Sri Lankan shares end slightly lower ahead of budget

Reuters: Sri Lankan shares ended marginally lower on Tuesday, down from a more than two-week closing high hit in the previous session, as investors turned cautious ahead of the national budget scheduled on Nov. 10.

Sri Lanka's 2017 budget plan will seek to boost revenue through a capital gain tax on properties, simplify tax collection and offer incentives to spur exports, though progress will depend on the coalition government agreeing on economic priorities, analysts say.

The benchmark index of the Colombo Stock Exchange ended 0.09 percent weaker, or down 5.91 points, at 6,439.06, slipping from its highest close since Oct. 21 hit on Monday.

Turnover stood at 161.7 million rupees ($1.10 million), less than a quarter of this year's daily average of 715.7 million.

Foreign investors bought beaten down stocks for a fifth straight session, picking up shares worth a net 12.3 million rupees. They have net sold 1.01 billion rupees worth of shares so far this year.

"It was a very lethargic day. Investors are waiting for the upcoming budget," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

Shares in the biggest listed lender, Commercial Bank of Ceylon Plc, fell 0.86 percent, while Dialog Axiata Plc lost 1.74 percent.

Conglomerate John Keells Holdings Plc fell 0.59 percent. 

($1 = 147.6000 Sri Lankan rupees) 

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

Sri Lanka's Overseas Realty records Rs. 2.28B Q3 Profit

Overseas Realty (Ceylon) PLC recorded a group Profit after tax of Rs. 2,2 billion for the nine months ended September 30, 2016.

The Company recorded a revenue of Rs. 1,395 million from Property Leasing at the World Trade Center (WTC) Colombo and expects to maintain good occupancy levels during 2016. Revenue from Other Services was Rs 150 million which is an increase of 21% over the corresponding period of 2015. However, the revenue from apartment sales reduced from Rs. 805 million to Rs. 284 million due to the inability to recognize revenue of Havelock City Phase 3 sales during this period.

Phase 3 was launched in March 2016 and as at the quarter end around 28% of the Phase 3 units had been pre-sold. While construction of Havelock City Phase 3 is currently underway, pilling work for Phase 4 is scheduled to be completed by April 2017.

The Group Net Asset Value per Share as at September 30, 2016 stood at Rs. 33.20 and the earnings per share for the period stood at Rs. 2.48.

www.sundaytimes.lk

Sri Lanka's Seylan’s growth momentum continues

Seylan Bank continued its growth momentum by recording a profit-after-tax of Rs. 2,828 million, for the 9 months ended 30th September 2016. This is a 3.6 per cent increase over the Rs. 2,730 million reported for the corresponding period of 2015 and has been achieved despite rising interest rates.

Interest income grew by 33.7 per cent driven by the sustained credit growth achieved by the Bank. Interest expenses increased at a faster pace of 59.5 per cent during the year, thereby compressing margins.

Despite the drop in margins, the bank posted a 7.9 per cent growth in Net Interest income from Rs. 8,850 million to Rs. 9,552 million for the 9 months ended 30th September 2016 as a result of the strong balance sheet growth.

Net fee and commission income witnessed a 17.8 per cent robust growth from Rs. 1,869 million to Rs. 2,202 million during Q-3 2016 driven by fees from card acquisitions, trade finance and related fees.

Other operating income comprising net gains from trading, gains on financial instruments, gains on foreign exchange and other income decreased by 8.78 per cent from Rs. 1,230 million reported in 2015 to 1,122 million during Q-3 2016 mainly as a result of mark- to-market losses on Government Securities, due to the upward movement in interest rates.

Total expenses recorded a growth of 9.7 per cent from Rs. 6,515 million to Rs. 7,146 million in nine months ended 2016.

The bank reported a significant net credit growth of 15.01 per cent, with net advances growing from Rs. 193,104 million to Rs.222,083 million during Q-3 2016. The NPA ratio increased marginally to 5.12 per cent but is expected to improve by year end with strong remedial measures being implemented.

The bank’s CASA ratio (current and savings accounts) stood at 33.65 per cent amidst the industry-wide shift witnessed towards higher yielding Fixed Deposits in the backdrop of increasing interest rates.

