Thursday, June 27, 2013

Sri Lanka stocks close up 0.6-pct

June 27, 2013 (LBO) - Sri Lanka's stocks closed up 0.64 percent on Thursday, with the heavy index stocks showing gains, ending a week of losses, brokers said.

The benchmark Colombo All Share Index closed 38.68 points higher at 6,111.36 and the S&P SL 20 Index closed 12.85 points higher at 3,426.48 up 0.38 percent.

Turnover was 1.3 billion rupees up from 2.2 million a day earlier.

Foreigners brought 450 million rupees worth shares while selling 947 million rupees in a day that 131 stocks advanced and 47 stocks declined.

Ceylon Tobacco Company contributed most to the index closing at 989.50 rupees up 9.70 rupees, John Keells Holdings gained 2.00 rupees to close at 251.80 rupees with over 2.6 million shares traded. Dialog Axiata gained 20 cents to close at 8.60 rupees.

Negative contributors included The Bukit Darah losing 13.40 rupees to close at 695.60 rupees, Ceylon Cold stores lost 7.70 rupees to close at 162.00 rupees.

Hatton National Bank closed at 161.20 rupees up 1.80 rupees and Sampath Bank closed at 204.70 down 0.30 rupees.

Nestle Lanka lost 9.30 rupees to close at 1940.50 cents and Distilleries Company closed at 194.70 rupees up 4.70 rupees and Aitken Spence closed at 130.00 rupees down 0.20 rupees.

source - www.lbo.lk

Monetary Policy: Impact of SRR Reduction







                                        
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source - acuity research

LOLC ties up with world giant BRAC to buy control of Nanda Investments

BRAC, one of the world’s largest micro financing providers, entered into a ground breaking strategic alliance with LOLC, one of the largest conglomerates whose core business is financial services, to acquire the controlling interest of Nanda Investments and Finance PLC (Nanda Investments).


 This transaction will transfer 90,645,057 shares with a 56.6% stake of Nanda Investments to BRAC with LOLC taking a stake of 33.4%. LOLC is expected to make this equity investment through its fully owned subsidiary, LOLC Micro Investments Ltd.

Nanda Investments yesterday saw 91.2 million of its shares traded between a high of Rs. 9 and a low of Rs. 8.40 before closing at Rs. 8.60, up by 10 cents. The BRAC-LOLC buying was at Rs. 9 per share in a deal worth Rs. 815.8 million. Strike price is above the Net Assets Value per share of Rs. 5.29 as at 31 March 2013.

 Nanda Investments is a registered finance company listed on the Colombo Stock Exchange with a lending portfolio of Rs. 290 million and a fixed deposit base of Rs. 88 million. The total assets of the company as at 31 March 2013 were Rs. 663 million.

 BRAC is the largest development organisation in the world in terms of the scale and breadth of its operations and was founded 10 years ago in Bangladesh by its Chairman, Fazle Hasan Ahbed.

 He is one of the ‘Global Greats’ in the social sector and for his outstanding contribution to social improvement, he has received the Ramon Magsaysay Award, the UNDP Mahbub Ul Haq Award, the inaugural Clinton Global Citizen Award and the inaugural WISE Prize for Education.

BRAC reaches out to the less privileged communities across the globe through microfinance, education, healthcare, legal services, community empowerment and more, catalysing lasting change and creating an ecosystem in which the less privileged have the chance to seize control of their own lives. Through this initiative, BRAC has reached and touched the lives of an estimated 126 million people, spanning across 11 countries in Asia and Africa and the Caribbean.

 BRAC, with its 100,000 employees dedicated to spreading antipoverty in the world, focuses on social and financial empowerment of women, healthcare and education, empowering farmers though inclusive financial solutions, not only catering to financial needs, but also improving livelihood and financial literacy among the less privileged.

 LOLC Group is one of the largest non-banking financial institutions in Sri Lanka formed in 1980 and pioneered leasing in the country. Within the open economy, the company revolutionised SME financing of income generating. This initiative changed millions of lives of the SME sector and many of them over the last three decades have graduated to the level of medium to large scale enterprises.

 With this objective achieved, LOLC moved on with its next objective of reaching the non-bankable micro sector to facilitate financing to empower the micro sector with financial solutions that not only provided the much needed seed capital but to be a partner with interests in sustainable improvement of the livelihood of this community.

 LOLC Micro Credit Ltd. (LOMC) was formed with this intention in 2009 along with FMO (The Netherlands Development Finance Company) who has a stake of 20% in the company. LOMC today is one of the largest micro financing institutions in the country, serving more than 160,000 customers and is reaching the poorest of the rural community through its 128 service outlets.

 In the medium term, it is expected that BRAC and LOLC will invite Triodos Bank to invest in a stake of 10% and the new shareholder is expected to spearhead the provision of micro funding to fuel portfolio growth.

 Triodos Bank is one of the world’s leading sustainable banks formed 30 years ago with the mission of making money work for positive social, environmental and cultural change and transacts only with sustainable companies. The bank has transactions with more than 355,000 customers with 6.8 billion euros under its management. The bank provides financial support for more than 6,000 sustainable enterprises in 40 countries worldwide.

 Nanda Investments was founded in 1961 by Sirisena Mallawarachchi and in 1990, Anura Mallawarachchi took over the management of the company as the Chairman. Later, he stepped down and managed the company as Managing Director in line with Central Bank guidelines.

 BRAC together with LOLC makes a formidable partnership in acquiring Nanda Investments which is expected to be positioned as a micro finance company to reach the rural community with whom both shareholders are familiar names for sustainable financial solutions.

 BRAC will extend its current business model together with the backing of its global business operations platform while LOLC will play a key role in providing the know-how on the local micro credit business. Together with Triodos Bank, this partnership will flourish as a strong microfinance company with a sustainable business model of providing financing to less privileged rural community.

source - www.ft.lk

Daily Market Review - Foreign Buying Up date




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source - acuity research

Tuesday, June 25, 2013

Daily market update and Foreign Holding up date - 24 06 2013






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source - acuity research

Monday, June 24, 2013

NDBS tips stock market upturn to persist

NDB Stockbrokers is forecasting the upturn in the stock market to persist aided by lower interest rates and improved corporate earnings.

“The ASPI has gained 28% since our review in May 2012. However, the rise in stock prices of 13% in 2013 (by end of May) is slightly ahead of our expectations. Accordingly we expect a lower rate of appreciation of stock prices in 2013H2 compared to 2013H1. We remain optimistic regarding the prospects in the equity market in 2014 on the premise the interest rates would ease resulting in improved corporate profitability and attraction of investors to equities (from fixed income investments). Therefore, we maintain the bull-run would continue in 2014 to reach our ASPI target of 9,000,” NDBS said in its latest Sri Lanka Equities report.

“We expect a modest increase in profits of 10% to 15% for 2013. With the pickup in economic activity and lower interest rates we expect a robust growth in profits of 20% in 2014. According to our estimates, the broad market is currently trading at a forward P/E of 12x based on 2013 expected earnings. We feel it is attractively priced compared to the regional equity markets considering the optimism and growth expectations in Sri Lanka over the next two to three years,” NDBS said. It also said as expected the market interest rates have come down in most commercial banks by 100 to 200 basis points in May 2013.

“We expect the private sector credit growth to be lower at 15% in 2013 compared to 18% in 2012. The anticipated reduction in the losses made by state owned enterprises (SOEs) and the attempt to reduce budget deficit may contain the demand for credit from Government entities. However, due to the high debt service obligations in 2013 we expect robust Government borrowing,” the company said.

“Accordingly, we do not foresee further significant reductions in interest rates in the short term. Since the government debt service obligations are comparatively less in 2014 further reductions in interest rates could be expected by early 2014 (or late 2013),” NDBS added.

 Noting that global bond and equities runs may slow down, the broking firm said the interest rates in USA were maintained at historical lows since 2011 to revive the economy. Therefore, the interest rates were exceptionally low in most parts of the world. Interest rates have gained since May 2013 with the assumption that USA would scale down quantitative easing programs in view of the improving economic conditions (continuing the program eternally was not sustainable).

 The global equities which were on a run from 2012 slowed down significantly in May simultaneously. “We do not expect an increase in global interest rates to have a significant upward pressure on local interest rates since the domestic market interest rates are around 5% to 10% higher than global interest rates (and also because the capital account is not fully liberalised). Accordingly, only a steep rise in global interest rates would have an upward pressure on the domestic interest rates,” NDBS said.

source - www.ft.lk

Buy on the pullback, says DNH Financial

Despite fears that foreign investors may continue to exit emerging markets off in response to the cut back in the US fed’s bond buying program, DNH Financial believes that foreign allocations to domestic equities could remain (notwithstanding the possibility of a temporary sell-off), with robust domestic economic and corporate EPS growth providing the necessary tailwind.

 It said descending close to the 6,200 support level, it is easy to shy away from the market on the conviction that it may lose further ground due to the perceived lack of any relevant support despite expectation of robust 2Q2013 corporate results for blue-chip counters.

“While we don’t rule out the possibility of further sideways movement in the short term, we are nevertheless reasonably convinced that the market should garner firm interest from foreign investors who may adopt a cherry-picking approach focusing on counters that present strong and sustainable value in high growth and defensive sectors,” DNH said.

