Dunamis Capital gets 'BBB+' rating

Ceylon FT: RAM Ratings Lanka has assigned Dunamis Capital PLC respective long- and short-term corporate credit ratings of BBB+ and P2.

"Concurrently, we have assigned an initial issue rating of BBB to the Company's proposed LKR1 billion Senior, Unsecured, Redeemable Debentures. The long-term rating has a stable outlook," the ratings agency said in a statement.

Dunamis is a holding company with interests in primary dealing, stock brokering, margin trading, debt structuring, asset management, property development and manufacturing. 

The Company and its subsidiaries are collectively referred to as the Group.

The Company's primary income generator is its financial services arm, held by First Capital Holdings PLC (FCH) (rated BBB+/P2 by RAM Ratings Lanka). The bulk of FCH's revenue and profits is generated by primary dealer First Capital Treasuries Limited (FC Treasuries). FC Treasuries is among the pioneer primary dealers in Sri Lanka, appointed by the Monetary Board of the Central Bank of Sri Lanka (CBSL) to deal with the CBSL as counterparty in the primary market and to trade in government securities in the secondary market.

Dunamis' ratings are upheld by the Company's exposure to minimal credit risk as most of the Group's trading and investment securities is......comprised of FCH's investments in government securities, which carry minimal credit risk.

Meanwhile, FC Treasuries' capitalisation levels are deemed good, supported by a risk-weighted capital adequacy ratio which comfortably surpassed the industry average in FY March 2013 and served as a sufficient buffer to absorb any loss arising from fluctuating interest rates.

Elsewhere, reflective of FCH's liquidity position, Dunamis' liquidity position is deemed good. Although a high proportion of the Group's investments consist of highly liquid government securities, most of it has been pledged against REPO borrowings; approximately LKR 230 million of its trading securities are unencumbered. We also note that the liquidity risk stemming from the Company's property development arm is insignificant due to its minimal investments in this segment.

Meanwhile, we also opine that FC Treasuries – the Group's largest revenue contributor – has an adequate risk-management and monitoring framework. This is reflected in its risk measures, such as stop loss limits and the adoption of a modified duration formula measures the impact of a 1% movement in interest rates on the value of the trading portfolio), which are more conservative than that of its However, it is also noted that a primary dealer is exposed to the inherent volatility of the securities industry, which in turn is dependent on a range of factors including interest rates, government monetary policy, the state of the economy and government borrowing requirements.

Portfolio values fluctuate in line with interest rate, which is reflected in FC Treasuries' fluctuating performance over the years and FCH's earnings profile. On this note, due to Dunamis' heavy reliance on FCH (or its financial services subsidiaries) Dunamis' earnings profile is further rendered volatile.

Dunamis' subsidiary Kelsey Developments PLC is loss making. Meanwhile, The Montessori Workshop (Pvt) Limited (Montessori Workshop) which made pre-tax losses in FY March 2013, was disposed of in January 2013.

However, we also note that Kelsey made a pre-tax profit for the quarter ended September 2013, owing to intra-group property transfers.

The management has recently ventured into the manufacture of synthetic leather, which is primarily targeted at furniture, footwear and other leather product manufacturers in the country. While acknowledging that the venture will diversify Dunamis' existing business profile and cash flow sources, thus alleviating its dependency on its financial services arm, we note that the requisite gestation period may hamper the Group's performance in the immediate term.

The ratings for Dunamis' debenture issue, has been notched down by 1 due to the structural subordination of Dunamis' debts to that of its subsidiaries. As Dunamis is a nonoperating investment holding company, we note that Dunamis' priority debts (debts relating to its major operating subsidiary, FCH) as a percentage of the Group's total assets (excluding money market instruments) is envisaged to exceed the threshold of 30% of the Group's total assets (excluding money market instruments) as at FY Mar 2014 stemming from the LKR1 billion debenture issuance, thus giving rise to structural subordination," RAM Ratings said.
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Sri Lankan shares close at over 10-wk high ahead of policy review

(Reuters) - The Sri Lankan share index hit its highest closing level in more than 10 weeks on Monday, led by blue chips ahead of the central bank's policy rates announcement while retail investor interest also helped boost sentiment.

The main stock index gained for a fourth straight day and closed higher 0.1 percent, or 6.27 points, at 6,187.03, its highest since Feb. 3.

"We saw some buying interest from retail investors after the long holiday," said Prashan Fernando, chief executive officer of Acuity Stockbrokers. "The market expects the central bank to keep the interest rates unchanged."

The central bank is expected to keep its key policy rates steady on Tuesday, a Reuters poll showed, in a sign it expects private sector credit growth to recover after rates were slashed to multi-year lows at the start of 2014.

With a lower interest rate regime, both Sri Lanka's central bank and finance ministry have said private sector credit growth will rise in the second half of this year.

Both currency and stock markets were closed for three days last week due to public holidays.

The day's turnover was 814.5 million rupees ($6.24 million), less than this year's daily average of 973.8 million rupees.

