Amãna Bank 1H PBT up to Rs 400 mn

Having recently declared its inaugural dividend of seven cents per share, Amãna Bank continued to showcase strong performance in terms of profitability, as it closed the first six months of 2018 by recording a Profit Before Tax of over Rs 400 million, which almost doubled from Rs 210.8 million recorded in the first six months of 2017.

Similarly, the Bank recorded a profit after tax of Rs 288.2 million against Rs 151.7 million recorded in the corresponding period of 2017, reflecting an impressive YoY growth of 90%. Whilst the bottom line performance has been noteworthy, EPS remained at 12 cents per share, purely due to the number of shares doubling, subsequent to the successful Rights Issue in Q3 2017.

The Bank’s focus to further expand its core banking activities yielded positive results, with the Bank recording a 27.1% YoY growth in Financing Income which grew to Rs 3.20 billion from Rs 2.52 billion, whilst Net Financing Income grew to Rs 1.58 billion from Rs 1.19 billion reflecting a 32.4% YoY growth. This assisted the Bank’s Financing Margin to record a healthy 4.4% compared to 4.2% at end 2017. During the period, the Bank’s Net Fee and Commission income reported a significant YoY growth of 31.8%. After providing for impairment on financing and accounting for an increase in operating expenses of 8.2%, the Bank was able to record a significant 70.8% growth in operating profit before VAT on Financial Services and NBT to close the first half at Rs 620.8 million. Commenting on its first half performance, the Bank’s Chief Executive Officer Mohamed Azmeer said “It is encouraging to see the traction the Bank has achieved during the last six month, resulting in sustained profitability for the Bank. Having commenced reciprocating our shareholders with the inaugural dividend, we are confident that this performance will lead us to greater success in line with our 5 year strategic plan.”

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Chemanex posts Rs 108mn PBT

Chemanex PLC, the leading importer and manufacturer of industrial chemicals and intermediates, recently saw the completion of a successful restructuring process. The company, with its assets reaching Rs. 2.03 billion, has consolidated its strengths holistically and is all set to meet future challenges with sheer confidence.

Despite the decline of group turnover from last year’s Rs. 181 million to this year’s Rs.108 million, the profit before tax (PBT) reflected a significant improvement recording Rs.41 million this year in comparison to Rs.8 million the previous year.

This undoubtedly signifies the company’s optimistic changes indicating focused business lines and slimmer organization. Furthermore, Chemanex was able to drop its administration expenses from Rs.31 million to Rs.12 million, whereas its distribution expenses dropped from Rs.14 million to Rs.3 million.

With an insightful approach to overcome impending obstacles, Chemanex steered its prudent restructuring process observing a number of crucial changes. The company took steps to clearly identify and terminate non-profitable or lagging operations, while fostering core competencies. It also introduced an actionable business model built on improved focus, structure and efficiency, which in turn encouraged a sustainable growth and enhanced stakeholder value.

Furthermore, by disposing unutilized lands, Chemanex was able to achieve significant funds to complement its short term investments. The company is hopeful that the steps taken will help them garner higher profits through strategic operations in due course.

Expressing his views on the matter, P.R. Saldin, Chairman of Chemanex PLC said, “With the successful completion of our restructuring process, we are more optimistic to face future challenges than ever before. Our next step is to leverage effective synergies with the CIC Group and incorporate their expertise to develop and expand our market strengths and presence. This approach will help us meet the rising demands of our local and international markets while providing them with full product requirements.”

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Lanka Ashok Leyland records Rs 3.2 bn revenue in 1Q-2018

Lanka Ashok Leyland recorded a turnover of Rs 3.2 billion in the first quarter of 2018, against Rs 3.3 billion for the first quarter of 2017.

Vehicle sales saw a marginal decline year on year to Rs 3 billion whilst revenue from other sources rose 44% to R 118.4 million against Rs 82 million for the same period last year. Prudent cost controls boosted the gross profit by 22% to Rs 308 million and saw the gross profit margin expand to 9.7% against 7.8% recorded a year ago.

Operating expenses for the quarter stood at Rs 138.9 million , a 172% increase over the first quarter of 2017 which was benefitted from a one off reversal. Net finance costs for the quarter rose 553% to Rs 67.2 million as we took on more debt to expand our stock of technologically superior BS3 compliant vehicles with latest safety standards. Inventory position grew 30% to Rs 5.7 billion cf. 4.4 billion in the first quarter of 2017 while interest bearing liabilities have risen 99% to Rs 4.1billion against Rs 2 billion a year ago.

