Sri Lanka Newspapers Friday 24/02/2012

Bourse continues to rise on back of heavy trades in LB & Hayleys
* Share swap between Dhammika companies

The upward momentum on the Colombo bourse continued yesterday with both indices rising sharply on a turnover of Rs.3.7 billion, up from the previous day’s Rs.1.52 billion, largely on account of heavy trades in LB Finance and Hayleys.

Brokers said that there was a share swap between Hayleys and LB Finance where Mr. Dhammika Perera has substantial stakes with Royal Ceramics, also a Perera controlled company, selling 7% of Hayleys to Perera and using the cash generated to buy into LB Finance from Perera.

A substantial volume of LB Finance was crossed at a price of Rs.150 while the big blocks of Hayleys changed hands at Rs.380 also by way of crossings.

Well informed sources said that Perera paid the Rs. 380 mandatory offer price for the Hayleys stake while Royal Ceramics paid Rs. 150 for LB Finance.

The All Share Price Index was up 86.63 points (1.60%) and Milanka by 70.44 points (1.49%) with 154 gainers leaving 63 losers trailing.

LB Finance closed 20 cents down at Rs.145 with nearly 7.4 million shares traded between Rs.144 and Rs.151 generating a turnover of Rs.1.1 billion while Hayleys closed flat at Rs.380 on over 2.8 million shares done between Rs.379.80 and Rs.380 contributing Rs.1.07 billion to the day’s turnover.

Analysts noted that the transaction value of both counters yesterday were approximately Rs.1 billion each.

Apart from LB Finance and Hayleys, Aitken Spence attracted interest with nearly 4.5 million shares done between Rs.115 and Rs.115.80 closing 50 cents down at Rs.115.

"There appeared to be foreign interest in the share," a broker said.

JKH continued its upward trend closing Rs.3.30 up at Rs.178 with over 0.4 million shares done between Rs.173 and Rs.178.

Other shares that showed both volume and price gain included ERI up 10 cents to Rs.22.20 on over 3.1 million shares, Colombo Fort Land up Rs.4.60 to Rs.40.10 on over 1.2 million shares and Vallibel One up 50 cents to Rs.21.30 on over 1.9 million shares.,

Royal Ceramics was down 50 cents to Rs.154.50 on over 0.2 million shares done between Rs.124.50 and Rs.129.

Pegasus Hotels announced the dates for its forthcoming rights issue of one new share for every nine existing shares priced at Rs.36.50 with an EGM scheduled for March 20 to obtain shareholder approval. The share will trade XR from March 21 and provisional letters will be issued on March 26.

Textured Jersey announced a dividend of 12 cents per share for 2011/12, XD from March 5 and with payment on March 15.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=45925

* Liquidity tight; banks borrow Rs. 900mn as last resort

Without the Central Bank to defend it, the rupee fell 0.6 percent against the dollar yesterday (Feb. 23) amidst heavy import demand, currency dealers said.

The rupee commenced the day trading at Rs. 118.80/90 and soon came under pressure with importers demanding dollars.

"The demand was purely for trade and oil bills have not yet come to the market. The rupee closed at Rs. 119.45/60 against the dollar," a dealer said.

The rupee has been fluctuating both ways against the dollar since the Central Bank announced the exchange rate would be floated from February 03.

Since then, the rupee depreciated steadily from 113.90/US$ to above Rs. 120/US$, but appreciated to the Rs. 118/US$ range, where currency dealers said the Central Bank was using moral suasion to keep the exchange rate stable. The rupee was seen depreciating again over the past few days.

The Central Bank is no longer intervening in the foreign exchange market to keep the exchange rate stable. It has not pumped in rupee liquidity either to help banks with liquidity constraints.

Since the end of July 2011, the Central Bank had sold more than US$ 2.5 billion to keep the exchange rate stable which significantly depleted the reserves. This also drained rupee liquidity in the banking system and since August 2011 the bank had printed more than Rs. 300 billion in order to keep interest rates low.

Yesterday, commercial banks borrowed Rs. 996 million from the Central Bank as a last resort with rupee liquidity still remaining tight. The previous day, Rs. 800 million was borrowed. These borrowings are done through the reverse repo window at 9 percent.

Overnight interbank interest rates inched up further yesterday after easing off the preceding few days.

