Board changes at Sri Lanka's Dunamis Capital group

ECONOMYNEXT - Sri Lanka's Dunamis Capital Plc, said Eardley Perera has been appointed chairman with the retirement of Manula Mathews, the firm said in a statement.

Mathews has chaired the group from October 2014 and was group managing director from 2007-2014

Perera who was an independent non-executive director of Dunamis will also chair the board of Kelsey Developments.

He is a graduate of the Chartered Institute of Marketing (UK), with over 40 years of experience in management.

He is also a member on the Board of Study of the Postgraduate Institute of Management, University of Sri Jayewardenepura (PIM).

First Capital Holdings, a unit of Dunamis will be chaired by Nishan Fernando, who has been an Independent Non-Executive Director since 2012.

He is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka, an Associate Member of the Chartered Institute of Management Accountants (UK) has an MBA from the Postgraduate Institute of Management of the University of Sri Jayewardenepura.

Fernando is a past president of the Institute of Chartered Accountants of Sri Lanka and was a Board Member of the Securities and Exchange Commission of Sri Lanka.

Sri Lankan shares end flat; foreign investors turn sellers

Reuters: Sri Lankan shares were largely unchanged in thin trading, near an 11-month high on Tuesday, as foreign investors turned net sellers for the first time in 26 sessions while blue chips saw profit-booking after a prolonged rise.

Foreign investors net sold shares worth 29.8 million rupees on Tuesday, but remained net buyers of equities to the tune of 16.4 billion rupees so far this year.

Meanwhile, blue chip shares such as John Keells Holdings Plc , down 0.37 percent, and Commercial Bank of Ceylon Plc , down 0.62 percent, witnessed profit-booking.

The Colombo stock index ended 0.03 percent weaker at 6,608.16, slipping from its highest close since May 20 hit on Friday.

"Short-term profit-taking was there today," said Dimantha Mathew, head of research, First Capital Holdings PLC.

"The market will continue to be bullish, but will see some profit-taking. The good thing is that we are seeing local investors coming back into the market."

Turnover stood at 471.5 million rupees ($3.10 million), nearly half of this year's daily average of 902 million rupees. 

($1 = 151.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

EPF stock market investments slump to Rs.2.6 bln in 2015/16

Stock market investments by the Employees Provident Fund (EPF) fell sharply in 2015/2016 to just Rs.2.6 billion from a total of Rs.17.9 billion in 2012-2014, data released by the EPF has revealed.

The data was made available to Transparency International Sri Lanka (TISL) which had requested information from the Central Bank, which manages the EPF, via the Right to Information (RTI) Act. TISL released this information in a media release this week.

Whilst Rs. 5 billion, 8.1 billion and 4.8 billion, respectively, were invested in companies on the Colombo Stock Exchange (CSE) during the 2012-2014 period, these figures fell dramatically in the following two years. 2015 and 2016 saw investments in companies quoted on the CSE drop to Rs.1.3 billion each (total of Rs.2.6 billion) in both years, TISL said.

“This change in investment pattern made by the Central Bank coincides with the change of government in 2015. It is also noteworthy that government investments in listed equities account for only 4 per cent of the total portfolio, while investments in government securities constitute a significant 93 per cent of the portfolio,” the release said.

Huge investments of EPF in the pre-Yahapalana period have been widely criticised as investments in companies, some of which were showing negative returns. Analysts and opposition politicians (including Dr. Harsha de Silva) criticised the investments as ‘politically’ motivated and warned of negative returns to its stakeholders (EPF members).

The data showed that the EPF invested in stocks in nearly 60 companies in 2012-2014 while the number dropped to 14 in 2015-2016. TISL had requested information for a 5-year period 2012-2016 and provided a link http://www.rtiwatch.lk/wp-content/uploads/2017/04/epf.pdf which contains the entire EPF response. The Central Bank also had outlined the criteria used by the EPF to evaluate investment opportunities, and which illustrates the distribution of investments across the EPF portfolio.