Fixed deposits increased from 61.98 per cent by end of year 2015 to 64.64 per cent Q-3 2016 of the total deposit base. The overall deposit base recorded a growth of 11.65 per cent from Rs. 224,525 million by end of 2015 to Rs. 250,691 million in Q-3 2016.

www.sundaytimes.lk

Sri Lanka's Union Bank profits surge

Union Bank of Colombo PLC (Union) reported a post-tax profit for the 9-months ended September 2016 of Rs.262 million, a 125 per cent increase year on year (YoY).

The total operating income of the bank grew by 30 per cent YoY to Rs.2,685 million. Interest income grew by 66 per cent YoY to Rs.4,951 million .

Interest expense grew by 128 per cent YoY to Rs.3,301 million. Net Interest Income grew by 7 per cent YoY to Rs.1,651 million. The bank’s fee and commission income of Rs.239 million is an increase of 57 per cent over the comparative period with fee income from business lending, cards and trade transactions being the primary contributors of the said impressive growth.

Other income grew significantly by 104 per cent to Rs.846 million.

Net NPL ratio improved to 1.9 per cent from 2.7 per cent in December 2015 with a corresponding reduction in impairment charges from the comparative period.

Total Impairment charge for the period is Rs.38 million and reflected a 72 per cent reduction YoY. The bank’s total operating expenses increased by 31 per cent to Rs.2,226 million primarily due to investment spending on new branches, ATMs, staff and technology in line with the strategic plan.

The bank remains well capitalised with a strong core capital adequacy ratio of 23 per cent and a total capital adequacy ratio of 22 per cent.

Source: www.sundaytimes.lk

Colombo Stock Exchange Market Review – 07th Nov 2016

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Colombo Stock Exchange Trade Summary 07-Nov-2016

Colombo bourse edged up at the start of the budget week with moderate investor activity. All Share index touched 6,458 mark in the morning hours but closed at 6,444.97, with a gain of 9.80 index points or 0.15%. 20-scrip S&P SL index bagged 11.35 index points or 0.31% to end at 3,619.90.

High caps in consumer staples sector namely, Ceylon Cold Stores (closed at LKR 705.20, +6.1%) and Nestle Lanka (closed at LKR 2,099.50, +2.4%) pushed the index higher. However losses in Sri Lanka Telecom (closed at LKR 35.80, -2.2%) and Ceylon Tobacco (closed at LKR 845.50, -0.5%) impacted the index gains.

Daily market turnover was LKR 406mn. John Keells Holdings top the turnover list with LKR 265mn underpinned by two crossings amounting to 0.82mn shares at LKR 152.00. High investor activity was witnessed in the stock and the counter accounted for 65% of the total turnover. Investor preference was supported by positive earnings for the 2nd quarter.

Sampath Bank (LKR 16mn), Dialog Axiata (LKR 10mn) and Commercial Credit & Finance (LKR 10mn) were among top contributors to the turnover.

Market breadth was equally divided where 63 slipped, 60 advanced while 75 remained unchanged. Commercial Credit & Finance, Ceylon Cold Stores and DFCC Bank were among most traded counters.

Meanwhile, Keells Food Products advanced to LKR 163.00 (+2.4%) backed by interim dividend of LKR 5.75 per share. Further, Aitken Spence second quarter profits increased by 50%YoY but the positive sentiment was not reflected in the share price as the counter closed with a slight increase of 0.1% to LKR 69.90.

Foreign investors continued to remain on buy side for the fourth consecutive session with a net foreign inflow of LKR 189mn. Net foreign inflows were seen John Keells Holdings (LKR 178mn), Dialog Axiata (LKR 8mn) and Commercial Bank (LKR 3mn). Net foreign outflow was mainly seen in Ceylon Cold Stores (LKR 3mn).
Source: LSL

Sri Lanka Ceylon Cold Stores Sept net up 49-pct

ECONOMYNEXT – Ceylon Cold Stores, a unit of Sri Lanka's John Keells Holdings, which owns the Elephant House beverage and ice cream brands, said September 2016 quarter net profit rose 49% to just over a billion rupees from a year ago.

Sales grew 33% to Rs10.9 billion during the quarter, interim accounts filed with the stock exchange showed.

Net finance income more than doubled to Rs59 million.

