Sri Lankan stocks hit over 8-mth closing low; lenders fall

Reuters: Sri Lankan shares fell for a third straight session on Tuesday to their lowest close in more than eight months as investors offloaded banking and diversified stocks.

The Colombo Stock Index ended 0.33 percent weaker at 6,325.46, its lowest close since April 11. The index was down 0.4 percent last week, its sixth consecutive weekly decline.

“Today we are seeing some selling in Sampath Bank after it announced a second rights issue for the year on top of the debenture issue,” said Atchuthan Srirangan, senior research analyst at First Capital Holdings PLC.

“With holidays ahead, we think this dull period will continue.”

Samapath Bank Plc, in a filing to the Colombo stock exchange, said it will issue 50.1 million new shares. The bank will issue three shares for every thirteen existing shares held, to increase its tier 1 capital to comply with Basel III requirements.

The bank added it would also issue 50 million five-year debentures at an issue price of 100 rupees apiece.

Sampath Bank Plc fell 4.9 percent while conglomerate John Keells Holdings Plc ended 0.7 percent lower and biggest listed lender Commercial Bank of Ceylon Plc lost 1.2 percent.

Turnover was 357.6 million rupees ($2.34 million), well below this year’s daily average of 933.4 million rupees.

Foreign investors were net buyers of 26.7 million rupees worth of shares on Tuesday, extending their year-to-date net equity purchases to 18.4 billion rupees.

Plantation stocks came under pressure after the Russian agricultural safety watchdog said on Thursday that the country will place temporary restrictions on imports of all agricultural products from Sri Lanka, including tea, from Dec. 18.

Analysts said the Russian restrictions on tea could pose a threat to long-term tea prices and it could impact the earnings of plantation companies. 

($1 = 153.0500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

Listed firms earnings dip 2% to Rs. 60 b in Sept.

Earnings of listed companies in the September quarter have declined marginally by 2% to Rs. 60.1 billion largely owing to a weaker performance by diversified financials and energy sector firms.

Analysing interim financials reported by 275 companies, First Capital Research revealed that September quarter earnings marginally dipped 2% YoY to Rs. 60.1 billion (Sep 2016 - Rs. 61.6 billion) driven by the adverse performance of the Energy (-108%YoY), Diversified Financials (-18%YoY) and Consumer Services (-54%YoY) sectors.

“The dip in earnings diminished the effect of positive earnings growth in the Food, Beverage and Tobacco (+9%YoY) and Banks (+6%YoY) sectors and one-off gains in the Food, Staples and Retailing (+178%YoY) sector,” First Capital said. It said the primary source of decline in September earnings was the Energy Sector (-108%YoY) which saw a loss of Rs. 137 million (September 2016 = Rs. 1,731 million), driven by LIOC (-112%YoY) and LGL (-85%YoY) attributable to higher oils prices and LP Gas prices that drove costs while the selling price remained fixed.

The Diversified Financials sector (-18%YoY) also almost equally contributed to an earnings dip where profits declined to Rs. 8.3 billion (September 2016 = Rs. 10.1 billion) driven by LOLC (-23%YoY).

Most finance companies in the sector saw higher net impairment losses as the effects of floods spilled over to the September quarter.

Consumer Services sector (-54%YoY) earnings dipped to Rs. 744 million (Sep 2016 = Rs. 1,613 million) driven by KHL (-71%YoY) which saw several hotels closing for refurbishment.

The negative effect was partially diluted by the positive earnings growth in the Food, Beverage and Tobacco sector (+9%YoY) to Rs. 12.5 billion (September 2016 - Rs. 11.5 billion) driven by BUKI (+788%YoY) and CARS (+2,419%YoY) which saw a dramatic increase in its gross margins while also being supported by plantation companies amidst higher tea prices.
The Banks sector (+6%YoY) reported earnings of Rs. 15.5 billion (Sep 2016 = Rs. 14.6 billion) driven by COMB (+11%YoY) which saw a healthy growth in net interest income.

