USD160 Mn Havelock City Commercial Development to Commence Construction

Havelock City- the premier integrated mixed-use development project in Sri Lanka conducted the Ground Breaking of its Commercial Development, the developers said in a news release.

"The on-time completion of the piling works paved the way to commence the construction of the Super Structure which will be completed by 2021. The construction contract was awarded to China Harbour Engineering Company Ltd. which has its global foot print in over 100 countries.

"Havelock City, the brain child of Mr. S P Tao is developed by Mireka Capital Land a fully own subsidiary of Overseas Realty (Ceylon) PLC, the owner, developer and manager of the iconic World Trade Centre Colombo.

"The Havelock City Commercial Development was designed by the globally renowned Palmer & Turner Group Singapore. It comprises a 50 storeyed Office Tower and a Shopping Mall built to International Standards which will be an iconic landmark in the vicinity," it said.

"The Office Tower housing Grade A premium office space is designed to be a LEED GOLD certified building and is built to the highest standards that enables efficient space planning through column free wide floor plates and a smart functioning infrastructure. The overall design, built quality and facilities will enable businesses an unparalleled competitive advantage.

"The Shopping Mall is developed as a community level shopping mall serving the lifestyle needs of the catchment. A miniature heaven for the ardent shopaholic, the mega mall comprises six floors of both local and international fashion brands, dining and entertainment experiences amidst a state-of-the-art multiplex cinema; a welcoming treat to anyone who craves an undivided shopping experience

"Additionally, the two basement levels of parking with ample space to park over 800 vehicles complements the convenience and vibrancy offered by the Havelock City Commercial development," it added.

The Commercial development of Havelock city will be the visual anchor of the Havelock City Residencies which comprises eight magnificently designed apartment towers in 18 acres of prime land in Colombo, the release said.

www.island.lk

Harry group cross 50% threshold in Aitken Spence

Melstacorp PLC together with related parties (Milford Exports, Stassen Exports and Ms. DST Jayawardena) now have a controlling 51.04% of the Aitken Spence conglomerate, Melstacorp Managing Director Amitha Gooneratne said in a Stock Exchange filing on Mar. 26 announcing the acquisition of approx. 8.13 million Aitken Spence shares by Melstacorp.

Gooneratne listed the shares held by Melstacorp and related parties as – Melstacorp approx. 47.17%, Milford Exports approx. 1.064%, Stassen Exports approx 0.799 and Ms. Jayawardena as 0.0068% (27,839 shares.)

They collectively hold approx 199.09 million shares in Spence (49.038% approx).

The filing explained that "as this purchase is made after a completion of one year cycle and also as the company together with the aforementioned connected parties has crossed the 50% threshold, the restriction on purchase without triggering a mandatory offer as per SEC Rule No. 31.1 will not apply to this purchase or any future purchase of Aitkent Spence PLC shares by this company (Melstacorp).

www.island.lk

Melstacorp get SEC nod for off-floor transfer of DCSL shares to its shareholders

Melstacorp PLC, the holding company of Distilleries Company of Sri Lanka (DCSL), last week announced in a Stock Exchange filing that the Securities and Exchange Commission of Sri Lanka has approved the off-floor transfer of DCSL shares declared as a "dividend in specie" (a dividend other than in cash) to the shareholders of Melstacorp on the already announced ex-dividend date.

In an earlier filing on Mar. 27, Melstacorp announced that DCSL had, "due to a deviation with regard to the previous approval obtained from the SEC," had made an additional submission to the SEC regarding its off-floor transfer application.

In February this year, Melstacorp announced the interim dividend in specie of DCSL shares to its shareholders under which every 27 shares of Melstacorp will qualify to receive eight DCSL shares.

Since August 2016, DCSL shares have not been traded on the Colombo Stock Exchange at the request of the company to facilitate a share swap between Melstacorp and DCSL under which Melstacorp, previously a fully owned subsidiary of DCSL, became the holding company of DCSL.

In its March 27 filing, Melstacorp said it expected that the suspension of trading of DCSL shares will be lifted once the SEC approves the off-floor transaction.

Accordingly, DCSL had given an undertaking to the SEC that it will comply with the requirements of SEC’s Nov. 17, 2016, directive within a time frame agreed with the SEC.

The filing said that the failure to comply with the regulatory requirements would result in the suspension of the trading of DCSL shares on the CSE.

Under the Aug. 2016 arrangement, described as the country’s first 180 degree share swap, Melstacorp which was a fully owned subsidiary of DCSL, became DCSL’s holding company.

Under this arrangement, holders of each DCSL share were allotted four Melstacorp shares in exchange. They were also told that they will enjoy preferential allotment of DCSL shares once the arrangements are completed and DCSL will once again trade on the CSE.

For many years the cash rich DCSL, conscious of the fact that it was a player in the controversial liquor industry, has been diversifying into various other business segments.

Melstacorp is now the holding company of DCSL and these businesses.

It is expected that the DCSL shares being issued as a non-cash dividend to Melstacorp shareholders, will be uploaded to their Central Depository System (CDS) accounts shortly and DCSL will once again be on the CSE trading boards after a long absence.

www.island.lk

Sri Lanka to bring transitional provisions on new income tax law

ECONOMYNEXT - Sri Lanka will bring changes to a new income tax law effective this year to tide over practical difficulties encountered and also introduce transitional provisions in the change-over from the old act.

Finance Minister Mangala Samaraweera had proposed transitional provisions covering unexpired tax holidays and capital allowances which have to be issued as regulations, the state information office said.

Some directions of the new act also had to be changed to take into account practical difficulties encountered, the cabinet was told.

The cabinet had approved the proposals.

Sri Lanka 12-month Treasuries yield edges up to 9.69-pct

ECONOMYNEXT – The yield on Sri Lanka’s 12-month Treasury Bills edged back up 03 basis points to 9.69% at an auction Tuesday where bids for other tenors were rejected, the central bank’s public debt department said.

The central bank collected its total requiremnt of Rs25.5 billion rupees from the sale of 12-month Treasury Bills at the auction, the total for all tenors offered, although it offered only Rs13.5 billion worth of 12-month bills and got bids worth Rs35.4 billion.

Bids for 03-month and 06-month bills were rejected although Rs6 billion in each tenor were offered, generating bids of Rs12.5 billion and Rs9.3 billion.

Sri Lanka’s Hemas Holdings retains 'AA-(lka)' Fitch rating

ECONOMYNEXT - Sri Lankan conglomerate Hemas Holdings has retained its 'AA-(lka)' Fitch rating with a stable outlook, with its stationary firm acquisition seen boosting cash flows while strong logistics and drugs businesses offset a slowdown in consumer goods and hotels.

Fitch said in a statement it has also confirmed the National rating on Hemas's outstanding senior unsecured debentures at 'AA-(lka)'.

The full statement follows:

Fitch Ratings-Colombo-27 March 2018: Fitch Ratings has affirmed Sri Lanka-based conglomerate Hemas Holdings PLC's (Hemas) National Long-Term Rating at 'AA-(lka)' with a Stable Outlook. Fitch has also affirmed the National rating on Hemas's outstanding senior unsecured debentures at 'AA-(lka)'.

