Sri Lanka stocks edge up from 2-week low; turnover at 2-month low

May 26 (Reuters) - Sri Lanka stocks edged up in thin trade on Monday from a two-week low hit in the previous session led by Sri Lanka Telecom PLC, but turnover slumped to its lowest in two months.

The main stock index ended 0.20 percent, or 12.71 points, firmer at 6,293.02, edging up from its lowest close since May 8 hit on Friday.

The day's turnover slumped to its lowest since March 24, bourse data showed. It stood at 291.3 million rupees, well below this year's daily average of 1.02 billion.

Stockbrokers said the low turnover was due to sluggish foreign participation owing to holidays in the United States and Britain.

The bourse saw a net foreign inflow of 46.04 million rupees ($353,100) on Monday, extending year-to-date net foreign inflow to 1.83 billion rupees.

Stockbrokers expect the market to gain in the near future due to lower interest rates after the central bank kept key rates at multi-year lows on Tuesday for the fourth straight month, as expected.

Shares of Sri Lanka Telecom PLC rose 1.46 percent to 48.80 rupees, pushing up the overall index.

The market has been on a rising trend since mid-March as many investors were compelled to return to the stock market because low interest rates have made fixed-income assets less attractive, stockbrokers said.

However, analysts have raised concerns over sluggish economic growth due to lower credit growth and consumer spending.

Despite a multi-year low interest rate regime, data showed private sector credit grew 4.3 percent in March from a year earlier, the slowest expansion since May 2010.

The latest trade data, released on Monday, showed imports have gained 8.2 percent in March, while exports hit a record high of $1.07 billion helping to narrow the March trade deficit by 15.5 percent compared to a year ago.

Central bank Governor Ajith Nivard Cabraal on May 19 said Sri Lanka's private sector credit growth would pick up to around 15 percent by the end of this year and continue to improve through 2016.

($1 = 130.4000 Sri Lanka rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka stocks close up 0.2-pct

May 26, 2014 (LBO) - Sri Lanka's stocks closed up with telco and other index heavy stocks gaining despite low foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 12.71 points higher at 6,293.02 up 0.20 percent. The S&P SL20 closed 3.46 points higher at 3,462.89, up 0.10 percent.

Turnover was 291.32 million rupees, down from 804.00 million rupees last Friday with 84 stocks closed positive against 100 negative.

John Keells Holdings closed flat at 234.00 rupees with an off market transaction of 24.52 million rupees changing hands at the same market price contributing 8 percent of the daily turnover.

JKH’s W0022 warrants closed 70 cents higher at 63.00 rupees and its W0023 warrants closed 10 cents higher at 68.90 rupees.

The Finance Company closed 1.70 rupees higher at 14.00 rupees and its non-voting shares closed 1.00 rupee higher at 7.00 rupees, attracting most number of trades during the day.

Foreign investors bought 56.14 million rupees worth shares while selling 10.10 million rupees worth shares.

Sri Lanka Telecom closed 70 cents higher at 48.80 rupees and Asian Hotels and Properties closed 2.10 rupees higher at 72.10 rupees, contributing most to the index gain.

Lion Brewery Ceylon closed 9.90 rupees higher at 449.90 rupees and Ceylon Tobacco Company closed 10 cents higher at 1,062.00 rupees.

Oil palm firms Selinsing closed 97.50 rupees higher at 1,697.50 rupees and Indo-Malay closed 96.00 rupees higher at 1,796.00 rupees.

HNB closed 90 cents lower at 157.10 rupees and Commercial Bank closed 10 cents lower at 126.40 rupees.

Aitken Spence Hotel Holdings closed 80 cents lower at 77.20 rupees and John Keells Hotels closed 10 cents lower at 14.90 rupees.

Lanka Indian Oil Company closed 60 cents lower at 41.40 rupees.

Sri Lanka commercial vehicle registrations slip in April, motor cycles up

May 26, 2014 (LBO) - Sri Lanka's commercial vehicle registrations continued were sharply down from a year earlier, especially trucks in April 2014, though motor cycle sales were up, an analysis by an equities research unit shows.

JB Securities quoting Sri Lanka's motor vehicle registry data said motor cycle sales rose 18 percent to 17,031 in April 2014 from a year earlier.

Two years ago in April 2012 the financing share of motor cycles was only 45.9 percent. The ratio had climbed to 62.9 percent by April 2014 as prices rose due to rupee depreciation and taxes.

It is not yet clear whether the higher purchases are a leading indicator of confidence returning to purchase decisions following the end of a balance of payments crisis in 2011/2012.

But truck sales were sharply down with mini trucks down 26 percent to 988 units, lite trucks down 26 percent to 226 and heavy trucks plunging 48 percent to 97 units.

Hand tractors were down 56 percent to 248 units and large tracktors were down 39 percent to 93.

There are anecdotal evidence of defaults especially in large trucks amid a slowdown in construction and related activity.