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Lankan business magnate Harry J. suffers rare loss at Sri Lankan hotel subsidiary

Shareholders at Browns Beach Hotels PLC, part of the Harry Jayawardena-controlled Aitken Spence Group, on Monday defeated a resolution to issue 53 million new issues to raise over a billion rupees in debt financing.

However while on the surface it appeared to be a rare loss for Sri Lanka’s most powerful business magnate as shareholders voted against a resolution at a Browns Beach EGM at the Aitken Spence office in Colombo, in reality it was not unexpected as a large percentage of the controlling shareholders had publicly announced earlier they were not subscribing to the rights issue. More than 90 per cent of the shares of Browns Beach is owned by Melstacorp Ltd, Aitken Spence Hotel Holdings PLC, Stassen Exports Ltd, Lanka Milk Food (CWE) Ltd among others – all controlled by Mr. Jayawardena.

The money was to be raised for a Browns subsidiary, Negombo Beach Resorts which owns and operates the Heritance Negombo, a 5-star resort which was completely renovated and opened under the current name from its former glory, Browns Beach Hotel. The old hotel was demolished and reopened in April 2016 under the Heritance brand owned by the Aitken Spence group.

In August 2016, the board of directors decided to offer five new shares for every 12 shares held by shareholders at a price of Rs. 25.85. In August, the market rate of the share was Rs.29.30 to Rs. 30 per share.

However, according to the company’s resolution, the price fell sharply to Rs.24.50 by end August and Rs.20.20 on January 31, 2017, Rs. 5.65 below the rights issue price, a factor that shareholders would have taken seriously into consideration. It was also unclear for the delay ns holding the EGM (more than eight months after the board decision) unless it was due to procedural matters.

“The company requested a price revision (to reduce the rights issue price) but the Colombo Stock Exchange was not agreeable on the basis that such a revision would result in misleading the market which has already reacted to the price announced by the company,” the company notice said.

Thereafter 53 per cent of the company stake held by ‘related parties’ opted to withdraw from subscribing to the rights issues.

With 90 per cent of the shares held by ‘related parties’, the company was confident of full subscription and didn’t seek any underwriter, in case of a lack of subscriptions.
While the company notice on the resolution listed the directors of the Browns subsidiary as Harry Jayawardena, his daughter - Stasshani Jayawardena, Susith Jayawardena and Christie Ranjan Jayawardena, an error appeared to have crept in as the last named director is Christie Ranjan Stanislaus (not Jayawardena). The last named is on the main board of Browns.

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Net foreign inflows surpass Rs 15 bn

The Bourse continued its upward momentum as the ASPI increased by 74.92 points (or 1.15%) to close at 6,610.46 points, while the S&P SL20 Index too increased by 50.56 points (or 1.35%) to close at 3,786.39 points.

Turnover & market capitalization

JKH was the highest contributor to the week’s turnover value, contributing LKR 1.88Bn or 27.77% of total turnover value.

Melstacorp followed suit, accounting for 11.66% of turnover (value of LKR 0.79Bn) while Commercial Bank contributed LKR 0.59Bn to account for 8.73% of the week’s turnover.

Total turnover value amounted to LKR 6.77Bn (cf. last week’s value of LKR 11.09Bn), while daily average turnover value amounted to LKR 1.35Bn (-38.96% W-o-W) compared to last week’s average of LKR 2.22Bn. Market capitalization meanwhile, increased by 1.15% W-o-W (or LKR 32.97Bn) to LKR 2,908.77Bn cf. LKR 2,875.80Bn last week.

Liquidity (in value terms)

The Diversified Sector was the highest contributor to the week’s total turnover value, accounting for 41.13% (or LKR 2.78Bn) of market turnover. Sector turnover was driven primarily by the JKH & Melstacorp which accounted for 95.87% of the sector’s total turnover.

The Banking, Finance & Insurance Sector meanwhile accounted for 32.51% (or LKR 2.20Bn) of the total turnover value with turnover driven primarily by Commercial Bank, HNB & Pan Asia which accounted for 78.43% of the sector turnover.