Hemas's rating reflects Fitch's view that the group's business risk profile has improved from the acquisition of Atlas Axillia (Private) Limited (Atlas), the largest domestic manufacturer and distributor of exercise books, pens, colour products and other school stationery, early this year. However, the benefits are offset to an extent by the operational pressures in its fast moving consumer goods (FMCG) segment that accounted for 40% of EBITDA in the financial year ended March 2017 (FY17) and its leisure business (12%), which we expect to persist in the next 12-18 months. The affirmation takes into account Fitch's view that significant expansion plans in the next couple of years could limit further improvements in Hemas's leverage, defined as adjusted debt/operating EBITDAR (FY17: 1.3x), as internally generated funds may not be sufficient to fully fund planned capex and shareholder returns.

KEY RATING DRIVERS

Atlas Boosts Defensive Cash Flows: We expect Hemas's LKR5.7 billion Atlas acquisition to improve cash flow stability as the latter's business is defensive across economic cycles. Fitch expects demand for school stationery to grow over the medium term, supported by government and private-sector investments in the education sector and rising per capita income in the country. We believe this acquisition is in line with Hemas's strategy of using its significant cash balance to expand its core businesses through M&A.

Atlas's stationery business fits into Hemas's FMCG segment and Atlas will be able to leverage on Hemas's established distribution network once the integration is completed. We expect Atlas to contribute around 15% and 25% to group revenue and EBIT, respectively, in FY19, its first year of full consolidation.

Expansion Limits Leverage Improvement: We do not expect Hemas to engage in any other large scale M&A that is similar to Atlas in the medium term, but the company will continue to spend LKR3 billion-4 billion on organic expansion in its core segments in the next few years. We estimate Hemas will generate around LKR4 billion per annum in cash flow from operations in the next few years but this may be insufficient to fully cover the planned capex and shareholder returns. We do not expect an improvement in company leverage in the medium term amid higher borrowings and a moderating operating performance.

FMCG Pressures: We expect the FMCG segment slowdown to continue in the next 12-18 months due to pressures in Bangladesh (around 15% of FMCG revenue in FY17) arising from the restructuring of Hemas's distribution network and increased competition. Bangladesh was the segment's growth driver in the last three years with revenue CAGR of over 50% but we expect the growth to materially decelerate in the near term as the company's moves to resolve the issues may take time. We believe Hemas may have to keep investing in its Bangladesh distribution network and marketing efforts to support its bigger operational scale and counter competition, which would keep margins below historical levels in the medium term.

We don't expect a recovery in domestic FMCG volumes in the near term as weak personal income and inflationary pressures may force consumers to continue to cut down on personal and home care spending. Domestic margins may also remain pressured due to a pickup in input costs and currency depreciation, which the company may find difficult to fully pass on to customers amid weak demand. However, steps taken by the company to streamline its supply chain operations are likely to generate cost savings to offset margin pressure to an extent. Hemas's FMCG revenue was flat yoy in 9MFY18 while EBIT margin contracted 270 bp over the same period.

Leisure Slowdown to Persist: We expect Hemas's hotel (around 50% of leisure sector EBIT) performance to continue to weaken in the medium term on declining occupancy and room revenue due to a slowdown in tourist arrivals, oversupply of graded accommodation and competition from the informal sector. Hemas's hotel sector revenue was flat in 9MFY18 while EBIT margins contracted almost 5 percentage points yoy.

Healthcare Stability: We believe the healthcare segment can offset most of the other segments' earnings volatility. We expect the drug distribution arm to continue winning market share from distributors exiting the market on price regulations, primarily on branded drugs. Hemas, which focuses on generic drugs, saw its market share rising to 30% in FY17 (22% in FY16) due to the lack of branded drugs in the market and acquisition of competitor brands. We expect the pharma segment and its hospital chain to continue growing in the medium term, supported by a rapidly ageing population, rising incidence of non-communicable diseases and undersupply in public healthcare services. However, the hospital sector may face regulatory pressure on pricing of certain services.

We expect Hemas's local drug manufacturing business to be the key growth driver for the segment. Less than 15% of Sri Lanka's drug requirements are produced locally with the government looking to increase it to 100% in the medium term with private-sector participation. Hemas plans to double its capacity by FY20 to cater to this demand. Hemas currently sells most of its output to the government under a long-term buyback program and we believe the company will be able to secure a similar contract for most of the new capacity. Any excess capacity can be used to produce its own branded products or for contract manufacturing.

Increased Mobility Contribution: We expect the mobility segment contribution to group EBIT to increase to 17% by FYE20 from 10% in FY17, supported by capacity expansion and exposure to high-margin businesses. The company is setting up a container yard and integrated logistics park to cater to the increased transhipment activity at the Colombo port and the growing demand for third-party logistics service. The new facility should contribute to the segment's top line and EBIT from FY19 when it is fully operational.

We expect Hemas's ship agency business to continue its growth, helped by extended service offerings and new partnerships. We do not believe the recent de-regularisation of foreign ownership in ship agency and freight forwarding businesses will have an immediate impact on the sector as it will take time and effort for foreign shipping lines to set up operations with similar service offerings provided by their local partners such as Hemas.

DERIVATION SUMMARY

Hemas is a well-diversified conglomerate similar to Richard Pieris & Company PLC (A(lka)/Stable) and Sunshine Holdings PLC (A-(lka)/Stable). Hemas is rated two notches above Richard Pieris to reflect its low leverage and higher exposure to defensive end-markets compared with the latter's modest presence in the cyclical plantation sector. Hemas is rated three notches above Sunshine due to its stronger business profile stemming from substantially higher cash flows from its defensive pharmaceutical and FMCG businesses and its larger operating scale. Sunshine's financial profile has weakened compared with Hemas due to its debt-funded acquisition in the cyclical plantation sector.

Hemas is rated one notch above leading beer manufacturer Lion Brewery (Ceylon) PLC (A+(lka)/Negative) to reflect its cash flow diversity, lower regulatory risks and strong financial profile.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Our Rating Case for the Issuer

- Excluding acquisitions, organic revenue growth to average in the high single digits in FY19 and FY20 on expansion in the pharmaceutical and mobility segments, offset to an extent by the continued weakness in the FMCG and leisure segments.
- EBITDAR margin to contract and stabilise at around 12.5%-13% in the next two years amid cost pressures, competition and price regulation across most segments.
- Capex to average around 7% of revenue in the next two years to support the planned expansion.
- Dividend payout ratio of about 30% of net income to be maintained over FY18-FY21.
- Three months of Atlas results taken into consideration in FY18 with the full 12-month results consolidated from FY19.
- No M&A activity in the next two to three years.

RATING SENSITIVITIES

Developments that May, Individually or Collectively, Lead to Positive Rating Action

- Improvement in business risk profile while maintaining the current financial profile.
Developments that May, Individually or Collectively, Lead to Negative Rating Action
- Group gross adjusted debt/EBITDAR rising above 2.0x on a sustained basis
- Any significant integration issues or deviation from the company's conservative approach to new investment.

LIQUIDITY

Strong Liquidity Position: As at end-December 2017, Hemas had about LKR10.3 billion of unrestricted cash and LKR5.8 billion in unutilised credit facilities to meet LKR2.0 billion of debt maturing in the next 12 months. We do not expect Hemas to generate positive free cash flow in the next 12 months due to working capital investments, high capex and the acquisition of Atlas but its large cash reserves at hand places the company in a strong liquidity position. Hemas has another LKR1.9 billion of short-term working capital-related debt, which we expect to be rolled over by lenders in the normal course of business.

