Sri Lanka Stock Picks

May 27, 2013 (LBO) - Sri Lanka's stock closed down 0.65 percent on Monday with profit taking by retail investors, brokers said.

The benchmark Colombo All Share Index closed 42. 31 points lower at 6,446.54 and the S&P SL 20 Index closed down 24.13 points at 3,641.91 down 0.06 percent.

Turnover was 696 million rupees, up from 556 million on last week Thursday the market closed early for a Bhuddhist religious festival Vesak.

Foreigners brought 159 million rupees worth shares while selling 46 million rupees of shares, in a day that 67 stocks advanced and 140 stocks declined.

Chevron Lubricants Lanka contributed most to the index gain closing at 314.70 rupees up 14.40 rupees. Ceylon Tobacco Company extended gains to close at 960.00 rupees up 8.50 rupees and C T Holdings closed at 153.00 rupees up 02.60 rupees.

In Banking sector, Hatton National Bank closed at 168.00 rupees down 2.00 rupees, DFCC Bank closed at 146.00 rupees down 2.00 rupees and National Development Bank closed at 174.10 rupees down 01.00 rupees

Commercial Bank of Ceylon closed at 122.50 rupees down 1.40 rupees, Pan Asia closed flat at 21.00 rupees. Union Bank of Colombo closed at 19.50 rupees down 30 cents and Sampath Bank lost 1.40 rupees to close at 223.40 rupees.

The Lion Brewery, lost 01.00 rupee to close at 425.00 and Distilleries Company of Sri Lanka gained 10 cents to close at 200.00 rupees.

Index John Keells Holdings lost 4.90 rupees to close at 288.90 rupees and Nestle Lanka lost 21.10 rupees to close at 2016.40 rupees.

source - www.lbo.lk

◾ Despite challenging conditions, ends FY13 with highest-ever profit by a listed corporate

◾Group pre-tax profit up 23% to Rs. 15.78 b; post-tax figure up 24% to Rs. 13.6 b

◾Results from operating activities down 7% to Rs. 6.7 b but bottom line buttressed by higher net finance income and others

◾Net profit attributable to equity holders up 26% to Rs. 12.2 b

◾Recurring net profit up 21% to Rs. 8.54 b; PBT up 19% to Rs. 13.5 b

◾Group revenue expands by 10% to Rs. 85.5 b

John Keells Holdings (JKH) has proved its prowess in a challenging year and reinforced the premier blue chip status by posting the highest-ever profit by a listed corporate, surprising expectations of even the most optimistic analysts.

The conglomerate, which is also the most valuable in the country by market capitalisation, yesterday disclosed a Group Profit Before Tax (PBT) of Rs. 15.78 billion for the financial year ended on 31 March 2013, reflecting a 23% growth over the previous year.

Post-tax profit showing a similar double digit growth was Rs. 13.59 billion, whilst profit attributable to the equity holders of the parent was Rs. 12.20 billion, a 26% increase over FY12.

For FY13, revenue was Rs.85.56 billion, up 10% from the previous year, whilst gross profit improved by 13% to Rs. 20.45 billion. The result from operating activities however was down by 7% to Rs. 6.7 billion due to higher increase in expenses and 20% dip in other operating income.

Nevertheless the bottom line was buttressed by net finance income growth of 153% to Rs. 3.68 billion and a 42% rise in change in fair value of investment property to Rs. 2 billion along with share of results of equity accounted investees growing by 22% to Rs. 3.36 billion.

JKH explained that the finance income of Rs.4.77 billion for the year included Union Assurance PLC’s Life and General insurance funds’ interest income of Rs. 2.66 billion, which net of related costs has been reflected under the Financial Services operating segment results.

It also said the recurring PBT for the financial year 2012/13, excluding fair value adjustments on investment property and capital gains on share disposals, was Rs. 13.54 billion, an increase of 19% over the recurring PBT of Rs. 11.41 billion in the previous year.

On a similar basis, the recurring profit attributable to equity holders of the parent was Rs. 10.31 billion, representing an increase of 21% over the Rs. 8.54 billion recorded in the previous year.

Interim results for FY13 were announced after the market was closed. Despite the Colombo Bourse declining yesterday, JKH managed to close marginally on the up at Rs. 289, commanding a market capitalisation of Rs. 247.8 billion or 9.92% share of the total. Last week it crossed the 10% milestone and the share price remains at highest levels.

Analysts said JKH results reaffirm its resilience amidst challenging macroeconomic environment with lower GDP growth in calendar year 2012 and rising costs, etc.

The FY13 bottom line of JKH is the highest-ever by a listed corporate, beating the previous best achieved by Dialog in 2006 with Rs. 10.12 billion net profit (EBIT of Rs. 10.85 billion) on a turnover of Rs. 27 billion.

In tandem with the release of results, JKH announced a final dividend of Rs. 1.50 per share on top of Rs. 2 per share paid previously via interim dividends bringing the total to Rs. 3.50 per share, up from Rs. 3 per share paid in FY12.

All key sectors of JKH have fared better than the previous year, though some continued to struggle in terms of profitability.

The Leisure sector reinforced its supremacy within JKH Group, delivering Rs. 5.2 billion pre-tax profit, up from Rs. 4.17 billion, whilst its turnover rose from Rs. 17.5 billion to Rs. 20.6 billion.

