Sri Lankan stocks hit over 8-mth closing low; lenders fall

Reuters: Sri Lankan shares fell for a third straight session on Tuesday to their lowest close in more than eight months as investors offloaded banking and diversified stocks.

The Colombo Stock Index ended 0.33 percent weaker at 6,325.46, its lowest close since April 11. The index was down 0.4 percent last week, its sixth consecutive weekly decline.

“Today we are seeing some selling in Sampath Bank after it announced a second rights issue for the year on top of the debenture issue,” said Atchuthan Srirangan, senior research analyst at First Capital Holdings PLC.

“With holidays ahead, we think this dull period will continue.”

Samapath Bank Plc, in a filing to the Colombo stock exchange, said it will issue 50.1 million new shares. The bank will issue three shares for every thirteen existing shares held, to increase its tier 1 capital to comply with Basel III requirements.

The bank added it would also issue 50 million five-year debentures at an issue price of 100 rupees apiece.

Sampath Bank Plc fell 4.9 percent while conglomerate John Keells Holdings Plc ended 0.7 percent lower and biggest listed lender Commercial Bank of Ceylon Plc lost 1.2 percent.

Turnover was 357.6 million rupees ($2.34 million), well below this year’s daily average of 933.4 million rupees.

Foreign investors were net buyers of 26.7 million rupees worth of shares on Tuesday, extending their year-to-date net equity purchases to 18.4 billion rupees.

Plantation stocks came under pressure after the Russian agricultural safety watchdog said on Thursday that the country will place temporary restrictions on imports of all agricultural products from Sri Lanka, including tea, from Dec. 18.

Analysts said the Russian restrictions on tea could pose a threat to long-term tea prices and it could impact the earnings of plantation companies. 

($1 = 153.0500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

Listed firms earnings dip 2% to Rs. 60 b in Sept.

Earnings of listed companies in the September quarter have declined marginally by 2% to Rs. 60.1 billion largely owing to a weaker performance by diversified financials and energy sector firms.

Analysing interim financials reported by 275 companies, First Capital Research revealed that September quarter earnings marginally dipped 2% YoY to Rs. 60.1 billion (Sep 2016 - Rs. 61.6 billion) driven by the adverse performance of the Energy (-108%YoY), Diversified Financials (-18%YoY) and Consumer Services (-54%YoY) sectors.

“The dip in earnings diminished the effect of positive earnings growth in the Food, Beverage and Tobacco (+9%YoY) and Banks (+6%YoY) sectors and one-off gains in the Food, Staples and Retailing (+178%YoY) sector,” First Capital said. It said the primary source of decline in September earnings was the Energy Sector (-108%YoY) which saw a loss of Rs. 137 million (September 2016 = Rs. 1,731 million), driven by LIOC (-112%YoY) and LGL (-85%YoY) attributable to higher oils prices and LP Gas prices that drove costs while the selling price remained fixed.

The Diversified Financials sector (-18%YoY) also almost equally contributed to an earnings dip where profits declined to Rs. 8.3 billion (September 2016 = Rs. 10.1 billion) driven by LOLC (-23%YoY).

Most finance companies in the sector saw higher net impairment losses as the effects of floods spilled over to the September quarter.

Consumer Services sector (-54%YoY) earnings dipped to Rs. 744 million (Sep 2016 = Rs. 1,613 million) driven by KHL (-71%YoY) which saw several hotels closing for refurbishment.

The negative effect was partially diluted by the positive earnings growth in the Food, Beverage and Tobacco sector (+9%YoY) to Rs. 12.5 billion (September 2016 - Rs. 11.5 billion) driven by BUKI (+788%YoY) and CARS (+2,419%YoY) which saw a dramatic increase in its gross margins while also being supported by plantation companies amidst higher tea prices.
The Banks sector (+6%YoY) reported earnings of Rs. 15.5 billion (Sep 2016 = Rs. 14.6 billion) driven by COMB (+11%YoY) which saw a healthy growth in net interest income.

However, First Capital Research said the largest positive effect on earnings came from the Food and Staples Retailing sector (+178%YoY) which recorded earnings of Rs. 2.7 billion (September 2016 = Rs. 960 million) driven by CARG (+189%YoY) which included a one-off non-operating gain of Rs. 1,012 million from the sale of its properties in Colombo 2. Having adjusted this one-off gain, the sector’s earnings dipped 33%YoY to Rs. 645 million while the quarter’s overall earnings dipped 6% to Rs. 58 billion.www.ft.lk