Feb 19, 2010 (LBO) – Sri Lankan tea prices eased at the Colombo auctions this week but are still at record highs being much higher than last year both in rupee and dollar terms, brokers said.
But the Western quality season, which is during this time of year, has yet to set in because of unseasonal rains, they said.
“The year 2010 has commenced on a strong footing with Sri Lankan national averages for January registering 389.74 rupees a kilo (3.38 dollars) which is an all-time record,” tea brokers John Keells said.
The previous best for January was 332.95 (3.07 dollars) a kilo 2008.
“Significantly all three elevations have achieved record averages for January. With three sales in February completed we could expect record averages in February as well,” John Keells said in a market report.
But they said the Western quality season, when teas grown on the Western slopes of the central hills yield their best quality, has been delayed.
“We are yet to see any seasonal quality from the Western sector due mainly to the unsettled weather.”
Sporadic rainfall in many areas in the central hills at the start of last week gave way to brighter weather over the weekend.
“However the latest reports, from the Western High Grown sector indicate that rainfall has been experienced in many areas last evening, which would inevitably lead to a delayed Dimbula season,” the brokers said.
But they said the rainfall in February is not likely to have a significant impact on the crop intakes unless they continue for a few more days.
Crop intakes from the high grown sector are falling which is normal for the time of the year.
source - www.lbo.lk
Friday, February 19, 2010
SRI LANKA - HNB ASSURANCE POSTS IMPROVED RESULTS
HNB Assurance PLC has released its interim financial statements for the year ending December 31, 2009 depicting a strong growth in both turnover and profits.
Its turnover measured by Gross Written Premium (GWP) crossed the 2 Billion rupee mark by recording a growth of 15 percent over the last year
Having crossed the 1 Billion rupee mark only in 2006, it has doubled its turnover within the space of just three years.
The combined turnover of Rs 2,116 million comprised the GWP of Rs 1,131 million from General Insurance and the GWP of Rs 985 million from Life Insurance. The General GWP grew by 22 percent while the growth in Life GWP was 8 percent.
The company also managed to cross the 200 Million rupee mark in respect of both Profit Before Tax (PBT) and Profit After Tax (PAT) with PBT reaching Rs 231 million and PAT recording Rs 202 million.
The growth achieved in PBT and PAT was also commendable and stood at 36 percent and 23 percent respectively.
The company was also able to deliver a Return on Equity (ROE) of 24 percent in line with previous years.
Managing Director HNB Assurance PLC Manjula de Silva said “the Company has built up an impressive track record of performance during the past eight years.
This gives us the confidence to move forward, overcoming whatever challenges that we have to face from time to time. With the dawn of a new era devoid of the conflict which was holding back growth to a great extent, HNB Assurance looks forward to a period of accelerated growth, taking advantage of new and emerging opportunities.
The formulation of sound strategies through a rigorous participatory process and their timely and effective execution supported by a strong monitoring and performance management process have been a critical force behind our success in the past. We strongly believe that it holds the key to our future success as well”, de Silva said.
source - www.dailynews.lk
Its turnover measured by Gross Written Premium (GWP) crossed the 2 Billion rupee mark by recording a growth of 15 percent over the last year
Having crossed the 1 Billion rupee mark only in 2006, it has doubled its turnover within the space of just three years.
The combined turnover of Rs 2,116 million comprised the GWP of Rs 1,131 million from General Insurance and the GWP of Rs 985 million from Life Insurance. The General GWP grew by 22 percent while the growth in Life GWP was 8 percent.
The company also managed to cross the 200 Million rupee mark in respect of both Profit Before Tax (PBT) and Profit After Tax (PAT) with PBT reaching Rs 231 million and PAT recording Rs 202 million.
The growth achieved in PBT and PAT was also commendable and stood at 36 percent and 23 percent respectively.
The company was also able to deliver a Return on Equity (ROE) of 24 percent in line with previous years.
Managing Director HNB Assurance PLC Manjula de Silva said “the Company has built up an impressive track record of performance during the past eight years.
This gives us the confidence to move forward, overcoming whatever challenges that we have to face from time to time. With the dawn of a new era devoid of the conflict which was holding back growth to a great extent, HNB Assurance looks forward to a period of accelerated growth, taking advantage of new and emerging opportunities.
The formulation of sound strategies through a rigorous participatory process and their timely and effective execution supported by a strong monitoring and performance management process have been a critical force behind our success in the past. We strongly believe that it holds the key to our future success as well”, de Silva said.
source - www.dailynews.lk
SRI LANKA - NAMAL ACUITY VALUE FUND - INVESTOR INFORMATIONS
NAMAL Acuity Value Fund (NAVF), the first close ended fund listed at the Colombo Stock Exchange released its first quarterly report for the period ended December 31, 2009, the press release from NAMAL stated.
