Norges wealth fund increases stake in Dialog, EPF reduces

(LBO) – Norges Bank has increased its shareholding in Dialog Axiata PLC to 96.6 million shares as of end June, data filed with the Colombo Stock Exchange shows.

Norway’s Norges Bank, which manages the world’s biggest sovereign wealth fund, is now the fifth biggest shareholder in telecommunications company Dialog with a 1.19 percent stake.

The shareholding is up from 28.7 million shares as of end September, 2015.

EPF has reduced its position from 193.8 million shares in March to 180.8 million shares by end June. EPF now has a 2.2 percent stake and is the second largest shareholder.

Norges Bank Investment Management has close to 900 billion dollars invested in global assets, a fund built from the country’s oil revenues.

Sri Lanka Tokyo Cement in deal with Japan’s Ube Industries

ECONOMYNEXT – Sri Lankan cement manufacturer Tokyo Cement Group said it has struck a deal with Japan’s Ube Industries Ltd. for technical support and import raw to make high quality cement.

A statement said the deal was signed on 1 August 2016.

“Tokyo Cement Group has entered into a collaborative agreement with Ube Industries Ltd. of Japan for technical support services and import part of their raw materials requirement from Japan to manufacture high quality cement,” it said.

The Ube Group has five main business segments - chemicals, pharmaceuticals, cement and construction materials, machinery, and energy and environment.

Its cement and construction materials business makes cement, ready-mix concrete, building materials, and does resource recycling.

Sri Lanka’s Dialog Axiata June net up 20-pct, 11 mn subscribers

ECONOMYNEXT – Sri Lankan celco Dialog Axiata said June 2016 quarter profit rose almost 20 percent to Rs2.3 billion from a year ago, but sharply higher taxes and floods eroded earnings compared with the previous quarter although a recovery is expected in the longer term.

Sales rose 18.6 percent to Rs21 billion in the period, which also saw a sharp rise in finance costs, interim accounts filed with the stock exchange showed.

Earnings per share for the June 2016 quarter were 28 cents. EPS in the first half rose to 61 cents from 48 cents the year before.

Dialog said in a statement that the introduction of Value-Added Tax at 15 percent and Nation Building Tax at 2 percent on telecommunication services resulted in “aggregate telecommunication service consumption taxes increasing from 27.6 percent to 49.7percent for voice services and from 12.2 percent to 31.7 percent for data services.”

The increase in consumption taxes have been observed to have a near term impact of constrained consumption.

“It is envisaged, however, that consumption would return to standard levels in the longer run,” the statement said, adding that bad weather and severe flood conditions during May dealt a significant impact on livelihoods and commerce.

As a result, sales in the June 2016 quarter were flat at Rs21.1 billion on quarter on quarter basis, with group EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) growth also virtually flat.

“Group NPAT (Net Profit After Tax) for the 2nd Quarter declined 14 percent QoQ to Rs2.3 billion, while 1H 2016 NPAT demonstrated YTD growth of 27 percent to Rs4.9 billion.”

At company level, NPAT fell 23 percent to Rs2.3 billion for Q2 2016 from the previous quarter.

Dialog also said it consolidated its market leading position within Sri Lanka’s mobile market to surpass the 11 million subscriber milestone during the 2nd quarter.

Dialog Television (DTV) suffered a net loss of Rs228 million for 1H 2016 compared to a Net Profit of Rs114 million in the corresponding period in 2015 owing to “an aggressive service and product enhancement program featuring the expansion of channel genres and the launch of new prepaid product offerings.”

Sri Lankan shares end lower; slip from more than 7-wk closing high

Reuters: Sri Lankan shares ended slightly weaker in dull trade on Monday, slipping from their more than seven-week closing high hit in the previous session, as investors waited for firm direction on the government's economic policies.

The benchmark Colombo stock index ended 0.16 percent, or 10.20 points weaker, at 6,506.93 on Monday.

On Friday, the index hit a more than seven-week high as investors bought blue chips expecting better profits on hopes that the central bank's rate hike would help improve the island nation's macro-economic outlook.

"There has been little bit more interest in the market. But institutional and foreign buying was less compared to retail investor buying as many investors are waiting for the government's economic policies," said Prashan Fernando, COO at Acuity Stockbrokers.

"With the better June-quarter profits, investors are interested in the stocks than earlier. But they also need some concrete policy decision on the economy."

Stockbrokers said the market was waiting for a policy announcement on the economy from Prime Minister Ranil Wickremesinghe, scheduled later this month.

Shares have risen on hopes economic fundamentals would improve after the central bank on July 28 raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

Turnover stood at 372.9 million rupees ($2.57 million), its lowest since July 27 and around half of this year's daily average of around 731.6 million rupees.

