Sri Lankan stocks end steady; turnover moderate

Reuters: Sri Lankan shares ended steady on Thursday in moderate trading volume as local buying boosted by positive sentiment was offset by foreign outflows and selling for month-end settlement.

Sentiment has been positive after the authorities started to take some bold steps to counter a balance of payments and credit problem.

Sri Lanka's new government is drafting reforms aimed at simplifying taxes, widening the tax base and increasing compliance, Finance Minister Ravi Karunanayake said on Wednesday, two days after his ministry said the country's tax revenue in the first seven months jumped 23 percent to 769.8 billion rupees from a year earlier.

The benchmark Colombo stock index ended 0.02 percent up at 6,589.71, hovering around its highest close since May 20 hit on Tuesday.

"There was some profit-taking due to month-end settling though the market is still on positive sentiment," said Prashan Fernando, COO at Acuity Stockbrokers.

Foreign investors sold a net 78.4 million rupees worth of shares on Thursday, extending the outflow so far this year to 3.94 billion rupees worth of shares. They are, however, net buyers of 714.4 million rupees worth of equities so far this month.

Turnover stood at 624.5 million rupees ($4.30 million), below this year's daily average of around 750 million rupees.

Conglomerate John Keells Holdings Plc edged up 0.4 percent, while private lender Sampath Bank fell 0.6 percent. 

($1 = 145.1000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Sri Lanka corporate earnings growth slows to 6.0-pct in June quarter

ECONOMYNEXT - Sri Lanka's corporate earnings grew 6.6 percent from a year earlier in the June 2016 quarter to Rs50 billion, slowing from 15.9 percent in the March quarter, an equities research report said.

CAL Research, a Colombo-base equities research house, said trailing 12-month earnings grew 5.0 percent to Rs217 billion, compared to a 16.5 percent growth last year.

CAL compared the results of 265 companies for year-on-year data. March quarter data involved 269 firms and the difference was not material, an analyst said.

In 2015, Sri Lanka's economy got an artificial boost as the government deficit spent, hiking state salaries and pensions and the central bank released about Rs300 billion of liquidity and printed outright about another Rs200 billion to drive credit to unsustainable levels and trigger a balance of payments crisis.

This year, credit is expected to be driven by real deposits.

Banks, Finance and Insurance, the largest sector in the Colombo Stock Exchange, showed a 46 percent gain; Beverage, Food and Tobacco gained 15 percent; and Diversified Holdings grew 10 percent.

The biggest individual contributors were Hatton National Bank (6.8 percent), Commercial Bank (6.5 percent), Ceylon Tobacco (6.1 percent) and John Keells Holdings (4.8 percent).

Top growth was shown by Power and Energy (166 percent), and Land and Property (+82 percent). (Colombo/Aug24/2016)

Motor industry records growth due to increase in per capita GDP

The motor industry in Sri Lanka has recorded enormous growth during the post war period in the country, mainly due to the increasing per capita GDP, which resulted in increasing customer affluence and proportionate increase in the spending on transportation.

The robust growth is expected to prevail with overall growth in consumption, development of road infrastructure and poor state of public transportation resulting an increase in demand for passenger vehicles. Also with the expected growth in the construction sector the demand for commercial heavy vehicles are expected to grow.

Over the past five years the tyre industry in Sri Lanka has been growing substantially due to the rise seen in the number of automobiles owing to increase in income levels, low interest rates and the growing infrastructure levels in the country.

Therefore, SC Securities (Pvt) Ltd expects the growth in demand for tyres in to positively benefit the company in the forthcoming period as CEAT Sri Lanka, is the present market leader in the radial and commercial tyre segments in the country.

Sri Lankan tyre manufactures caters to 22 % of the global solid tyre demand, with many manufactures producing specialized tyres to serve the growing technical requirements of the industrial world. Solid rubber tyres are used in forklifts and land mowers and industrial vehicles such as heavy trucks and trailers. Unlike pneumatic tyres, solid tyres are not filled with air and can endure high pressure and weight and are more durable to wear and tear.

At present, CEAT Sri Lanka manufactures half of the countries requirements with a 17 % share in the motorcycle segment in Sri Lanka, 30 % in the radial segment, 51 % in the truck/light segment, 54 % in the three wheel segment and 72 % agriculture tyre segment. Further, the company has a monthly tyre production volume of over 1,450 MT.

