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September quarter earnings declined by 9.6 per cent – FC research

The earnings of Sri Lanka’s listed companies (264 listed companies) for the September quarter dipped by 9.6 per cent year-on-year (YoY) to Rs 45.8 billion, primarily due to sluggish performance in Insurance (-48 per cent YoY), Consumer Services (-495 per cent YoY), Capital Goods (-39 per cent YoY) and Food, Beverage and Tobacco (-12 per cent YoY) sectors, an equity research firm stated.

However, equity research firm First Capital Research stated that increases in earnings were witnessed in Material (108 per cent YoY), Consumer Durable & Apparel (13,600 per cent YoY) and Energy (646 per cent YoY) sectors, negating the negative performance in the above-mentioned sectors.

Lackluster performance was seen in the Insurance, Consumer Services and Food, Beverage and Tobacco sectors, mainly due to lower consumer spending stemming from subdued economic activities.

Insurance sector earnings recorded a substantial drop, mainly due to earnings declines in Softlogic Life Insurance PLC (AAIC) (-85 per cent YoY) from a deferred tax adjustment and Union Assurance PLC (UAL) (-91 per cent YoY) due to the increased transfer of insurance contract liabilities to the life fund.

Consumer Services sector earnings declined and posted a loss of Rs 1.67 billion relatively to a profit of Rs 0.4 billion in September 2018, as a result of the drop in tourist arrivals subsequent to the Easter Sunday attacks.
Food, Beverage and Tobacco sector earnings dipped by 12 per cent YoY to Rs 7.8 billion, led by BIL, MELS and tea plantation companies. BIL posted a loss of Rs 1.19 billion, compared to a loss of Rs 0.6 billion a year ago, due to higher finance and admin cost.

MELS earnings dropped by 58 per cent due to hefty taxes, while the cost of sales also surged against the last year same period. A profit dip witnessed across the tea plantation counters due to weaker tea prices further dragged down the Food, Beverage and Tobacco sector earnings.

The Material sector saw a profit growth of 108 per cent YoY to Rs 1.8 billion, driven by TKYO (573 per cent YoY). TKYO profits were boosted due to operational efficiencies and increase in maximum retail price. Consumer, Durable & Apparel sector saw impressive earnings growth of 13,600 per cent YoY with TJL, MGT and GREG posting earnings growth of 84 per cent, 83 per cent and 184 per cent, respectively.

TJL and MGT earnings growth was supported by efficiency improvements, strong order book and stable cotton prices. Energy sector posted a strong earnings growth of 646 per cent YoY in profits as a result of turnaround in LGL, which posted earnings of Rs 17.0 million relative to a Rs 305.0 million loss posted in September 2018 and improved performance in LIOC due to higher focus on bunkering, lubricant operations and export market.

Nisansala Kuruppumudali, Research Analyst at First Capital commenting on the bond and stock market performance – 19.12.2019

Nisansala Kuruppumudali, Research Analyst at First Capital commenting on the bond and stock market performance.

“In the bond market the secondary market yield curve remained almost unchanged with limited activities and witnessed ultra-thin volumes. In the equity market the bourse concluded the day in red persisting the negative sentiment for the second consecutive trading session, mainly dragged down by the price losses In CCS and SLTL. ”

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Quarterly earnings dip 9.6% to Rs. 45.8 b

  • First Capital Research says earnings see recovery relative to previous quarters 
  • Insurance, Consumer Services, Capital Goods, Food sectors worst hit 
  • Material, Consumer, Apparel and Energy do well

First Capital Research yesterday said September quarter earnings declined by 9.6% year-on-year (YoY) to Rs. 45.8 billion for 264 companies, but still showed better performance than previous quarters. 

September quarter earnings dipped by 9.6% YoY to Rs. 45.8 billion, primarily due to sluggish performance in Insurance (-48% YoY), Consumer Services (-495% YoY), Capital Goods (-39% YoY) and Food, Beverage and Tobacco (-12% YoY) sectors, a report released by First Capital Research said.  However, earnings upside was witnessed in Material (108% YoY), Consumer, Durable and Apparel (13600% YoY) and Energy (646% YoY) sectors negating the negative performance in the above-mentioned sectors.

“Lacklustre performance in Insurance, Consumer Services and Food, Beverage and Tobacco was mainly owing to the lower consumer spending stemmed from subdued economic activities.”

Insurance sector earnings recorded a substantial drop mainly due to earnings decline in AAIC (-85% YoY) from a deferred tax adjustment and UAL (-91% YoY) due to the increased transfer of insurance contract liabilities to the life fund.

Consumer Services sector earnings declined and posted a loss of Rs. 1.67 billion relatively to a profit of Rs 0.4 billion in September 2018 as a result of drop in tourist arrivals subsequent to the Easter Sunday attacks. Food, Beverage and Tobacco sector earnings dipped by 12% YoY to Rs. 7.8 billion led by BIL, MELS and tea plantation companies. 