Call market rates for interbank borrowing not backed by security inched up to 9.50 percent yesterday from 9.48 percent the previous day. Market repo rates for borrowing backed by Treasury bills inched up to 8.60 percent from 8.58 percent. The overnight Sri Lanka Inter Bank Offered Rate stayed flat at 9.55 percent.

The excess liquidity position of the banking system, dominated by foreign banks with local banks holding short positions, declined from Rs. 10.87 billion the previous day to Rs. 8.19 billion.

Earlier this month, the Central Bank was forced to acknowledge the existence of a balance of payments crisis more than six months after leading economists had sounded the alarm. The stubborn denial of reality has also forced the government to impose sharp increased to domestic fuel prices and electricity tariffs. These adjustments were necessary and long overdue, but by persisting with price, interest rates and exchange rate distortions for far too long has meant that the necessary adjustments would be more painful to the people, economists say.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=45924

* Seeks global partners for future expansion

The board of directors of Capital Development and Investment Company (CDIC) approved a new business plan to position itself as a diversified financial services conglomerate with ultimate exposure to investment banking (both regionally and in Sri Lanka), stockbroking, wealth management, private equity investments and insurance sectors, the company said in a statement yesterday.

"With the aforementioned diversification, CDIC will be placed in a unique position to attract investors who are seeking exposure to finance sector both locally and regionally. According to the new business plan, CDIC will acquire 100 percent ownership of NDB Investment Bank and NDB Stockbrokers from National Development Bank PLC (NDB) which will complement its existing strategic investments in NDB Aviva Wealth Management and Aviva NDB Insurance PLC. The above acquisitions would be made subject to regulatory approvals. CDIC plans to float a private equity firm and also explore strategic investment opportunities in the region in the finance/banking sector. CDIC would seek collaborations with global and regional partners to implement the above plan. CDIC is 99.6% owned by NDB.

"In addition, the board appointed Ashok Pathirage and Vajira Kulatilaka as the Chairman and Chief Executive Officer of the Company respectively. Pathirage is the Deputy Chairman of NDB and is one of the leading entrepreneurs in the country. He is the chairman of Softlogic Group, Uniwalkers, Softlogic Finance and Chairman/Managing Director of Asiri Group of Hospitals. Kulatilaka is presently the CEO of the NDB Investment Banking Cluster and was instrumental in developing the investment banking business of the NDB Group. Kulatilaka is a director of the Colombo Stock Exchange and several companies of the NDB Group."
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=45927

Access Engineering Ltd (AEL) is making an initial public offering of 20 million ordinary voting shares at Rs. 25 each to raise Rs. 500 million.

Subscription lists for the IPO would open on March 06, 2012 and close on March 15 or when the offer is oversubscribed, which ever comes first.

The shares would be listed on Diri Savi Board of the Colombo Stock Exchange and subsequently transferred to the main board.

AEL’s prospectus highlighted the purpose of the IPO as follows: "AEL has undertaken the design and construction of five 12 storeyed Buildings (G+11 floors) at Henamulla, Colombo 15 with a total project value of Rs. 2,950 million. The project which is a design and build lump sum contract, is to be financed by AEL as per the contractual agreement signed with Urban Development Authority (UDA).

"On October 17, 2011, AEL received a sum amounting to approximately Rs. 435 million as a mobilisation advance from the UDA in order to commence operations. The balance amounting to approximately Rs. 2,515 million (backed by bank guarantees) will be received by AEL from the client, UDA only after the expiration of six months from the date of handing over the project upon the estimated completion in 2014. The balance funds required to develop and complete the project will be part financed by AEL using the proceeds of this Issue amounting to Rs. 500 million and the excess funds remaining from the share issue carried out on June 9, 2011 amounting to Rs. 687 million. The remaining investment required to complete the project subsequent to the above funding will be financed by AEL using bank borrowings and internally generated funds as and when required.

"The company expects to utilise the IPO proceeds during the Financial Year (FY) 2012/13. The IPO would facilitate AEL to obtain a listing on the CSE as morefully described in Section 5.6 and to further broad-base the public ownership of the Company and strengthen its identity through increased visibility and brand image amongst the public."

The AEL group has seen a steady increase in net profits since 2008.

