Japan’s Sagawa buys 16% more of Expolanka for Rs. 2.6 b

Japan’s Sagawa Group yesterday gave a welcome boost to the Colombo stock market and the private sector when it bought a further 16% stake in Expolanka Holdings Plc for Rs. 2.6 billion.

The latest acquisition increased Sagawa’s Singapore-based SG Holdings Global Ltd., stake in Expolanka to 67%.

Yesterday’s stake amounted to 313.8 million shares and was done at Rs. 8.30 each. This helped boost CSE turnover to Rs. 3.89 billion, the highest since 10 December 2015 and more than four times this year’s daily average of Rs. 875.4 million.

The price paid for the latest block was much lower compared to Rs. 10.70 per share when Sagawa acquired the original stake 30% in May 2014 in a deal second biggest since Malaysian sovereign fund Khazana bought 10% JKH in 2012. Via the mandatory offer, Sagawa subsequently acquired 51% stake. The original Sagawa-Expolanka deal bringing in over Rs. 12 billion in foreign investment was structured by NWS Holdings in 2014.

Expolanka shares rose as much as 6.7%, its biggest intraday percentage gain in a year before settling 4% higher at Rs. 7.80. 

The deal also boosted overall investor sentiment as the All Share Index gained 63 points to close at its highest since 14 January. 

Additionally, the Sagawa investment also nearly erased the year to date net foreign outflow. As of Monday the net outflow was Rs. 2.77 billion and diminished to Rs. 192 million yesterday. 

Major sellers were co-founder, former Chairman and current director Osman Kassim and three other former Directors from the same Kassim family. 

Osman as of September 2015 held around 163 million shares of 8.35% stake. He exited from Expolanka with yesterday’s sale.  The other three had shed 15 million shares each. As of September 2015, Farook Kassim held 8.22% stake of 161 million shares, Sattar Kassim held 8% and Shafik Kassim held 7.7% stake.

The buying broker was Navara Securities whilst the bulk of the selling was done by Candor Wealth Catalysts.

Expolanka Group recorded a profit before tax (PBT) of Rs. 661 million for the second quarter of the financial year 2015/16. The Group posted a cumulative PBT of Rs. 1,062 million for the first half of the financial year 2015/16 posting an increase of 127% over the PBT of Rs. 466 million recorded in the corresponding period of the previous financial year.

The recorded profit attributable to equity holders for the second quarter was Rs. 396 million. The first half performance of Rs. 618 million reflects an increase of 101% over the corresponding period of the previous financial year.

“The positive results indicate the concentrated efforts on business growth in the Group’s core sectors including operational efficiencies and restructuring efforts,” Group CEO Hanif Yusoof said in a review accompanying second quarter interim results. 

SC Securities said ASI gained mainly due to price gains in counters such as CTC.N (Rs. 999.60, +12.90%), JKH.N (Rs. 161.00, +8.64%), DIST.N (Rs. 225.00, +4.99%), SLTL.N (Rs. 41.00, +4.23%) and CARG.N (Rs. 171.60, +2.89%). The Blue Chip Index, S&PSL20 also advanced by 34.93 points or + 1.05% to close at 3,357.42.

Year to date ASPI Performance stood at -6.4%, while Blue Chip Index projected a decline of -6.7%. 

SC Securities said shares of 214 companies were traded yesterday. Of these, 28 companies declined while 111 closed higher.