Tag Archives: Investment in Sri Lanka

INSIDE SRI LANKA: First Capital Sees Volatile Rates During 1H

Wire: Bloomberg First Word (BFW) Date: Jan 10 2017 8:40:25

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By Anusha Ondaatjie
(Bloomberg) — “Dangerously low” foreign reserves around $6b, foreign debt payments of over $4.7b, along with maturing rupee bonds and Sri Lanka Development Bonds may lead to volatile rate conditions, says Dimantha Mathew, head of research at First Capital.

* LKR477b of rupee bond mature during Jan–Jul 2017, $1.8b Sri Lanka Development Bond mature from Jan-Aug 2017, he wrote in e-mail Monday
* Rupee little changed at 149.90/dollar; USD/LKR’s MACD, signal line both above zero
* Yield on 11% govt bonds due August 2021 rose 1bp to 12.1% Jan. 9, data compiled by Bloomberg show, after government sold LKR55b of treasury bonds
* Central bank plans to auction LKR24b of treasury bills Tuesday
To contact the reporter on this story:
Anusha Ondaatjie in Colombo at anushao@bloomberg.net
To contact the editor responsible for this story:
Tan Hwee Ann at hatan@bloomberg.net

 

Sri Lankan shares end flat as policy uncertainty continues to weigh

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

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Sri Lankan shares were little changed on Monday after hitting a nine-month low last week as uncertainty over the government’s monetary and budget policies continued to weigh on the market.

But foreign investors were net buyers on Monday for a second session after five straight sessions of net-selling through Thursday.

They bought a net 152.7 million rupees ($1.02 million) worth of equities on Monday, the highest since Dec. 8. However, foreign investors have been net sellers to the tune of 817.03 million rupees so far this year.

The Colombo stock index ended 0.04 percent up at 6,155.52, slightly above the lowest since April hit on Thursday. Last week the index fell 0.64 percent and was down 9.7 percent for 2016, its second straight annual decline.   The day’s turnover was at 843.6 million rupees.

“Net foreign inflow is a good sign and it will help regain the lost confidence,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

Yields on treasury bill auctions rose 5-6 basis points at a weekly auction on Wednesday, a day after the central bank governor signalled reduced intervention to defend the currency.

Shares in Hemas Holdings Plc rose 1.9 percent, while Teejay Lanka Plc gained 3.69 percent and Ceylon Tobacco Company Plc added 0.33 percent.

($1 = 149.6000 Sri Lankan rupees)

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

Sri Lankan shares rise on bargain hunting, snap 5-day losing streak

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

Sri Lankan shares edged higher on Friday, ending a five-day losing streak and recovering from a nine-month low hit in the prior session as investors picked up battered down shares.

People walk past an electronic board displaying various Asian countries' stock price index and world major index outside a brokerage in Tokyo, Japan, August 21, 2015.  REUTERS/Issei Kato/File Photo

Foreign investors turned net buyers on Friday after offloading shares for five straight sessions.

The bourse hit a nine-month low on Thursday as foreign investors sold close to one billion rupees worth of stocks in the first four sessions of 2017 amid worries over a weakening rupee and rising interest rates hurt sentiment.

Foreign investors bought a net 26.95 million rupees ($180,026.72) worth of equities on Friday. They have been net sellers to the tune of 969.69 million rupees so far this year.

The Colombo stock index ended 0.09 percent up at 6,153.02, edging up from its lowest close since April 4 hit on Thursday. It fell 0.64 percent for the week and was down 9.7 percent in 2016, its second straight annual decline.

The index has been trading in the oversold territory since Tuesday with the 14-day relative strength index breaking below 30, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.  The day’s turnover was at 273.7 million rupees.

“Market edged up in thin volumes despite continued selling pressure,” said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Analysts said interest rate volatility and policy uncertainties are also hurting investor sentiment.

Yields on treasury bill auctions rose 5-6 basis points at a weekly auction on Wednesday, a day after the central bank governor signalled less intervention to defend the currency as market has braced for a depreciation.

Shares in Ceylon Tobacco Company Plc rose 1.17 percent while Colombo Cold Stores Plc rose 1.26 percent and Dialog Axiata Plc rose 0.95 percent.

Shares in biggest listed lender Commercial Bank of Ceylon Plc rose 0.42 percent while Conglomerate John Keells ended 0.43 percent up.  Talks of a high net worth foreign investor exiting from Keells has triggered panic selling, dealers said.