“This should provide the necessary foundation for the market’s systematic rise over the medium to longer term. In this respect, we advise investors to focus on companies with largely monopolistic attributes and strong brand loyalty within sectors and sub-sectors that are both growth and resilient.

We reiterate the need to construct a diversified portfolio of stocks that have strong top line revenue growth and low debt to equity ratios,” DNH Financial added.

source - www.ft.lk

1Q GDP growth slows but still amongst world’s highest




Sri Lanka’s first quarter GDP growth slowed to 6% but still remains amongst the highest in the world, according to stock broking firm DNH Financial.

 It said Sri Lanka reported 1Q2013 GDP growth rate of 6.0% in line with its expectations. Growth was spearheaded by the industrial, services and agriculture sectors which rose by 10.7%, 4.3% and 2.0% compared to 10.8%, 5.8% and 12.0% reported during 1Q2012.

“We view this performance as satisfactory and indicative of the country’s resilience in an environment of globally heightened risk, while also setting the foundation for our expectation of 6.5% to 7.0% GDP growth rate for FY2013.

 With the exception of China, which has reported a GDP growth rate of 7.7% in 1Q2013, it is encouraging to note that Sri Lanka has outperformed all BRICS countries in terms of 1Q2013 GDP performance during the period,” DNH Financial said.

source - www.ft.lk

Foreign Participation @ CSE - 14 to 21 June





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source - acuity research

Tuesday, June 18, 2013

Daily Review - 18 06 2013

 
 
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source - acuity research

Sri Lanka stocks close down 0.4-pct

June 18, 2013 (LBO) - Sri Lanka's stocks closed down at 0.42 percent on Tuesday, continuing its downward trend with investors taking profits and index heavy stocks continuing to drop, brokers said.

The benchmark Colombo All Share Index closed 26.11 points lower at 6,193.00 and the S&P SL 20 Index closed 0.33 points higher at 3,497.12 up 0.01 percent.

Turnover was 291 million rupees down from 310 million a day earlier.

Foreigners brought 92 million rupees worth shares while selling 59 million rupees of shares, in a day that 48stocks advanced and 153 stocks declined.

Ceylon Tobacco Company contributed most to the index closing at 1002.20 rupees up 12.20 rupees helped by a crossing of 25,000 shares at 1000 rupees per share.

Commercial Leasing & Finance closed at 4.30 rupees up 20 cents and Ceylinco Insurance gained 56.90 rupees to close at 1016.90 rupees.

Negative contributors included N D B Capital Holding's losing 45.00 rupees to close at 450.00 rupees, The Lions Brewery closed at 400.00 rupees down by 10 cents and Sri Lanka Telecom lost 50 cents to close at 41.40 rupees.

Pan Asia closed at 19.60 rupees down 30 cents. Union Bank of Colombo closed at 18.30 rupees down 10 cents and Sampath Bank closed at 211.40 rupees up 40 cents. Commercial Bank of Ceylon gained 10 cents to close at 116.50 rupees
.
Nestle Lanka gained 2.20 rupees to close at 1930.80 rupees and John Keells Holdings lost 20 cents to close at 264.00 rupees.

Dialog Axiata closed at 8.70 rupees down 10 cents, Chevron Lubricants Lanka gained 3.20 rupees to close at 288.20 rupees and Distilleries Company closed at 192.00 rupees down 1.00 rupee.

source - www.lbo.lk

Monday, June 17, 2013

Sri Lanka stocks close flat

June 17, 2013 (LBO) - Sri Lanka's stocks closed flat Monday, due to index heavy stocks continuing to drop and profit taking by some investors, brokers said.

The benchmark Colombo All Share Index closed 0.28 points lower at 6,219.11 and the S&P SL 20 Index closed 7.56 points lower at 3,496.79 lower at 0.22 percent.

Turnover was 310 million rupees down from 577 million on last week Friday.

Foreigners brought 146 million rupees worth shares while selling 55 million rupees of shares, in a day that 77stocks advanced and 104 stocks declined.

Ceylon Tobacco Company contributed most to the index closing at 990.00 rupees up 10,20 rupees helped by a crossing of 25,000 shares at 1000 rupees.

The Lion Brewery Ceylon closed at 399.90 rupees up 12.50 rupee and Carsons Cumberbatch gained 6.00 rupees to close at 444.00 rupees.

Negative contributors included John Keells Holdings which lost 1.40 rupees to close at 264.20 rupees, Chevron Lubricants Lanka lost 8.20 rupees to close at 285.00 rupees and Distilleries Company gained 60 cents to close at 195.00 rupees.

Distilleries Company closed at 193.00 down 2.00 rupees with a crossing of 200,000 shares at 195 rupees.

Pan Asia closed at 19.90 rupees down 30 cents. Union Bank of Colombo closed at 18.20 rupees down 70 cents and Sampath Bank closed at 211.80 rupees up 60 cents. Commercial Bank of Ceylon lost 0.30 rupees to close at 116.40 rupees.

Nestle Lanka gained 8.40 rupees to close at 1928.60 rupees and Dialog Axiata closed flat at 8.80 rupees.
source - www.lbo.lk

ASPI tracks MSCI Emerging Market performance

Contrary to popular rhetoric, foreign investor sentiment appears to have a not inconsiderable impact on the ASPI’s performance, as can be seen in the chart in which the MSCI Emerging Markets Index has been juxtaposed against the ASPI.




 DNH Financial said with foreign participation accounting for approximately 30-50% of daily market turnover, it is not surprising thawt a strong correlation exists between emerging market performance and the ASPI’s trajectory on an YTD basis. Notwithstanding this however, given the robustness of the domestic economy and its impact on corporate EPS growth, it is believed that the Colombo Bourse will be spared much of the contagion that may continue to sweep through major markets in Europe and in other areas as a result of the Eurozone debt crises.

Commenting on the market’s trajectory, DNH said that with robust EPS growth expected in selected counters, it recommends investors to focus on companies that are liquid, cash generative, have a dominant market position and are intrinsically sound while advising against taking speculative positions in stocks.

“We reiterate a focus on companies with sustainably high ROCEs and defendable competitive advantages, resulting in above average earnings growth potential that is still not fully factored into share prices,” it said. “In terms of market trajectory, we expect the Bourse to re-test the 6,500 key resistance level over the coming weeks, although intermittent bouts of profit taking could result in temporary dislocations,” DNH added.

 Heading into the last few weeks of 2Q2013, DNH also expects a number of themes to emerge which are likely to shape the market trajectory; volatility in the global markets as they continue to capitulate to US and Eurozone debt tensions which could encourage foreign fund managers to increase their allocations to emerging/frontier markets such as Sri Lanka (even though foreign participation in the local bourse could peter out slightly in the short term if the sell-off in global equities continue), the likelihood of an improvement in 2Q2013 corporate EPS growth for listed blue chips which should in turn result in a decline in the PE and PEG valuations in turn providing a trigger for medium term to longer term buying interest.

 The convergence of these factors is likely to provide the perfect backdrop for the Sri Lankan Bourse to commence its re-rating, despite the fact that there could be sporadic bumps along the way.

source - www.ft.lk

Sunday, June 16, 2013

Orient Finance PLC net profit up by 23% for the year

Dr. D. C. Jayasuriya PC – Chairman, Orient Finance PLC

According to the un-audited Interim Financial Statement for the Financial Year ended 31st March 2013 released to the Colombo Stock Exchange, Orient Finance PLC has recorded a 23% increase in Net Profit after Tax over the previous year to Rs. 168.4 Mn. This is the highest ever profit made by the Company in its decade of operations.

Income for the year recorded a growth of 70%, registering Rs. 825 million as against the Rs. 529 million income recorded in the previous year.

The Company’s Earnings Per Share (EPS) improved to Rs. 1.46 for the year from Rs.1.30 recorded in the previous year which is a 23% increase.

By the end of the financial year, the Company’s net lending portfolio increased to Rs.3.3 Bn from Rs. 2.2 Bn as at 31st March 2012 recording a 49% growth despite the decrease in the overall demand for motor vehicles.

During the year, five window offices located at Anuradhapura, Gampaha, Galle, Kalutara and Kandy were converted to fully fledged branch status while three window offices in Jaffna, Killinochchi and Batticaloa were opened to provide a convenient reach to all its leasing customers. The Company has planned to upgrade more window offices to fully fledged branches during the current financial year.

The Company commenced mobilizing public deposits in August 2012 subsequent to the receipt of the Finance Business license from the Central Bank of Sri Lanka in June 2012. During the year the company has also added Gold Loans to its product lines to become a full service provider in the Financial Services Sector. The company pioneered the concept of a 365 day leasing through its upgraded Welisara branch in December 2012.

Orient Finance PLC is licensed under the Finance Business Act No.42 of 2011 by the Monetary Board of the Central Bank of Sri Lanka. It has a Rating of BBB- (Stable outlook) from ICRA Lanka. Its main lines of businesses’ are Leasing, Hire Purchase, Debt Factoring, Gold Loans and acceptance of Fixed Deposits.

source - www.island.lk

Saturday, June 15, 2013

Weekly Foreign Holding Update - Block Trade update


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source -  CAL Research

Friday, June 14, 2013

We are almost there for a recovery - History is repeating

 
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* Mkt came to its lowest level in June 2012 after its bull run started in year 2009.

* The lowest ASI reported was 4737.75 on June 6 2012.