A ten year Fund, NAVF was launched by NAMAL together with Acuity Partners in September 2009 to enable investors to profit from Sri Lanka's post war economic resurgence by investing in listed equities and also in listed and unlisted debt securities. It was envisaged that this scheme will provide the convenience and transparency of a managed fund and enable the investors to get the benefit of diversifying their investments across a range of companies and industry sectors through full time investment management provided by NAMAL.
During the period ended December 31, 2009, the fund investment had been increased gradually to 82.5 percent in twelve listed equities while keeping the balance funds in short term fixed income securities.
Overall the unit value increased by 11 percent in this period in comparison to 17 percent increase in the All Share Price Index (ASPI).
In this period, the fund had generated a nett gain of Rs 58.47 million comprising interest income (Rs 3.39 million), realised gains from sale of shares (Rs 4.80 million) and unrealized gain from shares (Rs 50.28 million). At the end of this period the Nett Asset Value of the Fund stood at Rs 582.59 million.
The fund raised Rs 537.5 million (Rs 524.12 million nett of front end fee of 2.5 percent) from investors in the Initial Public Offer.
source - www.dailynews.lk
A ten year Fund, NAVF was launched by NAMAL together with Acuity Partners in September 2009 to enable investors to profit from Sri Lanka's post war economic resurgence by investing in listed equities and also in listed and unlisted debt securities. It was envisaged that this scheme will provide the convenience and transparency of a managed fund and enable the investors to get the benefit of diversifying their investments across a range of companies and industry sectors through full time investment management provided by NAMAL.
During the period ended December 31, 2009, the fund investment had been increased gradually to 82.5 percent in twelve listed equities while keeping the balance funds in short term fixed income securities.
Overall the unit value increased by 11 percent in this period in comparison to 17 percent increase in the All Share Price Index (ASPI).
In this period, the fund had generated a nett gain of Rs 58.47 million comprising interest income (Rs 3.39 million), realised gains from sale of shares (Rs 4.80 million) and unrealized gain from shares (Rs 50.28 million). At the end of this period the Nett Asset Value of the Fund stood at Rs 582.59 million.
The fund raised Rs 537.5 million (Rs 524.12 million nett of front end fee of 2.5 percent) from investors in the Initial Public Offer.
source - www.dailynews.lk
Thursday, February 18, 2010
SRI LANKA - COCO LANKA HAS PLANS FOR FURTHER EXPANSIONS
Feb 18, 2010 (LBO) – Sri Lankan coconut products exporter Coco Lanka has said it plans to expand and is holding talks with companies it had identified for possible takeover.
The firm, part of the Renuka group, said in a stock exchange filing that group net profit for the December quarter rose 13 percent to 39.8 million rupees from a year ago although sales fell by 25 percent to 291 million.
Earnings per share for the quarter were 3.16 rupees compared with 2.81 rupees the year before.
“The company, being an investment vehicle for agriculture, food and beverage ventures, is currently evaluating certain acquisitions and green field projects,” Coco Lanka managing director S R Rajiyah said in a statement accompanying the interim accounts.
“With regard to acquisitions, we have identified potential companies and negotiations are underway.”
These investments are to be funded by proceeds from the rights issue which closed on February 16, 2010, he said.
For the nine months ending December 31, 2009, Coco Lanka’s net profit rose 55 percent to 124.7 million rupees while sales fell 14 percent to 917.9 million rupees.
Earnings per share for the nine months were 9.89 rupees compared with 6.36 rupees the previous year.
Finance costs reduced sharply in both the quarter and the nine-month period, the accounts showed.
According to a segmental analysis of the business for the nine month period, revenue from tea shot up 59 percent to 107.5 million rupees.
Revenue from coconut, which accounts for the bulk of revenue, fell 19.6 percent to 689.7 million in the period while that from organic products also fell.
During the period Coco Lanka acquired 60 percent of Ceylon Forestry and 50 percent of Renuka Teas (Cey).
source - www.lbo.lk
The firm, part of the Renuka group, said in a stock exchange filing that group net profit for the December quarter rose 13 percent to 39.8 million rupees from a year ago although sales fell by 25 percent to 291 million.
Earnings per share for the quarter were 3.16 rupees compared with 2.81 rupees the year before.
“The company, being an investment vehicle for agriculture, food and beverage ventures, is currently evaluating certain acquisitions and green field projects,” Coco Lanka managing director S R Rajiyah said in a statement accompanying the interim accounts.
“With regard to acquisitions, we have identified potential companies and negotiations are underway.”
These investments are to be funded by proceeds from the rights issue which closed on February 16, 2010, he said.
For the nine months ending December 31, 2009, Coco Lanka’s net profit rose 55 percent to 124.7 million rupees while sales fell 14 percent to 917.9 million rupees.
Earnings per share for the nine months were 9.89 rupees compared with 6.36 rupees the previous year.
Finance costs reduced sharply in both the quarter and the nine-month period, the accounts showed.
According to a segmental analysis of the business for the nine month period, revenue from tea shot up 59 percent to 107.5 million rupees.
Revenue from coconut, which accounts for the bulk of revenue, fell 19.6 percent to 689.7 million in the period while that from organic products also fell.
