seall14 21gpgppivg Morning Notes 12 November 2014 Market Diary ASI Outlook (based on charts) Today: Renuka Holdings – voting & non-voting - Right Issue – XR Date Commercial Bank of Ceylon – XD Date (LKR 1.50 per share) Tomorrow: Alumex - Dividend Payment date (LKR 0.33 per share) Corporate Announcements Interim Financial Statements 30-09-2014 - CIC Holdings (CIC), Ascot Holdings (ASCO), Capital Alliance Finance (CALF), Sinhaputhra Finance (SFL), Taprobane Holdings (TAP), Hunas Falls Hotels (HUNA), Browns Beach Hotels (BBH), Aitken Spence (SPEN), Aitken Spence Hotel Holdings (AHUN), AIA Insurance Lanka (CTCE), The Nuwara Eliya Hotels Company (NEH), Asia Siyaka Commodities (ASIY), LB Finance (LFIN). Employee Share Option Schemes – Month of October 2014: The following shares were listed during the period 01ts October to 31st October 2014. Stated Capital as at 31st Name of the company No. of Shares Listed October 2014 (LKR) John Keells Holdings Hatton National Bank 187,854 Voting - 9,000 Non-voting - 5,154 Commercial Bank of Ceylon National Development Bank Richard Pieris and Company Dealings by Directors Company Director Purchase Alumex R.P.Pathirana Citizen Development K.M.Weerasuriya Business Finance Sale Asia Siyaka Lanka Commodity Commodities Brokers Limited Sathosa Motors T.D.Gunasekara 96,298 28,619 51,300,430 Comments (short term trend): ASI is trading near a moderate resistance level. Several other technical indicators suggest a possible consolidation in the near term. Cautions approach is advised. ASI - Pivot Points Previous day’s close Pivot Point R1 R2 7,412.72 7,406.40 7,425.99 7,439.27 S1 S2 7,393.12 7,373.53 50 day 100 day 200 day 7,227.37 6,961.61 6,543.49 13,080,705,000.00 ASI - Moving Averages 07 day 14 day 21 day 21,371,848,110.90 1,220,255,715.00 1,972,829,168.91 Short-term Technical Indicators RSI 66 MACD The MACD line has crossed the signal line from below. 49,974,677,079.69 7,370.22 7,297.44 7,279.46 Global Equity Indices Date Quantity Price (LKR) 10 Nov 10 Nov 19,199 1,711 15.30 94.20-95.00 04 Nov 217,604 3.40 10 Nov 1,040 250.00 Local Business News Fitch Rates Sampath Bank's subordinated debentures 'A+(lka)(EXP)': Fitch Ratings Lanka has assigned Sampath Bank PLC's proposed subordinated debentures of up to seven billion rupees an expected National Long-Term Rating of 'A+(lka)(EXP)', the rating agency said in a media statement. Sampath expects to use the proceeds to strengthen its Tier 2 capital base and reduce asset and liability maturity mismatches. The final rating is subject to the receipt of final documentation conforming to information already received. The proposed debentures are rated one notch below Sampath's National Long-Term Rating to reflect their subordination to senior unsecured debt. Sampath Bank's rating is driven by its modest and expanding franchise, and relatively higher risk appetite as seen in its aggressive loan growth and high gold-backed lending until end-2013, which has put pressure on its asset quality. Fitch believes asset quality indicators could be weaker than those reported should a broader definition of impairment be applied. (LBO) Sri Lanka to change the inflation basket next year : Island's Stat Dept: Sri Lanka will see a new inflation basket stating from next year eliminating the Colombo Consumers Price Index (CCPI), a top official at the country’s statistics office told LBO in an interview. “We are going to change the inflation basket next year and introduce a national index covering all the districts,” D C A Gunawardena, Director General of Census and Statistics Department told LBO. “There is a continues price stability with the government policies introduced in 2006 and every five years we change the inflation basket,” “So now it’s high time to change it. Because the inflation now measured taking 2006/2007 as the base year.” Sri Lanka inflation continued its decelerating trend observed since June 2013 and reached 1.6% in October 2014 compared to 4.7% in July 2014, on an annual average basis the Central bank of Sri Lanka said in a media release. (LBO) Sri Lanka launches floating restaurant at Wetland Park: Sri Lanka launched a new floating restaurant at the Wetland Park in Nawala, Colombo yesterday, a media report said. The craft named 'Garton's Ark' holds a spacious fully air conditioned restaurant and an open deck which offers a complete package of a trip around the lake with food and drinks served 30 at an affordable price, the report said. Garton's Ark' is also equipped with special