The Transportation sector improved its pre-tax profit to Rs. 3.6 billion from Rs. 3.3 billion whilst turnover grew from Rs. 18.8 billion to Rs. 19.7 billion. The Property sector of JKH crossed the Rs. 1 billion mark in pretax profit posting Rs. 1.2 billion up from Rs. 977 million in FY12. Its turnover was down from Rs. 4 billion to Rs. 3.4 billion. Financial sector pre-tax profit was Rs. 1.77 billion up from Rs. 1.5 billion whilst turnover rose from Rs. 8 billion to Rs. 8.7 billion.

Consumer foods and retail saw pre-tax profit dip to Rs. 2.4 billion from Rs. 2.7 billion though top-line saw growth to Rs. 24.3 billion from Rs. 22 billion. IT sector had improved profits as well as others sector with the latter generating Rs. 1.1 billion pre-tax profit as against a loss in the previous year.

JKH net asset per share was Rs. 104.78 at Group level, up from Rs. 83.22 in FY12. Group assets surpassed the Rs. 150 billion mark to stand at Rs. 159 billion, up from Rs. 134.4 billion in FY12. This included Rs. 26.5 billion in short term investments up from Rs. 24.8 billion whilst fixed assets were Rs. 109 billion, up from Rs. 86.7 billion.

Revenue reserves were a staggering Rs. 42.7 billion as at 31 March 2013, up from Rs. 33 billion a year earlier. Long term liabilities of JKH Group grew to Rs. 32.4 billion from Rs. 29.8 billion whilst current liabilities were Rs. 25.5 billion, as against Rs. 24.4 billion in FY12.

The JKH Board of Directors comprises Susantha Ratnayake (Chairman), Ajit Gunewardene (Deputy Chairman), Ronnie Peiris, Franklyn Amerasinghe, S.S. Tiruchelvam, Tarun Das, Indrajit Coomaraswamy, A.R. Gunasekara and Ashroff Omar.

source - www.ft.lk

Hemas Holdings PLC saw net profits increase by 53.3 percent to Rs. 1.93 billion for the year ended March 31, 2013.

Group Revenue registered Rs 26,098 million, representing an increase of 21.2 percent over the previous period.

The group posted a growth of 42.3 percent in earnings to close at Rs. 1.6 billion. The groups’ operating profits recorded a growth of 36.4 percent to post Rs. 2.4 billion from Rs. 1.7 billion, while operating cash flows increased to Rs. 2.1 billion from Rs. 1.5 billion. The increased profit margins help drive the return on equity to improve to 14.5 percent from 12 percent.

"FMCG business enjoyed a successful year with its revenues growing by 14.5% and profits growing by 28.8%,to close at Rs 7.7 billion and Rs 745 million respectively. Despite challenges, the business was able to improve its market standing in overall terms. In Personal care, growth was driven by strong performances in Baby, Oral, Hair and Feminine hygiene categories," the company said in a statement.

"The healthcare sector performed exceptionally well during the year with a revenue growth of 20.0% and profit growth of 53.8% to close at Rs 9 billion and Rs 493 million respectively. Our Pharmaceuticals business was the largest contributor to Group revenue during the year. Hemas Pharmaceuticals continued to strengthen its market leadership position in pharmaceuticals distribution with a share of 17.9% (source: IMS). Our recent addition to the hospital portfolio, a 55-bed state-of-the-art facility at Thalawathugoda was completed in May 2013.

"The leisure sector enjoyed one of its best years, as it posted a revenue growth of 38.6% and a profit growth of 275.4% for the year under review. The sector closed the year with revenues of Rs 1.6 billion and a profit of Rs 464 million. Average occupancy across our hotel portfolio was above 75%, and Club Hotel Dolphin and AvaniBentota in particular performed exceptionally well.

"Driven by strong growth in the Aviation and Maritime business segments, our Transportation sector completed an excellent year. Sector revenues grew by 52.5% to reach Rs 1.1 billion, whilst profits increased to Rs 328 million reflecting a 33.6% growth

"The lack of rainfall in the catchment areas and depreciation of the Rupee has negatively impacted the performance of our Power sector. Despite this, sector revenues have increased 23.2% to Rs 5.5 billion, whilst sector profits have grown 12.8% to Rs 286 million."

source - www.island.lk

REUTERS: Sri Lankan shares recovered from the previous session’s near one-week low on Wednesday helped by banking shares and retail investor buying, while the rupee ended steady in dull trade.

The main stock index rose 0.33%, or 21.11 points, to close at 6,455.81, edging up from its lowest since 17 May, touched on Tuesday.

The index had hit a 19-month high last Thursday.

“At the bottom end, we saw some retail buying came in and the market is consolidating at these levels with blue-chips holding on,” said a stockbroker who declined to be identified.

The banking sector index rose 0.41% led by biggest listed lender Commercial Bank of Ceylon PLC which rose 1.81% to Rs. 123.60 a share.

Foreign investors were net buyers of shares worth of Rs. 102.5 million (US$ 810,900), extending net foreign inflows this year to Rs. 13.38 billion.

Turnover was Rs. 906.1 million, less than this year’s daily average of Rs. 1.04 billion.

The market’s 14-day Relative Strength Index (RSI) was still in over-bought territory, at 78.44 on Wednesday and has been above the upper neutral level of 70 since 16 April, Thomson Reuters data showed.