Earnings per share of Ceylon Cold Stores rose to Rs11.05 in the September 2016 quarter from Rs7.43 a year ago.

The bulk of the profits came from the firm’s manufacturing sector although profits from the retail segment, which generates the bulk of sales, grew at a faster pace.

In May this year, Ceylon Cold Stores announced it started a Rs3billion factory to expand capacity.

Sri Lanka October tea prices reach record levels

(LBO) – Sri Lankan tea prices at the Colombo auctions were at an new monthly high in October 2016 as volumes fell but demand picked up.

“Auction averages reached record levels in the backdrop of a sharp decline in availability,” Forbes & Walker Tea brokers said in their October report.

“Auction average for the month of October totaled Rs.550.92 vis-à-vis Rs.390.13 of October 2015 showing a substantial gain of Rs.160.79 thus establishing the highest ever average for a calendar month.”


Full statement is below

Highest ever monthly average – Up Rs.160.79 YOY
Monthly averages of all three elevations achieve record levels

Auction average for the month of October totalled Rs.550.92 vis-à-vis Rs.390.13 of October 2015 showing a substantial gain of Rs.160.79 thus establishing the highest ever average for a calendar month. It is also relevant to note that this is the second consecutive month where this feat was achieved the previous best being September 2016 when the average realized Rs.512.03.It is also commendable that all three elevations too have recorded the highest averages for a calendar month .

High Growns totalling Rs.523.88 have shown a gain of Rs.117.02 vis-à-vis Rs.406.86 of October 2015.Similarly Mediums averaging Rs.487.34 have shown a gain of Rs.131.69 vis-à-vis Rs.355.65 of October 2015. Low Growns with a substantial gain of Rs.179.95 have recorded an average of Rs.572.15 for October 2016 vis-à-vis Rs.392.20 of October 2015.These levels are significantly higher than the corresponding month of 2015 even in USD terms. Further these levels show a fairly significant gain over 2014 levels in LKS/USD terms.

January – October 2016 cumulative auction average totalled Rs.450.84 vis-à-vis Rs.400.04 of January – October 2015 showing a gain of Rs.50.80. High Growns totalling Rs.433.37 have shown a gain of Rs.47.69 vis-à-vis Rs.385.68 of January-October 2015 whilst Medium Growns totalling Rs.406.73 show a gain of Rs.45.18 vis-à-vis Rs.361.55 of January-October 2015. Similarly Low Growns totalling Rs.467.76 for the period of January-October 2016 show a gain of Rs.53.49 Vis-à-vis Rs.414.27 of January-October 2015. Here again these averages show a growth in USD terms although not as significant as the gain achieved for the month. It is also relevant that with the exception of the High Grown average, all other elevational averages have been lower when compared to 2014 cumulative averages.

Fitch rates LB Finance senior and subordinated debt

Fitch Ratings has assigned LB Finance PLC’s (LB; A-(lka)/Stable) proposed senior unsecured and subordinated debentures expected National Long-Term Ratings of ‘A-(lka)(EXP)’ and ‘BBB+(lka)(EXP)’ respectively.

The issuance is to total LKR5bn, with the debentures to mature in five years and carry fixed coupons. The debentures are to be listed on the Colombo Stock Exchange. LB expects to use the proceeds to reduce asset and liability maturity mismatches and to improve its Tier II capital base.

The final ratings are subject to the receipt of final documentation conforming to information already received.

KEY RATING DRIVERS

The proposed senior debentures are rated at the same level as LB’s National Long-Term Rating as they constitute unsecured and unsubordinated obligations of the company. The proposed subordinated debentures are rated one notch below its National Long-Term Rating to reflect the subordination to its senior unsecured obligations.

The rating of LB captures its established franchise, satisfactory levels of capital supported by sound profitability through its higher-yielding products. These are counterbalanced by its relatively higher risk appetite as seen from its exposure to gold-backed lending.

RATING SENSITIVITIES

The ratings on the proposed debentures will move in tandem with LB’s National Long-Term Rating.