During the period Coco Lanka acquired 60 percent of Ceylon Forestry and 50 percent of Renuka Teas (Cey).
source - www.lbo.lk
SRI LANKA - COLOMBO SHARE MARKETWAS UP BY 0.31% ON BACK OF FOREIGN BUYING
Turnover for the day was Rs 1.6 b.n.
Local investors were active in the market today as usual. However foreigners were active to some extent today in the market & witnessed a net foreign inflow of Rs 163 m.n. This was a very positive signal to the overall market where all the local investors were waiting foreigners / foreign funds to arrive at Colombo Stock Market soon after the presidential elections.
Many investors believe foreigners would have bought the JKH share to day on expectation of improved profit growth from the company in Dec 2009 quarter.
Foreign purchases were at Rs 241 m.n. & foreign sales were at Rs 78 m.n.
There were 96 price gainers as against 58 losers.
TOP FIVE GAINERS FOR THE DAY TOP FIVE LOSERS FOR THE DAY
CROSSINGS FOR THE DAY
ACCOUNTS FOR THE NINE MONTHS ENDED 31/12/2009
Note -
- There were several crossings in CIND an illiquid share. Sierra cables today sold 20.26 % holding in CIND . Still they owned 16.6% holding in CIND.
- CIND crossings took place @ Rs 230 - share.
- There are possibilities of increase the CIND share price further.
- JKH bought by foreigners - Unconfirmed news. Positive news for the market.
- Several JKH crossings took place @ Rs 170 - share.
- There are possibilities that share price of SIRA may go up further as a result of the sale of 20.26 % CIND stake @ Rs 230/share.
SRI LANKA - PLANTATION SECTOR REPORT
Investment Summary
Sri Lankan tea prices at record high levels: Sri Lankan tea prices marked a strong recovery from 2QFY10 onwards where it touched the highest ever prices in mid September which was recorded at LKR456 per kg (up 70% YTD). The upswing was mainly attributable to the global supply shortage created by the production deficit in Kenya, India and Sri Lanka due to unfavourable weather conditions. Furthermore, strong demand from the Middle East for Sri Lankan low grown teas and rising demand lead by slowly reviving global economy also strengthened the price increase. Going forward we expect the tea prices to stabilise at current levels and ease by mid 2010 with the production recovering globally. We forecast the prices to remain at LKR360 in 2009 and to reach LKR 389 (up by 8%) in 2010E.
Natural rubber prices on the rise: Local rubber sector suffered severely since FY08 owing to the global economic downturn where synthetic rubber was preferred by the buyers due to lower cost. Natural rubber prices have now started picking up on the back of rising fuel prices which will make synthetic rubber more expensive. Sri Lankan rubber prices which were at the lowest in December 2008 (LKR120 per kg) have now reached LKR350 per kg. We believe the upward price trend would sustain with the rising crude oil prices (now closer to USD80 per barrel) which would further strengthen the demand for natural rubber. Therefore we forecast the rubber prices to be at LKR211 per kg for 2009 and grow by a sharp 30% YoY to LKR274 per kg in 2010E.
Sector profitability to recover: The sector was poised to mark strong earnings in FY10E owing to high commodity prices. But the growth was hindered by the estate labour wage hike which increased the cost of production by a near 20% with effect from April 2009. However we believe the +70% rise in tea and three-fold rise in rubber prices would be able to wither the negative effects of the cost of production to a certain
extent. With tea prices stabilising at current levels and rising rubber prices which would be sustainable in the long run, we forecast the sector to record a strong earnings during the coming quarters.
Our key recommendations would be Malwatta (MAL), Kegalle (KGAL), Kotagala (KOTA) and Namunukula (NAMU) mainly on the back of strong earnings potential (where most of the companies have recorded results above expectations) coupled with strategies to strengthen the bottom line through aggressive cost management policies.
See more ....
SRI LANKA - MORE NEWS ABOUT ENVIRONMENTAL RESOURCES INVESTMENT
K.A.S. Perera
During the past few months, Environmental Resources Investment (ERI) has recorded dramatic upward movements of prices and was a favourite among retail and high net-worth investors.
This also contributed to very high sentiment in the stock market and the turnover as well. It should be mentioned that many retail investors who burnt their fingers the previous year were fortunate to recover the losses fully and become net gainers.
However in the absence of necessary information, investor public and many stock brokers are unable to ascertain the potential value of the company. Consequently this has unfortunately led to adverse news not based on facts and also malicious rumours deliberately spread by certain persons.
This Group consists of those who do not like the company ranked as one of the highest capitalized companies, those who failed to buy the stock at a earlier stage and due to other factors such as sheer jealously in a stock market where cut throat competition among stock brokering companies is well-known.
It is also rumoured that financial institutions, due to the proposed massive cash infusion mainly for rehabilitation of sick companies are very concerned of erosion of profits and stiff business rivalry.
The company presently has three subsidiaries in Ceylon Leather Products, D.N.H. Financial and Environmental Resources Ltd., a virgin based company holding assets and debentures including an undisclosed percentage of shares of Eastern Platinum, a quoted company in the Toronto Stock Market.
