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AAKASH CAPITAL LIMITED
Weekly Newsletter from Aakash Capital Limited for the week ending on 22nd February, 2019
NEPSE UPDATE
Indicators 17th Feb, 2019
21st Feb, 2019
(+)/(-) %
NEPSE 1109.72 1113.07 0.30% SENSITIVE 236.16 236.6 0.19% FLOAT 86.23 80.9 -6.18% BANKING 954.28 953.27 -0.11% HOTELS 1696.81 1721.52 1.46% DEVELOPMENT BANKS 1420.72 1417.24 -0.24% HYDROPOWER 1124.38 1117.83 -0.58% FINANCE 591.78 591.89 0.02% NON LIFE INSURANCE 5296.51 5342.14 0.86% MANU. & PRO. 1987.97 1990.22 0.11% OTHERS 703.26 706.2 0.42% MICROFINANCE 1387.06 1399.69 0.91% LIFE INSURANCE 5528.19 5594.78 1.20% TRADING 247.23 245.2 -0.82%
Market Summary Statistics (17th Feb to 21st Feb)
Total Turnover (Rs) 990,567,463.00
Total Traded Shares 3,576,841.00
Total Number of Transactions 25,694.00
Scrips Traded 173.00
Market Cap at Week start 1,349,570.59 Millions
Market cap at Week end 1,358,688.18 Millions
Floated Market Cap at Week start 47,234,168.84 Millions Floated Market Cap at Week end 475,554.39 Millions
Bullion Update
As on 22nd Feb, 2019 Hallmark Gold Rs.63,100/tola
Worked Gold Rs.62,800/tola
Silver Rs.785/tola
The market gained a meager 0.30% or 3.35 points in
the trading week between February 17 and February
21. Along with Nepse index, the float index also fell by
6.18% or 5.33 points. The sensitive index went up by
0.19% or 0.44 points to end the week at 236.6.
The secondary market had opened at 1117.70 points
on Sunday and went down 7.98 points to end the day
at 1109.72. On Monday, the index fell further by 7.21
points, hitting a 38 months low at 1102.51. The market
on Tuesday gained a major 21.72, followed by the
monetary policy review to check the increasing
interest on loan. However, the market couldn’t sustain
the next day as profit booking surged. It fell by 12
points on Wednesday and gained a slight 0.84 points
on Thursday to end the trading week at 1113.07.
In the review period, banking, development bank,
hydropower and trading subgroups ended in red.
Having said that, no significant changes in the NEPSE
index or any subgroup was seen compared with
previous trading week.
The total turnover during the trading week stood at Rs
990.57 billion. A lackluster market activity was seen,
with the average daily turnover at just Rs 198.11
million. This clearly indicates that investors are in a
wait and watch situation, as no new developments in
the market have taken. The total market value
increased by Rs 9117.59 million as the market
capitalization increased a minor 0.68% during the
trading week.
To conclude, the investors’ interest in the share
market is progressively fading. NRB’s mid-year
monetary policy review inclined towards addressing
the recent credit rate enigma fueled investor
optimism. The uninspired trading, however continued
as bankers criticized the policy, and debate rose
between the bankers and industrialists. This prompted
the investors into a wait-and-watch scenario as no
concrete developments have taken place in the
market.
.
News Update
PM instructs Finance Minister to intervene in reducing lending rates
Prime Minister KP Sharma Oli has instructed Minister for Finance Yuba Raj Khatiwada to make necessary 'intervention' in
reducing burgeoning interest rates of bank loans….Read More
NRB increases refinance fund size
the NRB has announced through the mid-term policy review that it will further increase the size of refinance fund to Rs 50
billion from existing limit of Rs 35 billion….Read More
International Monetary Fund predicts 6.5% growth
Nepal is expected to reach a growth rate of 6.5% in fiscal 2018-19, largely due to ongoing reconstruction, investment in
hydropower projects, a rebound in agricultural production, and strong tourism-related activities, according to the International
Monetary Fund….Read More
Central bank sets maximum interest rate spread at 4.5%
Nepal Rastra Bank has directed commercial banks to maintain the spread rate at a maximum of 4.5% by the end of the current
fiscal year ending mid-July. The central bank issued the directive through its mid-term review of the Monetary Policy released
on Monday….Read More
Government urged to allocate budget scientifically
The government has been recommended to promote ‘systematic and scientific’ allocation of its budget in a bid to ensure effective public expenditure at the federal, provincial and local levels….Read More
Market Announcements
7930226.30 units bonus shares of Chilime Hydropower Co. Ltd. has been listed on Falgun 09, 2075.