The bourse saw net foreign inflows for an eighth straight session. Offshore investors bought 159.6 million rupees worth of stocks, though they have sold a net 7.88 billion rupees of shares so far this year.

Market heavyweight and top conglomerate John Keells Holdings gained 0.42 percent at 239 rupees, while large cap Ceylon Tobacco Company PLC rose 0.72 percent to 1,097.80 rupees.

Analysts said foreign investors could shift from the island nation's risky assets if Sri Lanka does not cooperate in an international probe by the Office of the United Nations' High Commissioner for Human Rights into the country's alleged war crimes and human rights abuses.

Sri Lanka's foreign minister had said earlier this month that the country would not cooperate with the inquiry.

($1 = 130.6100 Sri Lanka Rupees) 

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

Sri Lanka stocks close up 0.1-pct

Apr 21, 2014 (LBO) - Sri Lanka's stocks close higher Monday with index heavy stocks gaining amid net foreign buying on the exchange, brokers said.

The Colombo benchmark All Share Price Index closed 6.27 points higher at 6,187.03 up 0.10 percent. The S&P SL20 closed 6.92 points higher at 3,394.94, up 0.20 percent.

Turnover was 816.06 million rupees, up from 664.12 million rupees last Thursday with 89 stocks close positive against 87 negative.

Royal Ceramics Lanka closed 6.40 rupees higher at 95.20 rupees with market transactions of 247.39 million rupees contributing to 30 percent of the daily turnover.

All off market transactions contributed to 20 percent of the turnover.

Piramal Glass Ceylon closed 20 cents higher at 3.70 rupees and Expo Lanka Holdings closed 30 cents higher at 9.50 rupees, trading heavily on the market.

Foreign investors bought 181.06 million rupees worth shares while selling 21.44 million rupees worth shares.

Carson Cumberbatch closed 20.00 rupees higher at 390.00 rupees and Ceylon Tobacco Company closed 7.90 rupees higher at 1,097.80 rupees.

Indo Malay closed 270.00 rupees higher at 1,980.00 rupees and John Keells Holdings closed 1.00 rupee higher at 239.00 rupees.

JKH’s W0022 warrants closed 1.00 rupee higher at 69.00 rupees and its W0023 warrants also closed 1.00 rupee higher at 73.90 rupees.

Distilleries closed 5.00 rupees lower at 205.00 rupees and Bukit Darah closed 8.50 rupees lower at 571.50 rupees.

AIA Insurance Lanka closed 43.80 rupees lower at 272.20 rupees and Commercial Leasing and Finance closed 10 cents lower at 4.00 rupees.

SLT closed 1.10 rupees lower at 45.60 rupees.

Dialog Axiata to invest US $ 30mn on new submarine cable

Dialog Axiata PLC, a unit of Malaysia’s Axiata Group said, it will invest US $ 30 million on a new sub marine cable and has entered into an agreement with Bay of Bengal Gateway (BBG) Consortium to establish a Cable Landing Station in South Colombo (Mount Lavinia, off De Saram Road).

The BBG submarine cable system, spanning approximately 8,000 km will link Sri Lanka and the region, spanning from Singapore to Oman/ UAE to high capacity Internet hubs in Singapore and India and to onward submarine cable pipes to Europe and the USA.

The project is expected to be fully commissioned by the end of 2014.

Other investors of BBG consortium include Telekom Malaysian Berhard (Malaysia), Vodafone Group (UK), Reliance Jlo Infocom Limited (India), Oman Telecommunications Company (Oman) and Emirates Telecommunications Corporation (UAE).

Commenting on Dialog’s investment Dialog Axiata Group Chief Executive Dr.Hans Wijayasuriya said, “Dialog’s investment in a submarine cable system leads on from our aggressive commitment to deliver the fastest and most advanced telecommunications technology to Sri Lanka and to make the downstream benefits of these technologies affordable and accessible to all Sri Lankan citizens.

The recent commissioning of our 4G services overlaid on our advanced 3G HSPA+ and fibre optic infrastructure reaching all districts of Sri Lanka will empower Sri Lankan consumers and businesses with the power of high speed connectivity. Our investment in a Cable Landing Station and submarine connectivity to the global Internet, infuse further speed and capacity to our broadband offerings spanning enterprise, retail and wholesale solutions.”
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Japanese investors boost Asia Capital with Rs. 400 m infusion

Asia Capital PLC has announced the infusion of Rs. 400 million into the group by two Japanese investors, brothers Yoshimichi Watanabe and Eiji Watanabe, through a private placement.

The Group has issued 21.33 million fresh shares to both individuals giving them a 16.3% stake in the company. This makes the Watanabe brothers the second and third largest  shareholders of Asia Capital PLC.

This fresh capital infusion strengthens the Group’s balance sheet as it is now able to clear out a significant portion of its debt. The move also changes the shareholding of the group to be in line with Colombo Stock Exchange (CSE) regulations.

