Gnanam said. A maximum retail price of Rs.870 per bag of cement was set by Finance Minister Ravi Karunanayake as a populist policy in the 2015 interim budget when the prevailing prices were around Rs.930-940. He also instructed the state-owned cement factories to sell a bag at Rs.760-770. 

Gnanam noted that with the depreciation of the rupee over the past financial year, the cost of importing clinker and other raw material required to manufacture cement has gone up. “Domestic cement manufacturers could not adjust the retail prices to reflect the cost increase. Imported cements on the other hand, did not face such a contingency as these cements are not manufactured in Sri Lanka and do not face domestic conditions,” he said. 

Gnanam noted that the importers do not have any capital investment costs or manufacturing, environmental and labour standards imposed on domestic manufacturers, which further worsen the problem. However, the cement price control may have contributed to a sharp increase in household construction. 

“The demand for cement maintained an upward trajectory on the back of private sector demand for concrete in the Western Province and the cement demand by households in the regions, contributed directly towards our top line growth,” Gnanam said. He noted that there was a 7-10 percent increase in demand for the household sector, even from the North and East. He added that the demand for cement reached six million tonnes in 2015/16 compared to 5.4 million tonnes in 2014/15. However, Gnanam reiterated the need to reintroduce market forces. “Given the large inflows of imports, supply shortages are unlikely in the future. 

Therefore, the market forces should be allowed to set cement prices and not be artificially propped up to benefit foreign manufacturers that are not accountable under national regulations,” he said. The current government has been highlighting the need to empower local industries. Further, while most other industries benefit from protectionism, a policy which the current regime had promised to remove but had failed to do, the cement industry seems to be a victim of the other extreme of the trading spectrum. - See more at: http:/

www.dailymirror.lk

Daya Group in takeover bid on Blue Diamonds?

In an interesting development, the Colombo bourse was yesterday informed of the purchase of shares in Blue Diamonds Jewellery Worldwide PLC (BLUE) in excess of 10 percent by Promodya Manjaree Kilittuwa Gamage, who is believed to be the daughter of Primary Industries Minister Daya Gamage. A stock market filing by SC Securities said its client P.M.K. Gamage as at July 12, 2016, controlled 22,395,344 shares of BLUE, which represents 10.8 percent of the issued shares of the company. However, market sources said P.M.K. Gamage, who is believed to be acting in concert with Bimputh Finance PLC—a Daya Group company— may have held more than 15 percent of Blue Diamonds as at yesterday (July 14). As at March 31, 2016, P.M.K. Gamage held 2.77 percent of BLUE as the fourth single largest shareholder of BLUE and featured as the seventh largest shareholder of Bimputh Finance PLC with a stake of 7.57 percent. 

The Securities and Exchange Commission has currently launched an investigation into Blue Diamonds of possible misappropriation of shareholder funds. BLUE currently doesn’t have a controlling shareholder, which makes it an open candidate for acquisitions. Chinese national Xia Liqiang, who currently functions as BLUE Chairman, holds 15.46 percent stake as the single largest shareholder of the company. He also holds another 10.56 percent stake through V.V.S. Lanka Holdings. Informed market sources said Daya Group has recently shown interest towards investing in a gem-cutting venture.

www.dailymirror.lk

Hayleys Fibre to dispose 6-acre property for Rs.420mn to Alumex

Hayleys Fibre PLC, a unit of the Hayleys group, has decided to dispose of its six-acre freehold property in Ekala for a consideration of Rs.420 million to Alumex PLC, another Hayleys group company, a disclosure made by the company to the Colombo Stock Exchange (CSE) said. For this purpose, the company has called for an Extraordinary General Meeting on July 27 to obtain the approval from the shareholders as the transaction value exceeds 50 percent of the total value of the assets of the company – a major transaction under the Companies Act. Further, the CSE listing rules also require the shareholder nod for the transaction as its value exceeds one-third of total assets. As of March 31, 2016, Hayleys Fibre had an asset base of Rs.583.9 million. 

The related party transaction will result in a thumping Rs.233.1 million profit as the carrying value of the said property in the books of Hayleys Fibre is Rs.186.9 million. The land, which in full extent, six acres, one rood and 7.9 perches, situated on the Minuwangoda Road, Ekala Road, Ja-Ela, had not been utilized for the company’s core business and rented out to third parties. Hayleys Fibre, a manufacturer and exporter of traditional coir products, said it would invest the sales proceeds in its core business to generate adequate returns. 