Sri Lanka's LOLC to continue growth path after Orix exit: Official

ECONOMYNEXT - Sri Lanka's LOLC group will continue its growth path after the exit of Japan's Orix, which had a 30 percent stake, Group Managing Director Kapila Jayawardene said.

LOLC will focus on micro-finance and growth with acquisitions in Asian markets, he said.

"I expect the growth trajectory to continue," Jayawadene said.

Orix sold its stake for 12.8 billion rupees to LOLC Holdings, privately held company controlled by Deputy Chairman Ishara Nayakkara taking 29.9 percent.

Orix had been a passive investor in the LOLC for many years.

The Orix stake was traded at 90 rupees, below the previous close of 111 rupees.

The stock was up 6.50 at 117.50 rupees in intra -day trading after the Orix deal.

Sri Lanka February vehicle registrations up 26-pct

ECONOMYNEXT - Sri Lanka's vehicles registrations rose 26.6 percent from a year earlier to 37,354 in
February 2018, with motor cars up 131 percent to 4,949 units and broad-based double digit growth in all categories, data compiled by an equities research house shows.

Total registrations of all vehicles in February was down from 42,783 unit in January, with working days down in the second month of the year, J B Securities, a Colombo-based equities brokerage said in an analysis of Sri Lanka's vehicle registry data.

Van registrations were up 73 percent from a year earlier to 1,000 and marginally down from 1,085 in January.

Three wheeler registrations were up 63 percent to 1,477 from a year earlier and slightly down from 1,544 in January.

The three wheelers became the car of the craftsmen and the public transport, ambulance and goods a haulage vehicle less affluent households especially in rural areas.

The current administration delivered an interventionist blow to people's aspirations by pushing up taxes and restricting credit to three wheelers.

There was also a collapse of the currency in 2015 and 2016 pushing up inflation. The administration took a drubbing in local elections last month.

Out of the 4,849 cars registered 773 were brand new and 4,042 pre-owned. Many so-called pre-owned vehicles are 'registered-de-registered' cars imported from Japan with zero mileage.

In February 2,681 vehicles registered were hybrids. Of that 1,836 were Wagon R models. Among vans Suzuki led with 618 out of a 1,000 units.

Sri Lankan stocks edge up as financials lead

Reuters: Sri Lankan shares ended firmer on Thursday led by financials, edging up from a nine-week closing low hit in the previous session, with block deals boosting turnover on the last trading day of the current fiscal year.

The Colombo stock index ended 0.57 points firmer at 6,476.78, edging up from its lowest closing level since Jan. 23 hit on Wednesday. The markets will be closed on Friday for a holiday.

The index rose 0.51 percent on week, its first weekly gain in five, but has fallen 1.14 percent this month.

“A number of crossings went through today and that helped to push the turnover. Being the last day of the financial year, we saw some window-dressing in some stocks,” said Dimantha Mathew, head of research at First Capital Holdings.

Shares in Sofltogic Holdings Plc rose 10.3 percent, while the biggest listed lender Commercial Bank of Ceylon Plc ended 1.9 percent.

Ceylinco Insurance Plc climbed 7.4 percent, while Dialog Axiata Plc inched up 0.7 percent.

Turnover stood at 3.5 billion rupees ($22.49 million), well above this year’s daily average of around 1.2 billion rupees.

Foreign investors bought a net 2.7 billion rupees worth of shares on Thursday, but they have net sold 2.6 billion rupees worth equities so far this year.

Political uncertainty and worries over a slowing economy weighed on sentiment, brokers said.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest pace in 16 years and well below the 4.5 percent seen in 2016, revised government data released showed last week.

Prime Minister Ranil Wickremesinghe is facing a no-confidence motion, which will be debated on April 4 before voting, with analysts saying support from many political parties will be needed for Wickremesinghe to clear the vote. 

($1 = 155.6000 Sri Lankan rupees) 

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

Sri Lankan stocks mark 9-wk closing low; turnover at 7-yr high

Reuters: Sri Lankan shares hit a nine-week closing low on Wednesday, but turnover touched a seven-year high as foreign investors exited from Lanka ORIX Leasing Company Plc.

The Colombo stock index ended 0.23 points weaker at 6,440.20, its lowest closing level since Jan. 23.

LOLC Holdings (Private Ltd) bought nearly 30 percent stake in its own subsidiary, Lanka Orix Leasing Company Plc, from ORIX Corporation of Japan, the company said in a disclosure to the bourse.

The Japanese firm’s stake sale resulted in a foreign fund outflow of a net 12.7 billion rupees ($81.62 million) worth shares on Wednesday, reversing the year-to-date net foreign inflow to a net 5.3 billion rupees worth outflow.

This was the highest net outflow in the last nine years for which data is available.

Turnover stood at 13.4 billion rupees ($86.12 million), the highest since March 16, 2012 and well above this year’s daily average of around 1.2 billion rupees.


“The biggest trade was the LOLC deal. Apart from that, there was no improvement in sentiment as investors are waiting for the outcome of the no-confidence motion against the prime minister,” said Prashan Fernando, CEO at Acuity Stockbrokers.

Losses in shares such as Ceylinco Insurance Plc, which fell 6.8 percent, and Ceylon Theatres Plc, which ended 4.4 percent weaker, offset gains by Lanka ORIX leasing Company and Dialog Axiata Plc, which ended up 2.2 percent.

Shares in Lanka ORIX leasing Company rose 6.3 percent.

Prime Minister Ranil Wickremesinghe is facing a no-confidence motion, which will be debated on April 4 before voting. Analysts say Wickremesinghe needs support from many political parties to survive the vote.

Negative sentiment over the island nation’s slower economic growth also weighed on the market, brokers said.

The index fell 1 percent last week, its fourth straight weekly drop.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest pace in 16 years and well below the 4.5 percent seen in 2016, revised government data released last week showed. 

($1 = 155.6000 Sri Lankan rupees) 

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

Sri Lankan stocks fall to lowest close in nine weeks

Reuters: Sri Lankan shares fell on Tuesday to their lowest close in nine weeks as negative sentiment over the island nation’s slower economic growth continued to weigh on the market.

However, foreign investors bought a net 477.1 million rupees ($3.06 million) worth of shares, extending the year-to-date net foreign inflow to 7.4 billion rupees worth of equities.

The Colombo stock index closed 0.13 percent weaker at 6,440.43, at its lowest close since Jan. 23.

The bourse fell 1 percent last week, its fourth straight weekly drop.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest pace in 16 years and well below the 4.5 percent seen in 2016, revised government data released last week showed.

“Most investors are on the sidelines waiting for the central bank’s interest rate decision in April,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

“But we can see some block trades taking place while foreign investors are also collecting.”

Turnover was 865.9 million rupees ($5.55 million), less than this year’s daily average of around 955 million rupees.

Shares in Ceylon Cold Stores Plc fell 3.9 percent, while conglomerate John Keells Holdings Plc ended 0.4 percent weaker and Lanka ORIX Leasing Company Plc ended 0.8 percent down.