This has been purchased for a consideration of Canadian dollar 76 payable in eight tranches. It is reported 52 percent investment is in Eastern Platinum Company.
Contrary to misconceptions that it is only an investment company such as Namal and other unit trusts, the main objective of the company is to purchase inefficient quoted and unquoted companies or those with constraints such as lack of funds.
Substantial value additions effected by rehabilitation of such units could be finally sold with a good margin.
For instance substantial improvements introduced to Ceylon Leather Products PLC resulted in an ultra modern factory and would give at least 100 percent gain if sold in the near term. Generally the company anticipates value addition and price growth of 200 percent to 300 percent prior to sale.
Eastern Platinum which has several platinum mines in South Africa was appr. Can dollar .92 (Rs 101) in the Toronto Stock Market at the time of purchase and this has risen to Can dollar 1.29 (Rs 130) on February 11.
This has risen from a low of Can dollar .25 (Rs 25) in 2009. On March 8, 2008 the share recorded highest price of Can dollar 3.60 (Rs 364).
The auto industry, a major user of platinum is expected to be fully revived by the year end and it is possible from the share to rise to high of Can dollars 3.60 and accordingly market value of Eastern Platinum would increase by almost 400 percent.
Consequently the net asset value of Environmental Resources PLC will rise dramatically.
Eastern Platinum has earned a net profit of Rs 187 million (Can dollar 1.85 million) for the quarter ended September 30, 2009 despite the downturn in the auto industry and low production mainly due to a strike in mines. During the quarter ending December 31, 2009 production has increased by 13 percent compared to the previous quarter and 17 percent compared to corresponding period ending December 31, 2008.
Consequently net profits are expected to record appreciable growth in the quarterly report to be released on March 31, 2010.
The company with a present paid up capital of Rs. 2469 million proposed one for two rights including many warrants and expects to mobilize Rs 4380 million during the current year and the total amount to be mobilized, a staggering Rs 44435 million up to 2015. The company has a unique advantage of purchasing ideal investment due to substantial cash position.
If we are to consider the company's minimum target of 200 percent increase in values the proposed value addition from above future investment amounts to Rs 88870 million in the long-term.
Similarly unlike other quoted companies, traditional use of historical and forecast EPS, PE and net assets value on a quarterly basis would be of little value for the financial analysts and investors due to practical difficulties and the objective of the company. However the company would be in a position to value its assets on a yearly basis.
The company is said to have evaluated over 35 companies in hydropower, tourism, manufacturing, plantation and IT and we understand this has been narrowed to eight to ten companies including interestingly four quoted companies which are at an advanced stage of negotiations for purchase. It is hoped most of the doubts raised has been explained.
The Board of ERI consists of persons with good track record and some have occupied highest positions in the country. The Chairman is one time Ministry Secretary and another has risen to the highest in the Administrative Service and served as Central Bank Governor.
Another was a career diplomat and former Ambassador to South Africa. The youngest is a computer expert having a rare Doctorate in Information Technology from a prestigious American University.
The only foreigner is a specialist in investments and conversant with financial markets in USA.
Some have doubts whether this has features of a pyramid scheme and it is strongly stressed these schemes have been introduced to attract maximum funds with the ulterior motive of defrauding.
In the case of ERI almost 94 percent is held by the Lion heart and in future too similar percentages would be brought to the country by the company by way of foreign exchange which is beneficial to the country.
ERI has a high skilled staff in finance and are competent in the evaluation of companies for ultimate purchase.
Since substantial portion of funds are owned by the major shareholder they would be extremely careful in their investments.
It is therefore obvious that such suspicion is due to either thorough ignorance or ulterior motives. It is sad most of the stock brokers and investors are ignorant of the comparative value of the normal share and the warrants. For instance warrant 2010 would be converted to a normal share and the investors would be able to trade it on June 13 after payment of Rs 22 per warrant.
Accordingly theoretically the price difference should be Rs 22. Unfortunately for instance comparative price difference is Rs 87.25 on February 12, 2010 which means warrant 2010 is under priced by a huge Rs 65.25.
It is observed there are valid reasons for most of the shares at present price despite negative assets and very high PE. For instance hotels shares in fact under priced due huge prospects where star hotels would not cope up with the demand during the year end winter season and major rally in this sector is long overdue. In fact results for the last quarter is only a tip of the iceberg. For instance above mentioned Keells hotel recorded a net profit of Rs 82 m for the last quarter.
There is a school of thought that forces opposing the Government attempted to bring down the market on February 9 day after the arrest of the defeated opposition candidate but failed mainly due to the fact Environmental Resources PLC price increased by Rs 43.
The price increase of the company impacted heavily since it is one of the highly capitalized companies. It is said due to various unfounded rumours they were successful in bringing down the prices for next three days and similarly indices plummeted.
Net result was that local/foreign newsprint and electronic media screamed political instability due to the arrest. This is very damaging to the country's image.
