Sri Lanka's Access Engineering buys university property

ECONOMYNEXT - Sri Lanka's Access Engineering Plc, a construction group said it had bought 92 percent stake in a company that will provide facilities for university education, for 575 million rupees.

Horizon Knowledge City Ltd, has land in Malabe, a fast-growing suburb of Sri Lanka's capital Colombo.

The firm said the move would be a long term property investment project.

Sri Lanka's Laugfs Gas hires China firm to build US$80mn LPG terminal

ECONOMYNEXT - Sri Lanka's Laugfs Gas Plc said a Chinese firm will build an 80 million US dollar liquefied petroleum gas (LPG) terminal for the firm at Hambantota port.

China Huanqiu Contracting and Construction Corporation, a unit of China National Petroleum Corporation at been given a turnkey engineering procurement contract.

The terminal will have storage capacity of 30,000 metric tonnes with provision to expand another 15,000 metric tonnes.

Laugfs Terminal Limited, a fully-owned unit, leased four acres of land at Hambantota port from the state-run port agency in August to build the terminal.

Sri Lankan shares snap five sessions of falls

Reuters: Sri Lankan shares edged up on Tuesday after five straight sessions of falls to a more than four-month closing low in the previous session, led by large caps on market talks that the government would lower corporate taxes in the coming budget.

The main stock index ended 0.17 percent, or 11.97 points, firmer at 6,977.95, after posting its lowest close since July 9 on Monday.

"It is too early to say whether the market will continue its upward trend," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Brokers said investors are also waiting for policy direction from the annual budget scheduled later this week.

Finance Minister Ravi Karunanayake will present the 2016 budget in parliament on Friday. He has said the budget will be "capital oriented".

Block deals pushed turnover to 1.47 billion rupees ($10.34 million) on Tuesday, the highest since Nov. 6, and well above this year's daily average of 1.1 billion rupees.

Shares of Hemas Holdings Plc rose 3.54 percent, Lanka ORIX Leasing Company Plc gained 3.83 percent and Commercial Bank of Ceylon Plc rose 1.19 percent.

Conglomerate John Keells Holdings Plc gained 0.33 percent.

Foreign investors sold a net 89.8 million rupees worth of shares on Tuesday, extending the year-to-date net foreign outflow to 3.63 billion rupees worth of equities.

($1 = 142.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Citrus Leisure posts steady performance for 1H 2015/16

The Citrus Leisure group announced a revenue of Rs.392 million for the six months ended September 2015, a 133 percent growth compared to the corresponding period last year. The group’s first property Citrus Hikkaduwa contributed Rs.105 million while the group’s flagship property Citrus Waskaduwa, which was opened last year, contributed Rs.247 million. The Steuart by Citrus, the Colombo city business boutique hotel which opened in July this year, contributed Rs.30 million, while Citrus Vacations, the inbound and outbound travel arm largely contributed to the rest. 

The hotel occupancy of Citrus Hikkaduwa saw a significant improvement over the last year and recorded a better bottom line than the previous year. Citrus Waskaduwa reported an operational profit of Rs.45 million during the six months ended September 2015. Taking into account this was earned during the off season period for the Southern belt, the future outlook for both properties for the six months ahead looks promising. The Steuart by Citrus has also started to generate profits in a matter of two months post opening. 

This financial year is set to be an exciting one for Citrus Leisure PLC. Despite the group posting an operational loss for the period under review, the Citrus group is poised to perform significantly better this year, compared to its performance in 2014/15. 

 Plans are underway and the company is reviewing several proposals for the foreseen 60-room Ayurveda spa resort in Kalpitiya. Meanwhile, the company continues to hold a strategic investment in a 20 percent stake of Colombo Land and Development PLC, which is an associate company of the group. The group’s substantial asset base includes a strategically located property in Passikudah, available for future development. No doubt these assets will gain value due to the renewed hype for the Passikudah region and planned efforts by the government for the Western Province mega city developments. - www.dailymirror.lk

MAS top employees join rival company

By Chandeepa Wettasinghe

 A number of employees of the country’s largest apparel exporter MAS Holdings are said to be moving out this month to join rival Hela Clothing (Pvt) Limited, industry sources said. 

Mirror Business learns that a majority of the individuals—numbering over 50—were at executive and managerial positions in the subsidiary MAS Intimates (Pvt) Ltd which produces lingerie for global heavyweights such as Victoria’s Secret. 