The Manufacturing Sector was also amongst the top sectorial contributors, contributing 10.53% (or LKR 0.71Bn) to the market. The sector turnover was driven by Chevron, Teejay Lanka and Tokyo Cement which accounted for 65.72% of the sector turnover.

Liquidity (in volume terms)

The Banking, Finance & Insurance Sector dominated the market in terms of share volume, accounting for 33.09% (or 80.36Mn shares) of total volume, with a value contribution of LKR 2.20Bn.

The Diversified sector followed suit, adding 21.69% to total turnover volume as 52.66Mn shares were exchanged. The sector’s volume accounted for LKR 2.78Bn of total market turnover value. The Hotels & Travels Sector meanwhile, contributed 44.39Mn shares (or 18.28%), amounting to LKR 0.32Bn.

Top gainers & losers

Kotmale Holdings was the week’s highest price gainer; increasing 49.00% W-o-W from LKR 195.10 to LKR 290.70. Huejay International gained 22.41% W-o-W to close at LKR 35.50 while Radient Gems gained 21.89% W-o-W to close at LKR 28.40. Browns Capital (+18.75% W-o-W) and SMB Leasing (+16.67% W-o-W) were also amongst the gainers.

Blue Diamonds[X] was the week’s highest price loser, declining 20.00% W-o-W to close at LKR 0.40. Printcare (-14.04% W-o-W), Adam Capital (-11.11% W-o-W) and Lake House Printers (-10.42% W-o-W) were also amongst the top losers over the week.

Foreign investors closed the week in a net buying position with total net inflows amounting to LKR 2.16Bn relative to last week’s total net inflow of LKR 6.55Bn (-66.98% W-o-W). Total foreign purchases decreased by 54.20% W-o-W to LKR 4.08Bn from last week’s value of LKR 8.90Bn, while total foreign sales amounted to LKR 1.91Bn relative to LKR 2.35Bn recorded last week (-18.50% W-o-W).

In terms of volume, Kandy Hotels & JKH led foreign purchases while Asia Assets and Browns Investments led foreign sales. In terms of value, JKH & Kandy Hotels led foreign purchases while Chevron & Tokyo Cement led foreign sales.

Point of view

Last week’s positive momentum led by blue chips continued this week too, helping push the benchmark ASPI to an ~11 month high. Sri Lanka defeating a motion to deny GSP+ trade concession, continued foreign buying, positive corporate earnings boosted the investor confidence this week helped the Index gain 75 points over the week to close at 6610.46 points.

The market rally since late last March has led to the bench mark price index gain a cumulative ~550 points, which help improve gains to 6.1% Y-T-D (cf. 4.9% last week). Off board large parcels accounted for ~41% of market turnover for the week helping push average turnover for the week to LKR 1.35 Bn, ~48% higher than Y-T-D turnover of LKR 0.91Bn. Crossings in JKH accounted for ~28% of the week’s total crossings while Melstacorp accounted for ~21% & of the week’s total crossings.

On the foreign investor side meanwhile, the net foreign position on the bourse continued in the green for the 11th consecutive week as the net buying position amounted to LKR 2.16Bn, bringing the total net inflows for the year to LKR 15.86Bn (cf. net outflow of LKR 3.19Bn Jan-Apr ’16). Similar market momentum is likely to prevail in the week ahead amid some profit taking.

EU grants GSP+, CB forecasts 5.0% GDP growth in ‘17E
Sri Lanka won the EU parliamentary vote on GSP+ yesterday (by 436) votes enabling tariff concessions across a wide range of exports to the EU. The GSP+ scheme is designed to help developing countries by granting full removal of tariffs on over 66% of tariff lines covering a wide array of products.

The EU was Sri Lanka’s main export destination in 2015, accounting for nearly 1/3 of the country’s global exports and the restoration of GSP+ is expected to benefit listed entities in the Apparel, Rubber and Ceramics Industries In its Annual Report for 2016 meanwhile, the Central Bank (CB) noted that the country is expected to progress towards higher growth trajectory over the medium term upon addressing certain structural issues.