The rupee ended flat at Rs. 126.48/55, per dollar in light trade as importer dollar demand offset exporter sales of the greenback, dealers said.

source - www.ft.lk

Hemas Holdings Plc yesterday said in the 31 March 2013 ended financial year, the diversified blue chip witnessed strong growth with most businesses delivering strong results.

Group revenue registered Rs. 26,098 million, representing an increase of 21.2% over the previous period. In terms of consolidated profits, it was an exceptional year, with the Group registering a Profit after Tax of Rs. 1,934 million, representing a growth of 53.3%.

The Group posted a remarkable growth of 42.3% in Group earnings to close at Rs. 1,658 million. The Groups’ operating profits recorded a growth of 36.4% to post Rs. 2,434 million from Rs. 1,784 million, while operating cash flows increased to Rs. 2,143 million from Rs. 1,508 million. The increased profit margins help drive the return on equity to improve to 14.5% from 12.0%.

Hemas said the FMCG business enjoyed a successful year with its revenues growing by 14.5% and profits growing by 28.8%, to close at Rs. 7.7 billion and Rs. 745 million respectively.

Despite challenges, the business was able to improve its market standing in overall terms. In Personal care, growth was driven by strong performances in Baby, Oral, Hair and Feminine hygiene categories.

The Healthcare sector performed exceptionally well during the year with a revenue growth of 20% and profit growth of 53.8%to close at Rs. 9 billion and Rs. 493 million respectively.

Pharmaceuticals business was the largest contributor to Group revenue during the year. Hemas Pharmaceuticals continued to strengthen its market leadership position in pharmaceuticals distribution with a share of 17.9% (source: IMS). Our recent addition to the hospital portfolio, a 55-bed state-of-the-art facility at Thalawathugoda was completed in May 2013.

Hemas Leisure sector enjoyed one of its best years, as it posted a revenue growth of 38.6% and a profit growth of 275.4% for the year under review. The sector closed the year with revenues of Rs. 1.6 billion and a profit of Rs. 464 million. Average occupancy across our hotel portfolio was above 75%, and Club Hotel Dolphin and Avani Bentota in particular performed exceptionally well.

Driven by strong growth in the Aviation and Maritime business segments, the Transportation sector completed an excellent year. Sector revenues grew by 52.5% to reach Rs. 1.1 billion, whilst profits increased to Rs. 328 million reflecting a 33.6% growth.

The lack of rainfall in the catchment areas and depreciation of the rupee has negatively impacted the performance of the Power sector. Despite this, sector revenues have increased 23.2% to Rs. 5.5 billion, whilst sector profits have grown 12.8% to Rs. 286 million.
source - www.ft.lk

◾Pays 17% premium for voting shares

Hemas Holdings Plc yesterday purchased a 71.5% voting stake and a 50% non-voting stake in J.L. Morison Son & Jones (Ceylon) PLC (JLM) valued at Rs. 1.7 billion.

Voting stake of 4.153 million shares was acquired via crossing at Rs. 366.50 per share, a premium of Rs. 53.80 or 17% from Thursday’s closing.

A block of 648,580 non-voting shares was done at Rs. 219.70 each and further block of 223,787 non-voting shares at Rs. 213.66 each were also bought. JML’s voting share closed at Rs. 346.20, up by Rs. 33.50 and non-voting at Rs. 219, up by Rs. 33.90. Their intra-day peak was Rs. 358.80 and Rs. 221 respectively. JLM’s consolidated net asst per share as at 31 December 2012 was Rs. 259.10 at Group level and Rs. 150 at Company level.

The buying broker to the deal was NDBS whilst advisor to the seller Acuity handled 41% of the voting shares sold and 24% of non-voting.

For the nine months of FY13, JLM’s Group revenue was static at Rs. 2.16 billion whilst after tax profit was Rs. 108 million down by 16% whilst profit attributable to equity holders was Rs. 73 million, down by 12% over first nine months of FY12. Group assets amounted to Rs. 2.7 billion and at Company level the figure was Rs. 1.6 billion

In a statement Hemas said the JLM Group has a portfolio of well-established consumer brands including Lacto Calamine, Valmelix, Morrison’s Gripe Mixture and Morrison’s Baby products. In addition, the company distributes leading consumer brands Good Knight, Kiwi, Wipro, Nivea, Garnier and L’Oreal as well as manufacturing and distributing pharmaceutical products island wide.

Incumbent Chairman R. Abeyawira, who has been part of the JLM Group for 61 years and due to retire from the business, said: “When the time came for us to look for a new parent for the business, our priority was to find the right partner, a party capable of taking the business forward. Having discussed with several prospective partners, we selected Hemas since it has the best fit with our business portfolio and is capable of taking this business to greater heights, building on our people-oriented culture and values.”

Hemas Holdings Plc CEO Husein Esufally said: “We look forward to working closely with the team at JLM bringing our deep insights into consumer and pharmaceutical business, helping to develop JLM as a leading consumer and wellness company.”

JLM’s outgoing CEO Nihal Samaranayake expressed his confidence in the new owners and their management capability to capitalise on the fast growing consumer and pharmaceutical markets.

Incoming CEO Trihan Perera highlighted the history and legacy of the JLM Group and said he hoped to build on the strengths and achievements of the company while bringing a new level of dynamism to the group.

source - www.ft.lk

◾ Post-tax profit dips by 4% to Rs. 4.25 b

◾Profit operations up 14% to Rs. 5.5 b

◾Group revenue up 20% to Rs. 37 b

Blue chip conglomerate Aitken Spence Plc yesterday reported a profit from operations of Rs. 5.5 billion, an increase of 14.4% in FY13 over the previous year excluding the reported capital gains (of around Rs. 630 million) on the sale of the shares of Colombo International Container Terminals Ltd. (CICT).