240250 units rights shares of Kisan Microfinance Bittiya Samstha Ltd. has been listed on Falgun 09, 2075.
8031117 units bonus shares of NIC Asia Bank Ltd. has been listed on Falgun 09, 2075.
1870274 units Rights shares of Century Commercial Bank Ltd has been listed on Falgun 09, 2075.
5500000 units IPO of Ghalemdi Hydro Limited has been listed on Falgun 05, 2075.
SEBON has approved 269,630 units share of Sparsha Laghubitta Bittiya Sanstha Ltd. to be issued to general public.
Global IME Bank Limited is going to issue 1,500,000 units "10.25% Global IME Bank Limited debenture 2080/81 " at
Rs.1000 per unit to the general public from Falgun 15 to Falgun 19, 2075.
Civil Bank Limited has proposed 4.05% cash dividend.
Sahara Bikash Bank Limited is distributing 1:2.5 ratio right share directly to DEMAT accounts.
Muktinath Bikas Bank Limited is distributing 18.25% bonus share directly to DEMAT accounts.
Shine Resunga Development Bank Limited is distributing 17.70% bonus share directly to DEMAT accounts.
Himalayan Distillery Limited is distributing Rs 21.05 per cash dividend directly to bank accounts of its shareholders
Manjushree Finance Limited is distributing its 2.9% cash dividend directly to bank accounts of its shareholders.
Nabil Bank Limited has announced its 34th AGM going to be held on Falgun 27, 2075.
Miteri Development Bank Limited has announced its 13th AGM going to be held on Chaitra 09, 2075.
Excel Development Bank Limited proclaim its 13th AGM going to be held on Chaitra 11, 2075.
Samata Microfinance Bittiya Sanstha Limited has changed its name to Samata Laghubitta Bittiya Sanstha Limited.
https://myrepublica.nagariknetwork.com/news/pm-instructs-finance-minister-khatiwada-to-intervene-in-reducing-lending-rates/https://myrepublica.nagariknetwork.com/news/nrb-increases-refinance-fund-size-to-rs-50-billion/http://kathmandupost.ekantipur.com/news/2019-02-19/international-monetary-fund-predicts-65-percent-growth.htmlhttp://kathmandupost.ekantipur.com/news/2019-02-20/central-bank-sets-maximum-interest-rate-spread-at-45pc.htmlhttps://thehimalayantimes.com/business/govt-urged-to-allocate-budget-scientifically/
NEPSE - TECHNICAL ANALYSIS
The benchmark index of Nepal, that made a high on 27th July, 2016 is currently on a bearish trend. The current bearish trend of
the market started from 16th of January, 2019. This trading week the market closed at 1112.87 showing bearish sentiment in
the market. Moreover, this trading week the market hit a 38 month low. The immediate support of the market lies at 1101 and
its strong support lies at 1022. Taking the Fibonacci retracement from 299 to 1881, 50% retracement lies at 1090 and 61.8%
retracement lies at 900. The mentioned Fibonacci retracement are the psychological support level for the market.
The weekly volume of the market stood at a dismal Rs 19.81 crore, which is even less than the previous week’s Rs 22.4 crore.
This shows a clear indication that investors are not attracted towards the stock market at the moment. Along with the market,
all the sub-indices and sector-wise indices are in the bearish trend. In a long-term view, the downfall of hydropower sector is
high in comparison to other sectors. In contrary, insurance is the only sector that has low downfall than that of other sectors
as well as the overall market.
This week, banking, development bank, hydropower and trading ended in a red zone. Among these, trading sub-group lost the
most. The other remaining sub-groups, namely, hotels, finance, non-life insurance, manufacturing, micro finance, life
insurance and others ended in the green zone. Among these hotels, non-life insurance, life-insurance and microfinance sub-
group was able to beat the market.
Currently, the market lacks volume and the selling pressure in the market is higher. The psychology of the investors are
instilled with indecisiveness and uneagerness and this is reflected in the stock market of Nepal. They are currently in a wait
and see strategy as the market and the economy as a whole has not seen any concrete positive changes.
Relative Strength Index (RSI) Analysis
RSI is a moment indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions
in the price of a stock. RSI is typically used on a 14-day time frame, measured on a scale from 0 to 100, where a value above 70
represents overbought and below 30 represents oversold condition.
