Sri Lanka’s Kelani Valley Sept quarter loss narrows sharply

ECONOMYNEXT - Sri Lankan regional plantation company Kelani Valley Plantations said its net loss for the September 2017 quarter narrowed sharply to Rs14 million from Rs168 million a year ago.

Sales rose 35% to just over Rs 2 billion during the period, according to interim accounts filed with the stock exchange.

The firm, part of the Hayleys group, made a gross profit of Rs222 million but its bottom line was still in the red owing to higher administrative costs and associate losses.

Kelani Valley made a loss per share of 41 cents in the quarter. The loss per share in the six months to September 2017 was 66 cents with sales up 45% to Rs4.5 billion.

The accounts showed that during the first six months the tea business returned to profit from a loss the year before while profits from rubber grew sharply.

Sri Lankan Treasuries yields fall across maturities

ECONOMYNEXT – Yields on Sri Lankan Treasury Bills fell across maturities at an auction Tuesday with the 01-year bill yield down 03 basis points to 9.48 percent from 9.51 percent last week, the public debt department of the central bank said.

The yield on the 03-month bill went down one basis point to 8.75 percent while that on the 06-month bill fell 02 basis points to 9.10 percent from 9.12 percent last week.

The public debt department got Rs21 billion worth of bids and accepted bid worth Rs7.5 billion.

Sri Lankan shares edge up; earnings, budget in focus

Reuters: Sri Lankan shares closed marginally higher on Tuesday in lacklustre trade as investors awaited cues from the September-quarter corporate results and the national budget scheduled to be presented next week.

The Colombo stock index closed 0.15 percent higher at 6,617.36, after two straight losing sessions.

“It was a sluggish day with investors awaiting for direction from earnings and the budget,” said Prashan Fernando, CEO at Acuity Stockbrokers.

Finance Minister Mangala Samaraweera will present the 2018 budget on Nov. 9.

Top lender Commercial Bank of Ceylon Plc gained 1.8 percent, while Hatton National Bank rose 2.0 percent. Ceylon Tobacco Co Plc climbed 1.5 percent.

Foreign investors bought shares net worth 166.7 million rupees ($1.1 million), extending the year-to-date net inflows to 20 billion in equities.

The session’s turnover was 732.5 million rupees, compared with this year’s average daily turnover of 942.3 million rupees.

($1 = 153.5500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lanka's Renuka Hotels to list on second board

ECONOMYNEXT - Sri Lanka's Renuka Hotels Plc, which operates a city hotel, is to list on the second board of the Colombo Stock Exchange.

The firm will list 40.29 million shares by through an 'introduction' process, the firm said.

Renuka Hotel operates a city hotel and is also known to have a stock portfolio, analysts said.

The second or 'Diri Savi' board has easier listing rules including on public float.

Sri Lanka sells 2 and 8 year bonds

ECONOMYNEXT - Sri Lanka has sold 10 billion rupees of 2 year 6 month bonds at 9.92 percent, and 15 billion rupees of 7 year 11 month bonds at 10.33 percent, the state debt office said.

The bonds have a settlement date of November 01.

Eight year bonds were last auctioned September 04, for 10.54 percent.

Secondary market yields have come down in recent weeks. 

Sri Lanka'a Amaya Leisure net down 87-pct

ECONOMYNEXT - Profits at Sri Lanka's Amaya Leisure Plc, a unit Sri Lanka's Hayleys group, fell 87 percent to 9.9 million rupees in the September 2017 quarter from a year earlier amid fall in revenues and higher administrative expense charge, interim accounts showed.

The group reported earnings of 19 cents per share for the quarter in accounts filed with the Colombo Stock Exchange. In the nine months to September, the group reported earnings of 94 cents per share on total profits of 48.9 million rupees down from 125 million rupees.

In the September quarter revenues fell 9 percent to 707.2 million rupees, but costs rose 3.5 percent to 348 million shrinking gross profits 18.9 percent to 358 million rupees.

Administration expenses charged to accounts rose 9.8 percent to 274 million rupees.