Speaking on behalf of both brothers about the investment into Asia Capital, Y. Watanabe said: “Sri Lanka is a beautiful country with a large pool of natural resources and furthermore the people are friendly and trustworthy. These are very important traits for us and we have worked closely with Asia Capital for the past two years so we are convinced we have found the right partner for our investment plans. Sri Lanka is one of the few countries in Asia which still has a huge growth potential and we look forward to bring in more Japanese investors to Sri Lanka.”

Expressing his enthusiasm at the new investment Asia Capital Plc Group CEO/Director Stefan Abeyesinhe said: “We are very excited to have the Watanabe brothers joining us to become shareholders in our company. This is a testament to the faith foreign investors have in Sri Lanka and Asia Capital and the obvious potential for growth that they see. Sri Lanka has shown exceptional growth figures during the past four years and the CSE has seen strong growth in net foreign inflow over the past two years. This capital infusion will enhance our ability to capitalise on that growth.”

Over the past two years, Asia Capital has seen several Japanese investors making capital infusions into the company through private equity. The company currently has several Japanese individuals and companies investing in its subsidiaries, especially in the leisure sector. The fact that the Watanabe brothers will be significant shareholders of the parent company will further strengthen the confidence in the Group among other Japanese investors. This is expected to greatly assist Asia Capital PLC in securing more capital for multiple projects in Sri Lanka.

Asia Capital PLC is the largest investment bank in Sri Lanka to be listed on the Colombo Stock Exchange. As a group, Asia Capital has identified strong potential in the property, leisure and real estate sectors and is changing direction to focus on these avenues of growth. ACAP plans to expand its leisure and property sectors over the next few years and to increase its leisure portfolio significantly.
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Casino laws coming again with word game

By Chandani KirindeView(s):

The Government will make a second attempt to gain parliamentary approval to grant tax concessions to two major projects that have run into controversy over allegations that the move would lead to legalising of the casino business. The amended regulations in which the words “entertainment and gaming facilities” have been replaced with the words “associated facilities”, are to be presented under the Strategic Development Projects Act. The regulations will be taken up for debate in Parliament on Thursday and Friday.

One of the projects is to be run by the Australia-based Crown Group headed by casino tycoon James Packer and the other by John Keells Holdings.
Both will “set up and operate Integrated Super Luxury Tourist Resorts”, one along D. R. Wijewardena Mawatha in Colombo 10 and the other in two phases along Glennie Street and Justice Akbar Mawatha in Colombo 2.

The main opposition UNP and the JVP have said they will oppose these regulations. Chief Opposition Whip John Amaratunga said yesterday they would strongly oppose the attempts to grant tax concessions for a casino-related project. The regulations grant a host of tax concessions to the investors in the two projects. They include tax holidays of up to ten years and duty concessions on the import of project-related goods.

The previous regulations which were presented to Parliament in October last year were subsequently withdrawn after an outcry by opposition political parties and religious groups who expressed fears that the legalising of casinos would ruin the culture of the country. www.dailymirror.lk

Tata Motors and DIMO seek greater share of SL’s new car market

Tata Motors together with Diesel and Motor Engineering PLC (DIMO) is aiming for a significant share of the new car market in Sri Lanka through the stylish e-XETA, a top official of the company revealed..

Unveiling the new e-XETA in Colombo recently Pranaw Kumar, Area Manager, Sri Lanka, Tata Motors, said, “Sri Lanka has traditionally been an important market for Tata Motors and the company hopes the new car will help them to achieve a significant share of the new car market in the island”. He noted that they are confident that the passenger vehicle range will continue to be seen as a range that offers superior value to customers in Sri Lanka

The e-XETA will further consolidate the Tata offerings in Sri Lanka, he said, adding it is a new way to look at style, comfort, larger space and performance.

The e-XETA is equipped with a 1.2 litre MPFI engine, and it delivers high fuel efficiency. The GLX variant offers a host of convenient and style features such as heating, ventilation and air conditioning, power steering, all four power windows, body coloured bumpers and ORVMs, front and rear fog lamps and 2 tone alloy wheels.

Tata Motors is already the market leader in commercial vehicles in Sri Lanka, industry observers say. It has thus far exported over 70,000 commercial and passenger vehicles to the country. Part of this success has been due to the DIMO’s sales and after-sales facilities available Island-wide, 24-Hour Road Side assistance for TATA vehicles and superior product performance.

The company’s portfolio of commercial vehicles in the country comprises of an entire range from sub 1-tonne small trucks to 49-tonne prime movers and from 14-seater buses to luxury coaches, while the passenger vehicle portfolio—initiated in 2004—already includes Nano, Tata Vista, Tata Indigo CS, Tata Manza and the Tata Safari. Further, Tata Motors has already established a Technical Training Institute in Jaffna, in association with DIMO, and has begun work on a Driver Training School in Hambantota as part of their community development initiatives, a media release said.

As DIMO is celebrating its 75 years of existence in the Sri Lankan market, this specially designed car will be manufactured and launched as a 75th Anniversary Edition.
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