Business

Sri Lanka’s Home Lands Skyline rated ‘A(lka)’ despite macro challenges: Fitch

Wednesday February 16, 2022 11:24 am

ECONOMYNEXT – Fitch has assigned Home Lands Skyline pvt Ltd, a real estate developer, a national Long-term rating of ‘A(lka)’ with a stable outlook despite the weak domestic economy.

Home Lands Skyline, a subsidiary of Home Lands group of companies, was founded in 2003.

The rating agency said it expects the company’s annual cash collection from contracted sales to reach around 10 billion rupees bythe financial year ending March 31, 2022 from Seven billion rupees in in 2021 and four billion rupees in 2020.

“We expect the company to face near-term challenges from the weak domestic economy,reflected in accelerating inflation, rising interest rates and difficulties in importing raw materials, which could dampen timely cash collection and project completion” the agency said.

“HLSL’shealthy financial profile provides a buffer against these risks in the next 12-18 months.”
The rating agency said, Economy in the country is expected to weakened in 2022 mainly due to forex issue and expects the GDP growth of the country to be around 2 percent for the year.

“We therefore expect demand for housing to moderate and have assumed sales and cashcollection at HLSL’s new projects will slow in the next 12-18 months compared with the last two years, with further downside a possibility” the agency said.

The full statement is reproduced below:

Fitch Assigns Home Lands Skyline First-Time ‘A(lka)’

National Rating; Outlook Stable

Fitch Ratings – Colombo – 14 Feb 2022: Fitch Ratings has assigned Sri Lankan real-estate
developer Home Lands Skyline (Pvt) Ltd. (HLSL) a National Long-Term Rating of
‘A(lka)’. The Outlook is Stable.

HLSL’s rating reflects the company’s limited record of operating at its current scale. Fitch
expects its annual cash collection from contracted sales to reach around LKR10 billion by
the financial year ending 31 March 2022 (FY23) from LKR7.0 billion in FY21 and
LKR4.0 billion in FY20.

We expect the company to face near-term challenges from the weak domestic economy,
reflected in accelerating inflation, rising interest rates and difficulties in importing raw
materials, which could dampen timely cash collection and project completion. HLSL’s
healthy financial profile provides a buffer against these risks in the next 12-18 months.

KEY RATING DRIVERS

Limited Sales Record: HLSL has a growing pipeline of around 1,500 new housing units
in the next three years compared with 2,000 units sold since it started operations in 2014.

However, our forecasts are subject to execution risks due to its limited record of operating
at the projected scale. HLSL’s pipeline includes several large projects of 200-300 units,
which would require it to balance the maintenance of cash collection, timely construction
and fund raising.

Challenging Economic Environment: Sri Lanka’s economy is likely to weaken in 2022,
as the challenging external position and exchange-rate pressure will have knock-on effects
on economic activity. Foreign-currency shortages have hampered food and fuel imports,
and continued external liquidity stress could worsen supply shortages. We expect GDP
growth to slow to 2.0% in 2022, from an estimated 3.6% in 2021, before recovering to
4.3% in 2023 due to base effects and a gradual easing of domestic pressure, but downside
risks to our forecasts remain.

We therefore expect demand for housing to moderate and have assumed sales and cash
collection at HLSL’s new projects will slow in the next 12-18 months compared with the
last two years, with further downside a possibility. HLSL’s inability to sell and collect
cash in a timely manner could tighten liquidity and increase leverage as it typically uses
the cash collected from sales to fund 30%-35% of its project costs.

Improving Market Position: HLSL is a leading property developer in the middle-
income segment, selling homes priced between LKR15 million and LKR30 million to
consumers looking for modern living options in suburban areas. The company is focused
on the concept of “themed resort living” where each project is based on a particular
recreational activity and the necessary infrastructure. Most of HLSL’s competitors operate
in the crowded urban market where there is little differentiation unless they are catering to
the high-end customer.

Land Sales Boost Cash Collection:HLSL derives around 25%-30% of its cash
collection from the land sales of its 100%-owned subsidiary, boosting its consolidated
cash collection. HLSL has a record of more than 20 years in land sales, where it collects
the cash within 12-18 months, compared with two-three years for home sales. Land sales
do not require significant development costs, which means the company does not have to
invest in large working capital compared with residential development.

Supply Pressure: Sri Lankan homebuilders are facing a shortage of construction
materials due to the country’s weak external finances, which has made imports
challenging. Around 20% of HLSL’s construction inputs are imported and we believe the
company may face increasing challenges when arranging funding facilities as banks are
prioritising essentials goods such as fuel, food and medicine, and intermediary goods used
for exports. We believe further supply pressure could drive cost increases and weaken
profitability.