Income tax expenses fell to 6.7 million rupees from 11.3 million rupees.

Sri Lankan shares fall; turnover hits over 6-wk high

Reuters: Sri Lankan shares edged down on Monday as losses led by consumer discretionary stocks outpaced gains in financials, with foreign investors boosting market turnover to a more than six-week high.

The Colombo stock index closed 0.09 percent lower at 6,607.14, further moving away from its highest close since July 31 hit last Thursday.

Top lender Commercial Bank of Ceylon Plc, which accounted for 55.5 percent of the day’s turnover, gained 2.4 percent. Losses were, however, led by Ceylon Tobacco Company Plc , which fell 2.5 percent and dragged down the index.

“We see some fresh foreign buying in Commercial Bank . There was a lot of foreign interest,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Foreign investors net bought shares worth 136.5 million rupees ($888,961), extending the net inflow to 19.8 billion worth equities so far this year.

Foreign investor purchases accounted for 85.4 percent of the day’s total turnover of 2.53 billion rupees ($16.48 million), which was around three times this year’s average daily turnover of 943.4 million rupees.

The day’s turnover was the highest since Sept. 15, exchange data showed.

“We do not see any major factors that would bring the market down in the next two months. The market also expects the interest rates to come down further and local investors are waiting for this,” Gani said.

Local investors were looking for direction from corporate results for the September quarter and the 2018 budget, which Finance Minister Mangala Samaraweera will present on Nov. 9.

($1 = 153.5500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka Tea Smallholder Factories Sept net up 60-pct

ECONOMYNEXT - Tea Smallholder Factories, which makes black tea from leaves bought from Sri Lankan small farmers, said net profit rose 60% to Rs10.8 million from a year ago

Sales rose 24% to Rs713 million, according to interim accounts filed with the stock exchange.

The company, in which John Keells Holdings has a 37.62 percent stake, reported earnings per share of 36 cents in the September quarter compared with 23 cents the year before.

EPS for the six months to September 2017 was Rs1.51 with net profit up 221% to Rs45 million and sales up 25% to Rs1.3 billion.

The accounts showed Tea Smallholder Factories profits improved sharply in the southern Galle low country district and in the hill country Nuwara Eliya district.

Losses were reduced in southern Matara. In the Ratnapura district its profits grew significantly although being much smaller than in other districts.

The other two main shareholders of the firm are Akbar Brothers Limited with 24.39 percent and Central Finance Company with 22.85 percent.

Pan Asia Bank 3Q profit flat over higher credit cost, slowdown in new loans

Pan Asia Banking Corporation PLC recorded modest performance during its third quarter as well as for the first 9 months amid challenging macro economic factors including higher interest rates, slowdown in demand for new loans and increase in provisions for possible bad loans.

The interim results released to the Colombo Stock Exchange showed for the quarter ended in September 30, the bank reporting earnings of Rs.301.3 million or 2.87 a share, largely unchanged from a year earlier. 

Meanwhile for the 9 months the bank posted Rs.918.1 million in after-tax profit or Rs.2.91 a share in comparison to the Rs.905.8 million reported for the corresponding period in 2016.

The other income led by fees and commissions cushioning much of the earnings as the core banking performance moderated amid rising cost of funds and relatively slow demand for new loans.

The net interest income for the 9 months rose by 8.0 percent to Rs.3.67 billion from a year earlier as the rise in interest cost beat the rise in interest income.

The net interest margin was tad weaker at 3.81 percent against 3.87 percent at the beginning of the year, albeit remaining above the industry average.

The bank gave Rs.4.8 billion in new loans and receivables during the period nudging the bank’s total loans and receivables book to surpass Rs.100 billion to end the period with a total book of Rs. 103.3 billion.

However, the provisions made for possible bad loans rose substantially during both the quarter as well as in the 9 months. During the 9 months the general provisions rose to Rs.390.1 million from Rs.261.9 million a year earlier while the specific provisions rose to Rs.178.7 million from Rs.18.6 million.

The growth in loans almost corresponded with the rise in deposits as the new deposits too rose by Rs.4.1 billion.

