Sri Lanka gold, jewellery price up after tax hike

ECONOMYNEXT - Sri Lanka's 24-carat gold price had risen to 62,000 rupees for an 8.00 gram sovereign after a 15 percent tax hike by the government, jewellers in Colombo said.

Before the New Year, gold was trading around 53,000 to 54,000 rupees for 8.00 grams.

Jewellery grade 22 carat gold was quoted around 59,000 - 60,000 rupees a sovereign, up from around 50,000-51.000 rupees before the tax hike.

The tax on gold is expected to increase smuggling into the country, while legal imports fall.

Due to a 10 percent import duty at 3 percent value added tax in India, gold imported to Sri Lanka was being smuggled into India giving a profits to smugglers in the island.

Sri Lanka's TAFL says exports of parent chicks up, weak domestic demand

ECONOMYNEXT - Sri Lanka's Three Acre Farms, a breeder farm and poultry processing firm said exports of parent stocks rose in 2017, while domestic demand fell as inflation and taxes rose after a currency collapse killing demand for eggs and meat amid a drought.

Sri Lanka being a country without avian flu had helped exports of parent stock chicks, the firm said. Its breeder farms unit had earned revenues of 1.84 billion rupees.

"…[G]rowth was upheld by exports of broiler Parent Stock Day Old Chicks (PS DOCs) to regional countries, which increased by a commendable 28 percent over exports in 2016, but a further increase in revenue was forestalled by a lower demand for layer DOCs due to an unstable egg market," the firm told shareholders.

"However, the Group maintained its revenue from Broiler Day Old Chicks (DOC) despite the glut in the chicken market by ensuring supplies of quality DOC and trust and confidence of our brand."

The company said a drought and floods had also affected. Meanwhile the currency had also depreciated. Higher inflation and a hike in sales taxes was also negative.

Sri Lanka's rupee collapsed from 131 to 150 levels from late 2015 to 2016 and continued to be pushed down by the central bank as it was targeting a real effective exchange rate index.

A currency collapse and the inflation that comes in its wake kills disposable incomes of people, and recouping of forex reserves after slowing credit also hits demand.

However poultry firms get demand support from the tourism sector.

TAFL said in 2017 it earned revenues of 2,401 rupees down 6 percent from 2,543 million a year earlier. Profits fell to 656 million from 814 million rupees.

After the 2011/2012 balance payments crisis and currency collapse, Three Acre Farms killed day old chicks as demand suddenly fell. Profits shrank to 36 million rupees from 170 million.

Sri Lanka 01-year Treasuries yield drops to 9.65-pct

ECONOMYNEXT – Sri Lanka’s one-year Treasury Bill yield fell further at an auction Wednesday, falling by 06 basis points to 9.65% from 9.71% last week, data from the state debt office showed.

The debt office accepted 24 billion rupees in bids from the market, after offering only 18 billion rupees of bills and getting bids worth 62 billion rupees.

Bids for 6 billion rupees of 6-month bills were rejected but the debt office accepted 4.0 billion rupees in 3-momth bills, the same amount offered, with its yield dropping 2 basis points to 8.15%.

Sri Lanka’s Cargills Bank to list in 2020

ECONOMYNEXT – Sri Lanka’s Cargills Bank, owned by the Cargills group, is to list on the Colombo stock exchange in 2020, the bank’s chairman Louis Page has said.

“The bank is working towards listing its shares in the CSE in 2020,” he said in the bank’s annual report for 2017 which was just released.
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The largest shareholders of Cargills Bank Limited are Cargills (Ceylon) with a 39.71% stake and CT Holdings with 25.29%.

The Employees’ Provident Fund is the third largest shareholder with a 4.98% stake. About 26% of Cargills Bank shares are held by institutions.

Sri Lanka’s Cargills gets ok for banking counters at all supermarkets

ECONOMYNEXT – Sri Lanka’s Cargills Bank, owned by the Cargills group, has got regulatory approval to operate banking counters at all its Food City supermarkets islandwide, helping it keep costs low.

The bank’s chairman Louis Page said a key competitive advantage of Cargills Bank centred on the retail network of over 350 Cargills Food City outlets spread across the length and breadth of the country.

“The Cargills outlets offer banking customers convenience with low overhead for the bank,” he said in the bank’s annual report for 2017 which was just released.