After tax profit amounted to Rs. 327 million as at March 31, 2008; Rs. 868 million in 2009; profits dipped slightly to Rs. 850 million in 2009 and increased considerably to Rs. 1,167 million in 2011.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=45928

Mackwoods Energy Ltd (MEL), a member of the Mackwoods Group, received approval to list on the Main Board for their Initial Public Offer (IPO) with an offer for subscription of 25 million ordinary shares at Rs.14 each.

The official opening of the IPO is scheduled for 22nd March and the prospectus would be delivered to Member Firms/Trading Members of the CSE on 8th March 2012. Financial Advisor and Managers to the issue is the NDB Investment Bank Ltd, and Registrars to the issue is SSP Corporate Services (Pvt) Ltd.

Mackwoods Group, having commenced its operations in the energy solutions business in 1996, and catering to the demands of a variety of sectors of the economy, thereafter, in 2008, brought its activities under a common identity through MEL, which previously functioned as Mackwoods Engineering (Pvt) Limited.

This was aimed at harnessing, at an optimum level, the growing opportunities in the area of power and energy, and for greater specialisation in the sector.

The advent of peace in 2009 accompanied by the strong growth in the economy and the emerging potential presented by the far reaching national infrastructure development programme, particularly in the North and East regions of the country, led to MEL repositioning itself as a total energy solutions provider of an extensive array of products and services including the development of hydropower and renewable energy projects, to enable the Company to be a significant player in the sector, leading to focused growth and expansion of the business.
http://www.dailynews.lk/2012/02/24/bus05.asp

RELATED party transactions involving top investor Dhammika Perera-controlled Hayleys, Royal Ceramics and LB Finance executed by his friend and Director deleted Perera bolstered the Colombo Bourse yesterday with year to date negative return now trimmed to single digit.
In deals worth over Rs. 2 billion accounting for 60% of the day’s turnover, Dhammika bought under his personal name 2.8 million shares in Hayleys (3.7% stake) held by Royal Ceramics for Rs. 1 billion whilst he sold his personal 10% stake in LB Finance to Royal Ceramics. Hayleys share was done at Rs. 380, the same price as the recent most mandatory offer whilst LB Finance stake amounting to slightly over 7 million shares was done at Rs. 150 each. The transactions were part of realigning the respective investment portfolios. Dhammika has been picking up Hayleys quantities from the market apart from some of those held by RCL and its Managing Director as well as Hayleys Director deleted Perera.
Dhammika's investment holding firm Vallibel One owns controllin (51%) stakes in both RCL and LB Finance. Despite yesterday’s sale of 10% stake in LB to RCL, Dhammika continues to hold a further 10%. RCL's stake in LB Finance, the fastest growing finance company, is around 15%.These deals apart the rest of the market remained robust with continued interest from institutional and retailer players.
The ASI gained by over 1% thereby reducing its year to date negative return to single digit level of 9%, substantially lower in comparison to over 17% a week ago. The market capitalisation too made a welcome return to Rs. 2 trillion mark after having sunk to Rs. 1.8 trillion mark on February 14.
Aitken Spence also emerged strong as the counter also recorded 10 crossings carrying a total of 4.3 million shares (generating a turnover of Rs. 517 million) being dealt at a negotiated price of Rs. 115 per share. Meanwhile, interest also continued in John Keells Holdings as it advanced by 1.9% to close at Rs. 177.2.
Foreign investors were net buyers of shares worth Rs. 530 million, extending the net foreign inflow to Rs. 2.81 billion so far this year.
Apart from blue chips, investors’ retail chase continued in Environmental Resource Investments and its Warrants, Blue Diamonds [non-voting] and Colombo Land and Developments. Arrenga Capital said amidst some struggle during very early trading, market managed to remain in the green for the sixth consecutive session, denoting a massive 498 points gain over the past six trading days.
Gains were recorded across the board as the days gainers’ outperformed losers’ by 91. Following the rally benchmark index advanced as much as 115.2 points at its high point of 5,536.2 points.
Overall participation levels of the bourse were energised by few heavy deals that took place in selected blue chips as the day saw a total of 88.2 million shares being traded, whilst the turnover crossed Rs. 3.7 billion -highest recorded since 01.12.11.
NDB Stockbrokers said foreign interest in fundamentally sound counters remained with net foreign buying continuing.
Diversified sector was the highest contributor to the market turnover (due to Aitken Spence, John Keells Holdings and Hayleys) and the sector index gained by 1.37%

yes casino dammika and deleted perera in action