The bank’s total deposits which was at Rs.95.63 billion by the end of September is now flirting the Rs.100 billion mark, another key milestone for the bank which is within the reach of the bank before the end of the financial year.

In March 2017, the bank raised Rs.2.1 billion fresh equity via a rights issue placing the bank’s capital adequacy requirements well above the minimum requirements under the new BASEL III rules.

As of September end, the bank’s both Common Equity Tier I (CET I) and the Tier I was 10.56 percent against the regulatory minimums of 5.75 percent and 7.25 percent respectively.

Meanwhile, the total capital adequacy ratio or the Tier II ratio was 13.1 percent whereas the minimum required is 11.25 percent.

Speaking on the performance, Pan Asia Bank Director/ Chief Executive Nimal Tillekeratne gave a more sanguine outlook for the bank albeit the recent modest performance, as the bank is currently reviewing its strategies and consolidating almost all areas of the bank, which is expected to yield stronger results.

“I consider this year as well as the next as‘re-set’years, which will lay a stronger foundation for a sustainable and a durable growth in the medium to long-term”, Tillekeratne said.

The bank is currently undergoing an overhaul in areas such as credit underwriting, risk management, operations, information technology, human resources and its network expansion strategy under Tillekeratne’s fresh leadership.
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Sri Lanka's Seylan Bank records Rs. 3B PBT in 3Q

Seylan Bank closed the 9 months ending September30, 2017 with a post-tax profit of Rs.3,002m, a moderate growth of 6% over the corresponding period last year. These results were impacted by provisions made on account of a legacy NPA, payment of which is due from the Compensation Tribunal.

Growth in advances coupled with the rise in interest rates enabled interest income to grow by 35% and interest expenses increased by 48% due to funds moving into higher yielding fixed deposits. Further impact on interest cost was partly cushioned by CASA base over Rs. 90b. As a result net interest income recorded a commendable growth of 17.2% to reach Rs. 11,376m.

Net fees and commission income recorded an impressive growth of 25% for the period under review driven by core banking related transaction fees and net trading income recorded a gain (compared to market losses in the prior period) due to favourable movements in the yields of the underlying government securities.

Total expenses increased by 14.8% from Rs. 7,146m to Rs. 8,200m and were fuelled by new investments in technology and human capital developments. Cost management initiatives coupled with the implementation of lean concepts across the bank has aided in rationalising key cost lines.

The bank reported a credit growth of 8.3 % increasing the advances from Rs. 236b to Rs.255b while the deposit base grew from Rs. 273b to Rs. 295b during the nine months ended 30th September 2017. Bank CASA ratio stood over 30 %.

The gross NPA (Net of IIS) ratio stood at 4.67% as at 30th September 2017, a reduction of approximately 0.5% over the three months from the previous quarter.

Overall as a result of the strong performance during the nine months, the bank’s earning per share improved from Rs. 8.20 to Rs. 8.54. The bank recorded a return on average assets of 1.60% and return on equity of 13.44%. The bank’s net asset value per share as at 30th September 2017 was 92.53(Group Rs. 97.08).

The bank’s Common Equity Tier 1, Total Tier 1 and Total Capital Adequacy Ratio remained strong at 10.73%, 10.73% and 13.07% respectively as at 30th September 2017, as against the statutory minimum as per the BASEL III requirement applicable with effect from 1st July 2017. As at 30th September 2017, the bank network comprised of 167 banking centres, 203 ATMs and 6 CDMs giving seamless accessibility to its customers across the country. The bank is currently in the midst of rolling out its 2020 strategic plan focusing on relationship building, SME sector, digital channels and sales.

The bank continued its CSR initiatives focusing on education and accelerated its libraries project for under privilege schools. During the nine months 19 school libraries were opened taking the overall number of libraries opened under the project to 139.

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Sri Lankan shares end lower, retreat from near 3-mth high

Reuters: Sri Lankan shares fell in thin trade on Friday, as the market took a breather after hitting a near three-month high in the previous session, with foreign investors net selling equities ahead of the national budget.