The current RSI of NEPSE is 34.80 which implies that the market is near the oversold zone. No divergence in RSI is seen in the
as the fall in price and RSI is somewhat similar. When the market index was at 1195.54, the RSI was at 57.61 and beyond that
point, continuous fall in price and RSI can be observed. The market gained some optimism once the mid-term monetary policy
review was published this week, but this couldn’t last long as seen in the decline in RSI afterwards.
Moving Average Convergence Divergence (MACD)
MACD is a momentum oscillator formed by using two different moving averages, typically a 26 day EMA and 12 day EMA,
which provides specific buy/sell signal. When the MACD line crosses signal line from above, it is considered bearish, indicating
a sell signal and vice-versa.
Currently histogram, MACD and signal line is at -0.9789, -15.5927 and -14.6138 respectively. Both MACD line and signal line
are below the baseline. The MACD line is below the signal line after the crossover on 20th of January, 2019 and currently
moving deep below the baseline. A cross over might be seen in the next trading week, but this does not give a clear indication.
Moving Average Analysis
Moving average is a technical analysis tool that smooths out price data by creating a constantly updated average price. It is
used to identify the trend direction, support or resistance levels and also to generate potential buy/sell signals. Price crossover
and MA crossover are some of the strategies that can be used to buy/sell a stock.
The EMA (5, 0) is at 1114.68 and EMA (20, 0) is at 1132.81. The market is currently trading below 5 days and 20 days
Exponential Moving Average. The market is continuously falling after making the dead crossover on 20th of January, 2019. The
gap between 5 days and 20 days EMA is gradually increasing which supports the current bearish trend. Also, the 5-day EMA has
acted as a strong resistance level.
Bollinger Band
Bollinger band is a technical indicator that consists of a set of lines plotted two standard deviations up and below a 21-day
simple moving average. The bands are an indication of volatility; a widening gap indicates higher volatility and vice-versa.
Prices are relatively high when above the upper band and low when below the lower band.
The upper, middle and the lower bands are at 1175.21, 1135.65 and 1096.08 respectively. The market, which was trading
closer to the lower band moved its way up a little before reverting back closer to the lower band. From the starting of the
month of February, the gap between upper band and lower band has increased, signaling the volatility.
Stock Analysis – Nepal Credit and Commerce (NCC) Bank Limited
Company Introduction
Nepal Credit & Commerce Bank Ltd. (NCC Bank) formally registered as Nepal - Bank of Ceylon Ltd. (NBOC), commenced its
operation on October 14, 1996 as a Joint Venture with Bank of Ceylon, Sri Lanka. The Head Office of the Bank is located at
Siddhartha Nagar, Rupandehi while its Corporate Office is located at Bagbazar, Kathmandu. The name of the Bank was
changed to Nepal Credit & Commerce Bank Ltd., (NCC Bank) on 10th September, 2002, due to transfer of shares and
management of the Bank from Bank of Ceylon, to Nepalese Promoters. At present NCC provides banking services and facilities
to rural and urban areas of the country through its 107 branches and 71 ATMs.
The bank has an authorized capital of Rs 10 billion and issued capital of Rs 7.109 billion, followed by the recent right share
issuance of 2:1.
Board of Directors
The BOD is chaired by Mr. Upendra Keshari Neupane and Mr. Ramesh Raj
Aryal is the current CEO of the company.
Snapshot of performance
1.472.03
2.35 2.35
4.68 4.68
0.79 0.60 0.61
1.32
2.562.86
0.00
1.00
2.00
3.00
4.00
5.00
Equity (in arba)
Paid Up Capital Reserve and Surplus
35.4839.21
40.77
70.78
132.58
107.20
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
Net Profit (in crore)
1.56%1.50%
1.42%
2.17%
2.39%
1.45%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Return on Assets (ROA)
16.95%16.03%
14.59%
21.35%
23.16%
13.95%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Return on Equity (ROE)
Name Position
Mr. Upendra Keshari Neupane Chairman
Mr. Iman Singh Lama Member
Mr. Chandra Prasad Bastola Member
Mr. Madhav Prasad Bhatta Member
Mr. Krishna Shrestha Member
Dr. Kailash Patindra Amatya Member
Company Financials
Yearly Analysis:
The following table presents the trend of financial performance of NCCB from the FY 2012/13 to 2017/18.
