Sri Lankan shares end steady ahead of long weekend

Reuters: Sri Lankan shares were flat at the close of trade on Thursday, as gains led by industrial and telecom counters were offset by losses in stocks of manufacturing companies.

The Colombo stock index edged up 0.01 percent to 6,390.74, but fell 0.3 percent during the week, its seventh straight weekly fall. It has shed more than 4 percent since July 27 up to Thursday’s close.

Sri Lanka’s stock and foreign exchange markets are closed on Friday for a religious holiday.

Diversified conglomerate Hemas Holdings Plc ended 0.9 percent higher, while Sri Lanka Telecom Plc rose 1 percent.

Knitted fabrics manufacturer Teejay Lanka Plc fell 2.2 percent, while conglomerate Richard Pieris Plc dropped 1.7 percent.

“We...see the accumulation of blue chips is continuing,” said Dimantha Mathew, head of research at First Capital Holdings. “We don’t see a big uptrend, but we see a complete slowdown in the downtrend.”

Foreign investors net sold 70.5 million rupees ($461,690) worth of shares, but they have net bought 27.5 billion rupees worth equities so far this year.

“We are yet to see big foreign inflows for the market to start a run. But we hope it will return after the tax confirmation following the Inland Revenue Bill,” Mathew said.

The bill, Sri Lanka’s major tax reform since independence from Britain in 1948, seeks to expand the tax net and stamp out evasion. It is expected to be presented in parliament on Sept. 6.

Turnover stood at 845.3 million rupees, slightly lower than this year’s daily average of around 858 million rupees. 

($1 = 152.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Hayleys buys Sri Lanka Shipping Company for Rs4.9bn

ECONOMYNEXT - Diversified Hayleys group said its logistics division had bought Sri Lanka Shipping Company Limited, a privately held firm, for 4.9 billion rupees.

"The acquisition is in line with the Group's strategy on expanding its maritime operations and paving the way for the establishment of the largest marine and shipping company in Sri Lanka," Hayleys said in a statement.

The group said is Hayleys Advantis Limited had brought 94.81 percent of Sri Lanka Shipping Company Limited on August 23, 2017.

Sri Lanka Shipping Company offers shipping agency services, stevedoring, clearing and forwarding, has fertilizer bagging plant at Colombo port, wareshousing and tea blending for export.

Sri Lanka's Seylan Bank to sell Rs10bn unsecured bonds

ECONOMYNEXT - Sri Lanka's Seylan Bank Plc said it planned to sell 6.0 billion rupees of unsecured subordinated with an option to sell a further 4.0 billion if there was demand.

The debentures would have a tenor of 5 to 10 years.

The interest rate would be set before the opening of the issue.

Seylan Bank said it will not go ahead with a plan announced in October 05, 2016 to issue rated senior unsecured debt.

The subordinated debt will company with BASEL III capital requirements.

Sri Lanka Treasuries yields marginally up

ECONOMYNEXT - Sri Lanka's 12 - month Treasuries yield rose 02 basis points to 9.67 percent at Wednesday's auction data from the state debt office showed.

The 6-month yield rose 03 basis points to 9.30 percent.

The debt office sold 10 billion rupees of 6-month bills and 8 billion rupees of 12-month bills.

There were no sales of 3-month bills.

Sri Lanka's Treasury bill yields has risen over the past two weeks, after falling sharply in earlier weeks. However bond yields have eased.

Sri Lankan shares fall for 2nd day; bank stocks, beverages down

Reuters: Sri Lankan shares fell for a second session on Wednesday, ending near a more than four-month closing low hit last week, as investors sold shares of banks and beverages companies.

The Colombo stock index fell 0.13 percent to 6,390.26.

Shares of Nestle Lanka Plc fell 0.6 percent, while biggest listed lender Commercial Bank of Ceylon Plc slipped 0.7 percent and Sri Lanka Telecom Plc lost 1 percent.

The index closed at its lowest since April 18 on Thursday. It fell 0.4 percent last week, its sixth straight weekly fall, and has shed more than 4 percent since July 27 up to Wednesday’s close.

“It was totally a volatile market. Lack of retail participation is the main reason for the market to come down,” said Atchuthan Srirangan, a senior research analyst at First Capital Holdings PLC.