A full list of LB’s ratings follows:

National Long-Term Rating: ‘A-(lka)’; Stable Outlook

Sri Lanka rupee-denominated subordinated debentures: ‘BBB+(lka)’

Proposed Sri Lanka rupee-denominated senior unsecured debentures: ‘A-(lka)(EXP)’

Proposed subordinated debentures: ‘BBB+(lka)(EXP)’

Sri Lanka’s Aitken Spence second quarter profits up 50-pct

(LBO) – Aitken Spence PLC posted 540 million rupees as profits attributable to equity holders of the company in the second quarter, an increase of 50 percent year-on-year.

Pre-tax profits rose by 26 percent to 973 million rupees while revenue rose by 70 percent to 9.8 billion rupees, in the second quarter from last year.

Earnings per share for the quarter was 1.33 rupees, an increase of 50 percent over the corresponding period.

“Increase in revenue during the quarter from the tourism sector was mainly driven by new additions, Al Falaj hotel (Oman), Turyaa Chennai (India) and the new wing of Turyaa Kalutara,” the company said in a statement.

“Resumption of operations at the Company’s thermal power plant contributed to the increase in revenue from the Strategic Investments sector, while the new segments in the freight and port management activities contributed to the increase in the Maritime & Logistics sector revenue.”

Aitken Spence PLC is among Sri Lanka’s most dynamic conglomerates with operations in South Asia, the Middle East, Africa and the South Pacific.

Listed in the CSE since 1983, it has interests in hotels, travel, maritime services, logistic solutions and power generation. The group also has a significant presence in plantations, printing, garments, financial services, insurance and information technology.

The diversified Group’s six months results reflected profits attributable to equity holders of the company at 789 million rupees and pre-tax profits at 1.45 bn. Six-month revenue increased by 50 percent to 17.38 billion rupees, while earnings per share for the same period stood at 1.94 rupees.

Operations of the Group’s thermal power plant recommenced in April this year following a lapse of one year, now contributing to a more stable national power generation effort, the group said.

“The Group has made substantial investments over the years to establish a portfolio of thermal, wind, hydro and especially renewable energy production, and expects growth in this area of engagement both in the local and foreign markets.”

“The interest in renewable energy has been worked into the Group’s sustainability initiatives and continues to be a key priority in the envisioned future of the Group involvement in the power sector.”

The tourism sector whose lion share is represented by the Group’s chain of resorts spread across four countries faced a challenging quarter. The interest and start-up costs of new hotel projects in Sri Lanka and overseas affected the bottom line of the sector.

Closure of a multitude of rooms in a few resorts in the Maldives for refurbishment coupled with lower demand from key source markets negatively affected the returns from the Maldives leisure segment. However, the Company is confident that the Maldives tourism sector would pick up in the short to medium term, the group said.

Sri Lanka October tourist arrivals up 14-pct

ECONOMYNEXT – The number of tourists visiting Sri Lanka rose 13.7% in October 2016 from a year ago with strong gains seen from traditional markets like Germany and new markets India and China maintaining their double-digit growth momentum.

Sri Lanka received 150,419 visitors in October and tourist arrivals in the first 10 months of the year have risen 14.6% to over 1.4 million from the year before, the tourist office said.

India remained the main market in October 2016 with the number of arrivals from there rising 19.3% to 36,471 while China was not far behind, with numbers up 19.8% to 20,566 from a year ago.

The number of tourists from Germany rose 26.5% to 12,246 while the numbers from the United Kingdom, the other traditional big market, were up 10% to 10,964.

Sri Lanka's Sampath Bank net up 37-pct in Sept

ECONOMYNEXT - Profits at Sri Lanka's Sampath Bank Plc, rose 37 percent to 2.59 billion rupees from a year earlier, helped by higher interest and fee income, interim accounts showed.

The bank reported earnings of 14.65 rupees per share for the quarter. For the nine months to September the bank reported 39.21 rupees per share, on total profits of 6.9 billion rupees, up 36 percent.

Interest income rose 54 percent to 15.77 billion rupees and interest expenses rose 76 percent to 9.5 billion rupees, but the bank grew 29.4 percent 6.2 billion rupees.

Fee income rose 22 percent to 1.74 billion rupees.

Sri Lanka’s Access Engineering Sept quarter net up 5-pct

ECONOMYNEXT - Sri Lanka’s Access Engineering PLC said September 2016 quarter group net profit rose 5% to Rs719 million from a year ago, largely driven by its core construction business.