The Colombo stock index closed 0.3 percent lower at 6,612.91, slipping from its highest close since July 31 hit on Thursday.

Large cap Ceylon Cold Stores fell 4.8 percent, while the biggest listed lender Commercial Bank of Ceylon Plc eased 1.2 percent.

“Market took a healthy break, which is important for consolidation. There was more local participation,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

“We still are positive on the stock market because the interest rates are gradually coming down.”

Foreign investors net sold shares worth 61.2 million rupees ($398,697) on Friday, but they have net bought 19.67 billion worth equities so far this year.

Analysts said the market was looking for direction from corporate results for the September quarter and the 2018 budget, which Finance Minister Mangala Samaraweera will present on Nov. 9.

Turnover stood at 352 million rupees ($2.29 million), less than half this year’s daily average of 936.3 million rupees. 

($1 = 153.5000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Small car prices in Sri Lanka cut further fearing tax reductions

By Our Political Correspondent

ECONOMYNEXT - Small car specialist AMW slashed prices of popular Suzuki Celerio and Alto models by up to 369,000 rupees today hot on the heels of slashing 422,000 rupees off the sticker price of a Renault Kwid.

"Special advantage of Rs. 370,000 before budget and not to be repeated," said an advertisement AMW took out in a mass-circulating Sinhala paper on Thursday.

A prospective buyer noted that he would wait till the November budget because he expected a bigger duty reduction and saw the AMW advertisement as a bid to push their inventories to minimise losses from a drastic customs duty reduction.

On Sunday, the second hand car sales slowed sharply following expectations that customs duties on electric and mid-size vehicles will be slashed in Finance Minister Mangala Samaraweera's maiden budget.

Sellers of Nissan Leaf electric cars were seen advertising repeatedly in the past month, but there were hardly any takers as news of the possible tariff reduction was known since late last month.

Official sources said duty reduction will apply to small cars with an engine capacity under 1,000 cc and electric cars with a motor of 80 kilo watts or less.

However, the sources said the authorities were also contemplating reducing taxes on all cars with an engine capacity of less than 1,500 cc. The vehicle category with an engine capacity of less than 1,000 cc is expected to benefit more.

Taxes on commercial and agricultural vehicles are also expected to be brought down.

In August, the minister slashed tax on single cab vehicles by 300,000 rupees and also lifted the 100 percent ad volarem tax on small motorcycles, mainly those imported directly from Japan.

Sri Lanka’s first hyper mall to open in December

LBO - Adding yet another luxury to the Colombo city line, Sri Lanka’s first hyper mall, will open in December at the Colombo City Centre (CCC) in Colombo 2.

A joint venture between Abans Group and Silver Needle Hospitality and divided in to three segments the total investment is US$ 170 million.

Both the apartments and the hotel would be ready by October 2018 under its second stage, said Anand Sundaram, Chief Executive Officer, Colombo City Centre.

He said that they are also happy with response for the apparent segment with over 70 percent being sold out stamping investor confidence for the project.

“Today housing is becoming the most preferred investment opportunity for Sri Lankans and this too has helped them in pre-sales.”

The handing over of apartments will commence from October 2018 onward whilst Next Hotel is expected to open in October 2018. Under the first phase the retail mall would be opened where several global brands along with local companies too would showcase there products and services.

“Here too over 80% of the five-floor retail lifestyle mall has been sold out and some of the brands are being showcased for the first time in Sri Lanka.”

The life style mall would include several entertainment options and would also offer Sri Lanka’s first and largest six-screen multiplex cinema bringing retail and entertainment of world standards.

“It has been our endeavour to contribute to making Colombo a world city where both the country and we too are set to gain. He said that the business hotel would be mainly targeting the high-end business travellers and for the first time it would offer mobile phone-enabled check in (smart booking) and check outs.

Travellers would book online, select their room and pay online via credit card upon check out without ever going to the reception. Commenting on the retail space which will open up in December, he said that some of the world’s top brands would be showcased in it.