The increase in finance resulted in a profit before tax of Rs 51.7mn versus Rs 135.5mn in 1Q 2017, signifying a 51% decline year on year.

Umesh Gautam, CEO of Lanka Ashok Leyland, relayed “that the first quarters’ sales performance has historically been sluggish over the last few years.

This quarter witnessed larger than normal exchange rate volatility which affected pricing and influenced our customers buying decisions. Despite these constraints, our vehicle sales continued to top the Rs 3 billion benchmark. Our bottom line does not fairly reflect the progress the company has made over the quarter which witnessed margin expansion at the gross profit level and saw income from other sources like repairs, hiring and spare parts grow 44%. This restructuring of our revenue profile will reduce exposure to cyclical sales and improve our overall financial position.

On the future outlook Gautam comments that the transportation sector will see the impact of the EURO 4 standard implementation coming into play in July 2018. We commend the government in its efforts to go green however commercially, transportation business models run on very thin margins and are cost sensitive. Higher initial investment in purchase of the vehicles and use of cheaper fuels in vehicles will be replaced by super diesel as required by EURO 4 engines adversely impacting running costs and profitability of the sector.

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Fitch Revises Bimputh Finance’s Outlook to Negative

Fitch Ratings Lanka has revised the Outlook on the National Long-Term Rating of Bimputh Finance PLC (Bimputh) to Negative from Stable. At the same time, the agency has affirmed the National Long-Term Rating at ‘BB(lka)’.

The Outlook revision reflects the finance company’s high capital-impairment risk arising from declining pre-impairment operating profit buffers amid a weakening in asset quality, reducing its capacity to absorb credit-cost shocks.

The revision also captures potential pressure on Bimputh’s financial profile from increasing exposure to the non-microfinance business as the company is still developing risk controls in this segment.

Bimputh’s rating reflects its high-risk appetite stemming from its substantial exposure to microfinance, which accounted for 50% of total lending at end-June 2018. The higher-yielding microfinance segment tends to be more vulnerable to economic changes. Fitch expects microfinance to remain a dominant product for Bimputh although lending to this segment has declined.

The rating also captures the company’s heavy reliance on borrowings and potential capitalisation drag from weakening credit quality and strong loan growth aspirations.

Bimputh’s asset quality is likely to continue to be pressured by Sri Lanka’s challenging operating environment. The company’s reported non-performing loan (reported on a six-months-in-arrears basis) ratio rose to 6.4% by end-March 2018 from 3.0% a year earlier. This was despite a 5.7% net charge-off of average gross loans for the financial year ended March 2018 (FY18).

We expect Bimputh’s medium-term profitability to remain weak, weighed down by high credit and operating cost burdens and a lower share of high-yielding microfinance. The company’s pretax profit to average assets declined to 3.0% in FY18 from 9.7% in FY17.

Bimputh’s weak deposit franchise means it remains reliant on wholesale borrowings. The company’s deposit base is highly concentrated and stayed small at 26.9% of total funding at end-March 2018.

Bimputh is a small finance company accounting for 0.7% of licensed finance-company and specialised leasing-company sector assets at end-March 2018 (March 2017: 0.9%).

Weakening in its capitalisation metrics due to aggressive loan growth and deterioration in credit quality may trigger a negative rating action. An upgrade is contingent on a sustained improvement in credit metrics - in particular capitalisation - and a moderation of its risk appetite.

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Sri Lanka's Central Finance June quarter profits up 23.4-pct

ECONOMYNEXT - Profits at Sri Lanka's Central Finance Company, a non-bank lender, grew 23.4 percent from a year earlier to 1.4 billion in the June 2018 quarter helped by higher net interest income, interim results showed.

The company reported earnings of 6.35 rupees a share in the June quarter, interim accounts filed with the Colombo Stock Exchange showed. The share closed 1 rupee higher on Monday at 97 rupees.

Net interest income rose 12.21 percent in the quarter to 2.9 billion rupees, with interest income growing 12.70 percent to 4.3 billion rupees and interest expenses growing at a faster 13.76 percent to 1.4 billion rupees.

Leases and hire purchase loans grew to 63.7 billion rupees from 61.3 billion rupees. Bad loans provisioning increased to 36.96 percent to 312.8 million rupees.

Other operating income grew 36 percent to 245 million rupees.

Income from related companies in healthcare, power generation, manufacturing, insurance broking and real estate, rose 37 percent to 312.2 million rupees.