($1 = 149.7000 Sri Lankan rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

INSIDE SRI LANKA: First Capital Sees LKR Weakening Through 2017

Wire: Bloomberg First Word (BFW) Date: Dec 28 2016 9:32:12

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By Anusha Ondaatjie
(Bloomberg) — Reduced political, economic uncertainty and an external environment supportive of inflows are factors required to amend expected weakness, Dimantha Mathew, head of research at First Capital, writes in report.

* Says foreign reserves dangerously low
* Rupee down 0.1% to 149.65/dollar; USD/LKR’s MACD above zero and signal line
* Yield on 10.75% govt bonds due March 2021 fell 7bps to 12.08% on Dec. 27, data compiled by Bloomberg show, ahead of Wednesday’s govt sale of 11.5b rupees of treasury bills
* Sri Lankan interest rates to be volatile “within 150bps-200bps strip” over Jan.-July 2017: First Capital
* Recommends investing in shorter tenors of debt to counter risk in the system and prevent capital erosion

To contact the reporter on this story:
Anusha Ondaatjie in Colombo at anushao@bloomberg.net
To contact the editors responsible for this story:
Tan Hwee Ann at hatan@bloomberg.net Shikhar Balwani

TOKYO CEMENT COMPANY – Earnings Update “Defining the Indistinctive Leadership” – STRONG BUY

FIRST CAPITAL RESEARCH – COMPANY REPORT

Earnings Performance –

Earnings up by 118% YoY: TKYO’s earnings for the 2QFY17 was recorded at LKR 1.1Bn oppose to LKR 490Mn recorded in comparative quarter in FY16 registering a 118%YoY. On a QoQ basis the earnings saw a 66% growth compared to LKR 644Mn recorded in 1QFY17. During the 1HFY17, TKYO generated an earnings of LKR 1.7Bn as opposed to LKR 956Mn recorded in 1HFY16 registering an impressive YoY growth of 79%.

Read Full Report

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Revenue generation grows by 24%YoY: Resultant to the boom in the construction sector coupled with the company’s investment into capacity enhancement to reach total plant capacity to 2.8Mn MT that’s coming into effect towards the latter part of the year 2016, topline was recorded at LKR 9.8Bn during the 2QFY17 with a 24%YoY growth in comparison to LKR 8Bn recorded in 2QFY16 while on a QoQ basis the same was recorded a growth of 30% as opposed to LKR 7.6Bn recorded in 1QFY17. During the 1HFY17 the topline was recorded at LKR 17.4Bn with a YoY growth of LKR 14.9Bn during 1HFY16. LKR 60.0 increase in Maximum Retail Price (MRP) to LKR 930.0 per 50kg of cement bag towards the latter part of the 1H2016 also impacted favourably on the revenue.

Future Outlook

Boom in construction sector led by Government led Infrastructure projects: With the recommencement of the construction of the Government led Infrastructure projects coupled with the Port City project and the initiation of the Western Region Megapolis development project undertaken by the government are likely to lead to a boom in the overall construction sector which is expected to boost the volumes of TKYO which in turn would increase the topline. TKYO revenue is expected to reach c.LKR 34.8Bn in FY17E registering a 15%YoY growth while the same for FY18E expected to reach c.LKR 40.8Bn.

Capital investments to increase volume and improve margins: Investment of USD 50Mn in construction of a new cement manufacturing plant in Trincomalee is expected to add 1.0Mn metric ton enhancing the overall capacity to 2.8Mn metric ton per annum. This would enable TKYO to increase volume thus benefit from the boom created in the industry. Further, newly built 8MW biomass plant would enable to meet the energy requirement of the increase capacity. These investments are expected to increase cost efficiencies and improve the GP margin to c.24% and c.25% in FY17E and FY18E respectively. TKYO invested USD 2Mn investment in a Joint Venture to manufacture 300,000 MT of sand per annum locally which would bring down the cost further.

Recommendation

Total return of 32% for both TKYO.N and TKYO.X: FC recommends a STRONG BUY on TKYO.N with a fair value of LKR 86.0 [LKR 87.3 on DCF based and LKR 85.0 on PER based] providing a total return of 32% and STRONG BUY on TKYO.X with a fair value of LKR 69.0 providing a total return of 32% for FY18E. For FY17E we expect a fair value of LKR 78.0 on TKYO.N while LKR 62.0 for TKYO.X.

First Capital Holdings PLC reports Rs. 406Mn consolidated PAT for the first half of 2016/2017

First Capital Holdings PLC, reported significant growth in the first half of 2016/17 recording a consolidated turnover of Rs. 1.78Bn.  The investment bank’s consolidated profit after tax increased to Rs. 406Mn compared to Rs. 4Mn in the corresponding period of the previous year.