The profit before tax is at Rs. 5 b for the year with a growth of 8.9% as compared with Rs. 4.59 b in the previous year, excluding capital gains on the sale of the shares of CICT.

Post-tax profit was down marginally by 4% to Rs. 4.25 billion whilst net profit attributable to equity holders of parent was down to Rs. 3.26 billion, from Rs. 3.48 billion in FY12.

The diversified Group’s annual revenue rose by 20% to Rs. 37.1 b whilst earnings per share declined by 6.3% to Rs. 8.05 for the financial year.

The revenue for the fourth quarter of 2012/2013 was recorded at Rs. 9.38 b, a negative growth of 3.3% compared to the fourth quarter of 2011/2012.

The profit before tax for the fourth quarter posted a negative growth of 4.13 % at Rs. 1.85 b when compared with 2011/2012 figures which excludes capital gains on the sale of the shares of CICT.
The revenue of the tourism sector for the financial year grew 24.9% to Rs. 14 b and profit before tax surged 31.4% to Rs. 3.4 b. Annual revenue for the Cargo Logistics increased 1.4% to Rs. 5.7 b whilst profits after tax for the sector declined by 33.7% to Rs. 556 m.

The Services sector reported growth in revenue of 11.4% and profit after tax of 1.5% to Rs. 537 m and Rs 162 m respectively for the financial year. The Strategic Investments sector (inclusive of revenue of equity accounted investees) reported an increase in revenue of 22.8% to Rs. 17.9 b, while profit after tax dropped by 46.4% to Rs. 837 m for the financial year.

“The company has had a year of mixed fortunes with challenges and pressures that have tested our strength and our ability to adapt, combined with fresh opportunities and prospects that excite us about the road ahead,” Aitken Spence Chairman D.H.S. Jayawardena said.

“We are proud to say that we have not approached our shareholders for funds in 15 years. This is particularly noteworthy considering that our dividend record has improved significantly during this period and will continue to grow in line with our earnings record,” he said.

“The Sri Lankan tourism sector has performed reasonably well but was affected somewhat with the country attracting a higher number of lower-end or budget tourists who do not regularly patronise star class establishments,” he added.

Deputy Chairman and Managing Director J.M.S. Brito said: “The Group was once again able to achieve a commendable performance for the year 2012/13 despite the macro-economic and global challenges we encountered. Our diversity and innate capabilities provided us with the ability to respond strategically and with agility to changing conditions whilst staying on course with the greater vision of Aitken Spence.”

“In terms of expansion, we will continue to explore new avenues of business as well as new markets both in Sri Lanka and overseas, where we may utilise our proven capabilities in management to build sustainable new businesses,” he added.

Aitken Spence is among Sri Lanka’s leading and most respected corporate entities with operations in South Asia, the Middle East and Africa. It is an industry leader in hotels, travel, maritime services, logistics, power generation and printing, with a significant presence in plantations, financial services, insurance, information technology and apparel. Aitken Spence was recognised as Sri Lanka’s Best Corporate Citizen for 2012 by the Ceylon Chamber of Commerce.

source - www.ft.lk

Access Engineering Plc has recorded an impressive profit attributable to equity holders of Rs. 2,367 million for the financial year ending 31 March 2013, when compared to a profit of Rs. 1,725 million to equity holders last year.

As per the financial results released to the Colombo Stock Exchange, turnover for the year ended 31 March 2013 recorded at Rs. 13,900 million and Rs. 11,447 million at group and company level is a growth of 90% and 64% respectively over the corresponding period. This is the second consecutive year that the company was able to almost double its turnover in view of the growth taking place in infrastructure development and the construction industry in the country.

The year ending 31 March 2013 is the first full year of operation of Access Engineering Plc since it made its debut on the Colombo Stock Exchange after a successful IPO on 27 March 2012. Delivering under the theme “new hope,” the above results stand testimony to the same. At the company level turnover is drawn from multidisciplinary value engineering activities such as roads and highways, bridges and flyovers, water and wastewater, ports and aviation, piling, building construction and production income.

At group level, the company’s subsidiary Sathosa Motors Plc has contributed Rs. 2,311 million to the top line. The company’s fully owned subsidiary, Access Realties Ltd. also contributed to the top line with a turnover of Rs. 170 million. Stemming from the top line growth, the company’s pre-tax profit of Rs. 2,674 million and Rs. 2,301 million witnessed a growth of 32% and 33% at group and company level in the year under review.

‘Capacity building’ initiatives which have been earmarked, were further strengthened during the year ended 31 March 2013, with the company making investments to the tune of approximately Rs. 1,198 million in property, plant and equipment. Taken together with the financial year 2011/2012, the company has made an investment over Rs. 2.8 billion in ‘capacity building’ within a period of 24 months.

At present, Access Engineering owns one of the most technically advanced and up-to-date fleet of heavy construction equipment and machinery in the country. These investments also includes the acquisition and setting up of quarries, crusher plants, concrete batching plants, asphalt plants and state-of-the-art piling equipment, through which the company has successfully consolidated its multidisciplinary activities and supply chain.