For the year ended March 31, 2016, the company made a net profit of Rs.16.4 million with an earnings per share of Rs.2.05. “The company is currently reviewing opportunities in business integration and consolidation thereof,” the disclosure said. The Hayleys Fibre share was trading at Rs.91.70, up Rs.2.90 or 3.27 percent yesterday. The buyer, Alumex PLC on the other hand, will use the property for its business expansion. As of March 31, 2016, Hayleys PLC had a 65 percent stake in Hayleys Fibre and 51 percent in Alumex PLC. www.dailymirror.lk

Fitch rates Sri Lanka’s USD Bond ‘B+(EXP)’

(LBO) – Fitch Ratings has assigned Sri Lanka’s upcoming US dollar-denominated bonds an expected rating of ‘B+(EXP)’.

The ratings agency said the expected rating is in line with Sri Lanka’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B+’ with a Negative Outlook.

“The rating would be sensitive to any changes in Sri Lanka’s Long-Term Foreign-Currency IDR,” Fitch Ratings said.

“In February 2016, Fitch downgraded Sri Lanka’s Long-Term Foreign-Currency IDR and Local-Currency IDR to ‘B+’ with a Negative Outlook.”

Sri Lanka imposes maximum price for 16 essential items

(LBO) – The controlled prices of 16 essential items were announced by the Minister of Industry and Commerce Rishad Bathiudeen today morning.

The Gazette is expected tomorrow and the maximum retail prices will be effective immediately.

The Items are:

1. Chicken Rs 410 per Kilo, Rs 495 per Kilo (skinless)
2. Red Dhal Rs 169 per Kilo
3. Sprats (Thai) Rs 495 per Kilo – Sprats (Dubai) Rs 410 per Kilo
4. Gram-Chickpeas Rs 260 per Kilo
5. Green moong/Green Grams Rs 220 per Kilo
6. Canned Fish Regular 480 grams Rs 140 (105 Grams– Rs 70)
7. White Sugar Rs 95 per kilo
8. White Flour Rs 87 per kilo
9. Full cream milk powder – imported Rs 810 per Kilo – Domestic Rs 735 per Kilo
10. Potatoes – Local – No control price Potatoes – imported – Rs 120 per kilo
11. B Onions imported – Rs 78 per Kilo
12. Dried chillies – Rs 385 per Kilo
13. Dried Fish – Katta – Rs 1100 per Kilo
14. Dried Fish – Salaya– Rs 425 per Kilo
15. Maldive fish –Rs 1500 per kilo
16. Sustagen – Rs 1500

Sri Lanka stock exchange promotes mobile phone trading

ECONOMYNEXT - The Colombo Stock Exchange (CSE) will conduct training programmes around the country to educate investors on the use of mobile phone trading applications, given the increasing use of smartphones which enable investor to place orders in real-time.

The facility requires a web-enabled smartphone and a stockbroker trading account, the CSE said in a statement.

The same security protocols adopted by Web-based portals and other e-commerce applications are used for mobile trading, it said.

The applications offer a range of features that include daily market summaries, portfolio management, buy and sell options, ability to track and view the history of orders, analyze gains and losses in real-time and breaking corporate news alerts.

The training, conducted free-of-charge, will be in Sinhala, Tamil and English mediums and be conducted in Colombo, Kandy, Ratnapura, Matara, Anuradhapura, Negombo, Kurunegala and Jaffna.

The popularity of smartphones is rapidly increasing and with that, tech savvy investors around the world have taken to mobile trading as a way to conveniently trade stocks using their smartphones. This is reflected in the growth of mobile applications as a whole.

“With the usage of smartphones growing worldwide, where devices are increasingly utilized to access online services and information, it is only just that we offer investors the convenience of trading from their mobiles,” said Niroshan Wijesundere, Head of Market Development at CSE.

“A common problem for investors has been gaining access to sources through which orders can be placed in real-time - in other words, the lack of the opportunity to trade live, from wherever they are located,” the CSE statement said.

“Given the active and sometimes volatile nature of the current market, an opportunity could be lost or capitalized on in a matter of seconds. Getting the timing right in terms of when to buy or sell a stock could therefore be as crucial as deciding what shares to buy.”

Sri Lanka company earnings growth seen slowing

ECONOMYNEXT – Earnings growth of Sri Lankan companies listed on the Colombo Stock Exchange are likely to slowdown in the second and third quarter of 2016, stockbrokers First Capital Equities said.

They attributed the slowdown to the likely slowdown in consumer demand resulting from the tighter monetary policy, higher interest rates and price increases in imports because of the depreciation of the rupee.