safety and security features for the benefit of its patrons. The Urban Wetland Park popularly known as 'Weli Park' completed under the Colombo Development Programme was aimed at flood retention and control while providing a people friendly setting for the general public to relax and enjoy. (LBO) S&P 500 (USA) FTSE 100 (UK) NIKKEI 225 (Japan) Shanghai Comp (China) BSE Sensex (India) KSE All (Pakistan) MSCI frontier markets MSCI emerging markets Index 2,039.68 6,627.40 17,273.95 2,471.17 27,910.06 31,303.63 646.64 997.66 Change +1.42 +16.15 +149.84 +1.49 +35.33 +21.80 +2.90 +10.01 % Change +0.07 +0.24 +0.88 +0.06 +0.13 +0.07 +0.45 +1.01 Global Business News Gold Retreats as SPDR Assets Post Longest Losing Run in a Year: Gold traded below the highest level in a week amid expectations that U.S. interest rates will rise, with assets in the largest exchange-traded product backed by the metal posting the longest slump in a year. Gold for immediate delivery was at $1,162.05 an ounce at 9:05 a.m. in Singapore from $1,164.33 yesterday, when prices rose 1.1 percent, Bloomberg generic pricing showed. On Nov. 7, the metal fell to a four-year low before rallying to $1,178.82 as U.S. jobs data that trailed forecasts hurt the dollar. (Bloomberg) Brent Falls for Third Day on Signs OPEC Will Resist Output Cuts: Brent crude fell for a third day amid signs that OPEC members are reluctant to reduce supply even as prices slumped deeper into a bear market. West Texas Intermediate dropped in New York. Futures slid as much as 0.7 percent in London. The oversupply in global markets “didn’t come from us,” Energy Minister Suhail Al Mazrouei said yesterday of the United Arab Emirates and the Organization of Petroleum Exporting Countries. Crude stockpiles in the U.S., the world’s biggest oil consumer, probably increased by 1.1 million barrels through Nov. 7 for a sixth weekly gain, a Bloomberg News survey shows before government data tomorrow. (Bloomberg) Southeast Asia Looks to a Weakened Obama for Assurances on China: U.S. President Barack Obama skipped a visit to Asia in October last year because of a partial government shutdown at home. Having lost control of Congress, he faces fresh questions about his commitment to supporting Southeast Asian nations against a more assertive China. During his first trip since elections handed the Republican party a majority, Obama will attend meetings in Myanmar’s capital Naypyidaw that start today. Southeast Asian leaders, embroiled in territorial disputes with China, will be looking for clues on whether the loss of legislative power risks weakening the U.S. engagement in Asia. (Bloomberg) Morning Notes Local Business News Renuka Tower to come up at Galle Face: Sri Lanka’s Renuka Holdings PLC would build a 28-storey tower at the Galle Face Terrace with an investment 3.2 billion rupees, the company said in a media statement. The tower will have 200,000 square feet of rentable office space and parking for more than 200 cars, the company said. The project is expected to begin in 2015 and is planned for completion in 2018. It will also have corporate entertainment areas, conference facilities, dining, recreation and all the modern necessities required to create a pleasant and safe working environment. “We believe the time is right for us to develop our land bank and create a new revenue stream for the company from these resources,” Executive Director (Projects) Shamindra Rajiyah said in the statement. “Using our past experience, we aim to make the Renuka Tower a preferred business address in the city,” he said. “The Renuka Tower will provide ‘A’ Grade office facilities built on the company owned land at the Galle Face Terrace and Uttrananda Mawatha, Colombo 03,” Rajiyah said in the statement. The total project cost of the two stage development is estimated at 3.2 billion rupees, which will be partly financed by the ongoing rights issue of 1.03 billion rupees. (LBO) Mattala attracts more investors: A theme park in a 400 acre land and three star hotel with a golf course will be built in the Mattala Rajapaksa International Airport (MRIA) land area MRIA CEO, Derik Karunaratne said. Hambantota District Chamber of Commerce said that in addition of global hotel giant Hyatt hotels have also laid the foundation for the four star hotel while the five star Shangri-La Hotel will open mid next year. He said that due to high end clientele expected to patronize these hotels the MRIA has also decided to open a private Jet Terminal at the airport