These backward integration measures have enabled the company to deliver its projects to clients well ahead of the scheduled completion dates and will be a catalyst in meeting the anticipated growth rates of the forthcoming years.

The company in the short to medium term is fully focused on its core business of multi-disciplinary engineering and owing to the growth in the infrastructure and construction industry, the Board of Directors are of the opinion that sustainable growth on the short to medium term could be achievable through the core business.

The company’s liquidity profile is excellent at both company and group level. Operating activities of the company have generated a net cash inflow of Rs. 1,623 million with the net cash outflow from investing activities amounting to Rs. 1,626 million mainly due to the capacity building initiatives undertaken by the company.

The total asset base of the group stood at Rs. 16,643 million. Equity attributable to equity holders of the parent was Rs. 12,472 million which translates into a net asset per share of Rs. 12.47. The earnings per share of the group are Rs. 2.38. The company declared an interim dividend of Rs. 0.25 per share for the year 2012/2013 which was paid on 28 February 2013.

Access Engineering increased its ownership in its subsidiary Sathosa Motors up to 84.4% during the period under review. Sathosa Motors is the authorised dealer for the world-renowned Isuzu brand of motor vehicles in Sri Lanka.

Since its acquisition in February 2012, Sathosa Motors has contributed to both the top and bottom line of the company. With effect from 1 April 2013, Sathosa Motors has also entered into a joint-venture and set up SML Frontier Automotive Ltd. and acquired the dealership for Land Rover UK.
The Board of Directors of AEL comprises Chairman Sumal Perera, Managing Director Christopher Joshua, COO Rohana Fernando, Shevantha Mendis, Dharshana Munasinghe, Gration Fernando, Ranjan Gomez, Prof. Malik Ranasinghe, Niroshan Gunarathna and Alexis Lovell.

source - www.ft.lk

* Rs. 2.8bn invested on capacity building in two years
Access Engineering PLC reported a net profit of Rs. 2.38 billion for the year ended March 31, 2013, up 37.12 percent from Rs. 1.72 billion a year earlier, financial results filed with Colombo Stock Exchange showed.

Turnover grew 90 percent at group level to Rs. 13.9 billion. At company level, turnover amounted to Rs. 11.45 billion, up 64 percent from a year ago.

"This is the second consecutive year that the company was able to almost double its turnover in view of the growth taking place in infrastructure development and the construction industry in the country," the company said in a statement.

The year ending March 31, 2013 was the first full year of operation after Access Engineering PLC made its debut on the Colombo Stock Exchange after a successful IPO in March 2012.

At the company level turnover is drawn from multidisciplinary value engineering activities such as roads and highways, bridges and flyovers, water and wastewater, ports and aviation, piling, building construction and production income.

At group level, the company’s subsidiary Sathosa Motors PLC has contributed Rs. 2.3 billion to the top line. The company’s fully owned subsidiary, Access Realties (Pvt) Ltd also contributed to the top line with a turnover of Rs.170 million.

Stemming from the top line growth, the company’s pre-tax profit of Rs.2.67 billion and Rs.2.3 billion witnessed a growth of 32 percent and 33 percent at group and company level in the year under review.

During the year the company invested approximately Rs.1.2 billion in property, plant and equipment. Taken together with the financial year 2011/2012, the company has made an investment over Rs.2.8 billion in capacity building within a period of 24 months.

At present, Access Engineering owns one of the most technically advanced and up-to-date fleet of heavy construction equipment and machinery in the country. These investments also includes the acquisition and setting up of quarries, crusher plants, concrete batching plants, asphalt plants and state-of-the-art piling equipment, through which the company has successfully consolidated its multidisciplinary activities and supply chain. These backward integration measures have enabled the company to deliver its projects to clients well ahead of the scheduled completion dates and will be a catalyst in meeting the anticipated growth rates of the forthcoming years, the company said.

The company’s liquidity profile is excellent at both company and group level. Operating activities of the company have generated a net cash inflow of Rs. 1.6 billion with the net cash outflow from investing activities amounting to Rs.1.62 billion mainly due to the capacity building initiatives undertaken by the company.

The total asset base of the group stood at Rs.16.64 billion. Equity attributable to equity holders of the parent was Rs. 12.47 billion which translates into a net asset per share of Rs.12.47. The earnings per share of the group is Rs. 2.38. The company declared an interim dividend of Rs.0.25 per share for the year 2012/2013 which was paid on 28th February 2013.

Access Engineering increased its ownership in its subsidiary Sathosa Motors PLC up to 84.4 percent during the period under review. Sathosa Motors PLC is the authorized dealer for the world-renowned Isuzu brand of motor vehicles in Sri Lanka. Since its acquisition in February 2012, Sathosa Motors PLC has contributed to both the top and bottom line of the company. With effect from 01-04-2013, Sathosa Motors has also entered into a Joint Venture and set up SML Frontier Automotive (Pvt.) Ltd. and acquired the dealership for Land Rover UK.

The Board of Directors of AEL comprises of Sumal Perera (Chairman), Christopher Joshua (Managing Director), Rohana Fernando (COO), Shevantha Mendis, Dharshana Munasinghe, Gration Fernando, Ranjan Gomez, Prof. Malik Ranasinghe, Niroshan Gunarathna & Alexis Lovell.
source - www.island.lk

The Colombo bourse yesterday closed marginally up on a turnover of Rs.731.7 million, down from the previous day’s Rs.2.5 billion, with the All Share Price Index gaining 7.94 points (0.12%) and S&P SL20 gaining 6.28 points (0.17%) with block trades in Commercial Bank contributing Rs.102.4 million to turnover.