Analysts said an increase in retail fuel prices also weighed on investor sentiment.

Sri Lankan fuel retailer Lanka IOC Plc, which fell 1.6 percent in the session, raised retail prices for gasoline and diesel over the weekend due to losses incurred after the government’s failure to implement a pricing formula. 

($1 = 156.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks edge higher from 8-week low

Reuters: Sri Lankan shares crawled higher on Monday from their lowest close in more than eight weeks as blue chip stocks gained, but negative sentiment over the island nation’s slower economic growth weighed on the market.

The Colombo stock index closed 0.08 percent firmer at 6,448.60, edging up from its lowest close since Jan. 24 hit on Friday.

The bourse fell 1 percent last week, its fourth straight weekly drop.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest pace in 16 years and well below the 4.5 percent seen in 2016, revised government data released last week showed.

Investors are waiting for the central bank’s interest rate decision in April, said Dimantha Mathew, head of research, First Capital Holdings.

Turnover was 1.6 billion rupees ($10.3 million), more than this year’s daily average of around 956.6 million rupees.

Shares in conglomerate John Keells Holdings Plc rose 0.8 percent, while Ceylinco Insurance Plc ended 2.3 percent firmer and biggest listed lender Commercial Bank of Ceylon Plc gained 0.1 percent.

Foreign investors sold a net 354.9 million rupees worth of shares, but they have been net buyers of 6.9 billion rupees worth of equities so far this year.

Analysts said an increase in retail fuel prices also weighed on investor sentiment.

Sri Lankan fuel retailer Lanka IOC Plc raised retail prices for gasoline and diesel, the company said on Saturday, due to losses incurred after the government’s failure to implement a pricing formula. 

($1 = 156.1000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks slip to over 8-week closing low; lower economic growth weighs

Reuters: Sri Lankan shares slipped to their lowest close in more than eight weeks on Friday, led by beverage and telecom stocks as investors remained worried about the island nation’s slower economic growth, brokers said.

The Colombo stock index closed 0.12 percent lower at 6,443.75, marking its fourth session of fall in five. It fell 1 percent this week, in its fourth straight weekly drop.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest pace in 16 years and well below the 4.5 percent seen in 2016, revised government data released on Tuesday showed.

“The market is moving sideways as investors are on the sidelines due to concerns over lower growth. They are also awaiting directions from the policy interest rate decision in April,” said Atchuthan Srirangan, a senior research analyst with First Capital Holdings Plc.

Turnover was 953.9 million rupees ($6.11 million), more than this year’s daily average of around 944.8 million rupees.

Shares in Lion Brewery (Ceylon) Plc fell 3.6 percent, Nestle Lanka Plc dropped about 1 percent, Softlogic Holdings Plc slumped 5 percent and Dialog Axiata Plc ended 0.7 percent weaker.

Foreign investors sold a net 58.4 million rupees worth of shares, but they have been net buyers of 7.2 billion rupees worth of equities so far this year. 

($1 = 156.0500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks snap 3 sessions of falls

Reuters: Sri Lankan shares ended marginally higher on Thursday, snapping three straight sessions of falls, as investors bought beverage and diversified stocks, brokers said.

The Colombo stock index rose 0.09 percent to 6,451.51, after it posted an eight-week closing low in the previous session.

However, investors remain worried about the island nation’s slower economic growth, said analysts.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest pace in 16 years and well below the 4.5 percent seen in 2016, revised government data released on Tuesday showed.

“We saw some of the positivity coming in after the release of GDP data. But investors are concerned over the lower growth,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

“We can see some high net worth investors collecting with the index trading below 6,500.”

Turnover was 1.4 billion rupees ($8.97 million), more than this year’s daily average of around 936.4 million rupees.

Shares in Ceylon Tobacco Co Plc rose 2.9 percent, Ceylon Cold Stores Plc climbed 4.1 percent and conglomerate John Keells Holdings Plc closed 0.3 percent higher.

Foreign investors sold a net 24.9 million rupees worth of shares, but they have been net buyers of 7.3 billion rupees worth of equities so far this year. 

($1 = 156.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks fall to 8-week closing low on growth worries

Reuters: Sri Lankan shares fell for a third straight session on Wednesday and posted their lowest close in eight weeks, as investors sold diversified stocks such as John Keells Holdings Plc on worries over slower economic growth, brokers said.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest pace in 16 years and well below the 4.5 percent seen in 2016, revised government data released on Tuesday showed.

The Colombo stock index fell 0.26 percent to 6,445.97, its lowest close since Jan. 24. It dropped 0.6 percent last week in its third straight weekly decline.

“The market is coming down on worries over the lower growth and political uncertainty,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

“With the index trading below 6,500, it’s a buyer’s market as most of the stocks are undervalued. But political uncertainty and no visible policy direction hurt sentiment.”

Turnover was 632.2 million rupees ($4.05 million), less than this year’s daily average of around 936.4 million rupees.

Shares in conglomerate John Keells Holdings dropped 1.1 percent, Ceylon Cold Stores Plc fell 1.7 percent and Commercial Bank of Ceylon Plc, the country’s biggest listed lender, declined 2.2 percent.

Foreign investors bought a net 164.9 million rupees worth of shares, extending the year-to-date net foreign inflow to 7.4 billion rupees worth of equities so far this year. 

($1 = 156.0700 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks fall to nearly 7-week closing low on growth worries

Reuters: Sri Lankan shares fell to their lowest close in nearly seven weeks on Monday, as investors sold diversified and manufacturing stocks on worries over slower economic growth, brokers said.

The statistics department withdrew its 2017 full-year and fourth-quarter GDP data on Friday, a day after saying the economy expanded 3.1 percent last year, the slowest pace in 16 years, and 1.4 percent in the fourth quarter.

The Colombo stock index fell 0.24 percent to 6,493.63, its lowest since Jan. 30. It dropped 0.6 percent last week in its third straight weekly decline.

“It’s a dull day as most of investors were on the sidelines and worried over the GDP,” said Atchuthan Srirangan, a senior research analyst with First Capital Holdings PLC.

Turnover was 396.5 million rupees ($5.29 million), the lowest since March 7 and well below this year’s daily average of around 966.8 million rupees.

Shares in Vallibel One Plc fell 1.7 percent, Carson Cumberbatch Plc ended 2.8 percent weaker, Sri Lanka Telecom Plc lost 1.4 percent.

Foreign investors bought a net 58.1 million rupees worth of shares, extending the year-to-date net foreign inflow to 7.2 billion rupees worth of equities. 

($1 = 155.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks recover as investors buy select blue chips

Reuters: Sri Lankan shares rose marginally on Friday, recovering from a one-and-a-half-month closing low hit in the previous session, as investors bought select blue chips in low volumes while lower economic growth weighed on the market.

The statistics department said after markets hours on Thursday that the economy grew at 3.1 percent in 2017 and 1.4 percent in the fourth quarter of last year.

The Colombo stock index rose 0.13 percent to 6,509.46, snapping two consecutive sessions of declines, and edging up from its lowest close since Feb. 1 hit on Thursday.

It dropped 0.6 percent this week in its third straight weekly decline.

“Market is up in low-volume trades in some blue chips,” said Atchuthan Srirangan, a senior research analyst with First Capital Holdings PLC, adding that investors were worried about the lower economic growth in 2017.