Three wheelers were down 18 percent to 6,772 units in April.

Motor car registrations were flat at 1,917 units, only marginally down from 1977 units a year earlier.

Among small cars (below 1,000cc) were down to 206 from 546 a year earlier. Sri Lanka's rulers tax small cars in the range of 200 percent. Indian made Maruti/Zusuki cars were holding at 209 units down from 264.

But Chinese and assembled Micro cars were down to 103 from 147 a year earlier.

In the pre-owned or reconditioned market, registrations rose to 1,270 units in April up from 1,156 helped by hybrid cars.

Toyota hybrids rose to 989 from 820 led by Aqua 376 units and Honda rose to 334 from 288, led by its Fit model.

CSE and SEC to host Investor Forum in London

The Colombo Stock Exchange (CSE) and the Securities and Exchange Commission of Sri Lanka (SEC) is scheduled to host an "Invest Sri Lanka- Investor Forum" in London on 30 May 2014 at the Savoy Hotel, London. The event is organised in association with the London Stock Exchange and Bloomberg.

The forum, has received an unprecedented response from institutional investors with over 120 registrants. The programme will focus on the growth potential and opportunities available in the capital market of Sri Lanka and will include representatives from the SEC, CSE, Stockbrokers, Local Fund Managers and Listed Companies.

The Key Note Address will be delivered by Central Bank Governor Ajith Nivard Cabraal and will feature a special note by Gordon Fraser, Fund Manager of BlackRock, Inc (an international investment management group) and member of the Emerging Markets Specialist Team Fundamental Equity Division.

For an in-depth perspective on the capital markets, Director & Country Head - Sri Lanka, Copal Amba (A Moody's Subsidiary) Chanakya Dissanayake will make a country presentation whilst Director (CSE) Vajira Kulatilaka will conduct a presentation on the Debt Market.

The Chief Executive Officer, London Stock Exchange plc. Alexander Justham and Sri Lankan High Commissioner to the United Kingdom Dr. Chris Nonis will also address the Forum.

A panel discussion will be conducted at the conclusion of the presentations. The panelists will include Governor of the Central Bank Ajith Nivard Cabraal, Sri Lankan High Commissioner to the United Kingdom Dr. Chris Nonis, Chairman (SEC) Dr. Nalaka Godahewa, Chairman (CSE) Krishan Balendra and CEO (CSE) Rajeeva Bandaranaike.

On the conclusion of the main forum, fund managers will meet with listed companies, in pre-scheduled one-on-one or small group meetings. The following listed companies, will participate at the forum; John Keells Holdings PLC, Commercial Bank of Ceylon PLC, Dialog Axiata PLC, Hayleys PLC, Access Engineering PLC, People's Leasing & Finance PLC, Tokyo Cement Company (Lanka) PLC, Laugfs Gas PLC and MTD Walkers PLC.
www.island.lk

 

Touchwood depositors get tough with Maloneys

By Sunimalee Dias

A group of Touchwood investors filed complaints with the Criminal Investigation Department (CID) on Friday, also aimed at obtaining an international warrant against the company former owners, the Maloneys.

The Touchwood Stakeholders Association (TSA) Co-ordinator lawyer Lakshan Dias told the Business Times that they had filed 12 complaints with the CID against Roscoe and Swarna Maloney, who are both abroad.

The complaint made against them was for fraud and cheating depositors of their monies invested in Touchwood. The complaint would be made highlighting that the Touchwood organisation had accepted money from various people and now that the company is closed and the management in hiding they expect justice to be meted out for fraud and cheating.

Meanwhile, the Touchwood Investments PLC winding up case scheduled to deliver verdict relating to the default in payments to the petitioner was postponed for June 5. The case which was taken up at the Commercial High Court No. 3 in Colombo was scheduled to deliver a verdict on the winding up of the company but was postponed. The company’s CEO Lanka Kiwlegedara was also present in court on the said date.
www.sundaytimes.lk

Commercial Bank posts Q1 pre-tax profit of Rs. 3.3 bln

The Commercial Bank of Ceylon PLC said last week that it has “made a measured start to 2014 despite excess liquidity, lower demand for credit and thinning margins”.

In a media statement, the bank reported operating profit before VAT and NBT of Rs 3.897 billion for the three months ended 31st March 2014, reflecting growth of 4.73 per cent over the first quarter of 2013. Operating profit after VAT and NBT (PBT) grew by a

modest 1.88 per cent to Rs. 3.291 billion, with VAT and NBT for the three months totalling Rs. 606.3 million, an increase of 23.53 per cent.

The bank’s profit after tax for the quarter reviewed was up 1.68 per cent to Rs. 2.279 billion on gross income of Rs. 17.760 billion.

