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The ASPI reached 21.7 points to reach a new peak on Friday at 752.12 while closing 19.62 points up WOW. It was a day full of activity as the retails investors contributed heavily towards the day's turnover of Rs.231.59 million.

Milanka reaches its highest ever point

The Milanka Price Index which tracks the most liquid and highly capitalised stocks, closed at 1327.07, gaining 34.97 points from last Friday's closing.

The turnover for the week was Rs. 716.5 million with an average of Rs. 143.3 million.

However as anticipated profit taking by retail investors brought the market down during the first half of the week by 19.6 points on ASPI and 34.9 points on Milanka. Nevertheless, the profit-taking binge did not last long with retail investors entering the market strongly, which helped both indices to regain its lost ground at Friday's closing.

Central Finance profits up 108%

Central Finance released results for the quarter ended June 30, 2002 with a 108.0% increase in net profits to Rs. 60.2 million. The Company's revenue grew marginally by 1.1% to Rs.1728.8 million compared with the corresponding period of the previous year while the main reasons for the growth in profits came from "other income" which saw a 363% increase to Rs. 36.3 million.

This was due to money received from the Treasury in settlement of liabilities due from 57 Peoplised Bus Service Companies, which had been written off by the company. Meanwhile, the claims of the company amount to Rs. 589 million while Rs. 45.0 million has been paid so far. Central Finance finished up Rs. 32 at Rs. 95 after the company announced doubling its first-quarter earnings on-year. The local businessman Dhammika Perera - who is believed to have picked up around 150,000 shares, or a 1.2% stake in Central Finance on Thursday was rumoured to be behind most of Friday's buying as well.

The heavy trading in Central Finance prompted local investors to enter the market.

CIC among heavily traded stocks

Generally illiquid, CIC share was among the heavily traded last week, as speculation of a strategic purchase shot up the market price to Rs.85.50 for voting and Rs. 62 for non voting shares. According to the group's un-audited accounts, the book value stands at Rs.179 per share as at 30th June 2002 with an annualised EPS of Rs.31.30. Hayleys records reasonable improvement

Hayleys is one of Sri Lanka's largest conglomerates, with interests in rubber and coconut-based products, plantations, transportation, automobiles and technology etc, posted its results for three months ended 30th June 2002.

Group turnover rose by 21% to Rs. 3.139 billion while the gross profit rose marginally by 5% to Rs. 830.1 million due to high cost of sales. However company's profit from operations improved marginally by 5% to Rs. 338 million but due to high finance cost which was up by 47% to Rs. 95.93 million and the lower contribution from its associate companies led to a 6% drop in profit before tax to Rs. 258.9 million.

However, the decline in minority interest by 21% helped the company to record a 8% growth in profit attributable to ordinary shareholders of Rs. 123.7 million resulting in an annualised EPS of Rs. 12.37.

Hayleys shares which contributed heavily to the market turnover last week, were not actively traded this week. However on Friday it rose to Rs.159.50 from Rs.150 the previous days close.

Losses made by subsidiary drag Royal Ceramics (RCL) profits down According to un-audited figures of RCL group revenue grew by 14% to 190.8 million for the three months ended June 30th. The group made a loss of Rs. 9.8 million compared with a profit of Rs. 22.2 million made during the same period last year due to increase in finance cost. RCL's finance cost increased by seven folds to Rs. 9.8 million during the same period due to long-term loans taken to acquire its subsidiary Royal Porcelain (Pvt) Ltd.

Meanwhile, its recently acquired subsidiary, Royal Porcelain made a loss of Rs. 19.75 million in its first quarter of operations. At present the company is operating at 60% of its capacity while the company expects it to be fully operational in two months thus doubling the production capacity of RCL.

RCL's net assets per share stands at Rs. 23.26 as at June 30th 2002. At the current price of Rs. 20.0 the stock is trading at 0.86 times of its book value.

Plantation stocks pick up with news of settlement

The plantation sector index rose by 9.42% on Friday as the unions struck a deal with managers for acceptable wage increases in the tea and rubber estates. Early Thursday, unions had threatened a second round of industrial action if wage discussions failed.

Late Thursday, the managers agreed to pay Rs.147 daily wage for tea workers and Rs.131 for rubber workers. Tea estate managers had earlier offered to pay only Rs.142 for a one-year period and Rs.146 for the second year, saying even these amounts would overstretch the companies' finances.

Accordingly the substantial wage increases could have a drastic impact on the company's cost of production thus affecting their bottom lines during the second half of the year.

Selected stocks in the plantation sector picked up in line with the overall market improving.

The superior performance in Madulsima and Balangoda for the half-year ending June 30th, 2002 helped their stock prices to register gains of Rs. 1.25 and Rs. 3.00 to close at Rs. 9.25 and Rs. 20.50 respectively.

Balangoda Plantations released its un-audited results for the six months ended June 30th with a 5% drop in revenue to Rs. 830.8 million compared with the same period last year however operating efficiencies led to a healthy growth of 66.0% in net profits to Rs. 52.3 million.

Madulsima Plantations recorded a 5% growth in net profits to Rs. 28.3 million for the six months ended June 30th while the revenue too saw a marginal 3% increase to Rs. 460.1 million according to its un-audited accounts.

Janashakthi acquires 100% stake of National Insurance Corporation

Janashakthi Insurance bought the remaining 39.0% of National Insurance Corporation (NIC) at a purchase consideration of Rs. 287.5 million on Thursday. In 2000, Janashakthi bought a 51% of NIC when it was privatised at Rs. 450.0 Mn. NIC also picked up the 10% stake held by its employees. Quoted on the second board of the CSE Janashakthi holds 4% of the life insurance business and 8% of the general insurance market as at December 2001. Meanwhile, 17 prospective investors have shown interest in the controlling stake of the country's insurance giant, Sri Lanka Insurance Corporation (SLIC). A 90% stake of SLIC is up for sale while a possibility of buying the remaining 10% from employees.

Privatisation of SLIC will play a major role in the Government's plan to raise Rs. 21 billion through privatisation during the year while the deal is expected to go through towards the latter part of this year. As published by electronic media SLIC's associate Commercial Bank is believed to be among the 17 interested parties.

Point of view:

The inevitable market correction was clearly seen but as prices dropped bargain hunters started picking up selected stocks.

The political situation centred around the 19th amendment should contribute towards the market movements during the next week. Meanwhile, the news on the peace process and the improved results in most of the companies could attract many fund managers and high-net-worth individuals both local and foreign into the market.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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