soon. “In addition SriLankan Airlines will also commence their MRO operations in Mattala next January bringing more value to the country's second international airport.” Karunaratne said they already have 800 hectares and a further 1200 hectares is available for development. “With the Southern Highway being commissioned to MRIA by 2017 we see more investments.” MRIA will be the first airport in Sri Lanka to have A380 flight facilities. The new state of the art airport also boasts a vast 12,000 square-meter international terminal building as well as a one million square foot duty free area. (DN) Mandira Bungalows invests Rs 60 m for overhaul: Zinc Boutique Journeys Lanka, a network of exclusive hotels and resorts, with investments of over US$ 200 million in Sri Lanka have further invested Rs. 60 million to refurbish three estate bungalows in Hatton to be developed to upmarket boutique lodges. General Manager Mandira Bungalows, Kingsley Liyanage told Daily News Business that two of the properties, the Craig Appin and Dick Oya Bungalows have already been fully refurbished with modern amenities while the third,the Strathdon Bungalow will be ready by mid-December. “When completed the three properties could accommodate 30 guests in all.” The 1,342nd Forbes US dollar billionaire in the world, Binod Chaudhary, a Nepali national is the owner of Mandira Brand and Zinc Journeys Lanka. (DN) Consolidation to slow margin decline for Sri Lankan telcos: Fitch: Over-capacity in Sri Lanka’s telecommunications industry could shrink as two weaker operators may exit the sector, which would benefit the remaining players, Fitch Ratings says in a new special report. Data tariffs could rise following consolidation, and this would slow the decline in profitability and prevent duplication of capex. The number of industry participants could fall to three from five. Sri Lanka Telecom (SLT; BB-/AAA(lka)/Stable), the largest integrated operator, plans to acquire Hutchison Lanka; while the third-largest operator, Etisalat Lanka, could merge with the fourth-largest, Airtel Lanka. The credit profiles for SLT and Dialog Axiata PLC (Dialog; AAA(lka)/Stable) will remain stable; ratings headroom will remain moderate despite a decline in profitability and continued large capex requirements. Fitch Ratings expects SLT’s and Dialog’s fund flow from operations (FFO)-adjusted net leverage to deteriorate in 2015 to 1.3x and 2.0x, respectively (2014: 1.1x and 1.9x), as cash generated from operations will fall short of capex requirements, and they would require debt funding. However, leverage will remain at levels appropriate for their current ratings. Fitch may revise the outlook for Sri Lanka’s telecommunications sector to positive if industry consolidation results in improvement in profitability. The regulator’s introduction of a data tariff floor could also ease pressure on profitability. (DFT) Rupee forwards slightly weaker on importer dollar demand: The rupee forwards ended a tad weaker on Tuesday due to importer dollar demand, while moral suasion by the Central Bank prevented a fall in the spot currency, dealers said. Traders said the local currency was under pressure as imports continue to rise in a stable exchange rate regime. The spot currency ended flat at 130.90/131.00 per dollar. Dealers said banks were reluctant to trade the spot below 130.90 due to moral suasion by the Central Bank. “The importer (dollar) demand was there,” a dealer said on condition of anonymity. “The spot was not trading below 130.90 and the spot next below 131.00 fearing repercussions.” An official at the Central Bank’s International Operations Department said there was not much of trade and moral suasion on Tuesday. “We have nothing to say now. We don’t see much of trades,” said the official on condition of anonymity. The market expects the local currency to remain weak due to rising seasonal imports at least through November and only start to inch up in December on remittances, dealers said. (DFT) Commercial Bank reduces interest rate on credit cards: The Commercial Bank of Ceylon has announced a reduction in the interest rate applicable on all credit cards issued by the bank, effective from 5 November. The interest rate on outstanding balances on Platinum, Gold, Silver and Classic cards has been reduced from 24%to 22%per annum or 1.83% per month, the bank said. This reduction is in line with the trend of reducing lending rates, is timely in the context of the approaching festive season, and comes in