Stock market gains to 1 month high

*  Holiday hits volumes; rupee weaker

*  Foreign inflows for seventh session

*  Inflation worries; credit shortage hurt  sentiment

*  Rupee weaker on importer dollar demand

(Reuters) - Sri Lanka’s stock market rose to a one-month high on Friday on retail buying, as the impending long New Year holiday next week kept volumes low.

The island’s main share index closed 0.48 percent or 35.14 points firmer at 7,413.87, Highest since 8 March. It hit a record closing high of 7,811.82 on 14 February.

The Stock Exchange declared 15 April a special holiday to mark the traditional New Year which falls on 13 and 14 April.

Foreign investors were net buyers of shares worth 33.7 million rupees on Friday, extending the total inflow to 1.2 billion rupees in the last seven sessions. But they have sold a net 6.6 billion in 2011, and a record 26.4 billion in 2010.

The day’s turnover was at 1.6 billion Sri Lanka rupees   ($14.5 million), less than last year’s average of 2.4 billion rupees and well below this year’s daily average of 3.1 billion rupees.

The bourse is still Asia’s best performer in 2011 with an 11.7 percent gain, after bringing in the region’s top return, 96 percent, last year.

Traded volume was 30.4 million, against a five-day average of 43 million shares. The 30-day and 90-day average trading volumes were 62.1 million and 68 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 15.4, one of the highest among emerging markets, compared with an average 12.7 in Asian markets and 11.9 for global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed weaker at 110.38/40 a dollar from Thursday’s close of 110.34/37 on importer dollar demand ahead of the festivals, dealers said. 

LOLC share price soars

Share price of LOLC yesterday shot up nearly 10% to a peak of Rs. 128 before cooling down after investors re-rated its prospects following the announcement of it pursuing a holding company model.

Over 760,000 shares of LOLC traded between a high of Rs. 128 and low of Rs. 118, before closing at Rs. 123.10, up by Rs. 6 or 5%.

LOLC on Thursday after the market was closed announced it was proceeding with a holding company model given the Group’s diversified nature following several strategic investments in a host of new growth sectors.

The gain yesterday helped LOLC to move back to the slot of 10th most valuable stock on the Colombo bourse with a market capitalisation of Rs. 58.49 billion, after momentarily losing the place to Harry Jayawardena-controlled Distilleries Company on Thursday. Though gaining sharply yesterday given its dip earlier on LOLC closed the week only up 70 cents from last week’s closing price of Rs. 122.40.

Nimal Perera zooms on ASCOT with second largest 13% stake

High networth individual investor Nimal Perera appears to be zooming on Ascot Holdings Plc by upping the stake in the company to 13%.

The 10% threshold was surpassed yesterday when he picked up 7% stake amounting to 551,000 shares.  Previously he held 479,800 shares or 6%. With 13% holding, Nimal has become the second largest shareholder of ASCOT, 41% control of which is held by Axis Financial Services, promoted by financial services specialist Rohan Iriyagolle.

Yesterday a total of 1.132 million shares or 14% stake of ASCOT changed hands for Rs. 143.2 million via 884 trades. It peaked to a high of Rs. 133.50 and a low of Rs. 114.20 before closing at Rs. 125, up by 7% or Rs. 8.90. In a relatively subdued market ASCOT emerged as the fourth biggest gainer percentage wise yesterday.

Nimal acquired the first block of 300,000 shares on 18 March at Rs. 100 each and thereafter at various prices picking up available quantities.

The higher price paid yesterday is tandem with analysts re-rating on ASCOT’s future prospects including some recent breakthroughs such as new rent income though it is currently loss making.

Only one floor out of eight floors of the ASCOT Developments building at Darley Road was occupied during a period of five months to 31 December, 2010. However commencing 1 January, 2011, all floors of the building had been leased to Ministry of Economic Development for two years.

In the quarter ended 31 December, 2010, the highest price of ASCOT was Rs. 96.90, up from Rs. 49 a year earlier whilst the lowest was Rs. 70, higher from Rs. 35.25. It closed the third quarter at Rs. 81.10, up from Rs. 40.50 a year ago.

Apart from Nimal, Citrus Leisure controlling shareholder Emagewise owns around 4% stake in ASCOT. Axis Financial Services in mid-March shed 12.5% stake to reduce its holding to 41.4% as against 54.58% as at December 2010.

ASCOT Holdings subsidiary Arrenga Capital Pvt Ltd. recently got a stock broking licence from the Securities and Exchange Commission whilst the Group is also venturing to deposit mobilisation and allied businesses via the setting up of a finance company. ASCOT (formerly Asian Cotton Mills), is rich with real estates in Ratmalana, part of which was divested sometime back whilst it has a property in Colombo 10. Both haven’t been revalued of late.

In the first nine months of 2010/11 financial year revenue was down by 57% to Rs. 34.6 million whilst losses rose to Rs. 26.8 million, from Rs. 7 million a year earlier. The loss was owing to administrative expenses being higher than revenue whilst finance cost amounted to Rs. 42 million.  As at 31 December, 2010 Group assets amounted to slightly over Rs. 1 billion and retained earnings were Rs. 255 million whilst long-term debt amounted to Rs. 323 million.

With around 1,900 shareholders, ASCOT has a public float of 30%.