Overseas investors were net buyers of 41.4 million rupees worth of shares on Monday, extending the net foreign inflow during the last nine sessions to 992.7 million rupees worth of equities.

However, they have been net sellers of 3.81 billion rupees worth of shares so far this year.

Shares in Nestle Lanka Plc fell 1.8 percent, while Lanka ORIX Leasing Company Plc ended 1 percent weaker.

Sri Lanka Telecom Plc closed 1.6 percent weaker, dragging the overall index down.

Top mobile operator Dialog Axiata Plc, which posted an 18.6 percent gain in June-quarter profit earlier in the day, closed up 0.9 percent. 

($1 = 145.1500 Sri Lankan rupees) 

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

MBSL records profit growth of 410 % in 1H

Merchant Bank of Sri Lanka & Finance PLC (“MBSL” or “the Company”)continued to demonstrate strong turnaround in performance, generating a profit of RS 135.04 million during the first half of 2016, compared to losses of Rs 43.54 million in the same period of last year.

Meanwhile, the MBSL Group (consisting of MBSL and its subsidiaries) also recorded commendable turnaround in comparison to the corresponding period of last year, to achieve a net profit of Rs 77.60 million, compared to losses of Rs 58.70 million the previous year. The strong performance during the year is testimony to the Group’s continued efforts in driving synergies across its multiple business lines, and pursuing further diversification of its loan portfolio. Emphasis was also placed on improving collections and strengthening the overall quality of the loan portfolio which has led to a sustained decline in impairment charges.

The Company’s net loans and advances grew by 9% during period to Rs 25.26 billion led by broad based growth in leasing (+6%) and other loans (+13%). Emphasis on expanding the business loans and micro loans segment enabled the Company to diversify its portfolio from its traditional focus area of leasing.

Meanwhile, demand for leasing facilities were affected by the sharp increase in duties as well as the escalation in vehicle import prices following the depreciation of the rupee.

Overall, the Company’s net interest income grew by 3.93% while the Group recorded net interest income growth of 5.23%. A significant drop in impairment charges against stronger collection and recovery mechanisms, upheld overall performance at both Company and Group level allowing net operating income growth of 53% and 35% respectively.

MBSL’s post-tax profit recorded strong turnaround to Rs 135.04 million during the period under review. On a consolidated basis, the Group’s performance has continued to improve every quarter since its amalgamation, reflecting the accrual of synergies as well as people and process efficiencies.

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Janashakthi continues remarkable growth in 1H, 2016

Janashakthi Insurance PLC (Janashakthi) posted a consolidated Profit After Tax (PAT) of Rs. 630 million for the six months ended June, 30 2016, recording an impressive Year-on-Year growth of 198%.

Consolidated Gross Written Premium (GWP) grew by 34% to Rs. 6.5 billion with the Company’s Non-Life segment leading the charge with 41% growth in GWP while its Life segment grew by 11%.

During the period under review, claims valued at an estimated Rs. 4.6 billion were intimated to Janashakthi as a result of the devastation caused by the severe floods and landslides which drastically affected central areas of Sri Lanka in the month of May.

=“I am delighted to report that we have delivered strong performance in the first half of the year. We recorded steady top line growth, led by the Non-Life segment, and an impressive growth in the bottom line despite a marked rise in claims which resulted from the recent floods.

This is yet another testament to the company’s sound financial fundamentals and prudent and farsighted reinsurance arrangements, as well as our steadfast resolve to honour our commitment to policyholders. We look forward to building on this momentum and growing the business exponentially towards market leadership, while staying committed to delivering greater value to all stakeholders,” said Prakash Schaffter, Managing Director of Janashakthi Insurance PLC.

Janashakthi maintained healthy Capital Adequacy Ratios (CAR) for both Life and Non-Life businesses, following the introduction of the Risk Based Capital (RBC) model which replaced the Solvency based regime from 1 January 2016. The Company’s asset base grew from Rs. 22.2 billion as at June 30, 2015 to Rs. 33.4 billion as of June 30, 2016. The quarter saw Janashakthi being recognized for its path breaking initiatives and service excellence. Some of the awards and accolades won by the Insurer during this period include the Brand Excellence Award in the ‘Banking, Financial Services and Insurance’ category at the Global Brand Excellence Awards 2016, the category award for ‘Excellence in Branding & Marketing’ at the 7th CMO Awards and the ‘Marketing Initiative of the Year’ award at the IASL - Fintelekt Insurance Industry Awards of Sri Lanka 2016.
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Port City attracts high tech hospital

The government has been able to woo an international hospital chain to invest in a high tech hospital at the Port City, said State Minister of International Trade, Sujeewa Senasinghe.