Turnover was 824.6 million rupees ($5.29 million), lower than this year’s daily average of around 966.8 million rupees.

Shares in conglomerate John Keells Holdings Plc rose 0.9 percent, Carson Cumberbatch Plc gained 5.3 percent, Trans Asia Hotels Plc jumped 6.9 percent and Hemas Holdings Plc edged up 1.6 percent.

Foreign investors bought a net 111.6 million rupees worth of shares, extending the year-to-date net foreign inflow to 7.1 billion rupees worth of equities.

($1 = 155.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks fall to 1-1/2-month closing low on foreign selling

Reuters: Sri Lankan shares extended falls on Thursday to a one-and-a-half-month closing low as foreign investors continued to reduce their holdings on expectation of an interest rate hike by the U.S. Federal Reserve at its next meeting.

Foreign investors sold a net 56.7 million rupees ($363,578.07) worth of shares, but they have been net buyers of 7.02 billion rupees worth of equities so far this year.

The Colombo stock index fell for a second straight session and ended 0.28 percent weaker at 6,500.99, its lowest close since Feb.1.

“Some foreigners are exiting because of the fear of Fed rate hike pencilled in March meeting. Till that, we will see some foreign selling,” said Atchuthan Srirangan, a senior research analyst with First Capital Holdings PLC, adding that Sri Lanka saw some outflows before the last two Fed meetings.

Turnover was 806.2 million rupees, lower than this year’s daily average of around 973.3 million rupees.

Shares in Dialog Axiata Plc fell 2.9 percent, while Melstacorp Plc ended 3.7 percent weaker and Ceylon Beverage Holdings Plc dropped 8.9 percent.

Analysts said a communal violence in the central district of Kandy also weighed on sentiment.

($1 = 155.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks fall on foreign selling

Reuters: Sri Lankan shares fell on Wednesday from their highest close in nearly two weeks hit in the previous session, as selling by foreign investors weighed on sentiment, brokers said.

Foreign investors sold a net 183.3 million rupees ($1.18 million) worth of shares, but they have been net buyers of 7.1 billion rupees worth of equities so far this year.

The Colombo stock index ended 0.54 percent weaker at 6,519.48.

Falls in large cap Ceylon Tobacco Co Plc dragged down the overall index, said Dimantha Mathew, research head at First Capital Holdings.

“The market came down on small quantity of CTC trade and some banks also came down as investors think the earnings could be hit on some tough regulatory compliance,” he added.

Turnover was 1.6 billion rupees, more than this year’s daily average of around 973.3 million rupees.

Shares in Ceylon Tobacco ended 4.8 percent weaker, Ceylinco Insurance Plc fell 7.6 percent and Commercial Bank of Ceylon Plc slipped 0.22 percent. 

($1 = 155.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks edge up as foreign investors return

Reuters: Sri Lankan shares rose slightly on Tuesday and posted their highest close in nearly two weeks as investors picked up beverage and telecom stocks, and foreign investors returned to the market following a communal violence last week, dealers said.

Foreign investors bought a net 1.2 billion rupees ($7.71 million) worth of shares, extending the year-to-date net foreign inflow to 7.3 billion rupees worth of equities.

Analysts said local and foreign investors returned to the market a week after a wave of anti-Muslim attacks by Sinhalese Buddhist hardliners in the central highlands district of Kandy.

The Colombo stock index ended 0.11 percent firmer at 6,554.83.

“It is a positive sign that both locals and foreigners are buying after a long wait,” said Dimantha Mathew, head of research, First Capital Holdings.

Turnover was 2.5 billion rupees on Tuesday, the highest since Feb. 26 and more than double of this year’s daily average of around 960.4 million rupees.

Shares in Asian Hotels and Properties Plc ended up 3.8 percent, Dialog Axiata Plc gained 1.5 percent and Singer Sri Lanka Plc rose 2.7 percent. 

($1 = 155.6500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks muted as investors await fresh cues

Reuters: Sri Lankan shares ended little changed on Monday, a week after attacks aimed at Muslim-owned properties by Sinhala Buddhist hardliners hurt sentiment, as investors awaited for fresh cues, dealers said.

The situation has improved in the communal violence-hit district of Kandy, but foreign investors were seen largely keeping to the sidelines for want of a clear direction.

Sri Lankan police on Friday said they were investigating whether 10 suspected ringleaders of a wave of attacks on Muslims by Sinhalese Buddhists had outside funding or foreign help.

The Colombo stock index ended 0.05 percent weaker at 6,547.73. It fell 0.1 last week.

Turnover was 540.1 million rupees ($3.47 million) on Monday, well below this year’s daily average of around 950 million rupees.

“The market is holding on,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

“The dampened sentiment we saw last week is not there. Foreigners were also trading in selective counters while locally, retailers traded in second tier counters.”


Foreign investors sold a net 37.8 million rupees worth of shares on Monday, but they have been net buyers of 6.1 billion rupees worth of equities so far this year.

Shares in Carson Cumberbatch Plc fell 4.2 percent while, Commercial Leasing Plc ended 6.5 percent down, conglomerate John Keells Holdings Plc fell 1.04 percent and Dialog Axiata Plc lost 0.7 percent.

($1 = 155.6000 Sri Lankan rupees) 

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

Sri Lankan stocks rise for 2nd day on foreign investor buying

Reuters: Sri Lankan shares rose for a second straight session on Friday as foreign investors bought into risky assets with some improvements in the communal violence-hit district of Kandy.

Police said on Thursday it had arrested the suspected leader and nine others suspects behind a wave of anti-Muslim attacks by Sinhalese Buddhist hardliners in the central highlands region this week.

“With the situation returning to normalcy we saw increased activities. We saw foreigners getting activated. Things are slightly improving and investors are waiting to see the real situation,” said Dimantha Mathew, head of research, First Capital Holdings, referring to inactive local investors.

The Colombo stock index ended 0.46 percent firmer at 6,551.19. Turnover was 868.9 million rupees ($5.59 million), less than this year’s daily average of around 950 million rupees.

Foreign investors bought a net 61.3 million rupees worth of shares on Friday, extending the year-to-date net foreign inflow to 6.1 billion rupees worth of equities so far this year.

Shares in Ceylinco Insurance Plc climbed 11.25 percent, Melstacorp Ltd rose 2.9 percent and Janashakthi Insurance Co Plc ended 7.7 percent firmer. 

($1 = 155.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks recover from over 1-month closing low; John Keells up

Reuters: Sri Lankan shares on Thursday recovered from a more than one-month closing low hit in the previous session, helped by gains in market heavyweight John Keells Holdings Plc, although investors remained concerned about communal violence.

After days of violence, a curfew in the town of Kandy was temporarily lifted on Thursday.

“But investors worry about the violence because it is not settled. It could resurface,” said Prashan Fernando, CEO at Acuity Stockbrokers.

The Colombo stock index ended 0.27 percent firmer at 6,521.24, following three straight sessions of declines.

Turnover was 733.5 million rupees ($4.72 million), less than this year’s daily average of around 950 million rupees.

Foreign investors bought a net 24.2 million rupees worth of shares on Thursday, extending the year-to-date net foreign inflow to 6 billion rupees worth of equities so far this year.