Sales rose 14.8% to Rs5.3 billion over the period, according to interim accounts filed with the Colombo stock exchange.

Access Engineering’s earnings per share for the September quarter rose to 72 cents from 68 cents the year before.

For the six months ending 30 September 2016, EPS fell to Rs1.24 from Rs1.28 the previous year with net profit down three percent to Rs1.2 billion and sales up marginally to almost Rs10 billion.

The group reported higher income tax costs in both the quarterly and six month periods.

September quarter profit growth came largely from Access Engineering’s construction business which has picked up with the government rviving projects initiated by the former regime that were put on hold pending cost evaluations.

But profit from its Sathosa Motors subsidiary fell despite an increase in sales.

Sri Lanka JKH to invest Rs5.7bn in new ice cream, bottling plants

ECONOMYNEXT – Sri Lanka’s John Keells Holdings will invest Rs5.7 billion to set up new ice cream and beverage bottling plants to expand its frozen confectionery and beverage businesses which are seeing double digit sales growth and improved margins.

The conglomerate has just reported 8% group net profit growth to Rs3.8 billion in the September 2016 quarter from a year ago, with big gains from its consumer foods, retail and leisure businesses while transportation earnings fell.

Group sales rose 13% to Rs25.76 billion for the quarter, according to interim results filed with the stock exchange.

“Profitability of the Frozen Confectionery and Beverage businesses were driven by double digit growth in volumes and improved margins,” JKH chairman Susantha Ratnayake said in a note accompanying the results.

“In order to cater to the envisaged demand and address existing capacity constraints, investments in both a new ice cream plant and bottling line at a cost of Rs.3.20 billion and Rs.2.50 billion respectively are due to commence shortly.”

Ratnayake said the Retail sector continued its strong performance with steady growth in average basket values and customer footfall contributing positively towards a year-on-year growth in same store sales coupled with a notable incremental contribution from the newly opened outlets.

Nine new outlets have been opened during the period under review and a further eleven outlets are due to be opened during the remainder of the financial year, he said.

JKH group’s Consumer Foods and Retail industry business reported a 55% increase in pre-tax profit to Rs.1.60 billion in the second quarter of 2016/17 over the previous year.

Sri Lanka JKH September quarter net up 8-pct

ECONOMYNEXT – Sri Lanka’s John Keells Holdings conglomerate said September quarter group net profit rose 8% to Rs3.8 billion from a year ago, with sharp gains from its consumer foods, retail and leisure businesses while transportation earnings fell.

Group sales rose 13% to Rs25.76 billion for the quarter, according to interim results filed with the stock exchange.

JKH chairman Susantha Ratnayake said transportation industry group Profit Before Tax of Rs.668 million in the second quarter of 2016/17 is a decrease of 18 per cent over the second quarter of the previous financial year.

“The decline in profitability is mainly attributable to the lower contribution from the Group’s Bunkering business and to a lesser extent the Ports business.

“Whilst South Asia Gateway Terminals (SAGT) recorded a double digit growth in throughput over the corresponding period of the previous year, a decline in the volume of domestic TEUs impacted profitability.”

The Bunkering profitability was impacted due to supply disruptions caused by shipping delays but the Logistics business recorded a strong performance due to an increase in throughput in its warehouse facilities.

Ratnayake said the Leisure industry group PBT rose 54 percent toRs.1.36 billion in the second quarter of 2016/17.

The City Hotels sector and Sri Lanka Resorts segment witnessed an increase in occupancy and average room rates across all properties compared to the corresponding period of the previous financial year.

The performance of the Maldivian Resorts segment was impacted by the slower than expected recovery of the overall market from the effects of political events in late 2015, he said.

JKH’s Consumer Foods and Retail industry group PBT rose 55 percent to Rs.1.60 billion in the second quarter of 2016/17 with both sectors contributing to the improved performance.

“Profitability of the Frozen Confectionery and Beverage businesses were driven by double digit growth in volumes and improved margins,” Ratnayake said.

Sri Lanka Hemas net up 33.4-pct, braced for VAT, price controls

ECONOMYNEXT - Sri Lanka's Hemas Holdings Plc said profits rose 33.4 percent to Rs847 million in the September 2016 quarter from a year earlier, warning of tough times ahead with value-added tax hikes and price controls.