Homebuilders are facing cost escalations due to the depreciation of the local currency,
which weakened more than 10% in 2021, hurting their operating margins. Homebuilders
are typically not able to pass on cost increases on units already sold. We believe the
company may find it challenging to increase prices on unsold units to reflect the cost
escalation in the current weak operating environment without affecting sales volume.

Positive Free Cash Flow: HLSL has a record of maintaining positive free cash flow
(FCF) from its prudent balance sheet and conservative cash-flow management. We expect
FCF to tighten in the next few years, but remain positive. Tighter FCF will stem from a
slowdown in cash collection and higher construction costs as most projects are reaching
completion. We estimate HLSL will invest around LKR2.0 billion per year on land
acquisitions to support its growth plans.

Low Leverage Supports Expansion: We expect HLSL net leverage, defined as net debt
to adjusted inventory, to fall below 40% from FY22 (FY21: 52%) due to higher
contracted sales and cash collection, which will provide the company with rating
headroom to invest in new projects. We expect cash collection from ongoing projects to
offset the need for external funding for land acquisitions and construction costs amid the
company’s prudent cash-flow management.

Limited Land Bank: We estimate HLSL’s land bank is sufficient to sustain around three
years of contracted sales at the current scale. We believe this exposes HLSL to rising land
prices, but this is not a material risk in the next 12-18 months given the availability of
land in the suburban areas in which it operates and their relatively benign land price
inflation.

DERIVATION SUMMARY

Domestic cable manufacturer Sierra Cables PLC (A+(lka)/Stable) is rated one notch
above HLSL to reflect its more established record in its market, evident from its profitable
operations over many years. Both companies are exposed to the cyclical construction
sector and could face liquidity pressure if there are material delays in customer payments.
We expect HLSL to maintain better leverage ratios than Sierra over the next few years.

Resus Energy PLC (A+(lka)/Negative), a domestic renewable-energy company, is also
rated one notch above HLSL on account of its cash flow visibility from fixed long-term
contracts and the increasing balance between hydropower and solar assets, which will
mitigate operational volatility arising from climatic conditions. Resus’ Negative Outlook
reflects the pressure on liquidity due to possible payment delays from its sole
counterparty, state-owned Ceylon Electricity Board (AA-(lka)/Stable), whose operations
are dependent on the financial support from the Sri Lankan government (Long-Term
Local-Currency Issuer Default Rating: CCC). HLSL’s customer base is highly granular,
which mitigates its counterparty risk.

KEY ASSUMPTIONS

Fitch’s Key Assumptions Within Our Rating Case for the Issuer:

– Contracted sales of LKR7.9 million in FY22, LKR10.9 billion in FY23 and LKR16.5
billion in FY24

– Cash collection of LKR9.5 billion in FY22, LKR10.3 billion in FY23 and LKR14.1
billion in FY24

– EBITDA margin to improve to 20% by FY24 from 9% in FY21 amid increased revenue
recognition with projects reaching completion, and a greater proportion of high-margin
premium products

– Land acquisition investment of around LKR2.0 billion per annum over FY22-FY24

– No dividend payouts in the medium term as per the company’s policy

RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:

– Implied cash collection (defined as change in customer advances + revenue) above
LKR10 billion on a sustained basis

– Net debt/adjusted inventory maintained below 40% for a sustained period
Factors that could, individually or collectively, lead to negative rating action/downgrade:

– Net debt/adjusted inventory above 50% for a sustained period

– Inability to generate neutral-to-positive FCF (including land acquisition-related cost) on
a sustained basis

LIQUIDITY AND DEBT STRUCTURE
Manageable Liquidity: HLSL had LKR573 million at end-September 2021 to meet
LKR1.6 billion of debt maturities in the next 12 months. Around LKR400 million of the
debt is maturing working-capital lines, which we believe its banks will roll over in the
normal course of business as the amount is supported by the company’s strong cash
collection.

The remaining contractual maturities of around LKR1.2 billion are related to ongoing
projects and can be met through more than LKR2.0 billion in cash flow from operations
(excluding land purchases) in the next 12 months. We have assumed around LKR2.0
billion in annual land acquisitions, which is more conservative than HLSL’s average
spending of around LKR1.0 billion per annum in the last two years. We believe this adds
a liquidity buffer that can absorb a degree of downside risk to cash collection while
allowing HLSL to meet its obligations. HLSL also has access to around LKR155 million
in uncommitted but unutilised credit lines.