BIL posted a loss of Rs. 1.19 billion compare to loss of Rs. 0.6 billion due to higher finance and admin cost. MELS earnings dropped by 58% due to hefty taxes while the cost of sales also surged against the last year the same period. Profit dip witnessed across the tea plantation counters due to weaker tea prices further dragged down the Food Beverage and Tobacco sector earnings.

Material sector saw a profit growth of 108% YoY to Rs. 1.8 billion driven by TKYO (573% YoY). TKYO profits were boosted due to operational efficiencies and increase in maximum retail price. Consumer, Durable and Apparel sector saw impressive earnings growth of 13600% YoY with TJL, MGT and GREG posting earnings growth of 84%, 83%, and 184% respectively. TJL and MGT earnings growth was supported by efficiency improvements, strong order book and stable cotton prices. 

Energy sector posted a strong earnings growth of 646% YoY in profits as a result of turnaround in LGL which posted earnings of Rs. 17 million relative to Rs. 305 million loss posted in Sep 2018 and improved performance in LIOC due to higher focus on bunkering, lubricant operations and export market.

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Atchuthan Srirangan, Assistant Manager – Research at First Capital commenting on the bond and stock market performance – 18.12.2019

Atchuthan Srirangan, at First Capital on the bond and stock market performance – 18.12.2019

“The secondary market yield curve remained broadly unchanged while overall market witnessed limited activities amidst thin volumes. Bourse concluded the day in negative territory predominantly dragged down by the price losses in LION and DIAL. ”

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Nisansala Kuruppumudali, Research Analyst at First Capital commenting on the bond and stock market performance – 17.12.2019

Nisansala Kuruppumudali, Research Analyst  at First Capital commenting on the bond and stock market performance.

“The secondary market yield curve remained broadly unchanged while overall market witnessed limited activities with low volumes. Bourse concluded the day in the positive territory rebounding from a two day negative skid mainly boosted by the price appreciations in CARS and MELS.

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Hiruni Perera, Senior Research Analyst at First Capital commenting on the bond market performance – 12.12.2019

Hiruni Perera, Senior Research Analyst  at First Capital commenting on the bond market performance.

“The secondary market yield curve remained broadly unchanged while overall market witnessed limited activity amidst thin volumes. At the primary bond auction held today, CBSL accepted LKR 15.0Bn of 15.09.24 at a weighted average of 9.87% and LKR 10.0Bn of 15.05.30 at a weighted average of 10.23%.”

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Atchuthan Srirangan, Assistant Manager – Research at First Capital commenting on the bond and stock market performance – 10.12.2019

Atchuthan Srirangan, Assistant Manager – Research at First Capital commenting on the bond and stock market performance.

“The secondary market yield curve remained broadly unchanged while overall market witnessed mixed activities with low volumes ahead of the bond auction. Bourse ended in negative territory for the fifth straight session on the price losses made in JKH and DIST.”

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Shares fall for 4th straight session; rupee steady

Reuters: Shares closed weaker for the fourth straight session on Monday, weighed down by foreign sell-offs and profit-taking in construction shares, while the rupee ended steady. 

The benchmark stock index closed down 0.75% at 6,103.63, its lowest since 26 November. The bourse fell 1% last week, but is up 1.61% for the year. 

The index touched its highest level since 25 June 2018 on 2 December, lifted by hopes of booming economic activity after the new government cut some key taxes. 

The rupee ended steady at 181.10/30 per dollar, Refinitiv data showed. It is up 0.8% so far this year.

Analysts said the tax reduction has already been factored in and the market was waiting to see the impact of the new policy. They said investors sold shares that rose on hopes the new Government will encourage an economic boom led by construction.

“We see a profit taking in construction sector shares, which jumped on construction boom hopes,” said Atchuthan Srirangan, assistant research manager at First Capital Holdings PLC. “There was no negative news and when investors see in values in shares, they will come again and buy.” 

The Government on 27 November reduced value-added tax to 8% from 15% effective 1 December, and abolished some other taxes as well in its attempt to boost economic growth that has fallen to a near two-decade low.

Singapore-based research firm Emerging Asia Economics in a note last week said the tax cut decision would provide a significant boost to the economy, but put increased strain on the country’s fragile public finances, with a possible loss of $ 2 billion in revenue.

Foreign investors were sellers on Monday in the equity market for the 28th session out of the last 31.

They sold a net Rs. 141 million ($783,333) worth of shares on Monday, extending the year-to-date foreign outflow to Rs. 11 billion, according to index data.

Equity market turnover was Rs. 435.5 million, less than this year’s daily average of about Rs. 726 million. Last year’s daily average was Rs. 834 million.

Foreign investors were net sellers of government securities on a net basis for the first week in seven, selling a net Rs. 4.2 billion worth of government securities in the week ended 4 December.

Total foreign outflows from government securities through 27 November stood at Rs. 47.9 billion, according to Central Bank data.