* The ASI moved up to 5078.06 after that until 20 June 2012. - first stage of recovery we witnessed.

* After that ASI took a dip and came to 4822.64 on 18 of July 2012.

* Once again a recovery was witnessed until 28 Sep and the ASI hit 6000 all important mark and ended up at 5971.99 - second stage of recovery.

* Again a mkt dip took place which is a natural behaviour in every mkt in the world. ASI dip up to 5323.21 and the lowest reported date was 05 December 2012.

* After that we witnessed another recovery up to 5883.66 until end of jan 2013. - third stage of recovery.
* Mkt was hit by another dip and this time ASI ended up in 5626.77 on 5 march 2013.

* The all important mkt recovery took place after that and that bull run helps to touch ASI all important mark of 6500 for the first time almost after two years. ASI hit 6488.85 on 23 may 2013. - fourth stage of recovery

*Now we are witnessing another dip in the mkt which is necessary for the all important fifth stage of recovery where we can expect ASI to hit 6750 levels or more.

Important points to remember

* look at the RSI movement of the mkt at every mkt bottom and at the highest point in every recovery. - We are almost there.

* look at the movement of ASI between Bollinger bands in every bottom and every recovery - We are almost there.

* look at MACD movement at every mkt bottom and every recovery. - We are almost there.

* After hitting low of ASI 4737.75 in June 2012 mkt is heading towards upward direction with required corrections from time to time.

( This is only the personal view of the writer )

source - yahoo finance

CB may take more measures to get lending rates down

Reuters: The Central Bank could take more steps to reduce high lending rates if commercial banks do not fall in line with monetary policy rate cuts, a top Central Bank official said on Thursday.

Deputy Central Bank Governor Nandalal Weerasinghe said lending rates remain too high despite trims of 75 basis points in policy rates since December. The high rates are crimping the country’s growth, he said.

 His comments come two days after the Central Bank told commercial banks to cut the rate charged on credit card advances by four percentage points in a bid to get other lending rates down.

“We don’t see a justification for very high interest rate margin for the banks. They are making huge profits and the interest margins are high,” Weerasinghe told Reuters.

“If the rates are not coming down, we have instruments. We can impose regulations if we want,” he said, without elaborating on what the Central Bank might do.

 In 2009, President Mahinda Rajapaksa in his capacity as the Finance Minister ordered State banks to slash lending rates by almost half, after repeated cuts by the Central Bank failed to reduce commercial lending rates.

 Sri Lanka is expected to release first quarter economic growth on Monday. Growth, which hit a record 8.2% in 2011, cooled last year to 6.4%.

 Central Bank Governor Ajith Nivard Cabraal last week said first quarter growth would be slightly lower than a year earlier, but this year’s 7.5% target should be achievable.

 The Central Bank kept key policy rates steady last Friday after slashing them 50 bps in May. The repurchase rate and the reverse repurchase rate are at one-year lows of 7% and 9% respectively.

 Since the Central Bank slashed the policy rates on 12 December, Treasury bill yields have declined more than 200 bps. But rates on commercial loans have declined only by about 100 bps and remain around 18%, bankers say.

“That’s why we are asking the banks to reduce the (lending) interest rates because they are not following our monetary policy path,” Weerasinghe said.
source - www.ft.lk

Thursday, June 13, 2013

Sri Lanka stocks down 1.2-pct, rupee weaker

June 13, 2013 (LBO) - Sri Lanka's stocks closed down 1.22 percent on Thursday for third straight day and the rupee closed lower touching 128 to the dollar, amid turmoil in global markets, dealers and brokers said.

The benchmark Colombo All Share Index closed 76.89 points lower at 6,207.87 and the S&P SL 20 Index closed 52.3 2points lower at 3,499.09 down 1.47 percent.

Turnover was 480 million rupees down from 566 million day earlier. Foreigners brought 67 million rupees worth shares while selling 24 million rupees of shares, in a day that 46 stocks advanced and 147 stocks declined.

The spot US dollar closed at 127.97/128.05 to the US dollar, near three month low, dealers said.

There had been some profit taking in Treasuries by foreign investors said. In many Asian markets foreign investors have cut their positions, leading to currency weakness.

Indonesia made a surprise rate hike Thursday, to shore up the rupiah.

In equity markets Ceylon Cold Stores contributed most to the index gain closing at165.00 rupees up 6.20 rupees. Overseas Realty closed at 18.70 rupees up 30 cents and N D B Capital gained 7.40 rupee to close at 488.00 rupees DFCC Bank closed at 140.70 rupees down 2.60 rupeess and National Development Bank closed at 167.70 rupees down 4.70 rupees.

Pan Asia closed at 19.90 rupees down 10 cents. Union Bank of Colombo closed at 18.90 rupees down 10 cents and Sampath Bank close at 213.00 rupees down 2 rupees. Commercial Bank Of Ceylon lost 1.50 rupees to close at 96.00 rupees.

Distilleries Company lost 60 cents to close at 194.40 rupees, The Lion Brewery closed at 385.00 down 50 cents and Ceylon Tobacco Company closed at 952.20 rupees down 23.80 rupees.

John Keells Holdings lost 6.50 rupees to close at 267.00 rupees and Nestle Lanka lost 5.30 rupees to close at 1978.20 rupees.

source - www.lbo.lk

DFCC posts Rs. 3.5 b profit after tax in FY13

DFCC Bank in its Annual Report for 2012/13 released last week presented good progress on all fronts. The consolidated profit after tax of the group increased 16% to Rs. 3,538 million. The contribution from the combined banking business of DFCC Bank (DFCC) and its 99% owned subsidiary, DFCC Vardhana Bank (DVB) was up 19% to Rs. 3,407 million.

 Commenting on the results, Chief Executive Nihal Fonseka stated: “I am happy to say that DFCC delivered better results in many areas compared to 2011/12 and even more importantly was able to make progress on several key aspects of the strategic re-positioning which commenced in the previous year. Amidst a somewhat challenging operating environment, total income of the combined DFCC Banking Business (DBB) comprising of interest income and other income recorded an increase of 47.8% to Rs. 17,862 million in the year under review.
 
Gross loans and advances of DFCC Bank increased 10%, while DBB grew by 14.7%.

“DFCC Vardhana Bank increased its exposure to personal financial services assets whilst construction, especially finance for contractors, and domestic trading sectors recorded relatively higher levels of credit growth. Customer deposits of DBB grew by 37.3% during the year.”

It is heartening to note that DFCC’s overall credit quality of the portfolio has been maintained. The DFCC banking business’s impaired loans, advances and receivables as measured in accordance with the applicable new IFRS-based accounting standards which came into effect, as a proportion of the total portfolio has reduced from 7.3% to 7.1% during the year.

 Expenses have also been managed effectively with DFCC Bank’s ratio of operating expenses to total operating income (before impairment charge) improving further from 30% to 28.7% during the year.

 Chairman J.M.S. Brito noted in his message: “A key deliverable is return on investment. A shareholder of DFCC would have received a total of Rs. 57.50 in dividends for each share held over the ten-year period from 2003 to 2012, which works out to an average dividend of Rs. 5.75 per share per annum. In overall terms taking into account the bonus issues and the rights issue during this period, the Total Shareholder Return (TSR) works out to approximately 20% per annum.”

Consolidated group equity increased from Rs. 32,927 million (including minority interest) to Rs. 37,252 million. Earnings per share increased to Rs. 13.04 from Rs. 11.19.

 In this reporting year, DFCC made a transition to the new Sri Lanka Accounting Standards that are IFRS-compliant. Commencing with this Annual Report, DFCC has also made a transition to presenting integrated reports drawing on concepts from the International Integrated Reporting Framework. The aim is to report how strategy, governance, performance and prospects lead to the creation of value to all the bank’s stakeholders, shareholders, customers and business partners, employees, community and the Government.

 DFCC Bank is one of the oldest development financial institutions in the world. Established under an act of parliament in 1955, it is private sector in form with project financing continuing to be its forte.

As Fonseka noted: “DFCC Bank is the apex entity in the group. It has never lost sight of its special role in the development agenda of the country, even after its conversion in the late 1990s from Development Finance Corporation of Ceylon, an unregulated provider of finance, to a specialised bank regulated under the Banking Act. It required a change in its business model, but it has continued to be in the forefront of sustainable development financing.”

Veteran banker Fonseka who will relinquish office at DFCC by the end of September 2013 after serving 14 years as Chief Executive noted in his conclusion: “The transformation from a narrowly focused specialised bank to a financial services group, with growth of total assets from Rs. 24,071 million to Rs. 151,124 million and market capitalisation from Rs. 3,350 million to Rs. 34,754 million during my tenure could not have been achieved without  the support of our valued customers from all over the country. I salute them all for the faith they have demonstrated in the DFCC Group.”

source - www.ft.lk

Wednesday, June 12, 2013

Net foreign inflow to CSE tops Rs. 16 b

The Colombo stock market closed weaker yesterday but net foreign inflows continue to be robust topping the Rs. 16 billion mark yesterday.

 The addition of a fresh billion rupees comes after the Bourse crossed the Rs. 15 billion year-to-date net inflow on Thursday. The market saw net foreign buying of Rs. 213 million yesterday, marking the 23rd straight session of net inflow. Foreign institutional investors sought after Commercial Bank and Sampath Bank shares.