The finance company's deposit base increased to 41.4 billion rupees at end June 2018, up 2 percent from three months earlier.

Group gross assets grew to 95.8 billion rupees by end June 2018 from 92.68 billion rupees in March and net assets grew to 29.2 billion rupees from 27.84 billion rupees.

Sri Lanka Asiri Hospital group June net up 1.8-pct

ECONOMYNEXT - Profits at Sri Lanka's Asiri Hospital Holdings grew 1.8 percent from a year earlier to 392.8 million rupees in the June 2018 quarter on slower revenue growth, interim accounts showed.

The hospital group comprising four hospitals and a laboratory service, reported earnings of 35 cents a share in the quarter, interim results filed with the Colombo Stock Exchange showed.

The stock closed unchanged at 24.70 rupees on Monday.

In the June quarter, gross profit grew 3.6 percent from a year earlier to 1.4 billion rupees on revenue growing 4.5 percent to 3.1 billion rupees and cost of sales contracting 5.3 percent to 1.7 billion rupees.

Administrative costs fell 6.7 percent to 681.3 million rupees and net finance costs declined 7.4 percent to 201.4 million rupees.

Selling and distribution costs had fallen 12.7 percent to 98.4 million rupees.

The hospital group reported other incomes of 83.6 million rupees, up 122 percent from a year earlier while the share of profits from associate companies and joint ventures surged 116 percent to 1.3 million rupees.

The group reported a 31.9 million rupee loss on revaluation of financial assets in the June quarter, compared to a 11 million rupee gain the previous year.

The group reported an outstanding commitment of 1.4 billion rupees for a new hospital under construction in Kandy.

The hospital group is controlled by listed Softlogic Holdings which held a 44.39 percent stake as at end June 2018, followed by TPG Growth Fund holding 28.86 percent.

-Asiri Surgical-

Asiri Surgical, a listed hospital under Asiri Hospital Holdings saw profits decline 35.6 percent from a year earlier to 52.7 million rupees in the June quarter, reporting earnings of 10 cents a share.

The share last traded at 10.30 rupees.

Gross profits in the June quarter declined 0.3 percent from a year earlier to 285.6 million rupees.

Revenue had declined 3 percent in the quarter to 779.4 million rupees while cost of sales grew 4.4 percent to 493.8 million rupees.

Sri Lanka's Janashakthi Insurance June net flat

ECONOMYNEXT - Profits at Sri Lanka's Janashakthi Insurance fell 1 percent from a year earlier to 133.9 million rupees in the June 2018 quarter amid higher expansion costs, interim results showed.

The firm reported earnings of 37 cents per share for the quarter, interim results filed with the Colombo Stock Exchange showed.

Earnings in the six months to end June were 19.52 rupees a share on a profit of 7 billion rupees, up sharply from 64 million rupees a year earlier due to a one-off gain of 7.8 billion rupees on the disposal of its general insurance business.

The share was trading 30 cents higher on Tuesday at 22.90 rupees.

In the June quarter, gross written premiums grew 3 percent from a year earlier to 680.9 million rupees, premiums placed with re-insurance companies fell 15 percent to 30.3 million rupees leading to a 4 percent increase in net written premiums to 650.6 million rupees.

Net claims and insurance benefits paid grew 18 percent to 315.4 million rupees and underwriting and acquisition costs rose 39 percent to 209.3 million rupees.

"Overhead expenses grew primarily due to one-off payments related to the divesture of Janashakthi General Insurance Limited and re-structuring," Janashakthi Insurance said in a statement.

The company said it was also expanding its branch network and digital capabilities to reach more customers.

Income from life fund investments grew 9 percent to 345.2 million rupees.

Life insurance liabilities totaled 10.1 billion rupees at end June 2018, up from 9.6 billion rupees six months earlier.

Gross assets fell 49 percent to 18.9 billion rupees and net assets fell 35 percent to 7.3 billion rupees.

"This was a result of Janashakthi’s move to return substantial revenue reserves to its shareholders through a share buyback in March 2018," the company said.

Sri Lanka's Royal Ceramics June profits down 33-pct

ECONOMYNEXT- Royal Ceramics Plc, the dominant tile and sanitary ware group owned by Sri Lankan tycoon Dhammika Perera, posted net profits of 348.7 million rupees in the June 2018 quarter, down 33 percent from a year earlier due to higher cost of sales, distribution and finance.