Particulars 2017/18 (Q4) 2016/17(Q4) 2015/16 2014/15 2013/14 2012/13
Net Profit (‘000) 1,072,037 1,325,817 707,840.70 407,654 392,112 354,828
Paid Up Capital (‘000) 4,679,853 4,679,058 2,353,176 2,353,176 2,028,600 1,470,000
Reserve and Surplus (‘000) 2,864,760 2,560,040 1,315,731.52 607,891 598,280 794,168
Book Net Worth 161.22 154.71 155.91 145.97 178.7 154.03
Earnings Per Share (EPS) 22.91 28.34 30.08 17.32 19.33 24.14
Return on Equity (ROE) 13.95% 23.16% 21.35% 14.59% 16.03% 16.95%
Return on Assets (ROA) 1.45% 2.39% 2.17% 1.42% 1.50% 1.56%
Non-Performing Loan (NPL) 3.9% 4.8% 1% 2% 3% 3%
Price to Earning (PE) ratio 10.91% 25.12% 12.07 26.5 33.21 9.24
CD ratio % 76.76% 71.48% 80.46% 80.43% 80.30% 73.96%
*For the FY 2016/17 and FY 2017/18, 4th Quarterly data are used.
NCC bank has paid up capital of 4,679,853 but with the adjustment of right shares, the paid up capital of the bank will
increase to 7.01 arab. The non-performing loan of the bank has increased in recent 2 years, which shows its weaker
performance in lending; this ultimately hits the profit and loss statement of the bank as loan loss provisions has to be
maintained. Within the past two years, the bank has increased its reserve and surplus which gives a stable backbone in case
of any failure. The company financials shows decline in EPS, ROA and ROE but still the PE ratio of the company is low.
Quarterly Analysis:
The following table presents 2nd Quarter analysis of the company for the FY 2017/18 to 2018/19.
Particulars (Rs. In '000) Industry 2018/19 Q2 FY 2018/19 Q2 FY 2017/18 Q2 Q2 % change
Paid Up Capital 8,707,963.48 7,018,559 4,679,058 50%
Reserve & Surplus 6,050,027.70 4,179,303 3,769,101 11%
Borrowing 1,910,978.41 1,130,570 779,231 45%
Deposits 91,622,816.78 64,717,387 59,152,766 9%
Net Profit/(Loss) 1,052,204.00 741,172 530,019 40%
Non-Performing Loan (NPL) 1.47 3.53 4.04 -13%
Cost of Funds 7.2 7.95 8.64 -8%
Credit to Deposit (CD) Ratios 77.77 78.21 76.48 2%
Base Rate 9.98 10.87 11.45 -5%
Earnings Per Share (Annualized) 24.58 21.12 22.65 -7%
Net Worth Per Share 167.84 159.55 180.55 -12%
P/E Ratio 12.84 10.32 14.61 -29%
Liquidity Ratio 21.4 24.61 24.32 1%
Return on Equity 14.26 13.24 12.55 5%
Return on Assets 1.85 1.88 1.51 25%
Price To Book Ratio 1.76 1.29 1.14 13%
The Bank has increased its paid up capital by 50% in comparison to corresponding previous quarter but still need to maintain
the required paid up capital as directed by Nepal Rastra Bank. The reserve & surplus, borrowings, deposits and net profit of
the company has increased but is low the industry average. The NPL of the bank shows poor performance in loan collection
from clients which ultimately hits the profit/loss statement. The CD ratio of the bank is below 80% as guided by regulatory
body but the base rate is below industry average. The earnings per share and net worth is below industry average
and has declined in comparison to previous corresponding quarter. The liquidity ratio of the company is above
industry average that shows excess liquidity in the bank. The PE and PB ratio is above industry average whereas,
the cost of fund of the company is below industry average. The ROE of the company is below industry average
whereas, the ROA is above industry average. The company fundaments are poor in comparison to industry
average.
Dividend Distribution
Dividend 2016/17 2015/16 2014/15 2013/14
Dividend Per Share (Rs.) - - 16.84 40
Bonus % - - 16% 38%
Cash % - - 0.84% 2%
Dividend Payout Ratio - - 97.21% 206.94%
From the above table it is clear that NCC Bank has failed to distribute regular dividend to its shareholders. In Fiscal year
2013/14, The Company has distributed bonus from its reserves since the dividend payout ratio is 206.94%.
Technical Analysis of the Company (As on 21st February, 2019)
Day Candle
Open 205
High 207
Low 204
Close 206
Pattern Analysis
Chart Pattern Sideways
Resistance 224 236
Support 197 172
Higher Breakout Level 236
Particulars Points Remarks
Volume 7,647
The volume of the stock is in a declining trend. Avg. Volume (1 week) 17,686.60
Avg. Volume (1 month) 25,061.52
No. of Transaction 32 The number of transaction of the stock is low.