Making Monday’s upturn short-lived, local investor sentiments were weak as the ASI dipped by 37 points and the S&P SL 20 Index lower by 11 points. Turnover was Rs. 750.6 million.

 Softlogic Stockbrokers said the Bourse depicted a rather stagnating pattern where the early uptrend in the benchmark index failed to sustain as it fluctuated between marginal gains and losses during mid-day. The key dividend players which saw considerable rallying recently; Ceylon Tobacco Company (-1.3%) and Chevron Lubricants Lanka (-5.2%) weighed negatively on the indices outweighing gains in John Keells Holdings, Lanka Orix Leasing Company and Hemas Holdings.

 Investor focus stayed in John Keells Holdings depicting strong on-board activity weighing largely on the selling side while off-board activity highlighted a block of 126,000 shares at Rs. 275. The counter closed with a gain of 0.8%. United Motors Lanka added a block of one million shares to the crossings board at Rs. 119 each, however on-board participation remained insignificant.

 Sampath Bank and Commercial Bank continued to gather focus with their strong valuation status as they dipped 0.1% and 0.3% during the day’s trading enabling opportunity for further accumulation.

The former saw a block of around 231,000 shares being transacted on-board at Rs. 217, while the latter encountered significant buying interest as several mid-sized blocks traded between Rs. 119.5 and Rs. 121.5.

 The BFI and diversified sectors collectively added 61% to turnover. Hemas Holdings sustained interest with a few large blocks being picked between Rs. 36.5 and Rs. 37 while renewed interest in Aitken Spence was noted as two blocks totalling c. 170,500 shares were collected on-board at Rs. 135. Some renewed interest was also observed in Lanka Orix Leasing Company.

 Selected retail favourites gathered attention amidst the consolidation phase of the Bourse. Interest continued in Kelsey Developments and Nation Lanka Finance while Blue Diamond [Non-Voting] and FLC Holdings also saw notable activity.

source - www.ft.lk

Tuesday, June 11, 2013

Sri Lanka DFCC, NDB plan $250 mln, 10-yr global bonds-Treasury


(Reuters) - Sri Lanka's top development lenders, National Development Bank and DFCC Bank are planning a $250 million bond issue each, Deputy Treasury Secretary S.R. Attygalle told Reuters on Tuesday.

"Both NDB and DFCC are working on the bond issue. Each of them will go for $250 million, 10-year bond issue," Attygalle said. He did not say when the lenders planned to tap the global capital market.

On Friday, Attygalle said Sri Lanka's state-owned National Savings Bank (NSB) is likely to sell up to $1 billion of global bonds by the end of this month, the biggest corporate bond issue so far.

(Reporting by Shihar Aneez; Editing by Sanjeev Miglani)
source - www.reuters.com

Sri Lanka stocks close down 0.5-pct

June 11, 2013 (LBO) - Sri Lanka's stocks closed down 0.59 percent on Tuesday, following a sudden rise in the market the day earlier. The market was down due to investors taking profit and losses in the heavy index stocks CTC, LLUB and SLT, brokers said.

The benchmark Colombo All Share Index closed 37.49 points lower at 6,303.79 and the S&P SL 20 Index closed 11.90 points lower at 3,562.55 down 0.33 percent.

Turnover was 751 million rupees down from 826 million day earlier.

Foreigners brought 358 million rupees worth shares while selling 145 million rupees of shares, in a day that 42 stocks advanced and 150 stocks declined.

Ceylon Tobacco Company closed at 972.00 rupees down 13.00 rupees. Sri Lanka Telecom closed at 41.90 rupees down 10 cents. Chevron Lubrication Lanka closed at 293.30 rupees down 16.00 rupees
John Keels Holdings, top contributor to the day’s turnover closed at 275.00 rupees up 2.20 rupees helped by crossing 260 thousand shares at 275 rupees per share. Lanka Orix Leasing Company closed at 60.00 rupees up 1.20 rupees and Hemas Holdings gained 1.00 rupee to close at 37.00 rupees.

DFCC Bank closed at 145.00 rupees down 80 cents and National Development Bank closed at 173.30 rupees up 1.60 rupees.

Pan Asia closed flat at 20.00 rupees. Union Bank of Colombo closed at 19.20 rupees down 10 cents and Sampath Bank close at 217.00 rupees down 20 cents.

LB Finance closed at 130.00 rupees down 2.00 rupeess and Peoples Leasing and Finance closed at 14.90 rupees down 10 cents.

Distilleries Company lost 70 cents to close at 195.00 rupees, The Lion Brewery closed at 390.00 down 10.80 rupees.

Nestle Lanka closed at 1,990.00 rupees down 8.00 rupees. United Motors crossed 1 million shares at 119 rupees to close flat at 117.50 rupees.

Aitken Spence closed flat at 135.00rupees. Browns Investments closed flat at 03.30 rupees.

Softlogic Holding closed at 10.90 rupees down 10 cents and Vallibel One closed at 19.00 rupees down 30 cents.

source - www.lbo.lk

Rupee falls sharply, bourse back in the green

The rupee depreciates sharply against the US dollar on Monday (10) on importer demand, currency dealers said. The rupee closed at Rs. 126.79/90 against the greenback after opening at Rs. 126.45/55.

The secondary bond market saw yields increase marginally with more liquid five year bond yield moving up to 11.08/10 percent from the previous day’s 11.06/08.

The Colombo bourse reversed a five-day losing streak yesterday with the All Share Price Index closing 0.54 percent higher at 6,341.28 gaining 33.85 points during the day.

The S&P SL20 gained 0.68 percent, up 23.98 percent to close at 3,574.45.

Turnover reached Rs. 825.85 million.

Foreign purchases amounted to Rs. 470.06 million leading to a net inflow of Rs. 357.56 million.

"The ASPI reversed a five day downtrend to end higher, led by renewed buying interest in large cap diversified and consumer stocks. Trades on CARG, CTC, JKH, and CSF, collectively accounted for over 60% of market turnover, inclusive of crossings," John Keells Stockbrolers said.

CARG and CSF closed flat at Rs. 180 and Rs. 11.40 respectively. JKH closed 2.94 percent higher at Rs. 272.80 while DIST gained 0.31 percent to Rs. 195.70. CTC gained 3.08 percent to close at Rs. 985.

source - www.island.lk

Monday, June 10, 2013

Sri Lanka stocks recover on foreign buying, hopes of falling rate

COLOMBO, June 10 (Reuters) - Sri Lankan shares recovered on Monday from a three-week closing low hit in the previous session, gaining for the first time in six sessions on foreign buying in blue chips and hopes of interest rates falling further after the central bank comments.

    The island nation's central bank head on Friday said the monetary authority is to issue guidelines to direct banks to cut lending rates and narrow the gap with the inflation rate, after it kept the key policy rates unchanged.

    "Expectations of market interest rates falling further boosted sentiment," a stockbroker told on condition of anonymity. "We expect the market lending rates to fall from this week despite the central bank holding the rates flat."

    The main stock index rose 0.54 percent, or 33.85 points, to 6,341.28, edging up from its lowest close since May16.

    Foreign investors were net buyers of shares for a 22nd straight session. The bourse saw a net foreign inflow of 357.6 million rupees ($2.83 million), extending the year-to-date inflows to 15.96 billion rupees.

    They accounted for around 56.92 percent of the day's turnover of 825.9 million rupees, less than this year's daily average of 1.04 billion rupees.

    Shares in conglomerate John Keells Holdings rose 2.94 percent to 272.80 rupees.

    The rupee ended weaker at 126.55/60 per dollar from Friday's close of 126.45/50 on demand for greenbacks from importers, dealers said.

($1 = 126.3500 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by
Subhranshu Sahu)

Sri Lanka stocks close up 0.5-pct

June 10, 2013 (LBO) - Sri Lanka's stocks closed up 0.54 percent on Monday following a week of losses with gains in the heavy index stocks like JKH and CTC, brokers said.

The benchmark Colombo All Share Index closed 33.85 points higher at 6,341.28 and the S&P SL 20 Index closed 23.98 points higher at 3,574.45 up 0.68 percent.

Turnover was 826 million rupees up from 883 million Friday.

Foreigners brought 470 million rupees worth shares while selling 112 million rupees of shares, in a day that 87 stocks advanced and 99 stocks declined.

John Keels Holdings contributed most to the index gain closing at 272.80 rupees up 7.80 rupees helped by a crossing of 186 thousand shares at 270 rupees per share.

Ceylon Tobacco Company closed at 985.00 rupees up 29.40 rupees with a crossing of 25,000 shares at 980 rupees .

George Steuart Finance gained 100.00 rupees to close at 650.00 rupees and Cargills Ceylon saw a crossing of 1.6 million shares at 180 rupees to close flat at 180 rupees.

DFCC Bank closed at 145.80 rupees up 4.80 rupees and National Development Bank closed at 171.70 rupees down 20 cents.

Pan Asia closed flat at 20.00 rupees. Union Bank of Colombo closed at 19.30 rupees up 20 cents and Sampath Bank closed flat at 217.20 rupees.

LB Finance closed at 132.00 rupees down 50 cents and Peoples Leasing and Finance closed at 15.00 rupees up 10 cents.

Distilleries Company gained 60 cents to close at 195.70 rupees and The Lion Brewery gained 9.70 rupees to close at 400.80 rupees.

