Sri Lanka's Kelsey Homes launches high end gated community

ECONOMYNEXT - Sri Lanka's Kelsey Homes, a property developer said it is launching an up market gate community project in Negombo, which is close to the country's international airport.

The firm said its 'Verdant Villas' gated community where 80-perch blocks of land is offered is 10 minutes from an expressway running from Colombo to the main airport.

The expressway has made access to Negombo from the capital faster than to some of the suburbs of Colombo, where traffic has led to gridlock.

Verdant Villas will have a clubhouse with a swimming pool, pool lounge, steam and sauna rooms, gymnasium, tennis court, kids play area and 24-hour security with closed circuit television monitoring.

Sri Lanka banks stable; loan growth may increase bad loans: Moody's

ECONOMYNEXT - The outlook for banks in Sri Lanka remain stable but continued loan growth driven by construction credit may increase bad loans but the levels will not be high, Moody's Investors Services, a rating agency has said.

The stable outlook for banks, is better than the negative outlook given to Sri Lanka's B1, speculative grade long term rating.

Despite external funding challenges, the rating agency expects economic growth to remain stable at 5.0 percent in 2017, a marginal improvement over the 4.7 percent expected in 2016.

"Continued strong loan growth may put downward pressure on asset quality and liquidity conditions, but nonperforming loan (NPL) ratios will remain at low levels," says Srikanth Vadlamani, Vice President - Senior Credit Officer at Moody's.

"We therefore expect a degree of asset quality deterioration consistent with the current credit profiles of Sri Lankan banks."

Moody's says construction loans have been a key driver of a 16 percent loan growth up to September.

"The weakening in asset quality will come from a generally low 2.9 percent nonperforming loan ratio for the system at end-September 2016, which are close to the lowest level for the last decade," the rating agency said.

Sri Lanka is seeing a boom in apartment building, which has been given a further boost in the budget with foreigner allowed to buy apartments with domestic credit.

Other analysts have warned that a bubble may be developing in the sector.

Sri Lanka, Maldives priority markets for hotel expansion: JKH

ECONOMYNEXT – John Keells Holdings sees its home base Sri Lanka and the Maldives as priority markets for hotel expansion, given the growth potential in both countries, Sunimal Senanayake, Executive Vice President of the group said.

Tourist arrivals had grown rapidly since the island’s 30-year ethnic conflict ended in 2009 and could “hopefully” exceed two million this year, he told a tourism industry forum.

“Given demand from generating markets, this could easily double in the next 4-5 years,” Senanayake said.

“We see growth coming to Sri Lanka from multiple markets,” he told the Asia Hotel & Tourism Investment Conference held in Colombo in partnership with the Sri Lanka Tourism Club.

“We see Sri Lanka as the priority market for further expansion followed by the Maldives which has had very steady growth in the last 10 years.”

Tourist arrivals in the Maldives had grown from 600,000 in 2006 to 1.2 million in 2015 but had been flat in the last two years.

“But it seems to be coming back – in the last two months we have seen occupancy levels going up,” Senanayake said. “And Maldives is one of a kind, unique destinations and very much still in fashion in most generating markets. It still is a lucrative market for investment.”

JKH group has 14 hotels – three in Colombo and eight resorts in Sri Lanka and three in the Maldives.

Sri Lanka Melstacorp listing reference price set at Rs69

ECONOMYNEXT – Melstacorp Limited (MCRP), currently a 100% subsidiary of Distilleries Company of Sri Lanka, which will become the latter’s parent in a share swap, is to be listed on the Colombo bourse at a reference price of Rs69.

According to a stock exchange filing, the fair value of MCRP’s share ranges from Rs65.52 to Rs74.94 with an average price per share of Rs69.78, based on several valuation methodologies used.

The valuation, done by brokerage CT CLSA Capital (Pvt) Ltd., used the Relative Price to Earnings Method (PE), Relative Price to Book Value Method (PBV), Market Price Method and the Sum of the Parts Method (SOTP), to derive a fair value for MCRP.