Such anti-national forces should realize the President had crushed terrorism after 30 years and undertaken simultaneously massive economic development in infrastructure such as Ports in Hambantota, Colombo, Power Projects in Norochcholai, Kerawalapitiya, Upper Kotmale and Trincomalee that would provide 1910 MW. It should be understood that power is the foundation for any development. Massive road and irrigation projects completed and under construction are other significant achievements. Achievements as above simultaneously is very remarkable in the midst of unprecedented world recession with a satisfactory GDP growth of around 4 percent in 2009 and above 6 percent growth year according to Central Bank estimates.
The writer is of the view country has potential for growth of 7 percent to 8 percent next few years.
The Government had drastically reduced inflation to 3.5 percent last year with a foreign reserves of US 5200m enough for 6 1/2 import requirements.
The stock market is very vibrant and State banks have reduced lending rates to unbelievable level with Treasury Bills (TB) rates in single digits.
Above achievements easily make the President not only the best leader since Independence but also for the past 500 to 600 years.
It is the experience of the writer with industrial credit of a State bank and as a member of think tank at macro level on industrial development of the country that since 1977 despite attempts made to rehabilitate sick companies, there have been many failures.
The banks after evaluation of sick companies may provide additional funds, some advice and monitoring but diversion of funds, high lifestyles, personal character and deficiency in management quality where banks had in some instances no control. Appointment of bank directors is also always not possible due to many reasons.
As a solution after obtaining approval of the then Industries Minister, the writer was involved in the preparation of a proposal for Cabinet approval through normal channel to set up a bank with private sector participation to buy sick companies and rehabilitate and sell through public tender. This was a very complicated proposal requiring massive funding and unfortunately abandoned.
It gives personal satisfaction to see a company with identical objectives ready to full this vacuum which could contribute to the national economy immensely considering their achievement in Ceylon Leather Products PLC (former Leather Corporation). It should be mentioned that this is an area private sector and commercial/development banks are reluctant to enter due to many factors and the entry of ERI to fill this vacuum without Government participation is commendable.
It is important that all Sri Lankan should realise above and unite for the development of the Colombo Stock Market.
The huge amount of funds in the region of Rs 44000 million be mobilized and invested upto 2015 and expected minimum return of 200 percent would make the company largest in terms of capital and the minimum growth of Rs 88,000 million would also result as the highest net assets company in the stock market. The prospect for the future based on fundaments is unprecedented and may justify a price far in excess of the highest price of Rs 270 recorded todate.
This is strongly recommended for retail, high net-worth and institutions and it would dominate the stock market for number of years and will be most attractive to investors.
(The writer is a retired Assistant General Manager of the Bank of Ceylon and a senior consultant in Banking, Finance, Industrial Projects, Restructuring and Investments)
www.dailynews.lk
During the past few months, Environmental Resources Investment (ERI) has recorded dramatic upward movements of prices and was a favourite among retail and high net-worth investors.
This also contributed to very high sentiment in the stock market and the turnover as well. It should be mentioned that many retail investors who burnt their fingers the previous year were fortunate to recover the losses fully and become net gainers.
However in the absence of necessary information, investor public and many stock brokers are unable to ascertain the potential value of the company. Consequently this has unfortunately led to adverse news not based on facts and also malicious rumours deliberately spread by certain persons.
This Group consists of those who do not like the company ranked as one of the highest capitalized companies, those who failed to buy the stock at a earlier stage and due to other factors such as sheer jealously in a stock market where cut throat competition among stock brokering companies is well-known.
It is also rumoured that financial institutions, due to the proposed massive cash infusion mainly for rehabilitation of sick companies are very concerned of erosion of profits and stiff business rivalry.
The company presently has three subsidiaries in Ceylon Leather Products, D.N.H. Financial and Environmental Resources Ltd., a virgin based company holding assets and debentures including an undisclosed percentage of shares of Eastern Platinum, a quoted company in the Toronto Stock Market.
This has been purchased for a consideration of Canadian dollar 76 payable in eight tranches. It is reported 52 percent investment is in Eastern Platinum Company.
Contrary to misconceptions that it is only an investment company such as Namal and other unit trusts, the main objective of the company is to purchase inefficient quoted and unquoted companies or those with constraints such as lack of funds.
Substantial value additions effected by rehabilitation of such units could be finally sold with a good margin.
For instance substantial improvements introduced to Ceylon Leather Products PLC resulted in an ultra modern factory and would give at least 100 percent gain if sold in the near term. Generally the company anticipates value addition and price growth of 200 percent to 300 percent prior to sale.
Eastern Platinum which has several platinum mines in South Africa was appr. Can dollar .92 (Rs 101) in the Toronto Stock Market at the time of purchase and this has risen to Can dollar 1.29 (Rs 130) on February 11.
This has risen from a low of Can dollar .25 (Rs 25) in 2009. On March 8, 2008 the share recorded highest price of Can dollar 3.60 (Rs 364).
