Sri Lankan shares end weaker on profit-taking

Reuters: Sri Lankan stocks ended lower for a second session on Thursday, on profit-taking in mainly blue chip consumer shares.

The benchmark index of the Colombo Stock Exchange closed 0.19 percent down at 6,566.96. It hit a six-week high on Tuesday after gaining for six consecutive sessions.

"It is healthy profit-taking. There was not much trading volume because institutional investors are not there," said Prashan Fernando, CEO at Acuity Stockbrokers.

"Still, the sentiment is bullish."

Stockbrokers have said the market might see lower trading volumes as many investors await direction from the budget, scheduled on Nov. 10, and the government's long term economic policy announcement.

Turnover was 468.5 million rupees ($3.21 million), much below this year's daily average of around 757.3 million rupees.

Foreign investors bought a net 21.7 million rupees worth of shares on Thursday, but have sold a net 2.91 billion rupees worth of equities so far this year.

Shares in Nestle Lanka fell 4.6 percent, while Ceylon Cold Store ended 2.1 percent weaker.

($1 = 146.1500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Colombo Stock Exchange Market Review – 06th Oct 2016

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Colombo Stock Exchange Trade Summary 06-Oct-2016

Colombo equity market end the Thursday session on a mixed note with low investor activity. Benchmark index started the day in green but price depreciation in Nestle Lanka (LKR 2,100.10, -4.5%) with thin volumes impacted the index gains. All Share index closed the session at 6,566.96, with a drop of 12.82 index points or 0.19% while 20-scrip S&P SL index marginally improved by 2.55 index points or 0.07% to end at 3,646.13.

Along with Nestle, Sri Lanka Telecom (closed at LKR 38.20, -1.3%), Ceylon Cold Stores (closed at LKR 631.00, -2.1%) and Asian Hotels & Properties (closed at LKR 61.10, -3.0%) drove the index performance down. However, price gains in three conglomerates, John Keells Holdings (closed at LKR 157.00, +0.6%), Hemas Holdings (closed at LKR 107.50, +1.6%) and Aitken Spence (closed at LKR 72.90, +2.7%) eased the negative impact.

Daily market turnover was LKR 469mn. Hatton National Bank emerged as the top contributor with LKR 118mn underpinned by a single crossing of 0.4mn shares at LKR 226.50. John Keells Holdings was the second best contributor with LKR 90mn supported a negotiated deal (0.2mn shares at LKR 157.00). Aggregate value of crossings accounted for 26% of the turnover.

Commercial Credit & Finance (LKR 21mn), Chevron Lubricants (LKR 20mn) and Tokyo Cement non-voting (LKR 18mn) were among top contributors.

Losers outweighed the gainers 74 to 64, while 81 scripts remained unchanged. High investor activity was seen in Commercial Credit & Finance and the counter closed the day at LKR 67.80, with a loss of 0.7%. Galadari Hotels, John Keells Hotels and Hayleys Fibre were among heavily traded scripts.

Foreign investors stood on buy side with a net foreign inflow of LKR 22mn. Foreign participation was 40%. Net foreign inflows were seen in Chevron Lubricants (LKR 14mn), LB Finance (LKR 8mn), Hatton National Bank (LKR 6mn) while net foreign outflow was mainly seen in Commercial Bank (LKR 4mn).

Source: LSL

ICRA Lanka reaffirms the long, short term ratings of First Capital Holdings

ICRA Lanka Limited, subsidiary of ICRA Limited, a group company of Moody’s Investors Service, has reaffirmed the issuer rating of [SL]A- (pronounced SL A minus) with stable outlook for First Capital Holdings PLC (FCH or the company).

ICRA Lanka has also reaffirmed the issue rating of [SL]A- (pronounced SL A minus) with stable outlook for the LKR 500 Mn Senior unsecured redeemable debenture programme of the company.

ICRA Lanka has also reaffirmed the [SL]A2+ (pronounced SL A two plus) rating to the LKR 1,000 Mn commercial paper programme of FCH.

ICRA Lanka has taken a consolidated view of FCH and its subsidiaries due to their common brand and senior management team and, other operational and financial linkages between the group entities. The ratings factor in the FCH’s status as the holding company of First Capital Treasuries PLC (FCT), a standalone primary dealer in Sri Lanka with issuer rating of [SL]A- with stable outlook.

The ratings take note of the potential improvement in the business and financial performances of the other group entities, which are engaged in corporate debt structuring, corporate finance, asset management, stock broking, extending margin trading facilities and trustee services. ICRA Lanka however notes that FCH’s performance is largely dependent on performance of FCT, as the contribution from the other entities presently is quite modest.

