Tag Archives: First Capital Holdings PLC

Sri Lankan stocks hit near 2-wk closing high

DIMANTHA MATHEW, HEAD OF RESEARCH AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS

DECEMBER 27, 2017

COLOMBO, Dec 26 (Reuters) – Sri Lankan shares touched a near two-week closing high on Tuesday, as investors picked up banking and diversified stocks, with muted trading as investors went on holiday in the Christmas week.

Investors were also waiting for direction on interest rates when the central bank unveils its monetary policy later this week, analysts said.

The Colombo Stock Index ended 0.42 percent firmer at 6,350.30, its highest since Dec. 15.

“The overall uptrend is due to some window-dressing in some of the blue chip counters,” said Dimantha Mathew, head of research at First Capital Holdings.

“Overall investor interest is very low and it’s a very weak market with most of the broker community also on holiday.”

Shares in conglomerate John Keells Holdings Plc gained 1.1 percent, while Sri Lanka Telecom Plc ended 4.1 percent higher and Hatton National Bank Plc rose 0.2 percent.

Turnover stood at 153.8 million rupees ($1.01 million), below this year’s daily average of 923.2 million rupees.

Foreign investors net sold 4.1 million rupees worth of shares on Tuesday, but they have net bought 18.4 billion rupees worth equities so far this year.

The currency and stock markets were closed on Monday for Christmas. ($1 = 152.6000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

 

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management, retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

Listed firms earnings dip 2% to Rs. 60 b in Sept.

Published on Daily FT on 18 December 2017

Earnings of listed companies in the September quarter have declined marginally by 2% to Rs. 60.1 billion largely owing to a weaker performance by diversified financials and energy sector firms.

 

Analysing interim financials reported by 275 companies, First Capital Research revealed that September quarter earnings marginally dipped 2% YoY to Rs. 60.1 billion (Sep 2016 – Rs. 61.6 billion) driven by the adverse performance of the Energy (-108%YoY), Diversified Financials (-18%YoY) and Consumer Services (-54%YoY) sectors.

“The dip in earnings diminished the effect of positive earnings growth in the Food, Beverage and Tobacco (+9%YoY) and Banks (+6%YoY) sectors and one-off gains in the Food, Staples and Retailing (+178%YoY) sector,” First Capital said. It said the primary source of decline in September earnings was the Energy Sector (-108%YoY) which saw a loss of Rs. 137 million (September 2016 = Rs. 1,731 million), driven by LIOC (-112%YoY) and LGL (-85%YoY) attributable to higher oils prices and LP Gas prices that drove costs while the selling price remained fixed.

The Diversified Financials sector (-18%YoY) also almost equally contributed to an earnings dip where profits declined to Rs. 8.3 billion (September 2016 = Rs. 10.1 billion) driven by LOLC (-23%YoY).

Most finance companies in the sector saw higher net impairment losses as the effects of floods spilled over to the September quarter.

Consumer Services sector (-54%YoY) earnings dipped to Rs. 744 million (Sep 2016 = Rs. 1,613 million) driven by KHL (-71%YoY) which saw several hotels closing for refurbishment.

The negative effect was partially diluted by the positive earnings growth in the Food, Beverage and Tobacco sector (+9%YoY) to Rs. 12.5 billion (September 2016 – Rs. 11.5 billion) driven by BUKI (+788%YoY) and CARS (+2,419%YoY) which saw a dramatic increase in its gross margins while also being supported by plantation companies amidst higher tea prices.

The Banks sector (+6%YoY) reported earnings of Rs. 15.5 billion (Sep 2016 = Rs. 14.6 billion) driven by COMB (+11%YoY) which saw a healthy growth in net interest income.

However, First Capital Research said the largest positive effect on earnings came from the Food and Staples Retailing sector (+178%YoY) which recorded earnings of Rs. 2.7 billion (September 2016 = Rs. 960 million) driven by CARG (+189%YoY) which included a one-off non-operating gain of Rs. 1,012 million from the sale of its properties in Colombo 2. Having adjusted this one-off gain, the sector’s earnings dipped 33%YoY to Rs. 645 million while the quarter’s overall earnings dipped 6% to Rs. 58 billion.