The group, which has interests in consumer products, pharmaceuticals and leisure, reported earnings of Rs1.48 per share for the quarter.

For the six months to September 2016, the group reported earnings of Rs2.70 a share on total profits of Rs1.53 billion, which was up 47 percent.

The group said consumer businesses volumes grew 13 percent for the six months, with operating profits growing 45 percent to Rs1.2 billion, heled by personal care and personal wash products.

Gross margins were better with low commodity prices. Sales in Bangladesh were also growing, the group said.

Healthcare revenue grew 17 percent to Rs9.2 billion. Leisure grew 8.4 percent to Rs1.8 billion.

However, the firm warned that a closure of Sri Lanka's main airport in Katunayake for runway repairs, price controls on pharmaceuticals, a broad hike in value-added tax and its imposition on healthcare will be challenging, the firm said.

Sri Lanka’s Haycarb Sept quarter net profit up 20-pct

ECONOMYNEXT – Sri Lankan coconut shell-based activated carbon manufacturer Haycarb said net profit for the September 2016 quarter rose 20 percent to Rs147 million from a year ago.

Group sales went up 16 percent to Rs3 billion over the same period, according to interim accounts filed with the stock exchange.

The firm, part of Hayleys Group, reported earnings per share of Rs4.94 for the latest quarter, compared with Rs4.12 the year before.

In the six months ending 30 September 2016, Haycarb’s earnings per share were Rs9.99, with net profit up 7 percent to Rs375 million from the previous year.

Haycarb Managing Director Rajitha Kariyawasan said the company’s initiatives to strengthen raw material supply chain networks in Sri Lanka and Thailand have made progress.

But the raw material supply chain in Indonesia faced setbacks due to adverse weather conditions and increased exports of charcoal.

“While depressed conditions in the gold mining sector continue to impact profitability, the raw material situation in Indonesia will be an additional challenge the company will have to contend with in the short term,” he said in a statement.

“On a positive note,” he added, “successes in marketing and new product development initiatives resulting in the acquisition of new customer accounts and product segments increased the market reach of the company, which is reflected in the improved top and bottom line.

“This was complemented by lean initiatives that streamlined processes which brought in cost efficiencies and productivity improvements.”

Sri Lanka's DFCC September net up 78-pct

ECONOMYNEXT - Profits at Sri Lanka's DFCC Bank group rose 78 percent to 953 million rupees in the September 2016 quarter from a year earlier, driven by strong net interest income, interim accounts showed.

The group reported earnings of 3.6 rupees per share for the quarter. For the nine months ending September 2016, the group reported earnings of 10.02 rupee per share, on total earnings of 2.6 billion rupees, which was up 32 percent.

Interest income rose 47 percent to 6.3 billion rupees and net interest expenses rose at a faster 54 percent to 3.9 billion rupees, but the group also grew net interest income 35 percent 2.4 billion rupees.

Customer loans grew 8.4 percent to 173 billion rupees in the nine months to September. Loan loss provisions fell 6 percent to 253 million rupees.

Fee and commission income rose 17 percent to 350 million rupees.

Sri Lanka’s Dipped Products Sept quarter net up 21-pct

ECONOMYNEXT – Sri Lanka’s Dipped Products said September 2016 group net profit rose 21% to Rs27 million from a year ago with the gains coming from gloves exports as plantations continued to lose money.

Sales of the group, which makes industrial, general purpose and medical rubber gloves, and manages tea and rubber plantations, sales rose 15% to Rs6.1 billion in the quarter from last year, according to interim accounts filed with the stock exchange.

Other income almost halved to Rs21 million and finance income fell 77% to Rs12 million in the September quarter, the accounts showed.

Dipped Products, a Hayeys group unit, reported earnings per share of 46 cents for the quarter against 38 cents a year ago.

For the six months ending 30 September 2016 the group suffered a loss per share of 30 cents compared with Rs2.57 earnings the year before.

The accounts showed profits from gloves manufacturing and exports improved while plantations losses rose sharply.

Group sales for the first half of the financial year rose 5% to Rs11.5 billion from the same period of the previous year.