“Still, investors are waiting to see the outcome of the Inland Revenue Bill.”

The bill, Sri Lanka’s major tax reform since independence from Britain in 1948, seeks to expand the tax net and stamp out evasion. It is expected to be presented in parliament on Sept. 6.

Foreign investors net bought 89.5 million rupees (about $585,925) worth of shares, extending the year-to-date net foreign inflow into equities to 27.6 billion rupees.

Turnover stood at 592 million rupees, compared with this year’s daily average of around 858.1 million rupees.

($1 = 152.8000 Sri Lankan rupees)

( Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lankan shares end lower on selling by foreign investors

Reuters: Sri Lankan shares ended slightly weaker on Tuesday, hovering near a more than four-month closing low hit last week, as foreign investors sold diversified shares, brokers said.

Foreign investors turned net sellers for the first time in six sessions, selling shares worth a net 495 million rupees ($3.24 million), although they have net bought 27.5 billion rupees worth of equities so far this year.

The day’s turnover however touched the highest in more than one month at 1.6 billion rupees, well above this year’s daily average of around 859.8 million rupees.

“Market slipped on a few counters, but it looks healthy with over a billion rupee in turnover,” said Hussain Gani, deputy CEO of Softlogic Stockbrokers.

The Colombo stock index ended 0.2 percent lower at 6,398.79, near its lowest close since April 18 hit on Thursday.

Shares of Hemas Holdings Plc fell 3.68 percent, while Nestle Lanka Plc ended 0.4 percent weaker and conglomerate John Keells Holdings Plc lost 0.3 percent.

The index fell 0.42 percent last week, its sixth straight weekly fall, and has shed more than 4 percent since July 27 through Tuesday.

($1 = 152.7500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Fitch affirms Bimputh Finance at BB(lka); outlook stable

Fitch Ratings Lanka has affirmed Bimputh Finance PLC’s National Long-Term Rating at ‘BB(lka)’. The Outlook is Stable.

KEY RATING DRIVERS

Bimputh’s rating reflects its small franchise compared with higher-rated peers and high-risk appetite stemming from its microfinance-dominated loan portfolio, which Fitch sees as risky due to the segment’s greater susceptibility to economic cycles. Fitch’s assessment also captures likely pressure on Bimputh’s capitalisation from high loan growth, which is forecast by management’s guidance, and limited funding diversity due to a heavy reliance on borrowings.

Fitch believes aggressive loan growth would pressure Bimputh’s capitalisation in the absence of any meaningful capital infusions. The company’s Fitch Core Capital ratio remained flat at 16.5% as at end-March 2017 and Fitch believes Bimputh would depend on its 94% owner, Daya Group, for capital infusions.

Fitch expects microfinance to remain Bimputh’s dominant product exposure, notwithstanding that this exposure declined to 63% of total lending in the financial year ending March 2017 (FY17), from 82% at FYE16, due to increased exposure to non-microfinance loans supported by corporate and personal loans. A challenging operating environment, together with prolonged drought and several floods, reduced loan growth to 39% during FY17, from 118% in FY16.

Fitch expects Bimputh’s assets quality to remain under pressure. The reported six-month non-performing loan (NPL) ratio increased to 3.0% at end-March 2017, from 0.8% at end-March 2016, due to microfinance defaults. However, the company maintains adequate provisioning levels for these NPLs.

Fitch believes weaker net interest margins from its business-model shift to a lower share of microfinance and higher funding costs could weigh on Bimputh’s profitability and increase its credit costs. We expect Bimputh to continue relying on wholesale borrowings due to its weaker deposit franchise relative to peers. Deposits made up only 30% of its funding at end-March 2017 and are highly concentrated among the top-20 deposit holders.

Bimputh is a small finance company accounting for 0.95% of licensed finance company and specialised leasing company sector assets at end-March 2017 (March 2016: 0.86%).

RATING SENSITIVITIES

Weaker capitalisation metrics may place downward pressure on the company’s ratings. Heightened risk appetite, indicated through aggressive loan growth or greater unprovided NPLs that increase capital impairment risks, could also lead to a downgrade of Bimputh’s ratings.

An upgrade is contingent on an improved franchise while sustaining credit metrics – in particular, capitalisation – similar to higher-rated peers, alongside a moderation of risk appetite.

Source: LBO