“However, we believe banking sector is likely to provide stability with higher margins while construction and building material companies may continue to show strong performance with the government’s infrastructure drive,” First Capital Equities said in a research note

The brokers forecast overall market earnings growth for the December 2016 and March 2017 financial years to be at 4%-5% year-on-year.

“We also expect market earnings to accelerate from 2H2017E onwards resulting in earnings for December 2017E / March 2018E growing by 11%-12% YoY,” the report said.

First Capital Equities said market returns will be bullish only in the mid-term and “conditionally on the longer term” if interest rates fall.

Sri Lanka tea prices rise at Colombo auction

ECONOMYNEXT – Sri Lankan tea prices rose at this week’s Colombo auction with some types grown on plantation company estates on the western slopes of the central hills up by Rs.20-30 a kilo on better quality, brokers said.

Forbes & Walker Tea Brokers said there was “excellent demand” for the total of 6.0 million kilos came under the hammer this week.

There was “fair demand” for low grown teas, which make up the bulk of the crop, with prices of most varieties up or steady, the brokers said.

The overall quality of teas, from both company estates on the Western and Eastern planting districts, showed an improvement and consequently rose in price by Rs.20 a kilo and more as the sale progressed.

“Western BOPs where quality was improved gained Rs.20-30 per kilo and more whilst the others were firm and dearer to a lesser extent,” the brokers said. “Corresponding BOPFs appreciated up to Rs.50 per kilo where quality was improved whilst the others were firm and dearer to a lesser extent.”

Some tea from the eastern slopes also rose by Rs.10-20 a kilo, Forbes & Walker Tea Brokers said.

“This week’s appreciation in prices is indeed encouraging although in no way would offset the increased cost following the sharp decline in volumes particularly in respect of estates in the High and Medium Grown elevations manufacturing small leaf teas,” .

Sri Lanka's Agalawatte Plantations controlling stake traded

ECONOMYNEXT - A controlling 60.8 percent stake in Agalawatte Plantations Plc, a unit of Sri Lanka privately held Mackwoods group was traded on the Colombo Stock Exchange Thursday in deal valued at a little over 300 million rupees.

Until the sale Mackwoods Plantations (Pvt) Ltd held 60 percent of the firm.

Members of the controlling Nonis family have been involved in a series of legal battles for control alleging mis-management and oppression.

Key shareholders petitioned court to hold a extra-ordinary general meeting and appoint directors, alleging that Chairman Chris Nonis was siphoning money off to the UK through fictitious marketing campaigns.

Nonis has denied the charges.

Agalawatte Plantations is a privatized plantations company which also grows palm oil.

Sri Lanka Browns group sells hydropower unit for Rs519mn

ECONOMYNEXT – Sri Lanka’s Browns Capital group said it had sold a 68% stake in a hydropower subsidiary to Lotus Renewable Energy (Pvt.) Ltd. for Rs519 million on the Colombo stock exchange.

The deal to sell control of Browns Hydro Power PLC was done at Rs7 per share, a stock exchange filing said.

Browns group subsidiaries, Browns Power Holdings (Pvt.) Ltd and Pussellawa Plantations Ltd, sold their stakes of 33.96% each in Browns Hydro Power PLC.

Mackwoods battle takes new turn with Sri Lanka's Agalawatte Plantations sale

ECONOMYNEXT - A battle among shareholders of privately held Mackwoods group took a new turn with the sale of a controlling stake in Agalawatte Plantations Plc, to Sri Lanka's Browns group.

Browns said in a stock exchange filing that it bought 60 a percent stake of APL made up of 15.2 million from Mackwoods Plantations (Pvt) Ltd, for 20 rupees a share on July 14.

The Mackwoods group has been embroiled in litigation after some members of the controlling Nonis family went to court alleging that Chairman Chris Nonis was oppressing them and mis-managing the group, whose ultimate holding company was Mackwoods Securities (Pvt) Ltd.

Agalawatte Plantations said in a statement that the "transaction was formally authorised and effected by the shareholders of Mackwoods Plantations (Pvt) Ltd."

Nirmalie Samaratunga, a director of Mackwoods Plantations (Pvt) Ltd, said Thursday that she had not been given notice of any board meeting to approve the share sale and she was consulting legal opinion.

There had been a series of cases involving the group filed by opposing factions.

Earlier in the month, some shareholders won a court order to hold an extraordinary general meeting of Mackwoods Securities (Pvt) Ltd in a bid to appoint three directors to represent their interests.