Sri Lanka’s Horana Plantations returns to profit in Sept quarter

ECONOMYNEXT - Sri Lanka’s Horana Plantations returned to profit in the September 2017 quarter with gains from tea although rubber continued to make losses albeit at a reduced level.

The firm, part of the Vallibel group, made a modest net profit of Rs7 million in the quarter compared with a loss of Rs84 million a year ago, according to interim accounts filed with the stock exchange.

Sales rose 29% to Rs537 million while costs were maintained at the same level.

Earnings per share for the September 2017 quarter were 28 cents. Horana Plantations share was trading at Rs28.50 Thursday.

EPS for the six months to 30 September 2017 were 85 cents compared with a loss of Rs5.97 the year before with sales up 36% to Rs1.2 billion.

The firm’s tea business made a profit of Rs132 million compared with a loss of Rs44 million while rubber reduced losses to Rs20 million from Rs38 million a year ago.

Sri Lanka’s People’s Leasing Sept quarter net down 16-pct

ECONOMYNEXT - Sri Lanka’s People’s Leasing & Finance (PLC) said net profit for the September 2017 quarter fell 16% to Rs940 million from a year ago with loan growth stagnant amid higher impairment charges and tax costs although deposit growth was strong.

Earnings per share were 62 cents, according to interim results filed with the stock exchange. EPS for the six months to 30 September 2017 was down 19.4% to Rs1.16. the share was trading at Rs17.30 Thursday.

PLC, a subsidiary of People’s Bank, said interest income rose 24% to Rs6.8 billion during the quarter while interest expenses rose 28.6% to Rs3.7 billion with net interest income up 18.7% to Rs3 billion.

There was a sharp rise in impairment charges to Rs410 million during the period, the accounts showed. Value Added Tax and Nation Building Tax on financial services rose 56% to Rs330 million.

PLC’s loan growth was stagnant at Rs136 billion although customer deposits grew 31% to Rs58 billion.

Bartleet Religare Securities attributed the fall in profits to “slow credit growth and higher than expected loan losses in leasing and Hire Purchase book.”

The Islamic finance segment reported flat earnings, while insurance unit reported increased profitability aided by higher premium income and investment income, it said in a report.

The overall loan book growth remained flat in line with the industry trends, Bartleet Religare Securities said.

“PLC recorded a credit growth of 1% for the quarter. This is largely due to macro slow down and decline in motor vehicle registrations subsequent to increase in Loan to Value (LTV) ratios and higher borrowing costs,” it said.

“With PLC aggressively expanding into non vehicle category recently, the asset mix has now changed to 54%:32%:7% of Lease HP, Non vehicle loans and Islamic Finance.”

Sri Lanka's Union Bank Sept net up 13-pct, strong asset growth

ECONOMYNEXT - Sri Lanka's Union Bank group, said profits grew 13 percent from a year earlier to 150.9 million rupees in the September 2017 quarter, helped by stronger trading income, with gross assets up 25 percent since January.

The group reported earnings of 14 cents per share for the quarter. For the nine months to September it reported earnings of 35 cents per share on total profits of 384.3 million rupees, which were up 4 percent.

Interest income grew 37 percent to 3.16 billion rupees in the quarter, and interest expenses grew 14 percent to 2.24 billion rupees, and net interest expenses grew 14 percent to 921 million rupees.

In the nine months from January loans grew 20 percent to 75.75 billion rupees, despite higher interest rates in the country. Deposits grew 26 percent to 72 billion rupees.

Union Bank said its personal loan base grew 75 percent during the nine months, amid a total retail loan growth of 73 percent.

Specific loan loss provisions grew 81 percent to 82 million rupees and general provisions were increased to 28 million rupees from 4.8 million a year earlier.

Fee and commission income grew 10 percent to 215 million rupees. Trading income more than doubled to 180 million rupees from 77.2 million rupees.

Union Bank group assets grew 24 percent to 124 billion rupees in the nine months to September. Equity was up a slower 4 percent to 17.96 billion rupees. The bank said its total capital adequacy was 19 percent.