The auto industry, a major user of platinum is expected to be fully revived by the year end and it is possible from the share to rise to high of Can dollars 3.60 and accordingly market value of Eastern Platinum would increase by almost 400 percent.
Consequently the net asset value of Environmental Resources PLC will rise dramatically.
Eastern Platinum has earned a net profit of Rs 187 million (Can dollar 1.85 million) for the quarter ended September 30, 2009 despite the downturn in the auto industry and low production mainly due to a strike in mines. During the quarter ending December 31, 2009 production has increased by 13 percent compared to the previous quarter and 17 percent compared to corresponding period ending December 31, 2008.
Consequently net profits are expected to record appreciable growth in the quarterly report to be released on March 31, 2010.
The company with a present paid up capital of Rs. 2469 million proposed one for two rights including many warrants and expects to mobilize Rs 4380 million during the current year and the total amount to be mobilized, a staggering Rs 44435 million up to 2015. The company has a unique advantage of purchasing ideal investment due to substantial cash position.
If we are to consider the company's minimum target of 200 percent increase in values the proposed value addition from above future investment amounts to Rs 88870 million in the long-term.
Similarly unlike other quoted companies, traditional use of historical and forecast EPS, PE and net assets value on a quarterly basis would be of little value for the financial analysts and investors due to practical difficulties and the objective of the company. However the company would be in a position to value its assets on a yearly basis.
The company is said to have evaluated over 35 companies in hydropower, tourism, manufacturing, plantation and IT and we understand this has been narrowed to eight to ten companies including interestingly four quoted companies which are at an advanced stage of negotiations for purchase. It is hoped most of the doubts raised has been explained.
The Board of ERI consists of persons with good track record and some have occupied highest positions in the country. The Chairman is one time Ministry Secretary and another has risen to the highest in the Administrative Service and served as Central Bank Governor.
Another was a career diplomat and former Ambassador to South Africa. The youngest is a computer expert having a rare Doctorate in Information Technology from a prestigious American University.
The only foreigner is a specialist in investments and conversant with financial markets in USA.
Some have doubts whether this has features of a pyramid scheme and it is strongly stressed these schemes have been introduced to attract maximum funds with the ulterior motive of defrauding.
In the case of ERI almost 94 percent is held by the Lion heart and in future too similar percentages would be brought to the country by the company by way of foreign exchange which is beneficial to the country.
ERI has a high skilled staff in finance and are competent in the evaluation of companies for ultimate purchase.
Since substantial portion of funds are owned by the major shareholder they would be extremely careful in their investments.
It is therefore obvious that such suspicion is due to either thorough ignorance or ulterior motives. It is sad most of the stock brokers and investors are ignorant of the comparative value of the normal share and the warrants. For instance warrant 2010 would be converted to a normal share and the investors would be able to trade it on June 13 after payment of Rs 22 per warrant.
Accordingly theoretically the price difference should be Rs 22. Unfortunately for instance comparative price difference is Rs 87.25 on February 12, 2010 which means warrant 2010 is under priced by a huge Rs 65.25.
It is observed there are valid reasons for most of the shares at present price despite negative assets and very high PE. For instance hotels shares in fact under priced due huge prospects where star hotels would not cope up with the demand during the year end winter season and major rally in this sector is long overdue. In fact results for the last quarter is only a tip of the iceberg. For instance above mentioned Keells hotel recorded a net profit of Rs 82 m for the last quarter.
There is a school of thought that forces opposing the Government attempted to bring down the market on February 9 day after the arrest of the defeated opposition candidate but failed mainly due to the fact Environmental Resources PLC price increased by Rs 43.
The price increase of the company impacted heavily since it is one of the highly capitalized companies. It is said due to various unfounded rumours they were successful in bringing down the prices for next three days and similarly indices plummeted.
Net result was that local/foreign newsprint and electronic media screamed political instability due to the arrest. This is very damaging to the country's image.
Such anti-national forces should realize the President had crushed terrorism after 30 years and undertaken simultaneously massive economic development in infrastructure such as Ports in Hambantota, Colombo, Power Projects in Norochcholai, Kerawalapitiya, Upper Kotmale and Trincomalee that would provide 1910 MW. It should be understood that power is the foundation for any development. Massive road and irrigation projects completed and under construction are other significant achievements. Achievements as above simultaneously is very remarkable in the midst of unprecedented world recession with a satisfactory GDP growth of around 4 percent in 2009 and above 6 percent growth year according to Central Bank estimates.
The writer is of the view country has potential for growth of 7 percent to 8 percent next few years.
The Government had drastically reduced inflation to 3.5 percent last year with a foreign reserves of US 5200m enough for 6 1/2 import requirements.
The stock market is very vibrant and State banks have reduced lending rates to unbelievable level with Treasury Bills (TB) rates in single digits.
Above achievements easily make the President not only the best leader since Independence but also for the past 500 to 600 years.
It is the experience of the writer with industrial credit of a State bank and as a member of think tank at macro level on industrial development of the country that since 1977 despite attempts made to rehabilitate sick companies, there have been many failures.