Nestle Lanka closed at 1,998.00 rupees down 2.00 rupees.

Aitken Spence closed flat at 135.00rupees. Browns Investments closed flat at 03.30 rupees.

Softlogic Holding closed flat at 11.00 rupees and Vallibel One closed at 19.30 rupees up 20 cents.
Sri Lanka Telecom closed at 42.00 rupees down 30 cents and Dialog Axiata closed flat at 09.00 rupees.

source - www.lbo.lk

Weekly Foreign Holding and Block Trade Update


                                                      (click image to enlarge)

source - CAL Research

Corporate earnings encouraging: DNH

DNH Financial described corporate earnings released so far encouraging, with double digit growth in revenues though bottom lines have been under stress due to rising costs.



“With the release of 1Q2013 corporate results season coming to an end, it is encouraging to note that consolidated revenues are up by 11%YoY for companies that have reported results so far. While the majority has recorded double digit revenue growth, bottom line profits have however come under pressure on the back of rising production costs which has resulted in margin erosion for several heavyweight and middleweights,” DNH Financial said.

 This notwithstanding, several bellwether companies have surprised on the upside reporting robust earnings as a result of higher other income generation despite slower revenue growth.

 Focusing on the stock market, DNH said any significant investment exposure into Sri Lankan equities appears to have been restrained somewhat over the past two weeks due to global economic headwinds, decline in international equity markets and the lack of short-term opportunities.

“The majority of domestic investors appear to be waiting for either a short-term rally to participate in or a strong correction before entering the market. We believe that neither of these would eventuate and expect a gradual and healthy market re-rating over the medium to longer term,” it said.

 In the absence of any significant market catalyst, DNH expects the Bourse to trade largely range bound in the coming week.

 Corporate…

 “Given the fact that most investors would now agree that the potential for short-term trading opportunities are markedly limited, selecting medium to longer term investments would depend on a number of parameters, most importantly the strength of the top line and the sustainability of the bottom line,” DNH said.

“While we do not rule out the importance of earnings as a strong indicator of growth, it is highly important to determine the source of profits, whether a result of actual top line growth or an increase in other (finance) income or a dramatic cut in costs that could have a negative impact on productivity in the longer term. Consequently, we advise investors to focus on companies with a sustainable earnings model supported by firm top line growth and not overly relying on non-recurring income generation to support the bottom line,” it added.

“In balancing what we consider the compelling opportunities provided by the Sri Lanka Bourse, we see particular value in domestically-focused companies which should experience less earnings volatility against a relatively uncertain global backdrop. Among domestically-oriented stocks, we are buyers of selected counters in the consumer, industrial, diversified, banking and hotel sectors, which we believe are likely to attract investors who will appreciate their potential upside,” DNH said.

 Although the overall valuation of the market appears relatively high (nevertheless still attractive vis-à-vis a number of other emerging markets), DNH is advising investors to break away from the herd, maintain a healthy investment horizon and focus on companies that will deliver quality earnings in 2013/2014.

source - www.ft.lk

Sunday, June 9, 2013

Foreigners Uplift Bourse, Fall Has Bottomed Out

Different reasons were given by stockbrokers in regard to the vicissitudes of the stock market, where it has fallen week on week (WoW), despite ‘strong’ foreign buying on selected blue chip stocks.

One said it was due to alleged price manipulation of blue chip JKH by certain miscreants who had taken the price of this stock artificially up on the back of foreign interest and then had dumped it.
The share price of JKH on Thursday fell by Rs 6.20 to Rs 273.20 over its previous day’s close.

 The following day Friday it followed suit by falling by another Rs 5, a source alleged, while two other index heavy stocks, namely Tobacco and Caltex also fell.

“It is however not foreigners who are fooled by this price manipulation of JKH, but locals,” the source said. JKH is considered as the trendsetter in the market, he said. When it falls, then others follow suit, he said.

Another source however said that the fall of JKH was due to profit taking by retailers.

Penny Stocks

However, these alleged manipulators who previously played on penny stocks, have withdrawn their interest in second tier stocks at the present, a source said.

 Another attributed the fall in the bourse due to a correction. “I don’t think the bourse can fall by more than another 50 points,” he said on Thursday, after it (ASPI) fell by 50.46 points (0.79%) on that day, whilst falling by another 64.95 points (1.02%), according to CSE data, on Friday. It has now bottomed out, the source said.

 On the previous day Thursday, the fall was due to the drop in prices of certain index heavy stocks, which had also been the case in the past few days, whilst continuing in the same vein on Friday, he said.

 On Thursday, it was specifically due to the fall of index heavy JKH, CTC and Caltex, which was also the reason for its fall on Friday (June 7), the source said.

Storm In A Teacup

In the case of CTC, its Thursday’s depression was caused by the decline in the price of only a few shares, he said. Such is the weight that such stocks have on market indices, the source said.
There is however hardly any day trades taking place. Day trades don’t occur in a falling market, he said.

But foreign interest in the bourse is strong and visible, that’s the silver lining, the source said.
The bourse since the beginning of the year and up to Thursday (June 6) has seen a net foreign inflow of Rs 15.3 billion. Even on the following day Friday, foreign buying was visible, this time in Cargills and Commercial Bank, the source said. Friday’s foreign inflow figures were not immediately available.

And since the beginning of the year (i.e., from 31.12.12.) and up to Friday, the ASPI has grown by 11.8% to 6,307.43 points and the S&P SL 20 Index by 15.1% to 3,550.47 points, according to CSE data. Meanwhile shareholder wealth (market capitalization) since 31.12.12.and up to Friday has had grown by 11.7% to Rs 2,422.1 billion.

However, WoW and Up to Friday, the ASPI has fallen by 2.4% and the S&P SL 20 Index by 2.6%. Meanwhile, market capitalization (shareholder wealth) WoW has had fallen by 2.4%.

And from 23.5.13 (Friday, May 24 was a Vesak Poya holiday for the bourse) to Friday (June 7), the ASPI has had declined by 2.8% and the S&P SL 20 Index by 3.2%, while market capitalization in the review period has had fallen by 2.8%.

Foreign Funds

But foreign funds are yet looking at the bourse. They are bullish about the Sri Lankan market, the source said. They are looking at selected, index heavy blue chip stocks to make their investments, the source said. That’s what’s driving the market.

The play is on the blue chips, not on the penny stocks, he said.

Corruption is not an issue as far as foreign investors are concerned, corruption is a worldwide phenomenon, the source said. The low interest rate regime prevailing in First World economies is another reason for investment funds to seek after markets such as Sri Lanka, he said. Because of them the market is bullish.

The locals however have a different set of interest when they look at the market, the source further said. They look at the market vis-à-vis the returns they may get from the fixed income market, he said.

Local retailers are however out of the market, the source said. There is no interest in the market for penny stocks. Trading is not taking place.

“We however don’t see the momentum which was there in the market in the latter part of 2009 as well as in 2010 and 2011, which were then largely driven by penny stocks, the source said.

1Q Performance

While it’s true that the blue chips didn’t have a great first quarter (1Q) in the current year, it’s however too early to comment on their performance for the rest of the year, he said. Taking the 1Q performance and extrapolating it for the rest of the year is wrong, the source said.

But another source said that the recent hike in electricity rates was going to impinge upon corporate earnings. The source also said that declining gold prices were also going to hit banks, which have an exposure to the pawning market.

Recent foreign investments however have a focus on a couple of blue chip banks. On Thursday it also centred round Commercial Bank and HNB, he said.

But in the fixed income market, interest rates have had come down by a few 100 basis points, the source said. However, the question is whether the interest rates have had come down naturally or artificially, he said. If interest rates are kept artificially low it’s not sustainable, sooner or later the lid will come off, the source said.

The issue is whether inflation is really coming down, even the IMF has raised concerns over the same, the source said.

High inflation is a dampener for interest rates to come down, because the fixed income market, mainly dominated by banks will then try to offer higher interest rates with a premium over inflation in order to induce the investor in to the fixed income market. And a high interest rate environment is also a stumbling block to investments due to higher borrowing costs, similar to a commodity in the real economy becoming too expensive to the consumer, thereby impeding investments.

Further, a high inflationary regime hits the poor and the fixed income earner the hardest.

source - www.sundayleader.com

Friday, June 7, 2013

Sri Lankan bourse edges lower after cbank holds rates

COLOMBO, June 7 (Reuters) - Sri Lankan shares fell for a fifth straight session on Friday  to a three-week low, led by a decline in John Keells Holdings after the central bank held policy rates steady.

The central bank, before the market opened, kept the key policy rates steady after it unexpectedly cut them by 50 basis points month ago.

"For the market to continuously move up, there should be some news. Even keeping the rates steady does not help investors to get in," said a stockbroker who declined to be named.

The main stock index fell 1.02 percent, or 64.95 points, to 6,307.43, the lowest close since May 16.

However, foreign investors were net buyers of shares for a 21st straight session. The bourse saw a net foreign inflow of 291.6 million rupees ($2.31 million), extending the year-to-date inflows to 15.6 billion rupees.

Foreign investors accounted for around 46.47 percent of the day's turnover of 883.7 million rupees, less than this year's daily average of 1.04 billion rupees.