FCT accounted for 74% of the total consolidated asset base of FCH as on March 31, 2016. Thus, FCH’s performance is expected to be susceptible to the risks inherent in the primary dealer business.

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DFCC Bank secures loan from Middle-East to fuel off-shore expansion plans

DFCC Bank has successfully raised funds in the Middle East on the strength of its credentials and sound track record established over a period of 61 years.

Witnessing growth across all its sectors, DFCC Bank has evolved into a technology-backed modern commercial bank that meets the aspirations of both its commercial and development clients. This loan will provide the right springboard for the dynamic bank to strengthen its offshore presence while tapping into new markets. The Bank has been an innovator in the industry and this infusion of capital will help to fuel its long term expansion plans.

A three-year US Dollar term loan facility has been secured by DFCC Bank from National Bank of Ras Al Khaimah (RAKBANK), of the United Arab Emirates (UAE). Alpen Capital (ME) Limited, an investment banking advisory firm, also UAE-based, acted as the sole financial advisor to the transaction.

DFCC Bank secured the loan for general expansion of its Offshore Banking Unit (FCBU) and the loan facility was signed in Dubai, UAE, recently. Attending the ceremony were Peter England, CEO - RAKBANK, Lakshman Silva, Deputy CEO - DFCC Bank, Rahul Oberoi, MD (Wholesale Banking) - RAKBANK and Kapila Nanayakkara, Senior Vice President (Treasury and Resource Mobilisation) - DFCC Bank, along with senior representatives from RAKBANK and Alpen Capital.

Lakshman Silva, Deputy Chief Executive Officer of DFCC Bank said, “DFCC is delighted to announce that it has successfully mobilised funding in the overseas market of the Middle East, by securing a significant US Dollar loan facility from RAKBANK.

We have strong aspirations to grow our offshore banking business and we believe these funds will provide the right leverage to power our growth plans and support our expansion strategy. Our ability to raise long-term funding on this scale from a reputed overseas financial institution reflects investor confidence in DFCC Bank's operations and in its future growth potential.

This long-term funding is also an encouraging sign for the local banking industry as a whole, as it reinforces faith in the industry prospects and in the trajectory of the national economy. This is our first foray into the Middle Eastern Market for medium to long term financing and I would like to take this opportunity to thank Alpen Capital for assisting us in diversifying our funding mix through their relationships with Middle Eastern banks.”

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Seylan Bank to raise Rs 8 bn

Seylan Bank has decided to go for Rs. 8 billion debenture issue with the bank hoping to have it quoted on the Main Board of the Colombo Stock Exchange.

The bank plans to issue 50 million debentures with an option to issue up to a further 30 million debentures at a par value of Rs. 100.

The proposed tenors of the issue are three years and four years from the date of allotment whilst the interest rate options/coupons will be decided by the Board prior to the opening of the issue. (IH)

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ADB buys 9.9% stake in HNB for US$ 50 mn

The Hatton National Bank’s Director Board has granted the Asian Development Bank (ADB) approval to purchase a substantial equity stake in the Bank by way of a fresh issue of shares.

Upon securing regulatory approval and shareholder consent at an Extraordinary General Meeting (EGM), the Bank will issue new ordinary voting shares worth US$ 50 mn, enabling ADB take up to 9.9% equity stake in the Bank with the valuation of each share being based on the 30 day average trading price immediately preceding the EGM but restricted to a price band between Rs. 190 to Rs.220.

HNB’s breakthrough partnership with the ADB is anticipated to open up new business opportunities across multiple areas including SME, Microfinance, project finance and renewable energy.

Fuelled by this fresh infusion of capital and guided by the ADB’s own extensive technical expertise, HNB aims to further strengthen its systems and processes.

HNB MD and CEO Jonathan Alles said the technical assistance that will be available through this strategic investment will power a complete transformation process within the organisation in order to further augment HNB’s position in the digital space.HNB will also be in a position to harness technical expertise to further refine its stringent risk management framework and drive continuous process improvement.

The ADB will also provide HNB with access to a wealth of knowledge on world class governance standards, corporate social responsibility and sustainable banking practices which HNB aims to integrate into its own business model, risk management framework and governance practices going forward.

Additionally, the capital infusion will support HNB, as it moves towards implementation of more stringent capital adequacy requirements stipulated under the BASEL III regulatory framework. The ADB’s investment in HNB will serve to provide a sizable capital buffer and position HNB as one of the best capitalized commercial banks in Sri Lanka.

This partnership with the ADB is also anticipated to significantly raise the profile of HNB on the global stage, potentially opening up new avenues for the bank to raise funding from international sources at attractive rates and long tenors; an area in which HNB has already demonstrated prolific success, most recently in relation to the raising of US$ 185 mn from multilateral financial institutions including US$ 100 mn from the ADB.

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