Block trades in ComBank, Lanka Tiles and Aitken Spence accounted for Rs.152.5 million to turnover with JKH which closed Rs.1.90 down at Rs.285 on slightly over 0.2 million shares topping the floor trades. The counter traded yesterday between Rs.294.50 and Rs.287 with brokers saying that foreign buying had dried up.

Despite the marginal gain in the indices 142 gainers strongly outpaced 77 losers while 49 counters closed flat.

There was activity in the property sector with CT Land, Colombo Land and Ceylinco Seylan Development showing activity.

CT Land closed 70 cents up at Rs.32.50 on nearly 1.5 million while Colombo Land lost 90 cents to close at Rs.52.70 on nearly 0.7 million shares.

On the trading floor Commercial Bank closed flat at Rs.123 whereas the block trades were done at a price of Rs.125. Nearly 0.2 million ComBank (voting) was done on the floor between Rs.122.50 and Rs.123.50.

Nation Lanka Finance continued to show volume closing 60 cents up at Rs.11.50 on nearly 3.8 million shares while Laugh Gas (non-voting) closed 10 cents up at Rs.23.50 on nearly 1.3 million shares.

Among the pricey stocks, Chevron closed Rs.10.90 up at Rs.331 on 79,610 shares and Ceylon Tobacco closed 11.10 up at Rs.990 on 20,893 shares.

Central Industries announced a final dividend of Rs.3 per share for 2012/13 with dates to be notified while Sathosa Motors announced a final dividend of Rs.5 per share for 2012/13 also with dates to be notified.

On Thursday Dankotuwa Porcelain announced a final dividend of 40 cents per share, CWE a first and final dividend of Rs.3 per share, Laugf a first and final dividend of Rs.1.50 per share, Odel a final dividend of 10 cents per share, Sunshine Holdings a final dividend of 50 cents per share and Singer Finance a final dividend of 65 cents per share.

source - www.island.lk

(click image to enlarge)

source -acuity research

(click image to enlarge)

source - CAL Research

Stock Market Review for the Week Ended 31st May 2013:

Colombo Bourse has displayed mixed signals during the week ended 31st May while hovering around the 6,500 ASI figure. Towards mid-week we witnessed the market recovering from its initial movement with turnover rising to its highest on Thursday in more than three weeks as conglomerate Hemas Holdings PLC bought a majority stake in pharmaceutical firm J. L Morrison Sons and Jones PLC.

To re-cap, starting from Monday; the Colombo Bourse slipped from a 19 month high on profit taking as the main ASI index dropped by 42.31 index points (0.65%) to close at 6,446.54 and S&P SL 20 Index lost 24.13 points to close at 3,641.91. Market turnover for the day was recorded at LKR 697mn whilst the market capitalization for Monday was LKR 2476 bn. Foreign participation was comparatively low and it calculated for 14.8% of the total market activity with a net inflow of LKR 113mn as the market turnover was recorded at a dismal LKR 553mn.

ASI lost 11.84 points and closed at 6,434.70 while the more liquid S&P SL 20 Index lost 14.95 points and closed at LKR 3,626.96 on Tuesday. Foreign participation remained sluggish and accounted for 12.7% as Tuesday ended while a net inflow of LKR 75mn was recorded for the day. Market capitalization for Tuesday stood at LKR 2413 Bn.

Colombo Stock market headed towards a recovery on Wednesday as the main index ASI rallied ahead by 21.11 points to close at 6,455.81 and S&P SL 20 Index advanced by 17.68 points to close at 3,644.64. Daily market turnover was LKR 906mn as foreign participation for the day was 21% of the total market activity as investors continued to act as net buyers with a net inflow of LKR 102mn.

Colombo Bourse on Thursday mimicked Wednesday’s ASI figures with ASI closing at 6,455 points and the S & P SL 20 index declining marginally to close at 3,640 points. Daily market turnover was a staggering LKR 2.55 Bn, an increase by 182 % from the previous trading day. Market capitalization stood at LKR 2478 Bn as a net foreign inflow of LKR 165 Mn was recorded for the day, an increase of over 60% from Wednesday. Ceasing trading for this week the Colombo Stock Exchange edged up 7.94 points on the main ASI index closing at 6,463.06 points while the more liquid S &P SL 20 increased by 6.28 points to close at 3,646.32. Market turnover for the day was recorded at LKR 731 Mn while foreigners remained as net buyers for the day with a net foreign influx of LKR 118 Mn.

Subsequently on Monday, the Colombo Bourse market capitalization depreciated by 1% due to profit taking by investors after a two-day consecutive growth experienced during the previous week. Investors booked profits in small volumes while lacklustre trading was made on blue-chips. Price depreciation was witnessed in Index heavy counters such as Dialog Axiata by LKR 0.40, Nestle by LKR 21.50 and John Keells Holdings by LKR 4.80 contributing to the negative market sentiment. Overseas Reality, Chevron Lubricants and Ceylinco Seylan Development were among heavily traded stocks during the day.

The Banking, Finance and Insurance sector contributed to drag the Colombo Stock Exchange down to a near one week low as investors were engaged in profit taking from recent gains in banking shares. Price reductions in index heavy stocks such as Bukith Darah by LKR 13.90, Carsons by LKR 2.50 and Commercial Bank by LKR 1.00 contributed negatively to the prevailing negative sentiment.

