*Softlogic Stockbrokers* *News Alert –13th February 2025* *Japanese firms in Sri Lanka see renewed optimism* • JETRO survey reveals 75% of firms expecting improved operating profits in 2025 – most optimistic outlook across entire Asia-Oceania region; surpasses markets such India, Philippines, Vietnam, and Bangladesh • Japanese businesses in Sri Lanka recover with 46% expecting profits in 2024, up 11.9% YoY • Cites economic recovery, rising domestic demand, better sales systems, improved production efficiency, lifting vehicle import ban and reduced container freight rates as key factors for optimistic outlook • Plans for expansion rise with 36% of firms planning to grow operations in SL, up by 8.6% YoY https://www.ft.lk/top-story/Japanese-firms-in-Sri-Lanka-see-renewed-optimism/26-773004 *Two national budgets in 2025 possible: KPMG* The situation could likely arise due to the delay in presenting the 2025 budget, noted KPMG Principal Tax and Regulatory Rifka Ziyad, elaborating on the Vote on Account, which was presented last December to cover the first four months of 2025. https://www.dailymirror.lk/business-news/Two-national-budgets-in-2025-possible-KPMG/273-302255 *No tax reduction this year: Deputy Minister* Industries and Entrepreneurship Deputy Minister Chathuranga Abeysinghe states that there is no possibility of reducing taxes within this year, as the government is required to collect 15.1% of the gross domestic product (GDP) in taxes in accordance with agreements reached with the International Monetary Fund (IMF). https://www.themorning.lk/articles/Odv1Nh44ycCisOST26G3 *Sri Lanka dollar bonds surge 30%* • Emerging market debt risk premium hits five-year low • Investors flock to high-yield bonds after successful debt restructurings https://www.themorning.lk/articles/Bwr166kRaJ90QnM78TNK *Currency demand up amid festivities, elections: CBSL* Sri Lanka’s economy witnessed a rise in currency in circulation (CIC) throughout 2024, fuelled by seasonal demand and the start of the election cycle, the Central Bank of Sri Lanka (CBSL) reported. The CBSL injected Rs. 163 billion into the economy during the March 2024 festive period, of which Rs. 87.8 billion was returned by April 2024. https://www.themorning.lk/articles/MXjSXhIDmugSgATFgHES *Priorities in Focus: Will Budget 2025 address Sri Lanka’s agricultural challenges?* • Public expenditure on agriculture as a share of total government spending has decreased from 6.4% to 2% between 2014 and 2023 • The irrigation subsector receives most of the agricultural spending (41%), with subsidies accounting for a high 26% • Change to funding priorities necessary to address critical concerns https://www.dailymirror.lk/business-news/Priorities-in-Focus-Will-Budget-2025-address-Sri-Lankas-agricultural-challenges/273-302251# *Sunshine Holdings 3Q profits under pressure as higher taxes weigh on consumer demand* Sunshine Holdings PLC’s third quarter performance showed that the Sri Lankan consumer still remains weak amid higher taxes, specially the higher value added tax (VAT). This is as the diversified conglomerate saw some stress in its consumer brands business and also in its agribusiness, as its margins and profits came under some stress in the three months ended in December 2024. https://www.dailymirror.lk/business-news/Sunshine-Holdings-3Q-profits-under-pressure-as-higher-taxes-weigh-on-consumer-demand/273-302254 *Cargills records strong Q3 performance; optimistic for 2025* Leading blue-chip company Cargills (Ceylon) PLC reported a strong bottom-line performance for the last quarter of 2024; driven by increased volumes across its key business segments—retail (supermarkets), consumer food (FMCG), and restaurants. For the three months ending December 2024, the company achieved a 9.1% increase in sales, totalling Rs. 61,865 million. https://www.ft.lk/front-page/Cargills-records-strong-Q3-performance-optimistic-for-2025/44-773000 *Aitken Spence records Rs. 4.3 b PBT, with triple digit growth of 124% in Q3* Aitken Spence PLC, a leading conglomerate with a diverse regional presence, reported a Profit Before Tax (PBT) of Rs. 4.3 billion, an increase of 124% for the nine months ended 31 December 2024. For the same period, the PBT excluding forex reached Rs. 4.9 billion. https://www.ft.lk/front-page/Aitken-Spence-records-Rs-4-3-b-PBT-with-triple-digit-growth-of-124-in-Q3/44-773002 *Softlogic Life hits Rs. 31.6 b in 3Q25* Softlogic Life marked a gross written premium (GWP) of Rs. 31.6 billion by December 31, 2024 (3Q FY25), with a 20% year-on-year growth and a total market share of 16.8%. Over the past 10 years, Softlogic Life has grown at an impressive 10-year GWP compound annual growth rate (CAGR) of 26%, significantly outpacing industry growth. https://www.themorning.lk/articles/AVagDEYflIcqFmHC1l31 _Softlogic Research_