addition to the many promotional benefits, discount packages and zero percent instalment benefit schemes available on Commercial Bank Credit Cards, the bank added. (DFT) 12 November 2014 Global Business News Economic situation has improved due to Govt’s policies: Nawaz Sharif: Prime Minister Muhammad Nawaz Sharif has invited German businessmen to invest in Pakistan’s energy and infrastructure sectors, offering lucrative incentives. Addressing a Pak-German Business Forum in Berlin, he said Pakistan is a natural hub of investment in the region. The Prime Minister said investment by small and medium entrepreneurs from Germany would also be beneficial for both the countries. He said: “Our tax collection has increased by 16%, inflationary pressures have softened, and large scale manufacturing is showing sustained improvement. Credit to private sector has increased manifold, as the Government has reduced its own borrowing significantly.” (DFT) Morning Notes 12 November 2014 Local Business News Dish TV receives DTH license in Sri Lanka: Dish T V Lanka (Private) Limited, the Sri Lankan subsidiary of the Direct to Home television services operator Dish TV has received a DTH license from the Government of Sri Lanka to launch operations in the country, Dish TV hasinformed BSE. Dish TV had earlier partnered with Sri Lanka-based Satnet to form a joint venture called Dish TV Lanka in April 2012. Dish TV owns 70% stake in the joint venture while Satnet owns the remaining 30% stake. The company had also received board approval to invest up to Rs 100 crore in the joint venture in February this year. Earlier this year, Dish TV had mentioned (pdf) that it had received DTH license from Telecom Regulatory Commission of Sri Lanka and was awaiting a license from Sri Lanka’s Media Ministry, following which the company will commercially launch its operations in the country. Dish TV had also launchedtest signals in Sri Lanka in May this year. (ADB) Secondary market bond yields increase marginally ahead of bill auction: Secondary market bond yields, consisting predominantly of the liquid maturity 1 July 2022, increased once again, with yields hitting an intraday high of 7.60% as against 7.54% which prevailed during the morning session. However, buying interest at these levels resulted in the upward momentum being curtailed to close the day at yields between 7.60/65%. Furthermore, maturities composed of 1 January 2024 and 1 July 2019 were quoted at yields ranging from 7.75/85 % and 7.00/05%. In money markets, overnight call money and repo rates averaged at 5.95% and 5.29% respectively as surplus liquidity stood at Rs. 8.02 b. The Open Market Operations department of the Central Bank was seen mopping up an amount of Rs. 6 b by way of a Repo auction on a three-day basis at a weighted average of 5.78% while a further amount of Rs. 2.02 b was seen been deposited at the Standing Deposit Facility. (DFT) HDFC Bank signs MOU with Sanasa Insurance for agro livestock insurance: HDFC Bank of Sri Lanka, the premier housing finance bank in the country, signed a Memorandum of Understanding with the leading agro livestock insurance provider in the market, Sanasa Insurance Company Limited (SICL) relating to Agro Livestock Insurance recently. The bank has changed its traditional business model in the year 2013 and embarked in new product diversifications towards development banking products and among them ‘HDFC Dirimaga’ Microfinance loan scheme and newly introduced Commercial Scale Dairy Development Loan Scheme (CSDDLS) are more popular among the rural and semi urban areas. The bank expects that the credit facilities at a concessionary rate of interest under CSDDLS will encourage improving productivity of the dairy farmers to convert existing subsistence level to the commercial level. Under this scheme, the maximum loan facility available is Rs. 25 million. (DFT) The information contained in this report, researched and compiled for purposes of information do not purport to be complete description of the subject matter referred to herein. In preparing this report care has been exercised to collect information from sources which we believe to be reliable although we do not guarantee the accuracy and completeness thereof. Lanka Securities (Pvt) Ltd. and/or its affiliates and/or its directors, officers and employees shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or in directly in any manner whatsoever. Lanka Securities Research
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