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The group’s primary dealer arm, First Capital Treasuries PLC, was the leading contributor towards the financial results for the period under review.  The company reported a profit after tax of Rs. 371Mn for the 1st half of 2016/17 (2015/16 – loss after tax of Rs. 97Mn).

First Capital Treasuries, is the pioneer non-bank Primary Dealer appointed by Central Bank and is listed on the Colombo Stock Exchange.  Further, the company’s credit rating was reaffirmed by ICRA Lanka at “A-” with a stable outlook in September 2016.

The Capital Markets Advisory of the Group, First Capital Limited, which specialises in structuring and placement of corporate debt securities, successfully mobilised Rs. 6.8bn through listed debentures, asset backed securitisations and other corporate debt securities.

Research driven investment recommendations published by First Capital Equities (Private) Limited  the Group’s stockbroker business have collectively outperformed the broad market index ASPI and the liquid counter index S&P SL20 in the past 2 years.

“We are pleased with our performance to date and expect to navigate the unsettled market conditions with caution during the second half of the financial year.  The Group will continue to build on the current growth momentum across all its subsidiary businesses while expanding on research and equity advisory services” said Dilshan Wirasekara, CEO of First Capital Holdings PLC.

Company information –

First Capital Holdings PLC (First Capital Group) is an investment bank comprising of First Capital Treasuries PLC, First Capital Limited, First Capital Asset Management Limited, First Capital Equities (Private) Limited, First Capital Markets Limited and First Capital Trustee Services (Private) Limited.  The company’s Board of Directors comprises of Ms. Manjula Mathews – Executive Chairperson, Dinesh Schaffter – Managing Director, Eardley Perera, Ms. Minette Perera, Nishan Fernando and Chandana de Silva as Independent Directors.

The company is listed on the Colombo Stock Exchange and is rated “A-” with a stable outlook by ICRA Lanka.

First Capital Holdings posts healthy profits

Colombo, 13 May, First Capital Holdings PLC has posted a healthy profit after tax for the financial year 2010/2011 of Rs. 990,260,000 compared to Rs. 682,244,000 for the previous financial year. Profits for the quarter ended 31 March 2011 were Rs. 81,299,000 an improvement on Rs. 41,264,000 for the same period the previous year. Earnings per share were Rs. 10.03 whilst Net Assets Per Share stood at Rs. 15.04.

“In the last couple of years, we have seen exceptional profit growth at First Capital,” a Company official said. “In 2010/11 although conditions were less conducive than those in the previous year in which a highly favourable bond trading environment resulted in exceptional profits by the Group’s primary dealer arm, the Company was able to sustain its momentum helped by strong performance in all areas.”

He went on to explain that reported profits were boosted by a one-off gain from the sale of an associate company – Kotmale Holdings PLC amounting to Rs. 180 million and a decision in the company’s favour by the Inland Revenue Board of Review resulting in a tax reversal of Rs. 444 million. He affirmed that First Capital was gearing up for measured and steady growth.

“First Capital Wealth Fund – a Unit Trust dedicated to investment in fixed income securities was launched and the company was granted a license to function as a Dealer on the Debt Exchange (DEX). Promotional campaigns and initiatives to further broad-base the services of the Group are on the cards,” he added.

The First Capital Group boasts of a rich pedigree in the Sri Lankan financial services arena with its lineage tracing 28 years. Having obtained its Primary Dealership license in 1992, when the Central Bank formed the Primary Dealership system, First Capital Treasuries has steadily grown to become a strong and resilient front runner with a loyal and widening customer base. With pioneer status in this area, aided by an unblemished reputation, First Capital Treasuries has developed strong bonds with its principal business partners which are commercial banks, other primary dealers and investors both big and small.

First Capital Asset Management Limited under license from the Securities and Exchange Commission, functions as an ‘Investment Manager’ and has mobilised a substantial quantum of funds under management on discretionary mandates. Upon being approved by the SEC to manage Unit Trusts, the company launched First Capital Wealth Fund in October 2010.

First Capital Markets is an SEC approved Margin lender for listed equity. It has, over the years, built up a strong client base. With the recent surge in the share market, this area has featured as a prominent contributor in the performance of the group.

First Capital Limited is actively involved in structuring and underwriting both short term and long term corporate paper and in generating placements on these and other secondary market debt instruments. The company has positioned itself as a debt market specialist by creating a ready marketplace for those seeking investments in debt securities and those vying to borrow from the debt capital markets.