Financial Times

Janashakthi’s weak share performance due to LMS – JKH saga

The weak performance of the Janashakthi Insurance PLC (JI) share is because it opened at the Colombo stock market on a ‘bad day’ after its initial public offering (IPO), a JI official. “After the IPO the share opened on the same day of the Lanka Marine Services judgment which was 23rd July last year,” Prakash Schaffter, Managing Director, JI told The Sunday Times FT on the sidelines of a press conference to release the company annual results on Wednesday.

The Supreme Court ruled against John Keells Holdings’ fully owned marine bunkering subsidiary, LMS in a fundamental rights application. The JI share which went on the boards at Rs 12 has seen almost a 50% drop as it darts around Rs 6, analysts said. The company on 31st December last year paid a 50-cent dividend.

Mr. Schaffter said the share has intrinsic value and is a long term share. “It still is a good share to hold on to.” Mr. Schaffter said the recent Ceylinco crisis has not shown noticeable shifts of policyholders of Ceylinco Insurance to other insurance firms.

He said the company recorded consolidated Rs. 503 million profit before taxes, adding that life business registered a rise of 18% to Rs 1.4 billion, but the performance of general business was not as encouraging as anticipated with a single digit increase of 7% to reach Rs 3.9 billion. “This was mainly due to intense price competition and the prevailing economic conditions.”

He said the net profit before tax, which was at Rs 503 million though below last year’s Rs 549 million is in reality a considerable improvement as the latter figure includes an exceptional fair value gain of Rs258 million from investment property.

W.T. Ellawala, Chairman of the company said that JI foresees insurance opportunities arising in the medium term from re-development, reconstruction and enhanced income streams for the population, resulting from the cessation of military operations.

“High interest rates and high inflationary trends that adversely impact the economy could trickle down subsequently to the insurance industry as well.

Janashakthi has been rationalising its insurance portfolio, working on a qualitative rather than a quantitative strategy to countervail such adverse trends and sustain steady growth,” Mr. Ellawala added.

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