Banks, insurance lead Sri Lanka Dec quarter corporate earnings growth

ECONOMYNEXT – Earnings of listed Sri Lanka companies grew 17.4 percent to 86 billion rupees in the December 2017 quarter from a year ago, driven by growth in banking, finance and insurance, CAL Research says.

Corporate earnings totaled 60.5 billion rupees in the previous quarter, down 1.4 percent from a year earlier.

Combined profits of listed banks, finance and insurance companies grew 62 percent in the December quarter, to 46.7 billion rupees, contributing 55 percent to total market earnings up from a 40 percent share a year earlier, CAL research said.

Diversified Holdings accounted for 13 percent of market earnings at 11 billion rupees followed by 11 percent from Beverages, Food and Tobacco sector earning of 9.4 billion rupees.

Plantations recorded the highest growth in earnings at 2,411 percent to 1 billion rupees, followed by Land and Property growing 308 percent to 6 billion rupees and IT earnings growing 262 percent to 7 million rupees.

The services sector saw earnings fall 238 percent to a 94 million loss while combined earnings of oil palm companies (100 million rupees) halved.

In the construction sector, earnings of Access Engineering (304 million rupees) and Lankem Developments (82 million rupees) offset losses of 386 million reported by MTD Walkers.

Hotels earnings fell 62 percent to 760 million rupees in the quarter which is part of the peak season. Healthcare earnings grew 13.4 percent to 895 percent while manufacturing fell 19 percent to 5 billion rupees.

Power and energy companies saw combined earnings fall 400 percent to a net loss of 224 million rupees.

Dialog and SLT reported combined earnings of 3.9 billion rupees, up 182 percent from a year ago.





AIA Insurance Lanka was the highest contributor to total market profits at 8.2 percent, followed by Ceylinco Insurance (5.7 percent), Commercial Bank (5.6 percent), John Keells Holdings (5.6 percent), HNB (5.4 percent) and Ceylon Tobacco (5.2 percent).

Troubled The Finance reported the highest net loss in the December 2017 quarter of 598 million rupees, compared with a 484 million loss a year earlier.

Trailing 12-month market (TTM) earnings grew 8.7 percent to 274 billion rupees with the banking, finance and insurance sector contributing 48 percent.

LOLC was the largest contributor to 12-month earnings at 6.2 percent, followed by Commercial Bank (6.1 percent), John Keells Holdings (6 percent) and HNB (5.8 percent).

"The CSE currently trades on a TTM price-to-earnings ratio of 9.9 times and a price-to-book value of 1.2 times," CAL Research said. (COLOMBO, March 20, 2018)


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