The banks after evaluation of sick companies may provide additional funds, some advice and monitoring but diversion of funds, high lifestyles, personal character and deficiency in management quality where banks had in some instances no control. Appointment of bank directors is also always not possible due to many reasons.
As a solution after obtaining approval of the then Industries Minister, the writer was involved in the preparation of a proposal for Cabinet approval through normal channel to set up a bank with private sector participation to buy sick companies and rehabilitate and sell through public tender. This was a very complicated proposal requiring massive funding and unfortunately abandoned.
It gives personal satisfaction to see a company with identical objectives ready to full this vacuum which could contribute to the national economy immensely considering their achievement in Ceylon Leather Products PLC (former Leather Corporation). It should be mentioned that this is an area private sector and commercial/development banks are reluctant to enter due to many factors and the entry of ERI to fill this vacuum without Government participation is commendable.
It is important that all Sri Lankan should realise above and unite for the development of the Colombo Stock Market.
The huge amount of funds in the region of Rs 44000 million be mobilized and invested upto 2015 and expected minimum return of 200 percent would make the company largest in terms of capital and the minimum growth of Rs 88,000 million would also result as the highest net assets company in the stock market. The prospect for the future based on fundaments is unprecedented and may justify a price far in excess of the highest price of Rs 270 recorded todate.
This is strongly recommended for retail, high net-worth and institutions and it would dominate the stock market for number of years and will be most attractive to investors.
(The writer is a retired Assistant General Manager of the Bank of Ceylon and a senior consultant in Banking, Finance, Industrial Projects, Restructuring and Investments)
www.dailynews.lk
SRI LANKA - TOURIST INFLUX ARE WE READY FOR THAT?
Sanjeevi JAYASURIYA - Lanka ready to face tourist influx
The country will be ready to face the anticipated influx of tourist arrivals with the dawn of peace by increasing the room capacity in the three zonal divisions identified.
With the completion of these projects 7,000 additional rooms will be made available, Sri Lanka Tourism Development Authority Director General S. Kalaiselvam told Daily News Business.
“Over 5,000 acres of land in 13 islands will be developed under the planned Kalpitiya tourist zone. The total land area will be supervised by the Tourism Development Authority (TDA) and will be leased out to potential investors for the proposed development.
The project is expected to generate 15,000 direct and indirect employment opportunities and 3,000 rooms will be added to the existing room capacity,” he said.
“The second project will be in Pasikudah for a 13-hotel project with a 1,000 room capacity. It is also expected to create 5,000 job opportunities. This project will be developed in keeping with the beach resort concept as in Bentota,” he said.
The third project will be in Kuchchaveli to develop 500 acres of land and 3,000 rooms will be added. The project will generate around 20,000 direct and indirect employment opportunities. The land in the area is owned by the Government and the TDA will work closely with the provincial administration to provide the land to the investors,” he said.
All the resorts will be set up along the beach areas promoting the beach resort concept and the projects are due to be complete within two years. Steps have also been taken to upgrade infrastructure facilities including roads, electricity and the water supply for overall development.
The projects will not only develop the tourism sector, but will also create many economic activities, Kalaiselvam said.
source - www.dailynews.lk
The country will be ready to face the anticipated influx of tourist arrivals with the dawn of peace by increasing the room capacity in the three zonal divisions identified.
 Tourists climbing the Sigiriya rock fortress. Picture by B. Cain taken from Travel-Images.com |
“Over 5,000 acres of land in 13 islands will be developed under the planned Kalpitiya tourist zone. The total land area will be supervised by the Tourism Development Authority (TDA) and will be leased out to potential investors for the proposed development.
The project is expected to generate 15,000 direct and indirect employment opportunities and 3,000 rooms will be added to the existing room capacity,” he said.
“The second project will be in Pasikudah for a 13-hotel project with a 1,000 room capacity. It is also expected to create 5,000 job opportunities. This project will be developed in keeping with the beach resort concept as in Bentota,” he said.
The third project will be in Kuchchaveli to develop 500 acres of land and 3,000 rooms will be added. The project will generate around 20,000 direct and indirect employment opportunities. The land in the area is owned by the Government and the TDA will work closely with the provincial administration to provide the land to the investors,” he said.
All the resorts will be set up along the beach areas promoting the beach resort concept and the projects are due to be complete within two years. Steps have also been taken to upgrade infrastructure facilities including roads, electricity and the water supply for overall development.
The projects will not only develop the tourism sector, but will also create many economic activities, Kalaiselvam said.
source - www.dailynews.lk
Wednesday, February 17, 2010
SRI LANKA - COLOMBO SHARE MARKET STARTS TO MOVE UP THANKS TO "GREG"
Turnover for the day was healthy Rs 1.6 b.n.,which was mainly driven by local investors on back of the improved quarterly results reported by the listed companies.
Foreigners were net sellers even today as well. They bought shares to the value of Rs 279 m.n. & sold Rs 320 m.n. worth of shares.