Shares in top conglomerate John Keells rose 1.4 percent, while Commercial Leasing & Finance Plc jumped 10.7 percent.

($1 = 155.3500 Sri Lankan rupees)

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks extend fall to over 1-month closing low; communal violence weighs

Reuters: Sri Lankan shares fell for a third straight session on Wednesday and posted their lowest close in more than a month amid investor concerns about continued communal violence.

Buddhist mobs attacked mosques and businesses belonging to the minority Muslims overnight, despite the imposition of a state of emergency to restore peace in the bitterly divided island.

The telecom regulator on Wednesday blocked social media networks such as Facebook Inc Viber and WhatsApp across the country for three days to prevent the spread of communal violence, officials said. “Investors are really worried about the continued violence,” said Prashan Fernando, CEO at Acuity Stockbrokers.

“The market thought the violence was under control yesterday. But it continued today as well. Investors will wait until there is a peaceful situation.”

Trading was thin as most investors stayed on the sidelines. Turnover was 371 million rupees ($2.39 million), less than half of this year’s daily average of around 950 million rupees.

The Colombo stock index ended 0.45 percent weaker at 6,503.86, following a 0.28 percent drop last week.

Foreign investors bought a net 27.9 million rupees worth of shares on Wednesday, extending the year-to-date net foreign inflow to 6 billion rupees worth of equities so far this year.

Nestle Lanka Plc fell 3.8 percent, Commercial Bank of Ceylon slipped 1.5 percent, Sampath Bank Plc dropped 2.7 percent and Commercial Leasing & Finance Plc declined 6.7 percent.

($1 = 155.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks drop to near 3-week closing low; communal clash weighs on market

Reuters: Sri Lankan shares dropped to their lowest close in nearly three weeks on Tuesday amid investors’ concerns about communal violence.

The country declared a nationwide state of emergency for 10 days on Tuesday to stop the spread of violence, after clashes erupted between majority Buddhists and members of the minority Muslim community.

“Market came down with investors worried over the government declaring state of emergency,” said Atchuthan Srirangan, a senior research analyst at First Capital Holdings PLC.

“Investors are waiting to see how foreign investors will react to this state of emergency.”

The Colombo stock index ended 0.3 percent weaker at 6,533.46, following a 0.28 percent drop last week.

Turnover was 436.8 million rupees ($2.82 million), less than half of this year’s daily average of 954.9 million rupees.

Analysts said local investors continued to be on the sidelines as they were still worried about political uncertainty.

Foreign investors bought a net 27.9 million rupees worth of shares on Tuesday, extending the year-to-date net foreign inflow to 6 billion rupees worth of equities so far this year.

Shares of conglomerate John Keells Holdings Plc fell 0.7 percent, Ceylon Tobacco Co Plc ended 0.4 percent weaker and Browns Investments Plc declined 7.7 percent.

Sri Lanka’s two key parties in the ruling coalition last week decided to remain in the ruling coalition, allaying fears of a government collapse.

President Maithripala Sirisena reshuffled his cabinet last week, appointing his prime minister as the law and order minister, after the governing coalition suffered a series of defeats in local elections earlier this month.

However, the changes failed to boost the market as the cabinet reshuffle was not enough to address the election defeats, analysts said. 

($1 = 155.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sierra Cables Plc, wins Rs872mn power cable deal

ECONOMYNEXT - Sri Lanka's Sierra Cables Plc, a publicly traded company had won an 872 million rupee deal to supply cables to state-run Ceylon Electricity Board.

The cabinet of ministers had approved a proposal to buy the cables from Sierra cables for 872.96 million rupees.

Sierra will supply 3x70+54.6+16sqmm aerial bundled cables.

Sierra Cable Plc group lost 8.08 million rupees in December 2017 quarter, down from a profit of 103 million rupees a year earlier.

Revenues fell to 1,086 million rupees in the quarter from 1,102 million a year earlier, costs rose to 932.8 million rupees from 884.7 million rupees and gross profits fell to 133 million rupees from 218 million rupees.

Sri Lanka's Industrial Asphalts leases out flood-hit site

ECONOMYNEXT – Sri Lanka’s Industrial Asphalts (Ceylon) (IAC) has leased out the site of its plant where operations were disrupted operations by floods in May 2016 to a unit of Thailand’s Siam City Cement Public Company Limited.

A stock exchange filing said IAC will lease the site at No. 28/1, New Nuge Road, Peliyagoda, on the banks of the Kelani river, north of Colombo, to Siam City Cement (Lanka) Ltd for 10 years.

The operations of IAC, which makes bituminous products and surface coatings for industry and household use, including road construction and maintenance, will be shifted to another site at Peliyagoda under a new subsidiary.

Sri Lanka's Hapugastenne Plantations expands pepper, cinnamon

ECONOMYNEXT - Sri Lanka's Hapugastenne Plantations has expanded pepper and cinnamon cultivation as well as forestry cover to diversify revenues, boost land use and protect the soil, the firm said.

"We consider it prudent to embark on a diversification strategy whilst reducing dependency on major plantation crops to expand the cinnamon plantations of the Company," Chief Executive Dushanth Ratwatte told shareholders in the annual report.

The firm has identified pepper, cinnamon and cocoa to diversify, from over dependence on tea and rubber. The company had added 24 hectares of cinnamon and planted 10,000 pepper vines using low-shade trees of tea plantation, increasing land use.

The firm had earned revenues of 26 million rupees from cinnamon last year. Another 8 million had come from pepper.

Hapugastenne had planted 800 hectares of rubber over the last 5 years, despite erratic prices making revenues volatile.

The company had also planted 1,493 hectares of timber trees. The plantations were less than 25 years old.

Sri Lanka privatized the plantations in the mid-1990s. Hapugastenne's parent is Finlays group. Finlays UK has given Hapugastenne over 450 million rupees in loans at rates of 3.5 percent to 6.0 percent to invest.

Central Bank cancels CIFL license; legal action against responsible parties

LBO - Monetary Board of the Central Bank has decided to cancel the licence issued to CIFL under the Finance Business Act with effect from today.

Director of the Department of Supervision of Non- Bank Financial Institutions of the Central Bank has also decided to cancel the Certificate of Registration as a Registered Finance Leasing Establishment under the Finance Leasing Act.

Accordingly, CIFL is not permitted to engage in Finance Business under the FBA and to grant new finance lease facilities under FLA with effect from today.

Central Investments and Finance (CIFL), a Licensed Finance Company in Sri Lanka has been facing severe financial problems over the last four years due to mismanagement and various fraudulent activities taken place in the company.

Depositors of the company have failed to withdraw their money over the last four years. All efforts made to revive the company through different strategies have been failed.

“The continuity of current status will further detrimental to the interest of depositors and other stake holders of the company,” the Central Bank said.

“Sri Lanka Deposit Insurance and Liquidity Support Scheme will take necessary actions to pay compensation to the insured depositors under the applicable laws and regulations.”

The Central Bank further said depositors may be able to recover some of their dues in the process of liquidation subject to the priority of claims.

“All debtors of the company are required to pay their dues to the company through a Bank account announced by the company,”

“Central Bank wishes to emphasize that legal actions will be taken against the responsible parties for the mismanagement and fraudulent activities of the company.”