Earnings per share was 3.15 rupees according to interim financial reports filed at the Colombo Stock Exchange. Royal Ceramics opened trading at 92.60 rupees per share on Tuesday and last traded at 90.30 rupees per share.

Royal Ceramics enjoys protectionist tariffs, and operates mainly in the local market. It opened a retail network in Australia in 2014, and has been exporting to 16 markets. Revenue from exports amounted to 3 percent in the last financial year.

Gross profits in the June quarter fell 3 percent to 2 billion rupees from a year earlier. Gross revenue grew 6 percent to 6.8 billion rupees from 2017, while net revenue grew 6 percent to 6.1 billion rupees and cost of sales grew 11 percent to 4.1 billion rupees.

Distribution expenses grew 15 percent to 1 billon rupees from a year earlier. Finance expenses grew 39 percent to 410.4 million rupees from 2017.

The plantation and aluminium extrusion arms of Royal Ceramics were in the red in the June quarter. Tiles and associated products, sanitary ware and packaging segments also reported lower profits.

Sri Lanka's Vallibel One June net falls 16-pct

ECONOMYNEXT - Profits at Sri Lanka's listed Vallibel One controlled by Dhammika Perera fell 16 percent from a year earlier to 691.2 million rupees in the June 2018 quarter on rising costs and falling profitability and losses at subsidiary companies, interim accounts showed.

Earnings were 64 cents a share in the quarter, interim accounts filed with the Colombo Stock Exchange showed. The share was trading 20 cents lower at 18.70 rupees on Tuesday.

Revenue grew 10 percent to 14.3 billion rupees, cost of sales fell 7 percent to 8 billion rupees expanding gross profits by 15 percent to 6.2 billion rupees.

Distribution costs increased 16 percent to 1.7 billion rupees and Administrative expenses rose 15 percent to 1.5 billion rupees.

Net finance cost grew 63 percent to 530.7 million rupees.

Vallibel One comprises subsidiary companies Royal Ceramics, LB Finance, Greener Water and Delmege Limited and an associated company listed Fortress Resorts.

LB Finance is licensed finance company and the highest contributor to Vallibel One earnings with profits from financial services rising 23 percent in the quarter to 1.1 billion rupees.

Royal Ceramics is in the business of manufacturing and selling floor and wall tiles.

Delmege Limited has interests in consumer goods, food, manufacturing and plantations. Vallibel One said losses from consumer goods deepened 259 percent to 79 million rupees

Greener Water is a mechanical, electronic and plumbing works of super-structures. Vallibel One raised 532.8 million via an IPO to finance the capital needs of this company in 2011.

Aluminium reported a 26 million rupee loss compared to a profit of 19 million rupees a year earlier.

Plantations made a loss of 35 million rupees, compared to a 15 million rupee profit a year earlier.

A segment classified as lifestyle saw profits fall 63 percent to 152 million rupees.

Profits from investments fell 29 percent to 348 million rupees, the group said.

Hotel losses increased 17 percent to 14 million rupees.

Sri Lankan shares edge lower to 5-week closing low

Sri Lankan shares edged lower in thin trade on Tuesday and posted their lowest close in nearly five weeks, as lacklustre corporate results dented investor sentiment for the island nation’s risky assets, stockbrokers said.

The Colombo stock index fell 0.26 percent to 6,113.00, its lowest close since July 11 and third straight session of declines. The index has declined about 3.8 percent so far this year.

Turnover was 380.4 million rupees ($2.38 million) on Tuesday, less than a half of this year’s daily average of 837.1 million rupees.

“There is an overall slowdown on the buying side from both foreign and local (investors). There was buying interest on select counters. John Keells dragged the overall index,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

“June-quarter corporate results have failed to give any bullish reasons for the market to gain.”

Global worries also weighed on sentiment, brokers said.

Emerging equities hit a 13-month low in Asian trading after disappointing Chinese data, before recovering to trade flat in the European session.

Foreign investors, however, bought shares worth a net 112.5 million rupees, after having sold a net 2.64 billion rupees worth of equities so far this year.

Shares in John Keells and top lender Commercial Bank of Ceylon fell 1 percent each.

The central bank left its key policy rates unchanged, as expected, on Aug. 3, citing its goals of stabilising inflation and fostering sustainable economic growth.

Central bank Governor Indrajit Coomaraswamy said the economy was unlikely to grow more than 4 percent in 2018, falling short of an earlier estimate of 5 percent. ($1 = 160.0500 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Subhranshu Sahu)