“The Hand Protection sector reported a profit before tax of Rs398 million compared to Rs344 million in the previous period,” a company statement said.

“However, the Plantation sector recorded a loss of nearly Rs400 million due to lower crop, mainly arising from adverse weather conditions and the ban on weedicides, which was further impacted by lower prices during the period.”

Sri Lanka's Sierra Cables to set up Fiji factory

ECONOMYNEXT - Sri Lanka's Sierra Cables Plc said it will set up a joint venture power cable factory in Fiji, with three other partners, where the firm will own a 30 percent stake.

The investment will be 4.0 million Fijian dollars (285 million rupees), the firm said in a stock exchange filing.

Vinod Patel and Company Ltd, a 50-year old company which deals in hardware, retail and export is one of the joint venture partners.

RC Manubhai & Company Ltd, the second partner is a hardware company with outlets in Ba, Suva, Tavua, Rakiraki, Valelevu, Labasa and Lutoka.

Progress Investments (Fiji) Ltd, an investment company set up in 2015 will be the other partner.

Sri Lanka’s Asian Hotels & Properties Sept quarter net up 45-pct

ECONOMYNEXT – Sri Lanka’s Asian Hotels & Properties said group net profit for the September 2016 quarter rose 45 percent to Rs546 million from a year ago.

Sales of the company, which operates the Cinnamon Grand Hotel and the Cinnamon Lakeside Hotel in Colombo, rose 25 percent to Rs2.4 billion over the same period.

Interim accounts filed with the stock exchange showed a 46 percent increase in tax costs to Rs67 million. September 2016 quarter earnings per share were Rs1.23.

The bulk of profits came from the group’s two five-star city hotels in Colombo under the Cinnamon brand. It also operates a property segment concentrating primarily on rental income derived from Crescat Boulevard shopping mall adjoining the Cinnamond Grand hotel.

EPS for the six months to September 2016 were Rs2, with net profit up 30 percent to Rs884 million on 20 percent growth in sales to Rs4.3 billion.

Sri Lanka’s Piramal Glass makes Rs37mn loss in Sept quarter

ECONOMYNEXT – Sri Lanka’s Piramal Glass Ceylon reported a net loss of Rs37 million in the September 2016 quarter compared with a net profit of Rs140 million a year ago as it was affected by a production stoppage to upgrade its furnace.

Sales fell marginally to Rs1.4 billion from Rs1.5 billion during the period, according to interim accounts filed with the stock exchange.

The company, a unit of India’s Piramal Glass Ltd., reported a loss per share of 04 cents in the quarter against earnings of 15 cents a year ago.

For the six months ending September 2016, the firm’s net profit fell to Rs73 million from Rs287 million a year ago.

A statement said the company had to supply the market while its factory was non-operational for a period of 2 months for the upgrade and capacity enhancement.

“During this period the market was supplied with bottles from the limited stock company had built and balance through trading,” it said. “Almost 50% of the sale was sourced from imports. Bottles were mainly imported from the parent company, Piramal Glass, India.

“Trading of bottles is not at all a profitable venture due to cost differential of bottles in India and other parts of the world and the huge transportation cost,” the company said.

But it said the management made a conscious decision to import “even at break-even price” to ensure customers of continuous deliveries, ensuring uninterrupted supplies.

“Nevertheless this decision has impacted the profitability margins during the 1st half of the year as against the previous year,” the company said.

Sri Lanka’s Trans Asia Hotels Sept net Rs168mn

ECONMYNEXT – Sri Lanka’s Trans Asia Hotels, which operates the 5-star Cinnamon Lakeside Hotel, said September 2016 quarter net profit was Rs168 million compared with a loss of Rs38 million a year ago.

Sales of the firm, owned by John Keells Holdings group, rose 66% to Rs846 million over the period, interim accounts filed with the stock exchange showed.

Net profit for the six months to September 2016 was Rs259 million against a loss of Rs70 million the year before.

For the six months Trans Asia Hotels declared earnings per share of Rs1.29 compared with a loss per share of Rs0.35 the year before.

Trans Asia Hotels also derives rental income from the investment property adjoining the hotel.

Cinnamon Lakeside was partly closed more than half the year last year for refurbishment, with a dedicated floor for Chinese tourists being built and the firm employing Mandarin speaking guest relations officers.