Market giant John Keells Holdings however edged up by 0.3% to close at LKR 289.00 as posted a 23% gain in its March quarterly earnings. Colombo Land & Development with LKR 42.5mn topped the turnover list today as Central Investment & Finance, Overseas Reality and Morisons non-voting were among the heavily traded stocks.

Indices gradually turned the Colombo Bourse back to green on Wednesday despite a few dips. Foreign investors displayed a selling sentiment due to Nation Lanka Finance (CSF) foreign stake in the counter reduced by 1,335,470 shares; as the price of the counter gaining 17% closed at LKR 11.70. Nation Lanka inevitable topped the turnover list adding LKR 107 Mn to the daily turnover whilst dominating the volumes list with 9.2 Mn shares.

Indices continued to fluctuate for the day on Thursday while transactions pertaining to J.L Morrison Sons and Jones (MORI) captured 61% of total turnover as the price closed at LKR 346.20 gaining 10.71%. MORI managed to strike the deal through eight crossings as Hemas Holdings PLC was rounded up as the majority stakeholder. Foreign interest was witnessed in Lanka Floor Tiles whereas the foreign stake in said counter increased by 1,166,400 shares. On Friday, notably Chevron Lubricants appreciated in value by 3.41% to close at LKR 331. Banks, Finance and Insurance sector contributed most to the daily turnover by contributing LKR 219 Mn for the day. Several crossings by Commercial Bank, Aitken Spence and Lanka Floor Tiles aided to the total turnover while Chevron Lubricants touched its 52 week high on Friday closing at LKR 328.30.

(Courtesy: Innovest Investments Pvt Ltd – an Investment Management Company licensed by the Securities & Exchange Commission of Sri Lanka)

source - www.ft.lk

First Capital Holdings PLC has reported profit after tax of Rs. 520.9 million for the year ending 31 March 2013, in a noteworthy turnaround from a net loss of Rs. 268.5 million at the end of the previous year.

While active trading strategies in the Government securities market generated a gain of Rs. 300 million in the review period, net interest income of Rs. 295 million and fee income of Rs. 40 million enabled the group to quadruple net operating income (before expenses) to Rs. 638 million.

Higher business volumes resulted in a doubling of turnover, and the group, which comprises of four financial services companies, posted profit before tax of Rs. 548.7 million for the year, as against a pre-tax loss of Rs. 253.6 million for 2011-12.

Profit attributable to equity holders of the parent company reached Rs. 490.1 million from a negative Rs. 259.9 million a year previously.

“Clearly, the strength of our capital base, which enables us to carry appropriate long term positions on Government securities, generates above average returns from our primary dealership,” said Jehaan Ismail, CEO of First Capital Holdings. “But we have also generated a noteworthy return from the corporate debt market and are making a name as a full service investment bank.”

He said the group had strengthened its management team in key disciplines during the year under review and moved its offices to a more conveniently located downtown address in Colombo to better serve its growing client base.

Consequent to its significantly improved performance, earnings per share of First Capital Holdings increased to Rs. 4.84 from a loss per share of Rs. 2.57 in 2011-12. One of the best performing non-bank financial service providers in 2012-13, First Capital Holdings comprises of First Capital Limited, First Capital Treasuries Limited, First Capital Markets Limited and First Capital Asset Management Limited. The group raised a noteworthy Rs. 6 billion for a diverse group of clients through commercial paper, debentures and securitisations in the year reviewed.

The group has recently acquired a 70% stake in a stock broking firm and states that this should enhance its revenue stream from equity based businesses in 2013/14.

The financial statements (unaudited) of the company for the year ended 31 March 2013 have been prepared and presented in accordance with new volume of Sri Lanka Accounting Standards (SLFRS/LKAS) which has become applicable for financial periods beginning on or after 1 January 2012.

source - www.ft.lk

The Colombo stock market has risen by 15.8% on an YTD basis (dollarised), well ahead of BRICS markets, according to broking firm DNH Financial.

It said while the BRICS have historically experienced fast growing economies, rapid FDI and FPI inflows and have remained a darling amongst hedge fund investors over the years, Sri Lanka could offer an effective panacea and ‘sharpe’ solution for Emerging Market (EM) portfolios seeking sustainable and robust domestic focused growth emanating from a local consumption cycle largely unaffected by the current global macroeconomic risks.

“While it is acknowledged that for foreign investment managers, investing in the Sri Lankan Bourse is not without challenges (considering its relatively low market liquidity which has historically been a deterrent for EM funds seeking investments), with market liquidity levels now generally improving, it is believed that the Bourse will attract increased foreign buying interest going forward,” DNH said.

It said whilst a mixed bag of quarterly corporate results were released last week, earnings have been largely positive with margin improvement offsetting lower than expected top line growth for several counters.

Noting that foreign participation has generally been the market catalyst over the last few weeks, DNH expects that market activity will be relatively restrained in the immediate term due to the easing off in international markets (and hence foreign buying).

“However, momentum is expected to gather steam in the medium to longer term with a break to the upside from the relatively sideways flag that has been experienced as foreign interest re-emerges,” DNH said.

“ Consequently, the current market environment is viewed as an opportunity for medium to longer investors to clean their books, re-align their portfolios and maintain a healthy investment horizon and focus on companies that will deliver quality earnings,” it added.