Avg. no. of Transaction (1 week) 50.60
Avg. no. of Transaction (1 month) 68.43
180 days Average 214.08 The price of the stock is trading below 180 days and 360 days average. 360 days Average 266.38
52 Weeks High Price 320
The stock price is moving towards 52 weeks low. 52 Weeks Low Price 172
Nepse Index 1-Year Change 19.75% The overall market is at downtrend and so as the industry as well as the stock. The 1 year change of stock is higher than that of the Industry and the overall market index.
Industry Index 1-Year Change 21.56%
Stock 1-Month Change -4.63%
Stock 1-Year Change -34.81%
Monthly Beta 0.965 The quarterly beta of the stock is above the market beta. Quarterly Beta 1.071
Total Holdings of Mutual Funds (Poush) 15,806 Poor holdings of stock by mutual fund.
Stock Holdings of Top Broker (from 31st July, 2018) 428,131 The sum of Stock holdings of 5 Brokers is shown with the average of their average buying and selling price. The holding period is taken after the price adjustment for 10% bonus share.
Top Broker Avg. Buy Price 210.9
Top Broker Avg. Sell Price 211.39
Indicators Points Remarks
RSI (14) 41.5767 BPCL is at moderate zone and nearer to oversold zone.
MACD (12,26,9) -1.9383 The MACD line is negative and converged to signal line and the histogram is above the baseline. So, MACD doesn’t give any indication of change in current trend.
Signal Line (12,26,9) -2.1419
Histogram (12,26,9) -0.2036
EMA (5,0) 206.1896 The EMA 5 and 20 are slightly above the price line.
EMA (20,0) 208.8062
+DMI(13,8) 21.5615 Both DMI are below 25 and +DMI is dominant over -DMI. The ADX is below the level of 25 which means the current trend is weak. The DMI doesn’t give proper indication when the stock is trending sideways. -DMI(13,8) 12.3933
ADX (13,8) 16.2578
Chaikin Money Flow (20) -0.1343 CMF is below the baseline which shows selling pressure in the market.
Concluding remarks
From the above financials it is clear that the condition of Bank is sound and the Bank is able to distribute dividend. The Bank
has basically focused on to increase its Reserves rather than its Paid up Capital. It has already issued right shares and currently
the Paid up Capital of Bank is 7.01 arab. NCC Bank still needs to issue shares to meet the required Paid up Capital of 8 arab as
directed by the regulatory body. The Bank is most likely to distribute Bonus shares either from its earnings or from its
reserves as we can see it has previously distributed huge bonus in the fiscal year 2013/14. Minimum required Bonus to meet
the Paid up Capital is 13.98%. The current price of the stock is very low and can be a proper time to buy for those investors
with long-term investment strategy.
Investing Solutions
Investing solutions enable individuals to realize their aspirations by making their money work for them.
Growing our hard-earned money should be simple and accessible to everybody, so that each of us is able to live the life we
desire. With this objective, we ensure we gain an in-depth understanding of each individual’s aspirations and ambitions so that
we are able to recommend the right investment solution. We encourage people to link their investments to specific life goals so
that they are able to realize these goals meticulously and with ease.
Portfolio Management Services
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Across the world people are turning to specialists Portfolio Management Services for managing their equity investments.
Portfolio Management Services is the Portfolio Management division of Aakash Capital that helps you access the equity market
in Nepal.
Portfolio Management Service brings you a whole range of investment products,
from which your portfolio manager puts together your optimal portfolio. We take
into account your financial goals, time horizon, risk appetite and investment
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Choose a solution that fits your needs
http://aakashcapital.com.np/portfolio-management-services/
Disclaimer and important information: This document has been prepared by Aakash Capital Limited for information and
illustration purpose only. The information provided in this document is subject to change. While this information has been
obtained from sources believed to be reliable, Aakash Capital Limited is not liable for erroneous information obtained from
the sources. Aakash Capital Limited, its directors and employees are not liable/responsible for any direct, indirect or
consequential loss arising from use of this document or its contents. Past performance is no indication of future results.
Aakash Capital is regulated by Securities Board of Nepal. This document may not be reproduced, distributed or published by
any person for any purpose without Aakash Capital Limited’s prior written consent.
Aakash Capital Limited
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Tel: 01-5111145
Email: [email protected]
Website: www.aakashcapital.com.np
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