First Capital Fixed Income Recommendation – July 2017

  • Economic Health Score

  • Recommendation

  • Recap of Dec 2016 Economic Wrap

Read the full report – First Capital Fixed Income Recommendation July 2017

 

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka proving services to invest in Sri Lanka through fixed income securities such as investments in government securities– treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

Sri Lankan shares slip from 17-mth high ahead of cbank rate review

FIRST CAPITAL’S JALIYA WIJERATNE SPEAKS TO REUTERS

Thu Jun 22, 2017

Sri Lankan shares fell on Thursday in low turnover, retreating from a 17-month closing high, as investors awaited the central bank’s monetary policy review.

The central bank is expected to keep its key policy rates steady at more than three-year highs, a Reuters poll showed. The policy announcement is due on Friday at 0200 GMT.

Investors are worried of a possible rate hike, said Jaliya Wijeratne, CEO, First Capital Equities (Pvt) Ltd.

“Only a few counters traded today. Buyers want top blue chip John Keells Holdings, but sellers were not ready to sell at the price buyers wanted.”

Keells, outperforming the overall index, ended 0.7 percent firmer.

The Colombo stock index fell 0.3 percent to 6,714.73, slipping from its highest close since Jan. 7, 2016 hit in the previous session.

Turnover was 495.5 million rupees ($3.2 million), about half of this year’s daily average of 905.7 million rupees.

Foreign investors sold a net 14.6 million rupees ($95,362) worth of shares on Thursday, but they have been net buyers of 20.86 billion rupees of equities so far this year.

Shares of Ceylinco Insurance Plc lost 6.7 percent, while Hemas Holdings Plc ended 2.3 percent weaker, and BRAC Lanka Finance Plc fell 15.5 percent. ($1 = 153.1000 Sri Lankan rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Amrutha Gayathri)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory. 

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.<

Sri Lankan banks lead in March quarter profits

Jun 28, 2017 09:58 AM

ECONOMYNEXT – Sri Lanka’s banking sector remained the largest contributor to earnings of firms listed on the Colombo stock exchange in the March 2017 quarter, helped by interest rates spreads, First Capital Equities said in a research report.

Earnings were up by 7.1% in the quarter to Rs 65.5 billion from a year ago and 0.2% from the previous quarter, for 278 companies analysed by the brokerage, excluding a large one-off gain made by the LOLC group.

March quarter earnings grew 16.1% from a year ago to Rs 75.9 billion, including the one-off gain from LOLC amounting to about Rs 10.4 billion.

Earnings were dominated by healthy performance in the banks sector (+21%YoY) and diversified financial sector (+194%YoY) with higher margins and one-off gains from LOLC Group, the report said.

The interest rates spreads boosted the banking and diversified financials earnings, First Capital Equities said.

The banks sector made a profit of Rs 14.36 billion, up 21% from a year ago, and the diversified financial sector Rs 17.42 billion, up 194% from the year before, primarily led by expansion in margins and one-off gains from LOLC Group.

Big banks led by Sampath, whose earnings grew 30%, Commercial Bank of Ceylon, whose profits rose 17% and HNB with a 16% YoY growth in profit, jointly represented 70% of the sector earnings.

The Food Beverages & Tobacco Sector grew 28%YoY and Capital Goods Sector 42% YoY which was positively affected by healthy consumer spending, First Capital Equities said.

“Improved consumer demand, increased volumes and commodity price volatility led to a boost in profitability in Food, Beverage & Tobacco and Staple Food Sectors by 28% year-on-year,” First Capital Equities said.

“However, the earnings growth was partially offset by Telecommunication Sector, which fell 32% YoY, mainly owing to foreign exchange losses, and Real Estate Sector which dropped 59% YoY, mainly because of RIL reported a lower profit than the previous year when earnings were boosted by a fair value adjustment.