“While the majority of the 1Q2013/4Q2012 corporate results have been released to the market, it is highly important to determine the source of profits, whether a result of top line growth or an increase in other income or a dramatic cut in costs that could have a negative impact on future productivity.

Of perhaps even more significance is the sustainability of such earnings. In this respect, investors are advised to seek quality stocks, both in terms of the top line and the bottom line but which are also sufficiently liquid,” DNH emphasised.

source - www.ft.lk

First Capital Holdings PLC has reported profit after tax of Rs 520.9 million for the year ending March 31, 2013, a turnaround from a net loss of Rs 268.5 million at the end of the previous year.

While active trading strategies in the Government Securities market generated a gain of Rs 300 million in the review period, net interest income of Rs 295 million and fee Income of Rs 40 million enabled the Group to quadruple net operating income (before expenses) to Rs 638 million, the company said in a statement.

Higher business volumes resulted in a doubling of turnover, and the group, which comprises of four financial services companies, posted profit before tax of Rs 548.7 million for the year, as against a pre-tax loss of Rs 253.6 million for 2011-12.

Profit attributable to equity holders of the parent company reached Rs 490.1 million from a negative Rs 259.9 million a year previously.

"Clearly, the strength of our capital base, which enables us to carry appropriate long term positions on government securities, generates above average returns from our primary dealership," said Jehaan Ismail, CEO of First Capital Holdings. "But we have also generated a noteworthy return from the corporate debt market, and are making a name as a full service investment bank."

He said the Group had strengthened its management team in key disciplines during the year under review and moved its offices to a more conveniently located downtown address in Colombo to better serve its growing client base.

Consequent to its significantly improved performance, earnings per share of First Capital Holdings PLC increased to Rs 4.84 from a loss per share of Rs 2.57 in 2011-12.

First Capital Holdings comprises of First Capital Limited, First Capital Treasuries Limited, First Capital Markets Limited and First Capital Asset Management Limited. The Group raised Rs. 6 billion for a diverse group of clients through commercial paper, debentures and securitisations in the year reviewed.

The group has recently acquired a 70 per cent stake in a stock broking firm and states that this should enhance its revenue stream from equity based businesses in 2013/14.

source - www.island.lk

June 04, 2013 (LBO) - Sri Lanka's stock closed flat Tuesday with investors continuing to take profit and losses in some index heavy stocks like JKH, DIST and NEST, brokers said.

The benchmark Colombo All Share Index closed 02.02 points lower at 6,449.66 and the S&P SL 20 Index closed 10.31 points higher at 3,645.90 up 0.29 percent.

Turnover was one billion rupees up from 752 million day earlier.

Foreigners brought 541 million rupees worth shares while selling 102 million rupees of shares, in a day that 87 stocks advanced and 125 stocks declined.

Chevron Lubricants Lanka contributed most to the index gain closing at 345.20 rupees up 16.90 rupees. The reduction of global oil prices has helped the company’s share price to rise and demand for the stock by investors has also gone up, brokers said.

John Keells Holdings lost 1.80 rupees to close at 281.70 rupees and Nestle Lanka closed at 1,978.00 rupees down 19.60 rupees.

Commercial Bank of Ceylon closed at 124.00 rupees up 2.00 rupees helped by a crossing of three million shares at a price of 125 per share. Lanka IOC gained 1.60 rupees to close at 28.00 rupees.

Hatton National Bank closed flat at 167. 00 rupees, DFCC Bank closed at 142.50 rupees up 50 cents and National Development Bank closed at 174.50 rupees up 40 cents.

Pan Asia closed at 20.60 rupees down 40 cents. Union Bank of Colombo closed at 19.20 rupees up 10 cents and Sampath Bank lost 1.60 rupees to close at 218.50 rupees. Banking sector which reached its peak has lost ground due to profit taking by investors, broker said

LB Finance closed at 131.60 rupees down 2.80 rupees and Peoples Leasing and Finance closed at 14.90 rupees up 10 cents.

The Lion Brewery lost 1.00 rupees to close at 409.00 rupees, Distilleries Company lost 1.20 rupees to close at 200.30 rupees and Ceylon Tobacco Company too lost 10 cents to close at 999.90 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 11.40 rupees down 30 cents and Vallibel One closed at 19.10 rupees down 60 cents.

Sri Lanka Telecom closed at 42.70 rupees down 30 cents and Dialog Axiata closed at 09.30 down 10 cents. (Ends)

source - www.lbo.lk

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

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

◾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

Sri Lanka stocks close down 0.6 pct

JKH proves its prowess

Hemas profits up 53% to Rs. 1.93bn

Bourse recovers on banks, retail buying

Hemas ups pre-tax profit by 58% to Rs. 2.4 b

Hemas takes control of J. L. Morison for Rs. 1.7 b

Spence ends FY13 with mixed fortunes

Access Engineering’s bottom line up 37% to Rs. 2.36 b in FY13

Access Engineering profits up 37pct

Bourse gains marginally on modest turnover

Weekly Foreign Holding Update

Weekly Foreign Holding and Block Trade Update

Mixed week for bourse

First Capital posts net profit of Rs. 520.9 m in FY13

With 15% gain Colombo stock market beats BRICS on YTD basis

First Capital turnaround after turnover doubles & four-fold operating income growth

Sri Lanka stocks close flat

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

Sri Lanka stocks close down 0.4-pct

Cargills posts stable performance in tough FY13