ISSUER PROFILE
HLSL is a property developer in Sri Lanka engaged in the development and sale of land,
houses and apartments mainly for the middle-income customers.

Markets

Sri Lanka stocks close up 1.37-pct, banks lead turnover

Monday November 9, 2026 3:29 pm

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed up on Monday, CSE data showed, with the benchmark All Share Price Index moving up 1.37 percent.

The ASPI was up 291.72 points at 21,531.37, while the more liquid S&P SL20 was up 1.67 percent, or 100.96 points, at 6,146.34.

Positive contributors to the ASPI were Commercial Bank of Ceylon (up 2.86 percent at 216.00 rupees), Hatton National Bank (up 1.52 percent at 399.75 rupees), Asiri Hospital Holdings (up 12.86 percent at 31.60 rupees), Tokyo Cement Company (up 5.22 percent at 84.70 rupees), and Access Engineering (up 3.93 percent at 81.90 rupees).

Carson Cumberbatch (down 4.24 percent at 712.00 rupees), Richard Pieris and Company (down 2.43 percent at 28.10 rupees), LOLC Holdings (down 0.62 percent at 400.00 rupees), Renuka Holdings (down 2.63 percent at 37.00 rupees), and Chevron Lubricants Lanka (down 0.61 percent at 204.25 rupees) were top negative contributors.

Market turnover was 3.33 billion rupees. The S&P/CSE Banks Industry Group led turnover with 667.76 million rupees.

The session saw heavy crossings, according to Raynal Wickremeratne, Head of Research and Strategy at NDB Securities. Significant crossings included Keells (23 million rupees), Distilleries Company (27.7 million rupees), Sunshine Holdings (30.6 million rupees), Commercial Bank (32.4 million rupees), Ceylon Tobacco Company (35.6 million rupees), Hatton National Bank (39.5 million rupees), Prime Lands (40.5 million rupees), and HAS Holdings (41.5 million rupees).

In corporate news, Hayleys Retail Holdings Ltd announced it has partnered with supply chain software provider Blue Yonder to build and scale an AI-native grocery supermarket chain across Sri Lanka. (Colombo/Nov09/2026)

Information Technology

Sri Lanka’s Hayleys Retail to launch supermarket chain with Blue Yonder

Monday November 9, 2026 3:12 pm

ECONOMYNEXT — Hayleys Retail Holdings Ltd has selected supply chain software provider Blue Yonder to build its grocery retail operations from the ground up, the two companies said in a joint statement.

Hayleys Retail, a member of Sri Lanka’s diversified conglomerate Hayleys Group, plans to open several stores in the near future to serve consumers across the country. The agreement marks Blue Yonder’s first retail customer in Sri Lanka.

“Our entry into supermarket retail is about bringing that same commitment to quality and reliability closer to everyday Sri Lankan consumers,” Mohan Pandithage, Chairman and Chief Executive of Hayleys PLC said.

“With Blue Yonder, our teams will have AI-driven insight to deliver a seamless, consistent shopping experience across every store,” he said.

Hayleys, which accounts for approximately 5 percent of Sri Lanka’s export income and operates across 17 business sectors, is entering the large-scale supermarket space by drawing on its group strengths in manufacturing, logistics, and services.

The company selected Blue Yonder to connect its data across merchandising and shelf space, deploy artificial intelligence agents to catch operational issues early, and scale its business into a national network without changing platforms.

The rollout will begin with merchandise operations to manage suppliers, items, costs, and pricing, followed by machine learning capabilities to forecast demand and balance store inventory during seasonal peaks.

“Hayleys Retail is choosing one where AI is the foundation rather than an add-on—connected data and agentic AI built into core merchandising operations, and planning that learns as the business grows,” Antonio Boccalandro, President, APAC at Blue Yonder said.

The retailer plans to use the platform to automate routine store tasks and adjust inventory according to real-time sales and local market trends as its store footprint grows. (Colombo/Nov09/2026)

Stocks & Companies

Sri Lanka’s Citrus Leisure extends Lotus Tower management pact

Monday November 9, 2026 1:16 pm

ECONOMYNEXT – Sri Lanka listed hospitality firm Citrus Leisure said it has extended an agreement to manage consumer-facing and entertainment spaces at the Colombo Lotus Tower, which includes revolving restaurant Blue Orbit, until June next year.

