Fitch maintains Ceylon Income Fund on Watch Negative

Fitch Ratings has maintained the ‘(A(lka))’ National Fund Credit Quality Rating of the Ceylon Income Fund on Rating Watch Negative.

The National Fund Volatility Rating is ‘V-NR’.

The maintenance of the RWN is driven by an increase in the proportion of the fund rated only by Lanka Rating Agency (LRA) following redemption activity in the fund.

The Securities and Exchange Commission of Sri Lanka issued a statement in July 2015 saying that LRA is not entitled to assess, evaluate or review the creditworthiness of listed securities or securities to be listed.
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BoC leads first half growth with Rs. 6.7 b profit

The Bank of Ceylon (BoC) continued to lead its growth course in first half of 2015 with Rs. 9.1 billion Profit Before Tax (PBT) achieving 6% growth over the previous year.

Profit After Tax (PAT) stood at Rs. 6.7 billion resulting in 8% growth. \The Group reported Rs. 9 billion PBT resulting in 5% growth over the corresponding period of the previous year and the Bank dominates the results of the Group accounting for 96% of total earnings and 97% of the Group’s assets.

Total operating income for the period stood at Rs. 31 billion and shows a 24% increase which has been accelerated through 52% growth in net interest income and 53% growth in other operating income.

Net interest income has increased due to higher interest income complemented by a 12% reduction in interest expenses depicting a greater efficiency in deposit mix management by the Bank which has contributed to improve the Net Interest Margin (NIM) by 36% to 3.4% on YoY basis.

Despite the increase in personnel expenses, the Bank has been able to maintain other expenses 17 % lower than those of the corresponding period in 2014, allowing only a marginal increase of 2% in total operating expenses.

BoC has grown its total assets by a further 6% to Rs.1.4 trillion as of end June 2015.

Loans and advances accounted for 56% of the Bank’s total assets base and gross loans stood at Rs. 837 billion.

Recovering from the slow credit growth in 2014, the loan book has grown by 8% during the first half of 2015. The investment portfolio also showed an upward movement due to increased investment and treasury activities.

Deposits accounted for 71% of the Bank’s liabilities as at end June 2015 and showed a marginal increase of 1% compared to the end 2014 position which is an 8% increase compared to end June 2014.

Deposit mix has improved favorably achieving a higher CASA mix (current and savings account to total deposits) of 45% resulting in 437 bp increase on YoY basis.

The Bank’s domestic liquid asset ratio was 30.8% as of end June 2015 while the off-shore liquid asset ratio was 28.9% standing well above the Central Bank’s required benchmark of 20%.

The Bank managed to maintain better trade-off between liquidity and interest earning assets.

The Bank also continued to sustain CAR by maintaining Tier I at 8.4% and Tier II at 11.9% levels against the Central Bank’s minimum requirements of 5% and 10% respectively.

Further, the Bank has created history once again by being ranked among the top five banks in the Asia – Pacific region (excluding China and Japan) in terms of return on capital by “The Banker” magazine, becoming the first Sri Lankan bank to achieve such a performance ranking.
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Listed corporates earn Rs 47B in 2Q

Earnings of listed corporates for the quarter ended 30 June 2015 showed a 10% year-on-year growth to Rs 47 billion amidst the slowdown depicted 'Quarter On Quarter basis (-12.8%) mainly on the back of continuously underperforming plantation and oil palm sectors, First Capital Research report said.

Positive contributions derived from growing consumption led Banking and Finance, Food and Beverage and Manufacturing sectors have assisted earnings to maintain at sustainable levels, the report stated.

According to report, the top contributor, the Banking and Finance sector continued its earnings uptrend by recording an earnings of Rs 4.4 Billion (31% YoY) amidst the boost in private sector borrowings.

"However, the positive contribution emanated from banks and finance companies was diminished by the negative impact derived from insurance companies, resultant to trading losses incurred due to slow movements in interest rates in the economy."

Manufacturing and Food and Beverage sectors also experienced a growth momentum owing to increasing demand for products coupled with improved disposable income.

Plantation and oil palm sectors were the main negative contributors to the June quarter earnings (139%YoY and 62%YoY respectively) due to lower commodity prices together with political and economic unrest prevailed in main export destinations.

As a result of lower trading gains recorded in the year, investment trusts sector's earnings also plunged by 70% to Rs 357 million, the report stated.