Sri Lankan shares hit near 3-month closing high; banks lead

Reuters: Sri Lankan shares touched a near three-month closing high on Thursday as investors picked up bank and diversified shares, brokers said.

The Colombo stock index finished 0.28 percent firmer at 6,633.20, its highest close since July 31.

Shares of the biggest listed lender, Commercial Bank of Ceylon Plc, rose 1.8 percent while Hemas Holdings Plc ended 2.4 percent higher. Sampath Bank Plc climbed 2.3 percent while conglomerate John Keells Holdings Plc gained 0.7 percent.

“Market is up on foreign blue chip buying. Foreigners are active again and block deals pushed the turnover levels,” said Atchuthan Srirangan, senior research analyst, First Capital Holdings PLC.

“Retail investors are still awaiting corporate results and budget, but foreign investors are active.”

Finance Minister Mangala Samaraweera will present the 2018 budget on Nov. 9.

Turnover stood at 1.2 billion rupees ($7.8 million), more than this year’s daily average of 938.3 million rupees.

Foreign investors net bought shares worth 36.1 million rupees on Thursday, extending the year-to-date net foreign inflow to 19.7 billion rupees worth equities. 

($1 = 153.4500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Sri Lanka 01-year Treasury Bill yield rises to 9.51-pct

ECONOMYNEXT – The yields on 01-year Sri Lankan Treasury Bills rose 05 basis points to 9.51% at an auction Wednesday from the week before, the public debt department of the Central Bank said.

The 03-month bill yield fell 03 basis points to 8.76% while the yield on the 06-month bill was steady at 9.12%.

The central bank got Rs62 billion worth of bids and accepted bids worth Rs19.5 billion of which Rs5 billion were for 01-year bills and Rs7.8 billion for 03-month bills.

Sri Lanka' Ceylon Cold Stores net down 28-pct

ECONOMYNEXT - Profits at Sri Lanka's Ceylon Cold Stores Plc, a consumer goods manufacturer and retailer fell 28 percent from a year earlier to 751 million in the September 2017 quarter, interim accounts showed.

The group reported earnings of 7.90 rupees per share for the quarter. In the six months to September CCS reported earnings of 15.01 rupees per share, on total profits of 1.43 billion rupees, down from 1.9 billion rupees.

Group revenues were up 15 percent to 12.48 billion rupees, but cost of sales rose at a faster 22 percent to 10.7 billion rupees, narrowing gross profits 15 percent to 1.71 billion rupees.

At the core company level, revenues were down 6 percent to 3.5 billion rupees and gross profits were down 20 percent to 1.23 billion rupees.

A segment breakdown showed manufacturing falling to 3.4 billion rupees from 3.7 billion rupees a year earlier, while retail sales rose to 9.0 billion rupees from 7.1 billion.

The group has been investing in expanding the retail network.

Key product of Ceylon Cold Stores include ice cream and carbonated drinks. It is not clear whether sales are down due to rains, an overall squeeze in spending or competition from other brands.

CSE to conduct national survey to understand public on share investments

LBO – Colombo Stock Exchange (CSE) plans to conduct a national survey to evaluate the understanding of the public on share investments.

The survey which will cover all the districts in Sri Lanka is to identify factors behind the lower level of participation towards share investments in Sri Lanka.

Accordingly, the CSE has invited prospective service providers to submit a proposal, quotations and technical specifications for the conduct of a national survey of the adult population with disposable income.

“The CSE leaves the opportunity with the contractor of deriving the said target population based on acceptable sampling frame,” the CSE said.

“The findings need to be segregated based on different Socio Economic Classes (SEC).”

CSE’s core stakeholder base constitutes of 34 members and trading members, 296 issuers, 750,000 investors, over 150 employees, and other stakeholders.

Their current investor base has a 25%: 75% mix of foreign to domestic investment in the equities market.

The Colombo Stock Exchange is the nucleus of Sri Lanka’s capital market as the licensed operator of the stock market.

The CSE is regulated by the Securities and Exchange Commission of Sri Lanka and was incorporated as a company limited by guarantee over 30 years ago.