“SOTP and PE are the two preferred valuation methods for a conglomerate where the value is driven as a combination of business units,” the research report said.

Discounted Cash Flow (DCF) valuation was used to value the beverage segment of the group within the SOTP method.

With MCRP group having two companies in the financial services sector, DCF valuation was considered less applicable for MCRP overall.

Sri Lanka’s PABC to raise Rs2.1bn through rights issue

ECONOMYNEXT – Sri Lanka’s Pan Asia Banking Corporation (PABC) said it plans to raise Rs2,065 million from a rights issue of one new share for every existing two shares.

A stock exchange filing said PABC will issue 147.5 million new shares at Rs14 a share.

The proceeds of the rights issue will be used to fund the bank’s growth plans, it said.

Colombo Stock Exchange Market Review – 02nd Dec 2016

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Colombo Stock Exchange Trade Summary 02-Dec-2016

Colombo equity market wrapped the weekly operations on positive note despite foreign outflows. All Share index continued the previous session momentum as index touched the 6,331 mark but closed at 6,325.57, an increase of 16.53 index points or 0.26%. 20-scrip S&P SL 20 index gained 16.91 index points or 0.48% to end at 3,525.35.

Two largest cap, Ceylon Tobacco (closed at LKR 885.00, +1.6%) and John Keells Holdings (closed at LKR 151.00, +0.7%) pinned the index in positive territory along with gains in Aitken Spence (closed at LKR 67.50, +3.9%) and Asiri Hospital Holdings (closed at LKR 26.50, +3.1%).

Daily market turnover reached LKR 948mn supported by negotiated deals in John Keells Holdings (1.42mn shares at LKR 150.00) and Hatton National Bank (0.46mn shares at LKR 218.50). John Keells Holdings was the top contributor with LKR 343mn followed by DFCC Bank (LKR 264mn), Hatton National Bank (LKR 113mn) and Commercial Bank (LKR 88mn) respectively.

Market breadth was positive where out of 181 scripts traded today, 76 advanced and 40 declined. High investor activity was seen in Commercial Credit & Finance, John Keells Holdings and Ceylon Grain Elevators.

Major banks such as Commercial Bank (+0.1%), Hatton National Bank (+0.4%), Sampath Bank (+0.6%), National Development Bank (+0.3%) and DFCC Bank (+1.9%) continued to post gains.

Foreign investors were net sellers with a net foreign outflow of LKR 250mn. Foreign participation was 64%. Net foreign outflows were seen in DFCC Bank (LKR 260mn), Hatton National Bank (LKR 61mn) and Hemas Holdings (LKR 14mn). Net foreign inflow was mainly seen in John Keells Holdings (LKR 41mn).
Source: LSL

Sri Lanka shares end at 2-wk high; banks lead

Reuters: Sri Lankan shares rose for a second straight session on Friday to close at a two-week high as investors sought bargains in large-cap shares after the benchmark index hit a near-eight-month low earlier in the week.

The Colombo stock index gained 0.26 percent to 6,325.57, its highest close since Nov. 18. The bourse gained 1.17 percent for the week, recording its first weekly gain in four.

Turnover stood at 947.9 million rupees ($6.40 million), more than this year's daily average of 697.9 million rupees.

"Buying interest continues as prices are attractive after they fell steeply," said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

Foreign investors sold a net 250.3 million rupees worth of shares on Friday, extending the year-to-date fund outflow to 1.84 billion rupees.

The index had hit a near-eight-month low on Tuesday on concerns that the proposed hike in various taxes and fees would reduce disposable income and challenge consumption-led growth.

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees year-on-year and meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

The market shrugged off the central bank's monetary policy decision on Tuesday to keep rates unchanged. Brokers said investors are concerned about sustainability of rates.

Shares of Ceylon Tobacco Company Plc rose 1.60 percent while conglomerate John Keells Holdings Plc rose 0.67 percent and biggest listed lender Commercial Bank of Ceylon Plc rose 0.14 percent. 

($1 = 148.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)