Sri Lanka Treasuries yields rise at auction

ECONOMYNEXT – Yields on Sri Lankan 06 month and 01-year Treasury Bills rose at Wednesday’s auction while the yield on the 03-month bill remained steady at 8.60 percent, the debt office said.

The one-year bill yield rose 04 basis points to 10.14 percent, according to data from the debt office, a unit of the Central Bank of Sri Lanka.

The 06-month bill yield rose 09 basis points to 9.56 percent.

The debt office got Rs53 billion worth bids and accepted bids of Rs10.4 billion.

AIA Sri Lanka revenue increases by 21%

AIA Insurance Lanka PLC (“AIA Sri Lanka” or the “Company”) announced the financial results of the Company and its subsidiary for the nine months ended 30 September 2016.

Consolidated revenue increased by 21 per cent up to LKR 10,794 million, from LKR 8,954 million reported over the same period in 2015. This growth was mainly driven by the increase in the gross written premium (GWP) of Conventional Life business.

Gross written premium of life insurance business increased by 22 per cent to LKR 7,425 million, from LKR 6,093 million reported over the same period last year. This is attributed to the favourable shift in premium mode mix and growth in business volumes.

Gross written premium of Conventional Life increased 27 per cent to LKR 6,720 million, from LKR 5,271 million reported over the same period in 2015.

Investment income rose by 24 per cent to LKR 3,513 million, benefitting from the interest rate hike and attractive yield locking.

Consolidated profit after tax of continuing business increased by 40 per cent to LKR 199 million, from LKR 142 million reported over the same period last year.

The surplus of the life insurance business is reported annually at the year end and is therefore not included in the profit reported during interim periods in the year.

Shah Rouf, Chief Executive Officer of AIA Sri Lanka, said: “I am delighted to report a 40% increase in consolidated profit after tax for the nine months ended 30 September 2016. Our team continues to dedicatedly implement our strategy of building Premier Agency and Bancassurance distribution to provide our customers with the best of products and services."

"I am confident that we will continue to have strong delivery as we consolidate our position as a leading player in Sri Lanka’s insurance market.”

William Lisle, Chairman of AIA Sri Lanka, said: “I am pleased to see the strong results achieved by AIA Sri Lanka. With focus on delivering profitable growth and sustainable progress through enhanced product portfolio and extended distribution reach, AIA Sri Lanka is well on course to becoming the pre-eminent life insurer in Sri Lanka.”

Through an extensive network of agents, partners and employees across Asia-Pacific, AIA serves the holders of more than 29 million individual policies and over 16 million participating members of group insurance schemes.
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Sunshine Holdings doubles 1h profits

Bolstered by impressive growth in its Agribusiness segment, Sunshine Holdings concluded the half year ended September 30, 2016 (1H17) on a strong positive note.

Consolidated revenue during the period in review rose by 13.6% YoY up to Rs. 9.6 billion, while profits after tax (PAT) increased by 42.2% YoY up to Rs. 935.4 million, leading to a 29% YoY increase Profits to Equity Holders of Rs. 433 million during, and earnings per share of Rs. 3.21 over 1H17.

Healthcare continued to be the largest contributor to top and bottom line performance, accounting for 41.7% of group revenue and 42% of Profit After Tax and Minority Interest (PATMI). The Healthcare sector’s contribution was followed by strong performances across

Sunshine’s Agribusiness and FMCG segments which accounted for 34.2% and 19.6% respectively.

Net Asset Value per share during the same period increased to Rs. 44.9, as compared with Rs. 42.8 at the beginning of the year.

Notably, the performance of Sunshine Holdings over the quarter ended 30th September 2016 (2Q17) amounted to the Group’s highest ever 2Q performance. During this period, profits more than doubled, recording 53.5% YoY growth to reach Rs. 527 million.

Group Managing Director Vish Govindasamy said Sunshine Holdings was able to achieve its highest ever 2Q profits. “These results stand as further evidence of the growing success that our growth-oriented strategy has enabled and the Group remains poised for further expansion and innovation over the medium-long term,”he said.

Healthcare revenue during 1H17 rose by 17.9% YoY driven by growth in the Group’s retail business, however as a result of price controls of Pharmaceuticals, an increased cost of sales and exchange rate fluctuations were absorbed by the company, leading to a 90 basis point (bps) contraction in Earnings Before Income Tax margins (EBIT).