Shares in conglomerate John Keells Holdings fell 3.00 percent to 265.00 rupees, while leading mobile phone operator Dialog Axiata Plc lost 3.23 percent to 9.00 rupees.

The rupee ended weaker at 126.45/50 per dollar from Thursday's close of 126.30/40 on demand for greenbacks from importers, dealers said.

($1 = 126.4250 Sri Lanka rupees)  (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Jijo
Jacob)

source - www.reuters.com

Sri Lanka Sunshine Holdings cuts plantations unit stake

June 7, 2013 (LBO) - Sri Lanka's Sunshine Holdings said it had sold a stake in its plantations unit to Pyramid Wilmar Plantations (Pvt) Ltd, for 910.3 million rupees.

The sale cut its stake in Estate Management Services (Pvt) Ltd to 33.15 percent from 51 percent by the sale of 5.59 million shares, the firm said in a stock exchange filing.

Estate Management Services (Pvt) Ltd is a joint venture with Tata Global Beverages Ltd of India.
It owns a 53.75 percent stake in Watawala Plantations Ltd, which produces tea, rubber and oil palm.
Pyramid Wilmar, a unit of the Singapore based firm is in the palm oil business.

source - www.lbo.lk

Foreign investors’ craving persists; net inflow tops Rs. 15 b mark

The craving for select Sri Lankan equities by discerning foreign investors persisted as the net inflow surpassed the Rs. 15 billion market yesterday, though profit taking by locals especially retailers with the Bourse up 15% last week remained a dampener.

 Heavy buying into Commercial Bank and HNB resulted in a net foreign inflow of Rs. 552 million yesterday, propelling the year-to-date figure to Rs. 15.2 billion. This healthy development is on top of a record Rs. 39 billion worth of net inflow last year. With the current inflows and that of last year, the Colombo Bourse has overtaken the net outflow experienced in 2010 and 2011 combined.

NDB Stockbrokers said the Banking, Finance and Insurance sector became the top contributor to the turnover (due to Hatton National Bank and Commercial Bank) and the sector index dipped 0.39%. The share price of Hatton National Bank increased by Rs. 1.20 (0.71%) to close at Rs. 170 with the counter’s foreign holding increasing by 2,063,399 shares. The share price of Commercial Bank decreased by 0.32% to close at 122.90 with the counter’s foreign holding increasing by 2,000,000 shares. “Despite starting on a positive note, market lost steam predominantly due to the fall in prices witnessed in index heavy counters John Keells Holdings and Ceylon Tobacco Company,” NDBS said.

 The ASI was down 50 points or 0.7% bringing the year-to-date gain lower to 13% from 15% on Friday and S&P SL 20 Index dipped by 39 points or 1%.

“The correction phase has set in with indices extending a steep downtrend,” Softlogic Stockbrokers said, adding that indices encountered a sharp dip as the Bourse moved on a volatile note.

 It said John Keells Holdings, Ceylon Tobacco Company and Kotmale Holdings also recorded one crossing each. The latter saw strong on-board participation whilst having touched a 52-week high at Rs. 58. (+25.0%).

“Key dividend players which saw considerable rallies recently encountered steep price dips today as Chevron Lubricants and Ceylon Tobacco weighed strongly negative on the ASPI dipping to Rs. 310 (-12.8%) and Rs. 960 (-4.0%) at their respective intra-day low prices. John Keells Holdings recorded a notable dip of 4.0% at its intra-day low of Rs. 268. Investor play was observed in Nations Trust Bank which dipped 0.3% to Rs. 66.5, leaving further opportunity to accumulate,” Softlogic said.
 Retailers remained cautious of the correction in the index, thereby focusing on a few selected counters. Nation Lanka Finance, Laugfs Gas and Tokyo Cement [Non-Voting] gathered significant interest.

source - www.ft.lk

Adam Investments buys 9% stake of Ceylon and Foreign Trades for Rs. 100 m

Dr. Ali Asger Shabbir Gulamhusein and his spouse Danushya Mediwake Wethasinghe Gulamhusein’s controlled entity Adam Investments yesterday purchased an 8.9% stake in Ceylon & Foreign Trades PLC via a private crossing on the CSE for Rs. 100 million.

 The block amounting to 12.5 million shares was done at Rs. 8 each, up from Rs. 7.10, CFT’s Wednesday’s closing price. The shares were sold by CFT Director Ali Asger Shabbir.

Adam Investments is also a leading investor in the Colombo stock market and its purchase of 9% stake in CFT is one of several strategic transactions initiated by Dr. Ali Asger Shabbir Gulamhusein and Danushya Mediwake Wethasinghe Gulamhusein.

 Adam Investments is a member of the Adam Group of Companies which is contemplating sharing its future success with the public through a proposed IPO. The details of the public offer are being discussed with the financial advisors and regulators at present. CFT, the flagship company has a subsidiary which is a freight forwarding company and an associate company which is a public quoted company, On’ally Holdings PLC popularly known as Unity Plaza.

 Dr. Gulamhusein serves as Chairman of the board of Adam Investments Ltd. He holds a PhD from Tokyo, Japan and a Degree from King’s College London, UK. He has been bestowed with the prestigious title of “Deshabandhu Manawahithawadhi Lankaputhra” and also serves as advisor to the Ministry of Justice, Ministry of Co-operatives and Internal Trade and as a Justice of Peace (all island). Danushya Gulamhusein is the great-granddaughter of Sir William Gopallawa, Sri Lanka’s first President and last Governor General. Wethasinghe Gulamhusein has served as an Executive Director of Adam Investments from the inception of the company. She holds a degree in Psychology and Business Management (UK) and also serves as an advisor to the Ministry of Justice and the Ministry of Co-operatives and Internal Trade.

 Adam Investments Ltd. was incorporated in 2011, to focus on key growth industries that play a pivotal role in the country’s economy. The companies that function under Adam Investments are;

Adam Apparels Ltd., a premier manufacturer and exporter of garments for leading global fashion labels. For three decades this company has contributed to the largest export earning industry in the island, which despite local and international challenges, has continued to grow steadily year-on-year.

  Adam Metals Ltd. which is one of the oldest manufacturers of metal hardware items in the island is expertly positioned today to take advantage of the rapidly booming construction and infrastructure development projects in the island.

 Network Communications Ltd. is the group’s IT / Electronics arm. With the rapid urbanisation of the island and the government’s systematic drive to push the ICT industry forward, Network Communications shows a very promising future as a key player in a growing ICT industry in future Sri Lanka.

 The group recently inaugurated two new companies, namely Adam Automobiles (Pvt) Ltd. and Adam Air Conditioners Ltd. In 2011/2012, Sri Lanka saw its largest ever volume of vehicle imports.

 Thus, Adam Automobiles Ltd. was conceived with the aim to provide spare parts and services to cater to the rapidly increasing demand for these items. 2012 saw a drop in importation of consumer electronics except for three items, which were, TVs, mobile phones and air conditioners. Since the group is already engaged in the importation of TVs and mobile phones through Network Communications (Pvt) Ltd., Adam Air Conditioners Ltd. was inaugurated to tap the growing demand for air conditioning systems in the country and the company has already placed purchase orders and opened L/Cs to import air conditioners from China.  Ceylon & Foreign Trades PLC goes back to 1949; one year after the country gained independence from British rule, when a group of pioneering businessmen banded together to form this company. The company, which began operations by exporting traditional Ceylonese commodities gradually, expanded and consolidated its status as an import/export house of repute.  A major development following increasing activity of the company was the broad basing of its ownership and it assumed the status of a Public Limited Liability Company in 1978. The company’s major exports were tea, rubber and coconut during the first and second phases of its operations, which were also the major export products of the country.

 During the last one and half decades, the CFT group diversified its operations to enter the field of spice and desiccated coconut exports. The export trade forms the backbone of the country’s economy and it is with justifiable pride that CFT could claim to be a stakeholder in the task of earning vital foreign exchange to the country for decades. An important facet of CFT’s operations have not merely enabled it to gain a degree of domestic fame for its stability and reliability but also to establish itself as an export house of repute among overseas buyers on the basis of its honourable conduct in fulfilling its contractual obligations to its buyers in various parts of the world.

source - www.ft.lk

Thursday, June 6, 2013

Sri Lanka stocks close down 0.8-pct

June 06, 2013 (LBO) - Sri Lanka's stocks closed down 0.79 percent on Thursday with the for a fourth consecutive day due to profit taking by investors and losses in heavy index companies, brokers said.

The benchmark Colombo All Share Index closed 50.46 points lower at 6,372.38 and the S&P SL 20 Index closed 53.49 points lower at 3,581.56 down 1.47 percent.

Turnover was 1.3 billion rupees up from 818 million day earlier.

Foreigners brought 744 million rupees worth shares while selling 191 million rupees of shares, in a day that 59 stocks advanced and 137 stocks declined.

The Lion Brewery contributed most to the index gain closing at 405.00 rupees up 13.70 rupees, Ceylinco Insurance closed at 1,039.00 rupees up 39.00 rupees and Commercial Leasing and Finance gained 10 cents to close at 04.20 rupees.

Kotmale Holdings was the top gainer Thursday gaining 7.30 rupee to close at 53.50 rupees, helped by a crossing of 500,000 shares at 55 rupees per share. Brokers speculate that Cargills, the parent of Kotmale is trying to increase its stake.