However, First Capital Research said the largest positive effect on earnings came from the Food and Staples Retailing sector (+178%YoY) which recorded earnings of Rs. 2.7 billion (September 2016 = Rs. 960 million) driven by CARG (+189%YoY) which included a one-off non-operating gain of Rs. 1,012 million from the sale of its properties in Colombo 2. Having adjusted this one-off gain, the sector’s earnings dipped 33%YoY to Rs. 645 million while the quarter’s overall earnings dipped 6% to Rs. 58 billion.www.ft.lk

Sri Lankan stocks hit over 8-month closing low

Reuters: Sri Lankan shares fell for a second straight session on Monday to hit their lowest close in more than eight months as investors offloaded plantation and telecom stocks.

The Colombo Stock Index ended 0.09 percent weaker at 6,346.70, its lowest close since April 11. It lost 0.4 percent last week, its sixth consecutive weekly decline.

“It’s yet another dull day and we don’t have any positive news to boost the market,” said Atchuthan Srirangan, senior research analyst at First Capital Holdings PLC.

Plantation stocks came under pressure after the Russian agricultural safety watchdog said on Thursday that the country will place temporary restrictions on imports of all agricultural products from Sri Lanka, including tea, from Dec. 18.

Analysts said the Russian restrictions on tea could pose a threat to long-term tea prices and it could impact the earnings of plantation companies.

Turnover was 233 million rupees ($1.52 million), the lowest since Sept.25, and well below this year’s daily average of 935.9 million rupees.

Foreign investors were net buyers of 71.8 million rupees worth of shares on Monday, extending their year-to-date net equity purchases to 18.4 billion rupees.

Shares of Hemas Holdings Plc ended 1.2 percent lower, while Hatton National Bank Plc fell 0.4 percent and Sri Lanka Telecom Plc lost 1.4 percent. 

($1 = 153.1500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

Carsons sell 500,000 Lion between Rs. 540 & Rs. 550

Carson Cumberbatch PLC, the controlling shareholder of Lion Brewery Ceylon PLC, last week sold off 500,000 shares of Lion at prices between Rs. 540 and Rs. 550, the Colombo Stock Exchange was notified in terms of its listing rules.

Carsons sources indicated that the parent held strategic stakes in its various subsidiaries with shares outside the strategic limit held in its trading portfolio.

"Such shares may be bought and sold within the fund manager’s discretion when the price is considered right," they said. "That in no way affects the strategic stakes."

www.island.lk

Shares at 8-month closing low on political & policy uncertainty - US Fed’s third rate increase affects foreigners

Equities continued to lose steam last week, falling ~23 points week-on-week to hit an eight-month low of 6,352.1 points as concerns over domestic political and policy uncertainty dominated sentiment and the US Fed raised interest rates for the third time this year, Acuity Stockbrokers said in their Share Market Weekly.

Since the first reading of Budget 2018 in early November, the broad-share price Index has fallen ~215 points (-3.3%) with consecutive losses in the six weeks since the budget, the report noted. Average daily turnover levels also fell 24% week-on-week as low market participation, particularly by institutional and high net worth investors dragged the average daily turnover for the week down to Rs.0.71Bn (cf. Rs.0.93Bn last week), it said.

"Crossings for the week accounted for just 36% of total market turnover, lower than the previous week’s crossings of 46% and reflecting the lower participation levels by high net worth and Institutional players. Crossings remained largely centered around mid-cap counters such as Teejay Lanka (28% of total crossings), Amana Bank (15% of total crossings) and LOLC (12% of crossings) while larger-cap blue chips such as JKH and COMB played a less dominant role as they cumulatively accounted for just 10% of total crossings," Acuity reported.

"Despite the lower daily average turnover levels, the year-to-date average remained at Rs. 0.94Bn, higher than the 2016 average of Rs.0.73Bn and reflecting relatively stronger equity market performance from earlier in the year."