There were 62 stocks in the positive contributors list as against 52 negative contributors.
Colombo Market has risen 9.9% so far for the year 2010.
We expect Colombo Stock Market to grow further up on back of the improved profit figures released by the listed firms & expectations of high dividend yield distribution from the companies as well.
TOP FIVE GAINERS FOR THE DAY TOP FIVE LOSERS FOR THE DAY
W e are proud to inform that several stocks mentioned by our Exclusive report "CSE RUMOR" were in today's top gainers list.
CROSSINGS FOR THE DAY
ACCOUNTS FOR NINE MONTHS [31/12/2009]
ACCOUNTS FOR THE FINANCIAL YEAR ENDED 31/12/2009
SRI LANKA INDIAN OIL COMPANY BACK IN PROFITS
Feb 17, 2010 (LBO) – The Sri Lanka unit of Indian Oil Corporation said it made a ‘nominal’ profit in the December quarter compared with a loss a year ago on higher petrol prices and other products like marine fuel and lubricants.
Lanka IOC said in a stock exchange filing that net profit for the December quarter was 12 million rupees compared with a loss of 770 million a year ago.
Turnover in the December quarter rose 1.5 percent to 13 billion rupees from a year ago with sales of petrol and diesel down but marine fuel sales up sharply.
Other operating income doubled to 264 million rupees mainly because of a dividend from Ceylon Petroleum Storage Terminals Limited, a common user storage facility partly owned by LIOC.
The dividend shot up 300 percent to 225 million in the December 2009 quarter from 56 million the year before.
LIOC managing director K R Suresh Kumar said he expects the company to do better in the next quarter.
“It was a nominal profit. During the December quarter our selling prices had been slightly better. Earnings from lubricants and bunkers (marine fuel) also helped.”
Sales of petrol and diesel fell in the quarter as supplies were disrupted by labour union action at the state-owned oil refiner, Ceylon Petroleum Corp., while marine fuel sales increased sharply.
Government-mandated retail petrol prices were cut by 15 rupees a litre on December 29.
Suresh Kumar said he expects the next quarter to be better with the government having removed a customs duty charged on LIOC along with the cut in petrol prices.
“The reduction in selling price has been matched by the duty being taken off. From this quarter onwards things will be better as there is a general improvement in the economic climate which should help volumes to grow.”
The island’s 30-year ethnic war ended last May, resulting in a revival in economic activity.
LIOC made a loss of 203 million rupees in the September 2009 quarter, after making a 110 million profit a year ago.
It made a 856.7 million rupee loss in the June quarter compared with a profit of 1.0 billion rupees a year earlier, as it was squeezed between high taxes and government mandated prices.
Suresh Kumar said sales of ship fuel in Colombo port were doing “reasonably alright” with total market volumes having stabilized at around 30,000 tonnes after rising during the year.
LIOC has captured a 35-percent market share, he said.
“I expect with things improving volumes to go up further. The market is extremely competitive but reasonably profitable.”
source - www.lbo.lk
Lanka IOC said in a stock exchange filing that net profit for the December quarter was 12 million rupees compared with a loss of 770 million a year ago.
Turnover in the December quarter rose 1.5 percent to 13 billion rupees from a year ago with sales of petrol and diesel down but marine fuel sales up sharply.
Other operating income doubled to 264 million rupees mainly because of a dividend from Ceylon Petroleum Storage Terminals Limited, a common user storage facility partly owned by LIOC.
The dividend shot up 300 percent to 225 million in the December 2009 quarter from 56 million the year before.
LIOC managing director K R Suresh Kumar said he expects the company to do better in the next quarter.
“It was a nominal profit. During the December quarter our selling prices had been slightly better. Earnings from lubricants and bunkers (marine fuel) also helped.”
Sales of petrol and diesel fell in the quarter as supplies were disrupted by labour union action at the state-owned oil refiner, Ceylon Petroleum Corp., while marine fuel sales increased sharply.
Government-mandated retail petrol prices were cut by 15 rupees a litre on December 29.
Suresh Kumar said he expects the next quarter to be better with the government having removed a customs duty charged on LIOC along with the cut in petrol prices.
“The reduction in selling price has been matched by the duty being taken off. From this quarter onwards things will be better as there is a general improvement in the economic climate which should help volumes to grow.”
The island’s 30-year ethnic war ended last May, resulting in a revival in economic activity.
LIOC made a loss of 203 million rupees in the September 2009 quarter, after making a 110 million profit a year ago.
It made a 856.7 million rupee loss in the June quarter compared with a profit of 1.0 billion rupees a year earlier, as it was squeezed between high taxes and government mandated prices.
Suresh Kumar said sales of ship fuel in Colombo port were doing “reasonably alright” with total market volumes having stabilized at around 30,000 tonnes after rising during the year.
LIOC has captured a 35-percent market share, he said.
“I expect with things improving volumes to go up further. The market is extremely competitive but reasonably profitable.”
source - www.lbo.lk
Subscribe to:
Posts (Atom)