Cargills closed at 180.60 rupees down 3.40 rupees.

The main crossing were recorded by Ceylon & Foreign, a crossing of 12.5 million shares at 8 rupees per share to close at 7.30 rupees up 20 cents.

Asian markets sank Thursday following a sell-off on Wall Street, where dealers were spooked by disappointing US jobs data. The dollar rose slightly after shedding around one percent against the yen in New York.

Tokyo fell 0.85 percent, or 110.85 points, to 12,904.02, extending an almost four percent decline on Wednesday while Hong Kong lost 1.05 percent, or 230.81 points, to close at 21,838.43. Shanghai was down 1.27 percent, or 28.82 points, at 2,242.11.

Commercial Bank of Ceylon closed at 122.90 rupees down 40 cents with a crossing of two million shares at 123.50 rupees per share, Hatton National Bank too had a crossing of two million shares at 169.50 rupees per share and closed at 169.30 rupees up 50 cents.

DFCC Bank closed at 142.80 rupees up 1.10 rupees and National Development Bank closed at 172.80 rupees, down 80 cents.

Pan Asia closed at 20.40 rupees down 10 cents. Union Bank of Colombo closed at 19.10 rupees down 10 cents and Sampath Bank lost 60 cents to close at 219.30 rupees.

LB Finance closed at 132.50 rupees down 1.40 rupees and Peoples Leasing and Finance closed at 15.00 rupees up 10 cents.

Distilleries Company lost 3.00 rupees to close at 196.90 rupees and Ceylon Tobacco Company too lost 24.60 rupees to close at 975.00 rupees.

John Keells Holdings lost 6.20 rupees to close at 273.20 rupees and Nestle Lanka closed at 1,980.10 rupees down 3.30 rupees.

Aitken Spence closed at 134.50 down 40 cents. Browns Investments closed flat at 03.30 rupees.
Softlogic Holding closed at 11.10 rupees down 20 cents and Vallibel One closed at 19.10 rupees down 10 cents.

Sri Lanka Telecom closed at 42.00 rupees down 30 cents and Dialog Axiata closed flat at 09.30 rupees. (Ends)

source - www.lbo.lk

Weekly averages ease across the board for first time in three weeks

All three weighted averages (WAvg) dipped across the board for the first time in three weeks at yesterday’s Treasury bill auction with the 182-day bill WAvg reflecting the sharpest decline of 9 basis points (bp) to 9.81%.

Wealth Trust Securities said the 91-day WAvg dipped by 3 bp to 8.70%, while the 364-day reflected a drop of 1 bp to 10.85%. Once again, the 364-day maturity dominated the auction as it represented 82.5% of the total accepted amount of Rs. 24.6 billion, which was Rs. 11.6 billion higher than the initialled offered amount of Rs. 13 billion. In secondary bond markets, activity continued to remain high yesterday mainly surrounding the two liquid five year maturities (i.e.1.4.2018 and 15.8.2018) once again. Yields dipped in morning hours of trading to intraday lows of 11.06% and 11.11% respectively before closing the day mostly unchanged at levels of 11.08/10 and 11.13/14 in comparison its previous days closings. In addition, the 364 day bill was quoted at 10.80/86 in secondary markets as well.  Surplus liquidity in money market dipped marginally to Rs. 19.3 billion yesterday as overnight call money and repo rates averaged 8.53% and 8.25% respectively. Central Bank continued to refrain from conducting any Open Market Operations (OMO) for a 14th consecutive day.

However, it announced its plans to mop up an amount of Rs. 6 billion by way of a seven day Repo auction to be conducted today with settlement for Friday, 7 June.

 Rupee gains marginally for a second consecutive day

 In dollar/rupee markets, the rupee gained marginally for a second consecutive day to close the day at Rs. 126.40/45 against its opening level of Rs. 126.50 on the back of export conversions. The total USD/LKR volume for the previous day (4 June) stood at US$ 45.57 million.
source - www.ft.lk

Profit taking pushed indices down

The Colombo bourse yesterday lost ground for the third consecutive day with turnover down to Rs.818.4 million from the previous day’s Rs.1.03 billion with the All Share Price Index losing 26.82 points (0.42%) and S&P SL20 10.85 points (0.30%) with 92 gainers outpaced by 128 losers while 91 counters closed flat.

"Profit taking had something to do with the indices moving down," a broker said. "It was basically a very quiet day with a block trade in Chevron contributing Rs.225 million to turnover."

This was the biggest transaction of the day with 0.6 million Chevron crossed at Rs.375 with a further 139,651 shares traded on the floor between Rs.354.20 and Rs.375. The counter closed Rs.10.90 down at Rs.355.70 on the floor contributing Rs.50.9 million to turnover.

"The ASPI ended lower for a third consecutive day amid a drop in activity levels dominated by trades on LLUB which accounted for over 30% of market turnover. The market also saw crossings on DIAL and CTC," John Keells Stock Brokers said.

There was a net foreign inflow of Rs. 314.22 with purchases of Rs. 432.33 million and sales of Rs. 118.12 million.

JKH edged down to Rs.279.90 on nearly 0.2 million shares traded between Rs.278.50 and Rs.281.50, Rs.1.80 below the previous close.

Other block trades included Dialog where slightly over 4.7 million shares were done at Rs.9.30 contributing Rs.43.8 million to turnover and a 34,884 shares Ceylon Tobacco done at Rs.1,000 contributing Rs.34.9 million to turnover.

Brokers said that foreign buying was seen in Ceylon Tobacco and Commercial Bank with Ceylon Tobacco also seeing 18,603 shares done on the floor between Rs.981 and Rs.1,000 closing 10 cents up at Rs.999.60 generating a turnover of Rs.18.6 million.

Commercial Bank (voting) closed 60 cents down at Rs123.40 on over 0.3 million shares done between Rs.122.50 and Rs.124.50 generating a turnover of Rs.42.5 million.

Haycarb gained Rs.10.20 to close at Rs.211.70 on over 0.1 million shares done between Rs.205 and Rs.215 contributing Rs.25.8 million to turnover while Tokyo (voting) closed Rs.1.10 up at Rs.27.10 on nearly 1.3 million shares traded between Rs.26 and Rs.27.30 contributing Rs.23.3 million to turnover.

Piramal Glass closed flat at Rs.6.70 trading between Rs.6.70 and Rs.6.80 with 2.4 million shares transacted.

source - www.island.lk

Laugfs net profits up 29%

The LP Gas industry locally has an immense potential as a cleaner source of energy. There is a significant imbalance in energy usage, which has to be adjusted with cleaner and more economic sources of energy like LP Gas in our country. However, the key challenges facing the LP Gas industry will be succeeding and educating the authorities and decision makers concerned regarding the use of LP Gas.

Laugfs Gas PLC reported a record performance during the 4th quarter ended 31st March 2013, crossing a ground-breaking Rs. 10.6 billion in revenue. For the year ended March 31, the group reported a net profit of Rs. 1.06 billion, up 29 percent from Rs. 822 million a year earlier.

"A landmark achievement for the group, Laugfs achieved this feat despite unprecedented changes which have taken place in its comparatively short one and a half decades of existence. The Group was able to withstand the turbulent times and preserved core of the business, by staying focused on the fundamentals of the operation, while being willing to change everything else necessary to win and retain customers," the company said in a statement releasing its financial results to the stock exchange.

Laugfs posted a Profit Before Tax of Rs.1.3 billion, displaying a remarkable growth of 29 percent over the previous financial year.

The Group Total Comprehensive Income for the year, Net of Tax recorded a commendable Rs.1.0 billion as against Rs. 597 million last year, which is a creditable improvement. 

The Total Group Assets increased by 3 percent to a position of Rs.10.6 billion while Property, Plant and Equipment alone increased to Rs.6.5 billion with Net of Depreciation showing an increase of 18 percent over previous year.

"The productive investments made in this manner would accrue benefits to the shareholders in the ensuing years in the form of better returns having comparatively shorter gestation periods and early pay backs," the company said.

The group retained earnings increased by 16 percent to Rs.3.5 billion, while Net Assets increased by 8 percent to Rs.6.5 billion. The Net Asset Value Per Share has increased to Rs.16.76 from Rs.15.58 last year.

The Earnings Per Share (EPS) increased by 28 percent from Rs.2.14 to Rs.2.74 per share.

In terms of the Group’s core business activities downstream operations of LP Gas once again recorded highest ever revenue of Rs.9.7 billion, an increase of 16 percent over the preceding year.

However, Gross Profit margins reduced to 11 percent from the previous year’s 14 percent, mainly due to escalation of world market prices of LP Gas and the impact of upward movement of foreign exchange rates prevalent during the greater part of the financial year under review.

Nevertheless, Laugfs’ EBITDA reached Rs.1.6 billion, amounting to a 62 percent increase over the previous year despite stated uncertainties and slowdown of economic activities that were faced with.

The Profit Before Tax of the company from continuing operations was recorded at Rs.1.4 billion, amounting to a 72 percent improvement over the previous year.

Notably, Total Comprehensive Income Net of Tax to Rs.1.2 billion during the year under review from Rs. 411 million recorded last year while the Company’s total liabilities reduced by 4 percent, during the year to Rs.3.9 billion.

Retained earnings increased sharply by 27 percent from Rs. 2.3 billion last year to Rs.3 billion in the current year.