Foreign investors however retreated to a net selling position last week, recording net sales of Rs. 0.07Bn as the US Fed raised rates for the third time this year in a widely anticipated move. The move along with the expectation of three hikes in 2018 represents the continuation of the US Fed’s monetary policy normalization which could in turn impact the performance of Emerging and Frontier market equities, Acuity said.

Markets in the week ahead are likely to remain dull ahead of the Christmas holidays, the brokerage anticipated.
www.island.lk

IPOs and listed debenture issues take off despite CSE depression

Despite the Colombo Stock Exchange plunging to an eight month closing low on Friday, two Initial Public Offerings (IPOs) by LVL Energy Fund Ltd. (LEF) and Jetwing Symphony Ltd. closed over-subscribed on their opening day while a listed debenture issue by the Sampath Bank was similarly over-subscribed.

"This is a positive signal in the context of the falling market," a stock analyst said. "Both LEF and Jetwing Symphony will be listed on the CSE when the share allotments are completed in the next few days."

LEF sought Rs. 1.2 billion equity funds by the issue of 120 million new shares at 10-rupees each while Jetwing Symphony raised Rs. 753 million through a ‘book building’ process through which bids for the shares were invited at Rs. 15, Rs. 16, Rs. 17 and Rs. 18.

With the majority of the bids at the 15-rupee price, this was determined as the strike price and investors bidding higher would have the difference between Rs. 15 and their bid price refunded.

Well informed sources said that the application for Rs. 600 million of shares from the IPO has made by the Amaleans of MAS assuring the success of the IPO.

Jetwing Symphony owns five operational hotels with part of the IPO Funds earmarked for the boutique Jetwing Kandy Gallery now on the drawing boards.

The Sampath listed debenture issue raised six billion rupees with an offer of rupees four billion initially with an option for a further two billion in the event of an oversubscription.

www.island.lk

Dialog, Richard Pieris in S&P Sri Lanka 20 Index

ECONOMYNEXT – The Colombo Stock Exchange (CSE) has included Dialog Axiata and Richard Pieris and Company in the S&P Sri Lanka 20 index, which tracks the top 20 largest and most liquid stocks, in its latest revision.

They replace Hayleys and Melstacorp in the semiannual rebalancing of the index, the CSE said in a statement.

The S&P SL 20 index includes the 20 largest companies by total market capitalization listed on the CSE that meet minimum size, liquidity and financial viability thresholds.

The constituents are weighted by float-adjusted market capitalization, subject to a single stock cap of 15%, which is employed to reduce single stock concentration.

The CSE said the S&P SL 20 index has been designed in accordance with international practices and standards.

Effective from 18 December 2017 the stocks in the S&P Sri Lanka 20 in alphabetical order are as follows.

Access Engineering PLC AEL.N0000
Aitken Spence PLC SPEN.N0000
Ceylon Cold Stores PLC CCS.N0000
Ceylon Tobacco Company PLC CTC.N0000
Chevron Lubricants Lanka PLC LLUB.N0000
Commercial Bank of Ceylon PLC COMB.N0000
Commercial Bank of Ceylon PLC Non-Voting COMB.X0000
DFCC Bank PLC DFCC.N0000
Dialog Axiata PLC DIAL.N0000
Hatton National Bank PLC HNB.N0000
Hatton National Bank PLC Non-Voting HNB.X0000
Hemas Holdings PLC HHL.N0000
John Keells Holdings PLC JKH.N0000
Lanka Orix Leasing Company PLC LOLC.N0000
National Development Bank PLC NDB.N0000
Nestle Lanka PLC NEST.N0000
People's Leasing & Finance PLC PLC.N0000
Richard Pieris & Company PLC RICH.N0000
Sampath Bank PLC SAMP.N0000
Seylan Bank PLC SEYB.N0000
Seylan Bank PLC Non-Voting SEYB.X0000
Teejay Lanka PLC TJL.N0000
Tokyo Cement Company (Lanka) PLC TKYO.N0000
Tokyo Cement Company (Lanka) PLC Non-Voting TKYO.X0000