It has started targeting tourists from India and China, the two biggest markets, helping push up occupancy.

Sri Lanka’s bumbling bureaucrats block paperless trade, deter investors

ECONOMYNEXT – Sri Lankan businesses alarmed over weakening export competitiveness are praying for prime ministerial intervention to prod lethargic bureaucrats into implementing a law passed 10 years ago to accept electronic signatures.

Delays in accepting electronic signatures by government agencies owing to bureaucratic inefficiency is preventing use of e-commerce and eroding Sri Lanka’s competitiveness, raising costs for businesses and citizens alike, a study by Verité Research, a think-tank, said.

“This is a cost for every single citizens in the country – their cost of living, their wealth and well being are affected because we are administratively inefficient,” said Nishan de Mel, Executive Director of Verité Research.

“For 20 years businesses have been trying to get electronic documentation through Customs,” he told a news conference. “Why is Sri Lanka taking 76 hours to process trade documents when Singapore an do it in four hours?”

De Mel said how fast documents can move is critical for the island to achieve its ambition of being a logistics and transhipment hub for the region.

Subashini Abeysinghe, Head of Economics at Verite Research, said the delay in accepting electronic signatures by government agencies is a “problem of attitude” since the law was already in place.

“People don’t want to get this done,” she said. “Some have vested interests, shifting to electronic commerce means they will lose the perks and privileges in the manual system – there’s a lot of corruption, bribery, money exchanged to get your trade done.”

Bureaucratic lethargy is also costing the country foreign direct investment since big multinationals like Toyota and Samsung would only set up manufacturing plants in countries where it is easy to do business.

“We have failed to attract export-oriented FDI. These companies come only if they know we have very efficient trading platforms,” Abeysinghe said.

“Paperless trade can enhance our export competitiveness. We are fast losing our comparative advantage – labour cost and availability. We are finding it very difficult to compete in international markets. This (paperless trade) can help reduce costs and save time.

“We have a fabulous location and want to be the next logistics hub. How can we be competitive in logistics if cross-border transactions take more time than in Dubai and Singapore? We are far behind even India and Pakistan.”

Government officials were still insisting on a duplicate manual process of documents signed by hand although the law, the Electronic Transactions Act, No 19 of 2006, supersedes existing laws, enabling government agencies to draft their own guidelines on acceting electronic signatures.

Dinesh de Silva, Chairman of the Import Section of the Ceylon Chamber of Commerce, said they hope Prime Minister Ranil Wickremesinghe will intervene to get bureaucrats to act since the law was in place and only institutional guidelines were needed.

“We need an order from the top – a single ministry may not be able to do it on its own,” he said. “This has to come from the highest level – it can be driven by the Prime Minister. If pressure comes, this can be implemented in days.”

Reluctance by government officials to accept electronic signatures is holding up wider use of an electronic ‘single-window’ platform launched in May 2016 by Sri Lanka Customs and the Finance Ministry meant to speed up export-import documentation, Verité Research said.
(COLOMBO, October 27, 2016)

Sri Lankan shares end at more than 2-wk high ahead of budget

Reuters: Sri Lankan shares closed at a more than two-week high led by large-cap beverages stocks while foreign investors picked up beaten down counters ahead of the national budget scheduled on Nov. 10.

The benchmark index of the Colombo Stock Exchange ended 0.15 percent firmer, or 9.80 points, at 6,444.97, its highest close since Oct. 21.

Turnover stood at 406.1 million rupees ($2.75 million), more than half this year's daily average of 717.4 million.

Foreign investors bought battered stocks for a fourth straight session, picking up shares worth a net 188.9 million rupees. They have net sold 1.02 billion rupees worth of shares so far this year.

"It looks like wheels are slowly starting to move with the budget getting closer," said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

Shares in Ceylon Cold Store Plc jumped 6.14 percent, while Nestle Lanka Plc rose 2.41 percent and Cargills (Ceylon) Plc rose 3.99 percent.

Conglomerate John Keells Holdings Plc rose 0.40 percent. The company on Friday reported an 8 percent rise in second quarter net profit. 

($1 = 147.6000 Sri Lankan rupees) 

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