The shareholders alleged that Chris Nonis was siphoning off money in the name of conducting international promotions through a company called APL Teas, which was owned by him and one sister and was actually not a subsidiary of APL.

The petitioner told court that another company called Taprospa Resorts (Pvt) Ltd, which had interests in leisure, was a 100 percent owned unit of Agalawatte Plantations until 2011.

The petition alleged that Taprospa Resorts (Pvt) Ltd, had later become a 60 percent owned unit of a company called Taprospa Holdings Ltd which was 99 percent owned by Chris Nonis and it had happened without the knowledge of the board.

Nonis denying the allegations said in statement that there were attempts to strip assets of the group by hostile corporate raiders who were making "wild and baseless allegations and are engaged in a vicious smear campaign against the Company and its Chairman."

Sri Lanka Browns Group buys Agalawatte Plantations

ECONOMYNEXT – Sri Lanka’s Browns Group has bought control of Agalawatte Plantations from Mackwoods Group for Rs304 million, a stock exchange filing said.

The statement from Mackwoods Plantations said it sold 15.2 million shares of Agalawatte Plantations or a 60.80% stake to Browns at Rs20 a share.

Agalawatte Plantations said falling commodity prices had made a "severe financial impact" and it was felt "prudent and timely" to sell out.

The full statement is reproduced below:

Agalawatte Plantations PLC sold to the Browns Group

The controlling interest of Agalawatte Plantations PLC– a public quoted company - was sold this afternoon (14th July 2016).

As has also been widely reported, domestically and internationally, the global commodities crash in the past few years, the Russian Crisis and subsequent depreciation of the Rouble, reduced the buying power of Russia and CIS countries. This was further aggravated by the oil price crash, which reduced the buying power of the Middle East Countries, and in addition substantially impacted the rubber industry, as the falling oil price allows for synthetic rubber substitutes to replace natural rubber. This has aggravated the strain in particular for those plantations Companies with predominantly rubber exposure, including Agalawatte Plantations PLC.

The sale of 60.8 % of the shares of Agalawatte Plantations PLC held by Mackwoods Plantations (Pvt) Ltd. was auctioned on the trading floor of the Colombo Stock Exchange. The transaction was formally authorised and effected by the shareholders of Mackwoods Plantations (Pvt) Ltd. The shares, worth Rs. 304,000,000/-, were purchased by the Browns Group.

Given the severe financial impact of the commodities crisis on Agalawatte Plantations PLC, it was felt both prudent and timely to divest its shares to the Browns Group, which is already in the Plantation Sector of Sri Lanka.

Sri Lanka central bank rejects 03, 06-month Treasury Bill bids

ECONOMYNEXT - Sri Lanka’s Central Bank rejected bids for 03-month and 06-month Treasury Bills at Wednesday’s auction, the Public Debt Department said.

The one year Treasury Bill Yield fell 07 basis points to 10.49%, a statement said. The bank offered 17.5 billion rupees worth of one year bills and accepted bids of 7.5 billion rupees.

It received total bids of 54 billion rupees at the auction .

Sri Lankan shares end flat; blue chips down

Reuters: Sri Lankan shares ended steady on Thursday, after it hit a near three-week closing high in the previous session, as investors sold blue chip shares such as Ceylon Tobacco Company Plc and John Keells Holdings Plc .

The benchmark Colombo stock index ended down 0.01 percent at 6,401.90. It gained 1.3 percent last week in its first weekly gain in four.

"There was profit-taking in some blue chip companies," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

The bourse touched a near three-week high on Wednesday due to positive sentiment after Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds earlier this week, as over $5.5 billion in offers for the issue showed global investors were bullish about the prospects of the $82 billion economy.

After the bond deal, yields in local T-bill auction fell along with the 364-day T-bill rates at Wednesday's auction for the first time since April 15.

Turnover stood at 1.06 billion rupees ($7.27 million), well above this year's daily average of around 742.7 million rupees.

Overseas investors, who were net sellers for the first time in seven sessions, sold a net 3.2 million rupees worth of shares, extending the year-to-date net foreign outflow to 5.08 billion rupees worth of equities.

Shares stumbled recently and hit their lowest close since April 7 on Monday, after losing in 10 of 11 trading sessions, on worries over capital gains tax on stocks, high-interest rates and policy uncertainty.

Shares in Ceylon Tobacco Company Plc fell as much as 1.96 percent while conglomerate John Keells Holdings Plc dropped as much as 0.64 percent and Aitken Spence Plc slipped as much as 2.03 percent.

($1 = 145.7600 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)