The FMCG sector reported revenues of Rs. 1.9billion in 1H17, up 20.3% YoY, on the back of both volume and price growth while the group’s domestic branded tea business within FMCG sold 1.89 million kilos of branded tea, up 15% YoY, driven by their largest brand ‘Watawala Tea’, and their converter brand ‘Ran Kahata’

PAT from the FMCG segment saw a contraction of 28.2% YoY, to stand at Rs. 164 million in 1H17, with a margin of 8.6%, compared to 14.4% in the same period last year.

High margins witnessed during same period last year were mainly a result of low tea prices which prevailed during the period. Business expansion investments pertaining to scaling up of the ‘Zesta Connoisseur’ brand across Shangri-La properties worldwide also had an impact on the operating margins.

The Agribusiness sector represented by Watawala Plantations (WATA) saw revenue growth of 1.7% YoY to Rs. 3.3 billion, despite a contraction of 6% YoY in Tea revenues, which was mitigated by the group’s flourishing Palm Oil sub sector which recorded a 42% YoY during the period in review.The Palm Oil sector, was able to record a PAT of Rs. 548 million, as compared with a previous Rs. 262 million.

"Packaging revenues increased by 13.4% YoY to Rs. 192 million, leading to a PAT of Rs. 7 million while the changing weather patterns resulted in 27.9% YoY reduction in revenue within the group’s Renewable Energy division. The group, which provides employment to around 12,000, generates over US$ 120 million in revenue," Group MD Vish Govindasamy said.
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Nestle Lanka posts Rs. 3.5 bn profit in first 9 months

Nestle Lanka has recorded a revenue of Rs. 27.8 billion for the first nine months of the year, posting a growth of 6.1% and net profit of Rs. 3.5 billion.

The Company faced stiff cost challenges and volatile market conditions, the impact of which was minimised through cost optimisation measures and consumer led initiatives providing more value.

Nestle Lanka Managing Director, Shivani Hegde said the steady performance is a result of the trust consumers place in their products.”We have once again reaffirmed our position as a leading and respected company, committed to enhancing the quality of life of the people of Sri Lanka, through our strong brands and rural development initiatives.”

Leveraging the Nestle group’s strong R&D capability and Nestle Lanka’s expertise in understanding local consumer preferences, the company launched Nescafe‚ 3 in 1 coffee mix, offering coffee lovers a product perfected to give the right taste and aroma.

The company continued to invest in Sri Lanka and recently invested around Rs. 500 mn in a new state-of-the-art milk processing and packing facility at its factory in Pannala, demonstrating its commitment towards enhancing local fresh milk usage.

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Colombo Stock Exchange Market Review – 09th Nov 2016

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Colombo Stock Exchange Trade Summary 09-Nov-2016

Colombo bourse echoed the losses in regional markets amid the surprising outcome of the US presidential election. All Share index shed 21.51 index points or 0.33% to end the session at 6,417.55. High cap constituent, S&P SL20 index lost 26.13 index points or 0.72% to close at 3,588.45.

Premier blue-chips namely, Hatton National Bank (closed at LKR 228.80, -1.8%), John Keells Holdings (closed at LKR 150.00, -0.7%) and Commercial Bank (closed at LKR 147.40, -1.1%) impacted the index performance.

Daily market turnover was LKR 437mn. Several negotiated deals were recorded in Nation Lanka Finance (53.6mn shares at LKR 1.70), Ceylon Tobacco (0.05mn shares at LKR 850.80), Hatton National Bank (0.15mn shares at LKR 233.00) and Tokyo Cement non-voting (0.5mn shares at LKR 51.50). Aggregate value of crossings accounted for 44% of the turnover.

Accordingly, Nation Lanka Finance top the turnover list with LKR 91mn followed by John Keells Holdings (LKR 48mn),Hatton National Bank (LKR 41mn) and Ceylon Tobacco (LKR 39mn) respectively.



Market breadth was negative where out of 200 stocks traded, 92 slipped, 41 advanced while 67 stocks remained unchanged. High investor activity was witnessed in Access Engineering, Textured Jersey, Ceylon Grain Elevators and John Keells Holdings.