Commenting on these results, Commercial Bank Chairman Dinesh Weerakkody said: “The bank performed well this quarter, despite a very challenging environment. We continued to grow our business volumes as well as strengthen our key performance indicators. As we move into the second quarter, we expect to grow in the areas where we have a long track record of strong earnings, and will continue to execute on our strategic priorities.”

Commercial Bank Managing Director Ravi Dias added: “The bank recorded healthy growth in net interest income despite narrowing margins through an increase in interest-earning assets and timely re-pricing of assets and liabilities.” The bank had also achieved gains from trading and financial investments and contained the growth in expenses to under 10 per cent in the period reviewed, he said, adding that the bank had also maintained the momentum of deposit growth, averaging more than Rs. 5 billion a month.

Impairment charges on loans and losses increased from Rs. 517 million in the first quarter of last year to Rs. 1.151 billion in the quarter reviewed, due to higher non-performing loans (NPLs), a common challenge faced by the banking industry. Total expenses for the period amounted to Rs. 3.847 billion, an increase of 9.68 per cent. The bank said it expects a similar trend in expenses, as it plans moderate expansion of the branch network in 2014, given the fact it is now present in key towns in all districts of Sri Lanka.

The bank’s total assets reached Rs. 648 billion at the end of first quarter 2014, recording a growth of Rs. 41 billion or 6.83 per cent. Loans and receivables totalled Rs. 418 billion at the end of the period reviewed, while total deposits reached Rs. 481 billion.
www.sundaytimes.lk

No new investments by Guardian Capital Partners despite better climate

Guardian Capital Partners PLC, a member of the Carsons group of companies, has reported what its Chairman, Mr. Israel Paulraj, called "an improvement in the private equity deal flow" during the year ended March 31, 2014 although none that had met the company’s investment criteria had materialized.

"Hence we did not make any investments during the year," Paulraj said with the company’s portfolio confined to Expolanka Holdings PLC (58% of the portfolio), Access Engineering PLC (34%) and Hsenid Business Solutions (Pvt) Ltd (8%) with a total value of Rs.523 million.

The chairman reported that one company in the portfolio had been divested with the other listed positions continuing to be held as the trading price of these companies on the Colombo Stock Exchange "continued to remain below our estimate of their intrinsic value."

The disposal during the year under review was of Textured Jersey Lanka PLC sold for Rs.20 million netting a gain of Rs.8.3 million, the report reveals.

Paulraj said that the year under review had seen the company generating an accounting profit of Rs.15.5 million and a comprehensive net income of Rs.99.6 million representing a significant turnaround relative to the previous year.

"The improvement was driven by favourable conditions at the CSE resulting in fair value gains as well as revenue growth and control in costs," he said.

"Growth in profits resulted in the NAV per share recording a 20.6% growth, increasing from Rs.18.70 to reach Rs.22.56 as at 31st March 2014."

He said that although the company had been challenged once again to make new investments, they continue to strongly believe in the important role that private equity can play helping promising businesses achieve rapid growth.

"Private equity is still a relatively new concept to Sri Lanka, as all stakeholders in the industry gain more experience and comfort in this form of investing, we could expect the level and quality of activity to improve over time," Paulraj said.

"Guardian Capital Partners hopes to play a key role in the development of this asset class."

He said the company will continue to focus on improving various facets of the business such as deal generation, deal evaluation and structuring and they continued to pursue opportunities to tie up with foreign private equity firms and foreign funding partners to expand assets under management and build their expertise.

He reported that the discrepancy between the actual net worth of the company and the price at which its share trades in the market had significantly narrowed relative to the previous year.

The net worth of the company as at March 31, 2014 stood at Rs.22.56 relative to a market price of Rs.25.30 per share.

The directors have once again recommended no dividend for the year under review stressing again to its shareholders that private equity investments are riskier, relatively illiquid in nature, carry a longer gestation period and therefore carry a higher risk rate than listed equity.

An operational review in the annual report said that the portfolio value of the company as at March 31,2014 stood at Rs.523 million recording a growth of 16% driven by fair value gains recorded by both Expolanka and Access whose share prices had increased.

The Expolanka share price had appreciated to Rs.8.70 from Rs.6.80 while Access closed at Rs.22.50, up from Rs.19.70 a year earlier.

Guardian Capital Partners funds are managed by Guardian Fund Management Limited, a fully owned subsidiary of the Ceylon Guardian Investment Trust PLC.

At present Guardian Fund Management manages the largest equity fund in the country and has built up its competencies with a field of portfolio management and research and support services.

Ceylon Guardian Investment Trust PLC is the dominant shareholder with 83.97% of the company followed by Lakeview Investments (2.39%) and Carson Cumberbatch (2.25%).

The company has a stated capital of Rs.513.7 million and revenue reserves of Rs.69.1 million in its books. Total assets ran at Rs.589 million and total liabilities Rs.6.2 million.

The directors of the company are: Messrs. I. Paulraj (Chairman), D.C.R. Gunawardena and S. Mahendrarajah.

www.island.lk