"The array of achievements described both for the Group and for the company in its core business activity, converged to underscore the strength of a financially healthy organization that always meets its growth targets and maintains uninterrupted momentum, despite uncertain external environment forces that usually prevails. Despite all these impressive achievement we believe the Laugfs Gas’s best and most exiting days remain ahead," the company said.

Considering the group’s strong performance throughout the year, The Board of Directors decided to declare a final dividend of Rs. 1.50 per share for the financial year ended 31st March 2013. This is the third consecutive time the company declared dividends after its historic IPO in December 2010.

"The LP Gas industry globally is in the midst of a profound structural change as new sources of supply compete for market share, and as a cleaner source of energy take a greater share of primary energy consumption.

"The industry globally can take heart that consumption so far has managed to keep pace with this production surge, despite uncertainty of the global economic slowdown. With LP gas demand and supply equilibrium maintain at optimum levels world market price stability is ensured at least in the short to medium term.

"The LP Gas industry locally has an immense potential as a cleaner source of energy, and also since the penetration levels are comparatively very low, as against some of the Asian countries. There is a significant imbalance in energy usage, which has to be adjusted with cleaner and more economic sources of energy like LP Gas in our country.

"However, the key challenges facing the LP Gas industry, in the country in the ensuing years, will be succeeding and educating the authorities and decision makers concerned regarding the use of LP Gas.

"In order to do so, the stakeholders involved are in need of effective, consistent communication using rigorous evidence based on data and analysis. Therefore, it is imperative that the industry must speak with strong, unified voice to persuade the authorities, other stakeholders and financial markets to support the use of LP Gas where appropriate," Laugfs said.

source - www.island.lk

Cargills posts stable performance in tough FY13

◾Revenue up15% to Rs. 55.4 b

◾Bottom line down 46% to Rs. 595 m

◾Operating profit up 3% to Rs. 2.3 b

◾Net financing cost up 94% to Rs. 1.2 b; Borrowings double to Rs. 14 b

Cargills (Ceylon) PLC has reported a stable performance for the year ended 31 March 2013, despite a substantially challenging market environment attributed to policy changes coupled with higher borrowing costs and a slower overall macro-economic growth.

 Group revenue recorded a growth of 14.8% in FY13 at Rs. 55.4 billion. Operating profit grew by 3.3% to reach Rs. 2.3 billion, despite the VAT impact and the soft alcohol and biscuits segments performing below potential. Profit-after-tax for the year ended 31 March 2013 declined by 45.6% to Rs. 594.8 million.

  “The steep rise in finance costs and increased debt levels also contributed to this decline,” Cargills said.

 Finance cost for the year concluded amounted to Rs. 1.2 billion up from Rs. 630 m in FY12 while total Group debt at the year-end stood at Rs. 14.1 billion, up from Rs. 7.4 billion a year earlier.
 Cargills…

The Company said the lack of transitional provisions to allow for the claiming of input Value-Added-Tax (VAT) on the closing stock as at 31 December 2012 had a significant impact on the Group’s retail business which enjoys peaks sales during the third and fourth quarters.

 Despite the inadequate time provided to adjust to the new policy, the retail team partly mitigated the adverse one-off impact of the policy change by curtailing inventory.

“While the challenges in the external environment remain, ‘Cargills Food City’ is committed to maintaining its consistent ‘low price’ positioning across all categories and has not passed on the VAT to its customers,” the Company said.

 Its established businesses in consumer brands and restaurants segments have continued to report a steady performance in terms of volume and transaction growth respectively. The restaurant sector’s diversification into the entertainment-dining segment with the launch of TGI Friday’s in Sri Lanka is in pre-operation stage and the flagship restaurant is set to open in the new financial year. Meanwhile, the KFC chain experienced a significant increase in input costs and steps have been taken to modify its value-for-money range to offer a lower entry price for KFC customers.

  “While the overall Group results for the year are below expectation, the management has already initiated measures towards turning around this performance. In the year ahead, Cargills would be increasingly focused on building the value-for-money advantage in its product portfolios while rationalising inputs costs and enhancing efficiencies to sustain profitability.

 The Group remains confident of the long term potential of its businesses and continues to be steadfastly committed to its ethos of creating sustainable value for all its stakeholders,” Cargills said.

source - www.ft.lk

Wednesday, June 5, 2013

Sri Lanka stocks close down 0.4-pct

June 05, 2013 (LBO) - Sri Lanka's stock closed down 0.42 percent retreating for a third consecutive day with losses in the index heavy diversified stocks, brokers said.

The benchmark Colombo All Share Index closed 26.82 points lower at 6,422.84 and the S&P SL 20 Index closed 10.59 points lower at 3,635.31 down 0.29 percent.

Turnover was 818 million rupees down from one billion day earlier.

Foreigners brought 432 million rupees worth shares while selling 118 million rupees of shares, in a day that 76 stocks advanced and 131 stocks declined.

Cargills contributed most to the index gain closing at 184.00 rupees up 4.40 rupees, Hatton National Bank closed at 168.80 rupees up 1.80 rupees and Dipped Products gained 6.50 rupees to close at 133.00 rupees.

Meanwhile, Asian markets also fell Wednesday, taking a negative lead from Wall Street as data showed the US trade deficit had widened, while Tokyo slumped following a policy speech by Japan's prime minister.

Tokyo dived 3.83 percent, or 518.89 points, to 13,014.87 -- continuing a rollercoaster couple of weeks that has seen the Nikkei lose about 17 percent.

In other Asian markets, Seoul gave up 1.52 percent, or 30.32 points, to end at 1,959.19. Hong Kong lost 0.97 percent, or 216.28 points, to end at 22,069.24 and Shanghai was flat, dipping 1.49 points to 2,270.93.

In the banking secor, Commercial Bank of Ceylon closed at 123.30 rupees down 70 cents and DFCC Bank closed at 143.90 rupees, up 1.40 rupees. National Development Bank closed at 173.60 rupees down 90 cents. Pan Asia closed at 20.50 rupees down 10 cents.

Union Bank of Colombo closed flat at 19.20 rupees and Sampath Bank gained 1.40 rupees to close at 219.90 rupees.

The Lion Brewery lost 17.70 rupees to close at 391.30 rupees, Distilleries Company lost 40 cents to close at 199.90 rupees and Ceylon Tobacco Company too lost 30 cents to close at 999.60 rupees.

John Keells Holdings lost 2.30 rupees to close at 279.40 rupees and Nestle Lanka closed at 1,976.80 rupees down 1.20 rupees. Aitken Spence closed at 134.00 down 1.00 rupee. Browns Investments closed at 03.40 rupees down 10 cents.

Softlogic Holding closed at 134.10 rupees up 10 cents and Vallibel One closed at 19.20 rupees up 10 cents.

Sri Lanka Telecom closed at 42.30 rupees down 40 cents and Dialog Axiata closed flat at 09.30 rupees.

source - www.lbo.lk

Bourse consolidates but foreign net inflow tops Rs. 14 b mark

The Colombo stock market saw mixed fortunes with some degree of consolidation led by profit taking by investors though the net foreign inflow remained robust surpassing the Rs. 14 billion mark.

Heavy deals on Commercial Bank shares saw the market enjoy a net inflow of Rs. 439 million thereby pushing the year-to-date figure to Rs. 14.3 billion. According to NDB Stockbrokers, foreign holding of COMBank rose by 3.18 million shares whilst the counter which dominated turnover saw three off-board blocks totaling  .9 million shares done at Rs. 125 each. COMBank closed at Rs. 124, up by 1.64%.

 That apart, the rest of the market was relatively lacklustre though it managed to gain lost ground mid-day. “The Bourse experienced a considerable dip during the early hours while a gradual recovery could be seen during the latter half of the day, closing the market in a mixed note,” LOLC Securities said.

 The ASPI dipped 2.02 points and the S&P SL 20 Index gained 10.31 points. The market is up 14.3% year-to-date.

 Turnover was a healthy Rs. 1 billion.

“Indices consolidated further,” noted Softlogic Stockbrokers, adding that the Bourse further continued its volatile path on a much wider 30 points band.

 It said gains recorded on Chevron Lubricants (+6.0%) and Commercial Bank (+1.6%) weighted positively on the index. However losses denoted on John Keells Holdings (-0.6%) and The Good Hope (-13.7%) held the index on marginal grounds.

 Softlogic said Chevron Lubricants extending the prolonged rally as the high dividend payer saw a notable appreciation in price with strong on-board volume. LLUB closed at Rs. 365.9 with a gain of 6.0%.

 Haycarb too recorded a single off-board block of 300,000 shares at Rs. 200 each. The Haycarb share price gained by Rs. 5.20 (2.60%) to close at Rs. 205.

 Premier blue chip John Keells Holdings continued its slide, depicting the highest on-board turnover for the day. The counter witnessed a single large on-board block of 60,000 shares which was transacted at Rs. 282.50 before settling at Rs. 281.70.

 Softlogic also said retailer activity was minimum and concentrated on some selected stocks such as Nation Lanka Finance, Commercial Credit and Finance and Abans Finance.

 Asia Wealth said Abans Electricals witnessed retail interest that enabled the counter to record its 52 week high price of Rs. 175 and to be on the top turnover list. The counter gained 20.5% to end the day at Rs. 162.4.

source - www.ft.lk