Sri Lankan stocks end near 2-week closing low

Reuters: Sri Lankan shares fell slightly on Monday and finished the session near a two-week closing low hit last week, as investors sold stocks of diversified and palm oil companies amid continued political uncertainty, stock brokers said.

The Colombo stock index ended 0.06 percent weaker at 6,552.81, following a 0.28 percent drop last week. On Wednesday, it posted its lowest close since Feb. 14.

Turnover was 1.3 billion rupees ($8.39 million) on Monday, more than this year’s daily average of 967.9 million rupees.

“It was a very slow day,” said Dimantha Mathew, head of research, First Capital Holdings, referring to inactive local investors.

Local investors continued to be on the sidelines as they were still worried about political uncertainty, he added.

Foreign investors bought a net 45.9 million rupees worth of shares, extending the year-to-date net foreign inflow to 5.97 billion rupees worth of equities so far this year.

Shares of Melstacorp Ltd fell 5.3 percent, Carson Cumberbatch Plc declined 6.1 percent and Bukit Darah Plc dropped 7.6 percent.

Sri Lankan shares hit a more than three-month high last month after two key parties in the ruling coalition decided to remain in the ruling coalition, allaying fears of a government collapse.

President Maithripala Sirisena reshuffled his cabinet last week, appointing his prime minister as the law and order minister, after the governing coalition suffered a series of defeats in local elections earlier this month.

However, the changes failed to boost the market as the cabinet reshuffle was not enough to address the election defeats, analysts said. 

($1 = 154.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Union Bank posts Rs 782 mn operational profits

Despite the volatile macro environment Union Bank has performed exceptionally well in 2017 resulting in a 35.6% increase in profits from operating activities to Rs. 782 million.

This is in comparison to Rs. 577 million recorded in 2016, while recording a profit before tax (PBT) of Rs. 534 million, a 23% growth YoY.

Gross income of the Bank improved by 39.7% to Rs. 11,938 million in comparison to Rs. 8,546 million recorded in 2016. Income growth of the Bank in 2017 was mainly driven by the core banking operations. This highlights the Bank’s continuing progress in its swift transition to a full-fledged commercial bank with a wider focus on Retail, Corporate and SME sectors. The impressive results reflect the success of the rapid expansion initiatives implemented by the Bank following the capital infusion made in the latter part of 2014.

The net interest income of the Bank recorded Rs. 3,046 million during the year, significantly improving by Rs. 539 million which translates to an increase of 21.5%. The rise in net interest income was mainly driven by the balance sheet growth of the Bank.

The Bank’s loans and receivables stood at Rs. 70,578 million as at end of 2017. This was a growth of Rs. 15,140 million which translated to a healthy increase of 27.3%. Composition of the loans and receivables of the Bank changed in line with the Bank’s strategy for the year.

The Bank’s deposit mobilisation strategies yielded good results with the deposit base of the Bank standing at Rs. 70,326 million along with a growth of Rs. 18,484 million which is an impressive 35.7% increase in 2017. Much of this growth was steered by retail fixed deposit growth of Rs. 13,284 million, 58.7% growth over the previous year.

The Bank has made significant efforts to improve its fee and commission income using the key enablers established during the current and the previous years.

The Bank reported a net trading and other income of Rs. 656 million.

Operating expenses of the Bank was well managed and increased to Rs. 3,345 million during the year, as opposed to Rs. 3,008 million in 2016, which is only an increase of 11.2%. This is in comparison to the total operating income increase of 17.1% during the same period.

Commenting on the performance of the Bank, Director, Chief Executive Officer of Union Bank, Indrajit Wickramasinghe said, “the year 2017 ended a period of transformation and the implementation of a 3 year strategic plan that resulted in significant enhancements to the business model resulting in transformational growth in the Bank’s performance during these three years.”
www.dailynews.lk

Nations Trust Bank records 31% growth in pre-tax profits

Nations Trust Bank closed the financial year December 31, 2017 with a post-tax profit of Rs.3,371 million, up by 18% over the previous year with pre-tax profits increasing by 31%.

A higher effective tax rate stemming from the increase in the financial services VAT rate as well as the additional tax of Rs. 210Mn on inter-company dividend payments impacted the Group bottom line growth. Healthy portfolio growth and strong fee-based income growth enabled the Group to record higher pre-tax profits, despite the effects of narrower NIMs and an increase in impairment provisions.

The Group’s Net Interest Income grew by 26% underpinned by good growth in its advances portfolio.The faster increase in deposits rates which mirrored market trends due to tightening of market liquidity, especially in the first half of the year, resulted in interest expenses increasing by 56% whilst the corresponding increase in interest income was lower at 42%. However, this trend was somewhat reversed in the second half with the decline in cost of funds and a moderate pick-up in NIMs.

Net fee and commission income increased by 29% driven by growth in the cards fee based income, increased trade and transactional fees as well as contributions made from structured financing transactions. Net trading losses for the year amounted to Rs. 558 Mn which is partly reflective of the swap cost arising from an increase in the funding of theforexswap book by30% and increase in SWAP premiums by 117bps.

Impairment charge increased by 58%, stemming primarily from the increase in individual impairment as the weather relatedweakening of thecountry’s agriculture sector had trickle down effects on several industry sectors. Previous year individual impairment charge was low as a result of reversals in impairment provisions.

Total operating expenses increased by 15% due to business growth in transactional volumes and increased operational activity. “It has been an extremely rewarding year as the Bank not only exceeded in achieving the financial goals set for the year but also successfully executed a numbers of strategic initiatives in our customer experience and digital journey,” Director/CEO Renuka Fernando, said.

Loans and advances recorded a well balanced growth of 25%.Depositsgrew by 28% faster than the industry growth of 17%. The Bank successfully concluded a $50Mn funding line from IFC adding more diversity to the medium term funding structure of the bank. During the year, the Bank reached a major mile stone in its digitization journey with thelaunch of Sri Lanka’s first digital bank, FriMi, a combination of next generation bank account, payment system and e-wallet wrappedup in one convenient app.
www.dailynews.lk

Sri Lanka Telecom profits rebound in Dec qtr

ECONOMYNEXT - Profits at Sri Lanka Telecom, a wireline operators with mobile and pay TV, rose 470 percent to 707 million rupees in the December 2017 quarter from a year earlier, helped by margin gains and an absence of forex losses.

SLT group reported earnings of 39 cents per share for the quarter. In the year to December the group reported earnings of 2.18 rupees per share on total profits of 4.3 billion rupees, which were down 17.7 percent.

In the December quarter group revenues rose 6.7 percent to 19.35 billion rupees, with costs rising at a slower 2.2 percent to 14.2 billion rupees, helping boost gross profits before depreciation to 5.0 billion rupees, up 21 percent from a year earlier.

Depreciation rose from 3.7 billion rupees to 4.2 billion rupees and operating profits rose to 508 million rupees from 248 million. Other income was 588 million rupees, up from 428 million rupees.

Last year's profits were dragged down by a 455 million rupee forex loss as the rupee fell, but this year there was a 23 million rupee gain.

In the year to December, the group has made 22 billion rupees of investments in plant and property. The group has also spent 4.9 billion rupees on unspecified intangible assets up from 1.3 billion rupees a year earlier.