(COLOMBO, June 28, 2017)

Central Bank expected to keep key rates unchanged: First Capital

Author LBO
Posted on | Economy, Featured, Forex, Policy

June 21, 2017 (LBO) – The Central Bank of Sri Lanka is expected to keep key interest rates unchanged in its monthly monetary policy announcement on Friday, with slower first quarter growth and a deceleration in inflation contributing to the decision, First Capital Research said in a pre-policy research note.

GDP growth for the first quarter was slower than expected, growing 3.8 percent year-on-year, with the agriculture sector decreasing 3.2 percent year-on-year due to drought.

“We believe inflation will be under control over the next 2-3 months while there could be some upward pressure towards September and beyond with the floods in May 2017 affecting the supply in the current growing season. As a result there could be possible supply side shortages towards September and beyond.”

CCPI based headline inflation, decelerated on a YOY basis to 6.0% in May 2017 from 6.9% in April 2017, and CCPI based core inflation also decelerated to 5.2% in May 2017 from 6.8% in April 2017.

Sri Lanka’s forex reserves rose to USD 6.8Bn in May 2017 from USD 5.0Bn in April, helped by a 1.5 billion dollar sovereign bond sale, 450 million dollar syndicated loan and dollar purchases by the central bank.

“Foreign Reserves are now at comfortable levels,” the note said.

Commenting on private sector credit growth, FC Research expects that the growth in private credit to descend towards around 18% to 20% from the current level of over 20%.

“In spite of a high private sector credit figure in March 2017 we believe the usual credit slowness in the month of April will keep overall credit under check.”

During the last one-and half months the central bank also bought down its holding in Government Securities from LKR 300Bn to below LKR200Bn as at 19th June 2017.

First Capital Research said there was a 85 percent probability rates would remain unchanged, and a 15 percent probability of a 25 basis point rate hike.

The Press Release on Monetary Policy Review is expected on Friday, 23 June at 7.30 am.

 

POLL: Sri Lanka cbank seen keeping rates steady as growth slows

    * Thirteen out of 14 analysts predict steady rates
    * Full-year growth expected to slow on adverse weather
    * Tight fiscal, monetary policies also weigh on growth
    * Policy announcement due on Friday, June 23 at 0200 GMT

    COLOMBO, June 21 Sri Lanka's central bank is
expected to keep its key interest rates steady at more than
three-year highs at a policy meeting on Friday, a Reuters poll
showed, to boost faltering growth hit by adverse weather.
    Thirteen out of 14 economists surveyed predicted the central
bank would keep its standing deposit facility rate (SDFR) and
standing lending facility rate (SLFR) unchanged at 7.25 percent
and 8.75 percent, respectively.
    The lone outlier expected a 25-basis-point hike in both
rates.
    All 14 economists predicted the statutory reserve ratio
(SRR) to stay at 7.50 percent.
    "With the slower-than-expected first-quarter growth, the
central bank would keep the rates steady," said Dimantha Mathew,
head of research, First Capital Holdings PLC.
    "With improvement in the reserves, inflation under control,
and slowing private sector credit growth, they (the central
bank) might see the current conditions to be appropriate to hold
the rates steady."
    The $81 billion economy grew 3.8 percent in the quarter
ended March 2017 from a year earlier, slowing from the 5.3
percent growth in the previous quarter and marking its weakest
period since the second quarter last year.             
    The full-year growth is expected to be hit by extreme
weather, after the island nation faced its worst drought in 40
years in the first quarter and heavy rains resulting in floods
last month, the country's worst in 14 years.
    Sri Lanka's 2017 growth rate is likely to be significantly
lower than the official forecast, private economists have said.
            
    The central bank tightened monetary policy four times since
December 2015 through March this year to fend off pressure on
the fragile rupee and curb stubbornly high credit growth that
had pushed up inflation.
    Analysts said previous policy tightening cooled inflation
and private sector credit growth in the last two months. 
    Private sector credit grew 20.4 percent in March from a year
earlier, up from February's 21 percent. It has eased from a near
four-year high of 28.5 percent hit in July.
    Consumer prices rose 6.0 percent in May from a year earlier,
slowing from the previous month's 6.9 percent.               
    Policy tightening also dragged on the economy, which grew at
a slower 4.4 percent annual pace in 2016 compared with the 4.8
percent growth a year earlier. 
    The Sri Lankan rupee          fell 3.9 percent in 2016 and
has eased around 2.3 percent so far this year, pressured by
dollar demand from importers and withdrawal of foreign investors
from government securities in the first three months.
    The central bank has quit defending the rupee after it
missed an end-December reserve target set by the International
Monetary Fund for a $1.5 billion loan. 
    
