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.