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Browns Beach Hotels to raise Rs 1.4 bn

Browns Beach Hotels is to raise Rs. 1.4 billion via a rights issue, the company said in a stock exchange.

The company will issue 54 million new ordinary shares at Rs 25.85 each subject to necessary approvals at an Extraordinary General Meeting of the Company.

The objective of this rights issue would be to re invest it to minimise the existing debt of the company and also to re build the hotel. The new hotel construction work was done under, Negombo Beach Resort (Pvt) Ltd, a fully owned subsidiary of Browns Beach Hotels PLC.

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Distilleries Corp. to be suspended

Shares of Distilleries Corporation of Sri Lanka will be suspended and owners as of September 30 will get four shares of Melstacorp in return, company said in a stock exchange filing.

The trading in shares will be suspended starting from October until the public float in DCSL is restored. Distilleries will then become a 100% owned unit of Meltacorp.

Directors of DCSL recently decided to make Melstacorp limited the ultimate holding company of the group and to obtain a listing from the CSE subject to necessary approvals.

The decision is subject to the special resolution being passed by the shareholders at the EGM convened for 6 September and the Court sanctioning the arrangement on the 7 September being the date fixed for the next hearing.
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Four hotels to be divested: Water’s Edge, Hilton, Grand Hyatt, GOH up for sale

The government will soon offer investment opportunities in Colombo Hilton, Grand Hyatt, Water’s Edge and the Grand Oriental Hotel that will be divested in the private sector, Tourism, Lands and Christian Religious Affairs Minister John Amaratunga said.

Speaking at the Indian Ocean Hospitality Investment Conference at the Colombo Hilton yesterday he said the finalization of the Megalopolis Plan and the new financial city will make Colombo the trading and commercial hub of the Indian Ocean between Dubai on the west and Singapore in the east.

“In addition there is substantial state investment in infrastructure development in identified tourist resorts based on a new master plan being formulated by the Sri Lanka Tourism Development Authority.We are investing on developing domestic air connectivity to get over the road traffic congestion issue. New airports will be opened close to Kalpitiya and Badulla.Another one was recently opened in Batticaloa.”

“With absolute peace in all parts of the country and a stable government that has given priority to the development of the economy, it is the right time to invest in Sri Lanka,” Amaratunge said.

“What is truly encouraging is that tourist arrivals to Sri Lanka hit an all-time high last month. The number of arrivals which reached 209,351, represented a growth of 19.1 percent compared to July last year and is the highest number recorded in a single month since records began in the sixties. The July arrivals figure is higher than even the figure recorded last December which is traditionally Sri Lanka’s highest grossing month. Last December too was a record with 206,114 arrivals but the July performance had eclipsed this mark.

“This will require doubling of our current capacity. Already some of the world’s top hotel brands have begun construction of hotels here. Some of them are Ritz Carlton, Marriot, Grand Hyatt, Shangri-La, Sheraton and ITC.

“With the increasing arrival targets, new hotels and thousands of new rooms we are also aware of the massive manpower requirement and steps are already underway to address this issue. According to estimates over 20,000 new jobs will be added to the hospitality sector each year over the next four years raising the number directly employed in the hospitality trade from 140,000 at present to 240,000 by 2020.”

“We are also very keen to develop the MICE segment in addition to medical, health and wellness tourism, adventure and sports tourism, and especially event based tourism. While our focus will be on attracting the high spending upmarket segment we want Sri Lanka to continue to be a destination for people from all walks of life. We have no problem with the budget travelers and backpackers, and we welcome the hostels and other establishments that are opening up to cater to these segments.”

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Lanka Ventures to raise Rs 900 mn in IPO

Lanka Ventures Chairman Jonathan Alles in company’s annual report 2015/2016 said the company is making efforts to list its subsidiary LVL Energy Fund during the current financial year.

This will be at the Colombo Stock Exchange by way of an initial public offer (IPO) aiming to raise Rs. 900 million. Following the IPO, LEF will have funds in excess of Rs. 1 billion to invest in projects in the energy sector locally and overseas. Meanwhile,in June 2016, LEF raised Rs. 336 million through rights issue of shares issued on the basis of 1 for 10 at an issue price of Rs. 8.00 per share.

The company invested Rs.255 million towards the rights issue and maintained its subsidiary status with 71.8% equity stake in LEF.

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