The initial agreement signed between Citrus Leisure and Colombo Lotus Tower Management Company (Private) Limited (CLTMC) is due to expire on December 11.

“The Board of Directors of CLTMC at meeting held on 2nd November 2026 has resolved to extend the term of the Management Agreement and continue the existing Management Agreement until 30th June 2027, to which the company has given its concurrence,” the company said in a market filing.

Citrus Leisure Plc opened its revolving restaurant at the Lotus Tower in December 2023.

The company signed a 3-year agreement with CLTMC in May 2023 to provide services in the management of (l) the banquet hall 1 on the 25th floor, (2) the banquet hall 2 on the 26th floor, (3) the revolving restaurant on the 27th floor, (4) the 6 suites situated on the 28th floor and the kitchen in the basement floor of the Colombo Lotus Tower.

The 350-meter or 1,150-feet tower, the tallest in South Asia, was built at a cost 104.3 million US dollars with 80 percent of the money borrowed from Exim Bank of China.

Located in the commercial heart of Colombo, the tower has been called a symbolic landmark of Sri Lanka as well as a colossal white elephant and has been mired in controversy for years. (Colombo/Nov9/2026)

Markets

CIC Holdings Sept quarter net profit rises 20-pct to Rs1.7bn

Monday November 9, 2026 11:50 am

ECONOMYNEXT — Sri Lanka conglomerate CIC Holdings recorded a net profit of 1.66 billion rupees for the quarter ended September 30, rising 20.3 percent from 1.38 billion rupees in the same quarter last year, interim accounts showed.

The group posted basic earnings per share of 0.87 rupees for the September quarter, up from 0.73 rupees a year earlier.

Quarterly revenue grew 3.4 percent to 20.89 billion rupees from 20.20 billion rupees, supported by broad-based growth across industrial solutions, livestock, and healthcare segments, which counterbalanced relative demand moderation in agricultural inputs.

Cost of sales rose 5.3 percent to 15.20 billion rupees, outpacing revenue growth and causing gross profit to contract marginally by 1.2 percent to 5.68 billion rupees.

Results from operating activities dropped 7.3 percent to 2.66 billion rupees from 2.87 billion rupees, impacted by higher operating overheads.

Selling expenses expanded 6.8 percent to 2.15 billion rupees, and general and administrative expenses climbed 5.8 percent to 1.07 billion rupees, while other operating income dropped 29.6 percent to 117.40 million rupees.

However, operating profits were cushioned by an impairment reversal on trade receivables of 85.83 million rupees, turning around from an impairment provision of 23.38 million rupees in the corresponding quarter last year.

Net finance costs climbed 35.4 percent to 712.25 million rupees from 526.01 million rupees.

The increase was driven by a 30.8 percent rise in finance expenses to 771.46 million rupees, primarily reflecting higher interest expenses on loans to finance elevated working capital and inventory requirements.

The quarter’s bottom line was strongly bolstered by CIC’s equity-accounted investment in John Keells Holdings PLC (JKH).

Share of profit from equity-accounted investees surged more than fourfold to 590.50 million rupees from 257.87 million rupees, driven by JKH’s strong profit expansion during the period.

The group also recognized a gain on bargain purchase of 55.59 million rupees during the quarter resulting from additional share purchases in JKH where the proportionate net asset value exceeded acquisition cost, compared to no such gain a year earlier.

With associate income gains offsetting operating margin contraction and higher borrowing costs, group pre-tax profit held virtually flat at 2.59 billion rupees, down 0.11 percent.

Income tax expense fell 29.4 percent to 606.24 million rupees from 858.71 million rupees, driving total group profit for the period up 14.1 percent to 1.98 billion rupees.

Total group assets stood at 108.58 billion rupees as of September 30, up from 99.75 billion rupees at the end of March 2026.

Group net asset value per share increased to 25.52 rupees from 22.10 rupees a year earlier.

CIC Holdings’ ordinary voting shares closed at 27.80 rupees at the end of September.(Colombo/Nov09/2026)

Sri Lanka’s Home Lands Skyline rated ‘A(lka)’ despite macro challenges: Fitch

Sri Lanka stocks close up 1.37-pct, banks lead turnover

Sri Lanka’s Hayleys Retail to launch supermarket chain with Blue Yonder

Sri Lanka’s Citrus Leisure extends Lotus Tower management pact

CIC Holdings Sept quarter net profit rises 20-pct to Rs1.7bn

Sri Lanka stocks trend up; ASPI gains 0.78-pct

Sri Lanka rupee at 332.54/58 to US dollar spot, bond yields steady