The CB added that the formulation of policy frameworks with the help of multilateral agencies including the IMF, along with the swift and consistent implementation of these policies will be essential to improve the economy’s productivity and efficiency.

The CB also emphasized the importance of attracting Foreign Direct Investments, improving export income through diversified exports (eg: value added, technologically intensive products), attracting high spending tourists as key measures to reach a higher economic growth over the medium term.

The Monetary Authority projects a GDP growth rate of 5.0% Y-o-Y in 2017E (cf. 4.4% in 2016) and a medium-term output target of ~6.5-7.0% Y-o-Y.

www.dailynews.lk

eChannelling posts Rs.107 mn revenue in 2016

eChannelling PLC, has reported a strong performance for the financial period ending December 31, 2016, recording an overall revenue of Rs.107 million in addition to its net earnings of Rs. 27.9 million.

The Company is now on a financially robust path, with Rs. 172 million in short-term investments and a debt-free balance sheet. eChannelling Executive Director Nalin Perera told company’s shareholders in company’s recent annual report.

“It is evident that the Sri Lankan healthcare fraternity is now experimenting, collaborating and leveraging its collective synergies to usher in a new dawn in the healthcare sector.”

During the period under review, the eChannelling brand was rated as one of the top 100 brands in Sri Lanka and a pioneer of eChannelling services to Sri Lanka.

The 2016 financial period was underscored by numerous new partnerships that mirror eChannelling’s passion for delivering convenience and better access to medical care for patients islandwide.

“Our marketing strategy has always been dynamic and even during the period under review, the ompany’s website was revamped, our mobile app was launched, and our pricing mechanism revised to stay ahead of competition. All these factors have driven high demand for eChannelling’s services.”

Greater operational efficiency in terms of stringent cost controls and effective local service management by Directors, Corporate Managers, Department Heads and their teams were achieved.

Since Mobitel’s acquisition of eChannelling during the period under review, eChannelling now has access to advanced telecommunication technology, a synergy which will take digital healthcare to the next level by providing more ICT based innovations and services to the customers to improve the livelihood of the society.
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Rebound in March motor car registrations

There was a rebound in March motor car registrations due to higher number of working days and pre-holiday season push from dealers on most categories.

Total registrations recorded 39,173 units significantly up from 30,036.The main causal factor being the rebound in 2-wheeler registrations according to a report filed by J. B. Securities.

Motor car registrations recorded 2,961 units significantly up from 2,148 in Feb and marginally up from 2,901 units 12 months ago. In the brand new segment total registrations recorded 936 units up from 786 units the previous month and 1,186 units 12 months ago. Market leader Maruti recorded 218 units up from 213 units the previous month.

In the pre-owned segment registrations were 2,025 units significantly up from 1,362 units the previous month but down from 2,140 units 12 months ago.

Premium motor cars recorded 67 units slightly up from 54 units the previous month and 49 units 12 months ago. Mercedez accounted for 23 new units (C class 7, E-class 14) and 22 pre owned units (C class 5, E class 14), a majority of the E class are E350e which is a plug in hybrid. Electric cars accounted for 31 units slightly up from 26 units the previous month but significantly down from 185 units 12 months ago. Nissan Leaf accounted for 22 units.

SUV registrations recorded 498 units in March up from 361 units the previous month and 610 units 12 months ago. Hybrid registrations were 2,023 units significantly up from 1,330 units recorded in Feb and down from 2,328 units recorded 12 months ago. Cars accounted for 1,646 units.

Van registrations recorded 746 units significantly up from 519 units in February and 429 units 12 months ago.Three wheeler registrations were 1,296 units in March up from 903 the previous month but down from 3,978 units 12 months ago. 2-wheeler registrations rebounded strongly to record 30,200 units in March up from 23,211 in Feb and 28,619 units 12 months ago. Scooters accounted for 15,879 units up from 12,444 units the previous month. Financing share was 68.6%.

Pickup trucks recorded 223 units up from 195 units the previous month but down marginally from 228 units 12 months ago.Mini truck registrations recorded a low 291 units marginally down from 299 the previous month and significantly down from 840 units 12 months ago.

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