Sources said that there will also be a shakeup at the MAS Holdings group level in January 2016. 

Hela Clothing was established in 1992 as Hemas Garments Ltd. The Hemas Group exited the company in 2006.

 The ownership of Hela Clothing changed hands mid-2015 with an industry veteran purchasing the controlling stake—who refused to comment citing conflict of interest. 

Hela Clothing has over 5,400 employees and produces 1.8 million pieces of apparel a month. It has also expanded into production in Bangladesh. Its portfolio includes several big brands such as Marks & Spencer, Nike, Armani and Levi’s. Hela Clothing is gearing up for a major acquisition drive in the coming years, and intends to list in the Colombo Stock Exchange within 3 years.
www.dailymirror.lk

Commercial banks pump out Rs.49bn in leases in 9 months

Top three commercial banks account for over half 

 In an startling revelation, the top eight private sector licensed commercial banks (LCBs) have given out a staggering Rs.48.6 billion worth of leases during the first nine months of 2015, accounting for close to 20 percent of the total growth in their loan books during the period, a Mirror Business analysis showed. 

 The top three private sector commercial banks based on assets— Commercial Bank PLC(ComBank), Hatton National Bank PLC (HNB) and Sampath Bank PLC—accounted for 68 percent or Rs.32.9 billion of this growth. 

 Most leases were given for vehicle financing as once the gold bubble burst, vehicles were the only remaining collateral-based lending available for banks and finance companies. 

Leasing facilities for industrial equipments for manufacturing and value addition purposes such as machinery and industrial vehicles must have accounted for a minute share of this growth as most of the mega infrastructure projects were stalled from the beginning of this year while the private sector took a wait-and-see approach for investments. 

 Hence, even some of the excess liquidity available for banks through foreign borrowings was appeared to have channeled into consumer vehicle financing as some of the larger banks offered leases at rates as low as 9 to 10 percent. 

 This was evident from the monthly vehicle registration numbers which was hitting all time highs month after month for most part of the year. 

 However, the sustainability of the growth in the leasing portfolio is uncertain as the increased import levies are expected on vehicle imports from the forthcoming budget. 

Also, the 70 percent Loan-to-Value ratio on motor vehicle financing proposed by the Central Bank will come into effect from December 1, further dampening the prospects for vehicle imports. 

The exposures to leasing by the banks in our analysis however remains less than 10 percent except in the case of Nations Trust Bank PLC (NTB), where leasing accounts for a quarter of its loan book. 

 NTB saw its net interest margin coming under pressure during the period under consideration due to its corporate and leasing portfolios feeling the pinch of declining yields under heavy competition. 

 However, the access to cheaper credit could still fuel the vehicle imports despite the high import costs. 

Meanwhile in absolute terms, ComBank accounted for the largest share of Rs.77.9 billion for the private sector credit growth during the first nine months followed by HNB with Rs.67.8 billion, Sampath Bank with Rs.42.2 billion and the new entrant in to the league of top five players, Pan Asia Banking Corporation PLC with Rs.18.4 billion. Further Pan Asia Bank was able to grow its loan book by 29.1 percent during the nine months, the highest by any bank in the list. 

The eight banks in the sample account for over 70 percent of the total private credit in the economy during the first nine months.

www.dailymirror.lk

Kelsey Development set to launch gated housing project in Negombo

Schaffter family controlled Kelsey Development PLC is preparing to launch a gated housing project in Negombo in the 1st quarter of the 2016/17 financial year, the company’s interim financial statements said. 

“The company is preparing to launch a gated housing project consisting 46 houses in Negombo. This gated community is strategically located 10 minutes away from the Colombo – Katunayake Expressway and 15 minutes from Bandaranaike International Airport,” it said. 

It added that the houses are built on 80 perch land plots in sizes varying between 2,000-3700 square feet, and that the construction of common facilities and model houses have already commenced. 

The new project is coming on the heels of Kelsey Development successfully selling out its Templer’s Square project prior to completion. 

“It is expected that approximately seventy five of the hundred houses will be handed over before the end of the financial year. This will generate a contribution of approximately Rs.160mn from the Templers’ Square project in the 2015/16 financial year,” the company said. 

For the quarter ended September 2015, the group level net loss stood at Rs.24.76 million compared to a net profit of Rs.18.34 million year-on-year. 

www.dailymirror.lk