In an interview with Daily News Business he said that this will encourage medical tourism to Sri Lanka. “In addition there will be several other state of the art facilities and numerous international projects in the Port City.”

The State Minister said that the construction of the facility will commence next month. “Before that we hope to bring proper legislature as there have been certain misconceptions regarding ownership of the land. “It is in the government’s interest to turn the area into a separate business entity where the operation would be slightly different to the previously signed agreement,”he said. Speaking about the Hambantota development projects the minister said they have managed to accomplish new terms of these project as well. “Some of them include offering on a 99 year lease basis with China which will erase some of the country’s debt to China,” he said.

Senasinghe said that this public private partnership would be a profitable venture as it would create a number of business opportunities. The minister said China will aid the development of the airport and Harbour which is closely located to each other.

The project will focus on developing two areas: gas refinery and cement. Senasinghe said this is a very successful project where the entire economy will be promoted and the project will attract multinational companies and thus improve the country’s economy.

He said China and India has been having a certain friction between them in terms of business. Both countries has shown interest in making Sri Lanka a mediator between the two country’s to aid in future business deals.

Meanwhile commenting on the long overdue Volkswagen assembly plant, he said it will be put in to action within the next six months. It was previously mentioned that a land in Kuliyapitiya has been successfully secured to facilitate the Volkswagen assembly plant in the country. The land will be handed over to M/S Senok Automobile Private Limited. The total investment value of this project is US $ 26.5 million. Volkswagen will assemble 1,000cc to 2,000cc category of vehicles which includes passenger cars, sport utility vehicles (SUV), multi utility vehicles (MUV) or commercial vehicles. These vehicles will be powered by diesel and marketed locally in the country for three years and will move towards exports as well.

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Sri Lanka records 4.8% annual real GDP growth in 2015

The Sri Lankan economy reached an annual real GDP growth of 4.8 percent in 2015, while the nominal GDP recorded a growth of 7 percent to Rs. 11,183 billion.

According to Statistics Department of the Central Bank of Sri Lanka (CBSL) based on the disaggregation of the rebased series of National Accounts estimates (2010 constant prices) by the Department of Census and Statistics (DCS) as in previous years, Western province provided the highest contribution to GDP in 2015.

However, in line with recent trends, its share in the GDP declined to 41.2 percent in 2015 from 41.7 percent in 2014, contributing gradually to reduce regional disparities. The North Western province which recorded the second highest contribution to GDP in 2014, maintained its position in 2015 while its share also declined to 10.9 percent in 2015 from 11.1 per cent in 2014. The third highest contribution recorded from the Southern province at 10.4 percent in 2015 while the Central province contribution remained unchanged at 10.3 per cent. The contribution of the Sabaragamuwa province increased to 7 percent in 2015 from 6.8 percent in 2014.

The Eastern, North Central and Northern provinces increased their GDP contributions while Uva province contribution marginally decreased in 2015.In line with improvements in country’s economic environment, all provinces recorded nominal growth rates ranging between 5.4 per cent to 12.1 per cent in 2015. The North Central and Northern provinces recorded the highest growth rate of 12.1 percent, in nominal terms in 2015. Further, in 2015, Eastern province recorded a double digit growth rate of 10.9 percent, while those of Sabaragamuwa and Central provinces were higher than the country’s nominal growth rate of 7 percent. The Western province recorded a nominal growth rate equivalent to 5.8 percent and a growth rate of 5.4 percent was observed in the Uva province in 2015.

The Agriculture sector accounted for 1.7 percent of the GDP in the Western province in 2015, whereas it accounted in the range of 9.0 to 16.3 per cent of the GDP in other provinces. The contribution of the Agriculture sector to the PGDP increased in Northern, North Western, North Central and Uva provinces in 2015, while the same decreased in all the other provinces.

The highest Industry sector contribution to PGDP was observed in the Western province while the lowest was recorded from the Northern Province in 2015. The Northern, Eastern, North Western and Uva provinces’ contribution to Industry sector decreased, while that of all other provinces increased in 2015. The Services sector was the most dominant sector in 2015 accounting in the range of 49.0 and 60.6 percent of the PGDP across the provinces.

The contribution from the Services sector increased in the Southern, Eastern, North Western and Uva while that of all other provinces decreased in 2015.

The per capita income of the Western province was 1.4 times the national per capita income in 2015. However, per capita income ratio in the Western province declined marginally over the period of 2014 to 2015.

In Northern and North Central provinces, the per capita income ratio increased while in other provinces, the per capita income ratio remained unchanged except in the Uva province.

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