Foreign investors were buyers for the sixth straight session with a net foreign inflow of LKR 106mn. Foreign participation was 16%. Net foreign inflows were seen in Hatton National Bank (LKR 39mn), Ceylon Tobacco (LKR 39mn) and John Keells Holdings (LKR 29mn). Net foreign outflow was mainly seen in Tokyo Cement (LKR 4mn).

Meanwhile, at the weekly treasury bill auction, six month treasury rate increased by 9bps to 9.56% while one year yield advanced by 4bps to 10.14%. Three month treasury bill rate remained unchanged at 8.60%. CBSL received bids amounting to LKR 52.9bn and it was decided to accept LKR 10.4bn worth of Treasury bills.

Source: LSL

Sri Lankan shares hit more than 1-wk closing low ahead of budget

Reuters - Sri Lankan shares hit a more than one-week closing low on Wednesday as a surprise win for Republican Donald Trump in the U.S. presidential election weighed on sentiment and as investors turned cautious ahead of the national budget on Thursday.

Investors feared a Trump victory could cause global economic and trade turmoil and years of policy unpredictability, which among other things, will discourage the U.S. Federal Reserve from raising interest rates in December as long expected.

The U.S. dollar, Mexican peso and world stocks began to steady in the European morning though, after having been hammered overnight. Sri Lanka's 2017 budget plan will seek to boost revenue through a capital gain tax on properties, simplify tax collection and offer incentives to spur exports, though progress will depend on the coalition government agreeing on economic priorities, analysts say. The benchmark index of the Colombo Stock Exchange ended 0.33 percent weaker, or down 21.51 points, at 6,417.55, its lowest close since Nov. 1.

"Primary focus will be on our budget," said Danushka Samarasinghe, research head at Softlogic Stockbrokers.

"It will take a few weeks for global markets to settle and during that period there could be volatility in our markets also, a trickle down effect of the global funds."

Turnover stood at 437.2 million rupees ($2.96 million), less than this year's daily average of 713.3 million rupees.

Foreign investors bought beaten down stocks for a sixth straight session, picking up shares worth a net 106.03 million rupees. They have net sold 899.3 million rupees worth of shares so far this year.

Shares in the biggest listed lender, Commercial Bank of Ceylon Plc , fell 1.07 percent, while Hatton National Bank Plc fell 1.80 percent.

Conglomerate John Keells Holdings Plc fell 0.66 percent. 

($1 = 147.5000 Sri Lankan rupees)

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

Colombo Stock Exchange Market Review – 08th Nov 2016

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Colombo Stock Exchange Trade Summary 08-Nov-2016

Colombo bourse closed flat on Tuesday amid thin market activity. Benchmark index dipped slightly by 5.91 index points or 0.09% to end at 6,439.06 while S&P SL 20 index lost 5.32 index points or 0.15% to close at 3,614.58.

Price depreciation high caps, Dialog Axiata (closed at LKR 11.30, -1.7%), John Keells Holdings (closed at LKR 151.00, -0.6%) and Commercial Bank (closed at LKR 149.00, -0.9%) drove the index down.

Daily market turnover was LKR 162mn. Two negotiated deals were recorded in Access Engineering (1.0mn shares at LKR 26.10) and Central Finance (0.2mn shares at LKR 108.00). Aggregate value of crossings accounted for 29% of the turnover.

Accordingly, Access Engineering emerged as the top contributor to the turnover with LKR 45mn followed by Central Finance (LKR 24mn), Ceylon Tobacco (LKR 9mn) and Sampath Bank (LKR 9mn).

Losers outweighed the gainers 67 to 41, while 82 remained unchanged. High investor participation was witnessed in Access Engineering, Ceylon Grain Elevators, Alliance Finance. Ceylon Cold Stores advanced to LKR 721.90 (+2.4%) supported by the interim dividend announcement.

Foreign investors were net buyers for the fifth straight session with a net foreign inflow of LKR 12mn. Foreign participation was 11%. Net foreign inflows were seen in Ceylon Tobacco (LKR 8mn), Ceylon Cold Stores (LKR 4mn), John Keells Holdings (LKR 1mn) while net foreign outflow was mainly seen in National Development Bank (LKR 1mn).

Source: LSL