Low interest rate regime, higher disposable income and stable exchange rate are likely to drive Colombo Stock Market earnings for next March quarter positively affecting Banking and Finance, F & B, Manufacturing and Trading sectors while indirectly affecting diversified sector as well, the report said.

Realizing its June quarterly review, First Capital Research said that market returns are likely to stay low amidst the current uncertainty in the political front.

"Market returns to be strong once the prevailing uncertainty settles down. However, we expect a slowdown in economic conditions beyond June 2016 due to possible rise in interest rates affecting companies across the board ", it stated.

As a result the report predicted that Market earnings to slowdown for the earnings period Dec 2016E / Mar 2017E resulting in an earnings forecast of 4%-5% YoY.
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CSE listing rules amended

The CSE Listing Rules pertaining to the basis of determining the Reference Price and the eligible persons to carry out such task in the event of an Introduction of shares have been amended.

This is to be in line with those of an Initial Public Offer of shares. Accordingly, Section 3.4.8 and 3.4.11 (a) (ii) have been amended to reflect these requirements.
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Unity Plaza to get new look

On'ally Holdings PLC will invest money to modernize the Unity Plaza building to international standards to maintain its competitive edge.

On'ally Holdings Managing Director Brian Selvanayagam said the company has already engaged with an internationally renowned real estate company, named Jones Lang LaSalle to advise them on this process. He is confident that modernization process of Unity Plaza will result in an improved performance of On'ally Holdings. (IH)
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Hayleys Amaya to enter Maldives

Shirajiv Sirimane shirajivs@gmail.com

Hayleys PLC will be entering the leisure market of the Maldives for the first time.

This will be through their leisure arm Amaya Leisure PLC which consists of Amaya Lake in Dambulla, Amaya Hills in Kandy and Langdale by Amaya in Nuwara Eliya.

Hayleys have already leased a lagoon from the Maldivian government for 55 years for this operation. Managing Director, Amaya Resorts and Spa, Lalin T. Samarawickrama said that they wanted a property where a guest could travel from the airport in speed board under half an hour.”

He said that the group hopes to invest around US$ 65 million for this project offering around 100 keys and hope to start operations in 36 months.

Samarawickrama said they are looking to build an ultra luxurious property comprising of beach bungalows. “We hope to market each property for around US$ 450 mainly for the luxury travellers.”

Amaya Leisure PLC acquired a 51% stake in the 125-room Sun Tan Beach Resorts for Rs 563 million, in Passikudah. It was earlier known as Centara Passikudah Resorts. “We have now have our foot print in key leisure areas in Sri Lanka and the Male expansion is towards extending our international reach.”

He said that with the Maldives resort they would be now in a position to market both destinations in one package.

Commenting on their local expansions, he said they will also focus to have several bungalows in tea estates. “We would also invest to refurbish some of the properties we operate.”

He said that the leisure sector was doing well and this was another reason for them to re invest in the industry. “For example Kingsbury Colombo which started operations with a Rs. 500 million loss in the first year and in the second year they were able to post a Rs. 32 million profit.” In the second year of operation we recorded a Nett Profit of over Rs.300 million and hope to end the financial year with a 20% increase against the previous year.”
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Sri Lanka shares up as investors snap up battered stocks; Keells leads

Reuters: Sri Lankan shares ended firmer on Thursday as investors bought in some select battered shares such as conglomerate John Keells Holdings Plc after recent falls, but foreign outflows from the island nation's risky assets continued.

The main stock index ended up 0.46 percent, or 33.04 points, at 7,273.14 on Thursday, further moving away from its lowest close since July 23 hit on Tuesday.

The index had lost 3.2 percent in the two sessions through Tuesday as foreign investors sold off risky assets on fears of a China - led global economic slowdown, and on selling by retail investors for month-end settlements.

"The market is recovering after a sharp fall due to global worries," said Harsha Fernando CEO at SC securities in Colombo.

Foreign investors were net sellers of 456.6 million rupees ($3.40 million) worth of shares on Thursday, extending the year to date net foreign outflow to 3.2 billion rupees.

Turnover stood at 1.44 billion rupees, more than this year's daily average of 1.17 billion rupees.

Shares in John Keells rose 1.66 percent, while Dialog Axiata Plc advanced 1.79 percent. 

($1 = 134.1500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)