The bank is converting Cargills Food City (CFC) cashier counters to banking counters.

“During the year the bank was able to obtain approval for all its CFC outlets to operate as banking agencies,” the report said.

The year under review saw the opening of 3 new branches in Wattala, Ratnapura and Kaduruwela in September, October and December.

The report said that with technology being a strategic priority, Cargills Bank has been able to enable the deposit and withdrawal of funds 365 days of the year, from 8 am to 11 pm., by converting supermarket checkouts to simple but versatile banking counters.

“This complements the bank’s ability to compete in a non-traditional banking space where there is much untapped potential amongst hitherto excluded segments and the SME sector of the country.”

Cargills Bank said it will increase investments and focus on electronic and mobile banking channels to augment the extensive retail banking channels at CFC and carve out a niche by serving the underbanked and offering the best in customer convenience.

“Our unique retail and SME- focused and technology- led model, with the aim of offering customers new paradigms in convenience and speed of service, is based on an “Operational Expenditure model” rather than a Capital Expenditure based one,” it said.

“This approach places us on a firmer foundation of lower costs with greater agility and nimbleness to adapt to rapidly evolving technology.”

Sri Lanka Telecom sees data revenue growing, margins falling

ECONOMYNEXT – Sri Lanka Telecom said broadband data will dominate revenue despite thinning margins and rising capital expenditure with the telco developing its own over-the-top (OTT) platforms for voice, audio, picture and video messaging services like WhatsApp and Viber.

SLT has invested over 70 billion rupees over the last two years to expand a fibre optic network for faster broadband.

"In terms of the telco industry, growth will focus on broadband-related digital services. Broadband revenues will dominate the income statement within the next three years," SLT Chairman Kumarasinghe Sirisena told shareholders in the company's 2017 annual report.

However, the fibre network with broadband speeds up to 100Mbps will boost third party OTT consumption eating into SLT's own traditional voice and messaging revenue.

"The year 2017 was another turbulent year for the global and local telecommunication industry as revenue from IDD and other traditional avenues declined due to the threat from OTT players," SLT said in its 2017 annual report.

Also, "margins from data are decreasing while the capital expenditure in infrastructure is on the rise," it said.

However, the telco said it doesn't see OTT's as a threat.

"The usage boosted by OTT consumption will fill up the broadband 'pipes', thereby contributing towards better return on investment," the telco said, adding that it would develop its own OTT platforms.

In 2017, revenue from broadband and 'data and other services' was 27 billion rupees at company level, accounting for nearly 60 percent of total revenue of 44.5 billion rupees.

The share of broadband and 'data and other services' to revenue was 38% percent in 2012.

SLT has connected 315 government establishments to the fibre optic network, and will add 545 more by the end of 2018.

It has also connected 2 million homes to the fibre network by the end of 2017 both in terms of fixed and mobile broadband.

SLT also provides IPTV on both its copper and fibre network.

Sri Lankan stocks slip as investors sell select blue chips

Reuters: Sri Lankan share index slipped on Thursday from a five-week closing high hit the previous day, snapping a six-session winning streak, as investors offloaded select blue-chip stocks in low volumes.

Many market participants stayed away due to extended holidays after the Sinhala-Tamil New Year festival last weekend, brokers said.

The Colombo stock index ended 0.36 percent weaker at 6,528.57, slipping from its highest close since March 13 hit on Wednesday. The index gained 0.44 percent last week.

“Market came down on blue-chip selling in low volumes,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings PLC.

“Just 159 shares of Ceylon Tobacco Co (CTC) were traded. The small volume of selling in CTC dragged the market down,” he added.

Turnover stood at 269.8 million rupees ($1.73 million), less than a quarter of this year’s daily average of 1.11 billion rupees.

Shares of Ceylon Tobacco ended 2.5 percent weaker, while Lanka ORIX Leasing Company Plc closed 2.2 percent down and Melstacorp Ltd closed 1.00 percent lower.

The market has been waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said.

Foreign investors bought shares worth a net 57.1 million rupees on Thursday, but they have net sold 1.27 billion rupees worth of equities so far this year.

The central bank unexpectedly cut its key lending rate by 25 basis points early this month, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

($1 = 156.1500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)