Following are poll forecasts for rates on Friday: 
                    SDFR         SLFR        SRR
                  (in pct)    (in pct)     (in pct)    
Median              7.25         8.75       7.50
Average             7.27         8.77       7.50  
Minimum             7.25         8.75       7.50
Maximum             7.50         9.00       7.50   
Rates in May        7.25         8.75       7.50
No. of economists     14           14         14

 (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Pre-Policy Analysis – 20th June 2017

Investment-in-Sri-Lanka

By First Capital’s Dimantha Mathew & Atchuthan Srirangan

 

Read the full report here: Pre-Policy Analysis – 20th June 2017

 

 

Sri Lankan shares hit near 1-wk closing low; Keells down 3 pct

FIRST CAPITAL’S HEAD OF RESEARCH DIMANTHA MATHEW SPEAKS TO REUTERS

Mon Jun 19, 2017

Sri Lankan shares hit a near one-week closing low in tepid trade on Monday, as selling in diversified and banking shares offset foreign inflow into equities.

The Colombo stock index ended down 0.52 percent at 6,684.02, its weakest since June 14.

Foreign investors net bought 26.7 million rupees ($174,396) worth of shares, extending the year-to-date net foreign inflow to 20.74 billion rupees.

Turnover was 846.3 million rupees ($5.53 million), less than this year’s daily average of 899.4 million rupees.

“Market came down on selling in Keells,” said Dimantha Mathew, head of research, First Capital Holdings PLC.

Shares of conglomerate John Keells Holdings Plc fell 3.03 percent, while the country’s biggest listed lender, Commercial Bank of Ceylon Plc, ended 1.43 percent lower.

“Investors are (also) worried about growth numbers,” he said.

Sri Lanka’s economy grew 3.8 percent in the first quarter, slowing from the previous quarter’s 5.3 percent, the state-run Census and Statistics Department said last week.

($1 = 153.1000 Sri Lankan rupees) ($1 = 153.1000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory. 

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.<

Sri Lankan shares gain for 3rd day to hit near 4-wk closing high

FIRST CAPITAL’S ATCHUTHAN SRIRANGAN SPEAKS TO REUTERS

Fri Jun 16, 2017

Sri Lankan shares rose on Friday for the third straight session to hit a near four-week closing high as investors picked up blue chip stocks.

The Colombo stock index ended 0.36 percent higher at 6,718.83, its highest close since May 22, and recorded its first weekly gain in four.

Analysts said investor reaction to slower economic growth in the first quarter was mixed.

Sri Lanka’s economy grew 3.8 percent in the first quarter, slowing from the previous quarter’s 5.3 percent, the state-run Census and Statistics Department said on Thursday.

“The first-half growth will be affected by the drought and the floods, but we expect a pick up in the second half,” said Atchuthan Srirangan, a senior research analyst at First Capital Holdings PLC.

“But slower growth this year will cause a higher loan-to-GDP ratio, which is a concern.”

Turnover on Friday was 966.4 million rupees ($6.3 million), above this year’s daily average of 899.4 million rupees.

Foreign investors were net buyers of 63.3 million rupees worth of shares, extending the year-to-date net foreign inflow to 20.71 billion rupees.

Inflation could rise in the short term, especially due to crop damage and difficulties in distributing fresh-food produce and staple food items, analysts said, after the recent floods and landslides, caused by the worst torrential rains in 14 years.

Shares in Hemas Holdings Plc ended up 4.2 percent, while Ceylon Tobacco Company Plc rose 1.2 percent. ($1 = 152.9500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory. 

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.<