Sri Lanka's Bank of Ceylon net down 5-pct

ECONOMYNEXT - Profits at Sri Lanka's state-run Bank of Ceylon, fell 5 percent to 7,502 billion rupees in the December 2017 quarter from a year earlier, amid shrinking margins though the lender also posted 5.2 billion rupees in capital gains.

The bank reported earnings of 630.28 rupees per share for the quarter. In the year to December it reported earnings of 1,900 rupees on total profits of 21.8 billion rupees which were down 7.2 percent.

Bank of Ceylon is not publicly traded but its bonds are listed on the Colombo Stock Exchange.

Interest income in the quarter rose 24.8 percent to 46.75 billion rupees, but interest expenses rose at a faster 49 percent to 31.6 billion rupees, shrinking net interest income 7.6 percent to 15.1 billion rupees.

During the year to December, Bank of Ceylon grew loans 16.5 percent to 1.19 billion rupees, while deposits grew at a faster 23 percent to 1.56 billion rupees.

The bank reversed 904 million rupees in loan loss provisions. In the December 2016 quarter it made 3.7 billion rupees in specific provisions and a 5.3 billion rupee general provision.

Bank of Ceylon's bond portfolio grew in the held-to-maturity book rose 27.2 percent to 309 billion rupees and the trading portfolio grew 39 percent to 22.6 billion rupees.

There were 5.8 billion rupees in revaluation gains.

Fee and commission income rose 5.8 percent to 2.0 billion rupees. Other operating income fell 72 percent to 1.36 billion rupees.

Total group assets grew 16.5 percent just short of two trillion rupees to 1,999.12 billion rupees.

At standalone bank levels, total assets grew 16.9 percent to 1.951 billion rupees. Net assets grew 20.5 percent to 111.8 billion rupees.

Sri Lanka's Bairaha Farms to invest Rs1.3bn to increase production

ECONOMYNEXT – Sri Lankan poultry firm Bairaha Farms said it will spend Rs1.3 billion to increase day old broiler chick production by more than 50% over a period of three years.

The investment will be done through Siyane Farms Ltd., a fully owned subsidiary of Bairaha Farms, a stock exchange filing said.

Last January Bairaha Farms announced it was expanding feed mill storage facilities.

The company’s net profits had slumped by half in the December 2017 quarter to Rs98 million from a year ago with falling revenues and shrinking margins.

Sri Lanka’s Colombo Dockyard near profit in December quarter

ECONOMYNEXT – Sri Lanka’s Colombo Dockyard narrowed its losses further to just Rs192,000 in the December 2017 quarter from a loss of Rs76 million a year ago, and down from a loss of Rs189 million in the September 2017 quarter.

Interim results filed with the stock exchange showed earnings per share of 35 cents in the year to 31 December 2017, compared with a loss per share of Rs3.99 the previous year.

The stock last traded at Rs85.20 Friday. The firm has announced a final dividend of Rs1.50 per share for the financial year ended December 31, 2017.

December 2017 quarter sales of the yard, majority owned by Japan’s Onomichi Dockyard Company, rose 13% to Rs2.6 billion from a year ago with gross profit up 8% to Rs464 million.

Income tax expenses were sharply higher in the December quarter, the accounts showed.

Earnings from ship building and heavy engineering business fell during the 2017 financial year while that from ship repair business improved, the accounts showed.

Sri Lanka small car, heavy truck imports rebound in January

ECONOMYNEXT – Sri Lankan vehicle imports recovered in January 2018 with big increases seen in small cars, scooters and heavy trucks, especially tipper trucks, brokerage JB Securities said in a report.

“January has seen a strong rebound in vehicle registrations compared to December 2017 specifically in the small car segment, 2-wheelers and heavy trucks,” it said.

Total car registrations in January rose to 5,306 units, significantly up from 3,394 units in December and 3,487 units 12 months ago, with small cars accounting for the bulk of new and second-hand imports.

There were 840 registrations of brand-new cars in January, up from 756 units the previous month but significantly down from 1,149 units 12 months ago.

“The segment is dominated by small cars which account for 88% of the total – Suzuki/Maruti accounted for 252 units of which 114 units were Wagon R imported by the agents,” JB Securities Managing Director Murtaza Jafferjee said.

Toyota is showing steady growth with its Wigo model with 55 units registered. It is a 1L petrol engine small car that is made in Indonesia and marketed locally for Rs3.4 million.

Pre-owned cars accounted for 4,466 units in January, which is a 24 month record, up from 2,638 units in December 2017 and significantly up from 1,930 units 12 months ago, the report said.

Suzuki accounted for 2,777 units of which 1,883 were Wagon R followed by Toyota which accounted for 1,257 of which 760 units were 1L Vitz.

Heavy trucks registrations rose to 398 in January, up from 322 units in December and significantly up from 222 units 12 months ago, Jafferjee said.

Tata wa the market leader with a 47.4% share followed by Lanka Ashok Leyland with a 44.9% share.

Jafferjee said registrations of tipper models rose to 159 in January, up from 81 units the previous month and 115 units 12 months ago.

Registrations of two-wheelers shot up significantly to 31,596, in January 2017 from 25,019 in December, and marginally up from 31,158 units 12 months ago.

Scooters accounted for close to 60%, JB Securities said. “

“Honda dominates this category accounting for 58% share and 38.8% segment share. Bajaj is a distant second with a segment share of 17.2% followed closely by Yamaha with a 15.3% share and TVS with a 14.2% share.”

Sri Lankan stocks climb for 3rd session as Janashakthi Insurance jumps

Reuters: Sri Lankan shares rose for a third straight session on Friday to their highest close in more than three weeks, boosted by a surge in Janashakthi Insurance Plc as it agreed to sell its general insurance unit to Germany’s Allianz SE.

Janashakthi stock jumped about 28 percent in the session, bringing its weekly gain to a whopping 73 percent.

The insurer said on Friday it agreed to sell its wholly owned subsidiary, Janashakthi General Insurance Ltd, for 16.4 billion rupees ($106.4 million) to Allianz.

The Colombo stock index ended up 0.34 percent at 6,520.46, its highest close since Jan. 9. The market rose 1 percent this week, its second straight weekly gain.

“A combination of retail, high-net-worth and foreign investors were active today,” said Dimantha Mathew, head of research at First Capital Holdings.

Cargills (Ceylon) Plc rose 5.7 percent, while Nestle Lanka Plc ended 2.4 percent up, and Ceylon Tobacco Company Plc rose 0.9 percent.

The market turnover was 1.22 billion Sri Lankan rupees ($7.9 million), more than last year’s daily average of 915.3 million rupees.

Foreign investors sold a net 3.8 million rupees worth of shares on Friday, but they have been net buyers of 4.2 billion rupees worth of equities so far this year.

Analysts said the political uncertainty ahead of a local election next month continued to weigh on sentiment. Sri Lanka will hold a long-delayed local government election on Feb. 10.

President Maithripala Sirisena in an election rally over the weekend said he was ready to form a new government with his Sri Lanka Freedom Party (SLFP), breaking away from the current coalition - a comment that exacerbated worries about the future of the coalition government.

Sri Lanka’s stock, bond and foreign exchange markets are closed on Monday for a special holiday. Markets will resume trading on Tuesday. 

($1 = 154.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)