Perpetual Capital buys 9% of Central Finance for Rs. 1.5 b

Bullish on the post-war boom in financial services sector, the new kid in the market Perpetual Capital yesterday bought a 9% stake in Central Finance Plc for Rs. 1.5 billion whilst the seller Sri Lanka Insurance Corporation exiting with a hefty profit.

Slightly over 1.8 million shares of Central Finance (CF) traded for Rs. 1.516 billion yesterday between a high of Rs. 985 and a low of Rs. 790 before closing at Rs. 928.90, up by Rs. 125 or 15.5%. Of that the biggest block of 1.6 million shares transacted at Rs. 800 each.

Last week CF closed at Rs. 869.30, down by Rs. 29.50 whilst its 52-week highest is Rs. 1,050.

Perpetual Capital promoted by young kid on the block Arjun Aloysius picked up all available quantity of CF bringing the stake to around 9.3%.

Seller was SLIC which as at 31 December, 2010 held 1.67 million shares in CF, down from 12% a year earlier.

Analysts speculated that SLIC’s cost of CF holding was around Rs. 100 per share suggesting the insurance giant would have booked around Rs. 1 billion as capital gains.

CF is controlled by the Wijenaike family with a collective stake of around 40%. The Net Asset Per share of CF is Rs. 435 up from Rs. 389 in March 2010 and Rs. 373 in December 2009.

The decision to invest in CF by Perpetual Capital is on strong upside for the financial services sector in post-war Sri Lanka. Its other exposure in financial services sector is a 15% stake in HDFC Bank in addition to 3% stake in Seylan Bank and around 2% stake in LOLC.

In the first nine months of 2010/11 financial the net profit attributable to equity holders of CF grew by 69% to Rs. 1.2 billion whilst profit before VAT and tax was Rs. 2.4 billion, up by 78% in the first nine months of 2009/10 financial year. CF Group turnover grew by 7% to Rs. 6.06 billion.

Perpetual Capital has been among the most bullish on post-war Sri Lanka as far as investing in the stock market. As part of its growing portfolio is over 10% stake in Ceylon Grain Elevators, 12% in Bairaha Farms, over 12% stake in Ashok Leyland and nearly 2% stake in DIMO.

Bourse down on Libya turmoil, forced-selling

(Reuters) - Sri Lanka’s stock market closed weaker on Monday on concern over rising oil prices and export reductions due to the turmoil as Western powers launched air strikes on Libya.

The island’s main share index closed 0.4 percent or 28.61 points weaker at 7,156.33. It hit a record closing high of 7,811.82 on 14 February.  Sri Lanka imports all its crude oil, so the crises in Libya and the Middle East mean the island nation’s booming post-war economy could get hit by soaring imported inflation.  The crises could also cut earnings from Sri Lanka’s main agricultural export, tea, which has a big market in the Middle East, and prompt a reduction in remittances from Sri Lankan workers there, which would hit its top foreign exchange source.



A 31 March deadline imposed by Sri Lanka’s Securities and Exchange Commission on brokers to cut the debt levels of their clients by 50 percent has prompted continuous forced selling, which has weighed on market sentiment.

The day’s turnover was 2.6 billion Sri Lanka rupees ($23.5 million), just above last year’s average of 2.4 billion rupees and but less than this year’s daily average of 3.3 billion.

Foreign investors were net sellers of 296.5 million rupees’ worth of shares on Monday and have sold a net 4.8 billion in 2011, after selling a record net 26.4 billion in 2010.

The bourse is Asia’s best performer so far in 2011 with a 7.8 percent gain, after bringing in the region’s top return with 96 percent last year.

Traded share volume was 29 million, against a five-day average of 49.6 million. The 30-day and 90-day average trading volumes were 77.3 million and 69.1 million respectively. Last year’s daily average volume was 67.9 million.

The bourse is trading at a forward price-to-earnings (P/E) ratio of 14.8, one of the highest among emerging markets, compared with 12.8 in Asian markets and 11.3 in global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed firmer at 110.40 a dollar from Friday’s close of 110.40/50 as the Central Bank reduced its dollar trading band to 109.70/110.40, despite heavy importer dollar demand, dealers said.