AAKASH CAPITAL LIMITED Weekly Newsletter from Aakash Capital Limited for the week ending on 22nd November, 2019

NEPSE UPDATE

Indicators 17th Nov, 2019

21st Nov, 2019

(+)/(-)

Change %

NEPSE 1135.95 1120.60 -1.35%

SENSITIVE 250.06 246.89 -1.27%

FLOAT 84.33 83.27 -1.26%

SEN. FLOAT 80.6 79.59 -1.25%

BANKING 1042.03 1031.19 -1.04%

TRADING 365.45 521.18 42.61%

HOTELS 1775.48 1755.88 -1.10%

DEVELOPMENT BANKS 1544.45 1535.61 -0.57%

HYDROPOWER 944.35 914.23 -3.19%

FINANCE 565.22 557.15 -1.43%

NON LIFE INSURANCE 4158.85 4061.59 -2.34%

MANU. & PRO. 2450.96 2259.76 -7.80%

OTHERS 634.42 636.16 0.27%

MICROFINANCE 1492.74 1473.67 -1.28%

LIFE INSURANCE 5015.19 4955.24 -1.20%

MUTUAL FUND 9.31 9.18 -1.40%

Market Summary Statistics (17th Nov to 21st Nov, 2019)

Total Turnover (Rs) 1,572,873,495

Total Traded Shares 5,520,822

Total Number of Transactions 26,143

Scrips Traded 167

Market Cap at Week start 1,435,490.44 Millions

Market cap at Week end 1,421,890.79 Millions

Floated Market Cap at Week start 522,127.28 Millions

Floated Market Cap at Week end 516,884.17 Millions

Bullion Update

As on 21st November, 2019 Hallmark Gold Rs.72,000/tola

Worked Gold Rs.71,700/tola

Silver Rs.860/tola

Quote for the week

“Do not save what is left after spending but

Spend what is left after saving.”

-Warren buffet

The market decreased by 1.35% (15.35 points) in the

trading week between 17th November and 21st

November 2019. The sensitive index, which measures

the performance of the companies classified under

group “A”, also registered a decline of 1.27% (3.17

points). Similarly, float index which measures the

performance of securities which are floated to public

also went down by 1.26% and sensitive float followed

the trend by decreasing 1.25%.

This week the market opened at 1135.95 on Sunday

and went down 4.59 points to sit at 1131.36 The

market failed to show positive signal in the review

week. The market declined 0.24 points on Monday

followed by 1.13, 1.65 and 7.74 points on Tuesday,

Wednesday and Thursday respectively. The market

closed at 1120.60 with negative candle on Thursday.

In this review period, most of the sectors closed lower

except the Trading and Others sub-index. The Manu &

Pro sub-index declined the most with 7.80% The

Hydropower sub-index also registered the fall of 3.19%

followed by Non-Life Insurance sector with 2.34% The

Banking, Hotels, Development Banks, Finance,

Microfinance, Life Insurance, and Mutual Fund sub-

index registered the fall of 1.04%, 1.10%, 0.57%, 1.43%,

1.28%, 1.20%, and 1.40% respectively. However, the

Trading sub-index registered the highest gain of

42.61%, followed by 0.27% of Others sub-index.

The market witnessed normal volume of transaction

turnover this week. The total turnover stood at Rs.1.57

billion with average of Rs.314.57 million a day. The

total market value decreased by Rs.19,544.37 million

as the market capitalization went down by 1.36%.

Similarly, floating market cap also registered a fall of

1.26% this trading week.

.

News Update

Newly appointed ministers take oath

President Bidya Devi Bhandari has administered the oath of office and secrecy to the newly appointed cabinet ministers on Thursday.....Read More

Government issues a second notice asking to stop ride-sharing services The government, which had backtracked on its earlier decision to ban ride-sharing services, has issued a fresh order, instructing not to use private vehicles for purposes other than specified.....Read More

Capital expenditure only 6% in first four months

The government spending on development works was recorded 6.05% of the allocated budget in the first four months of the current fiscal year, revealing low spending capacity of the government in the construction of infrastructure despite its repeated commitments to spearhead economic prosperity.....Read More

PM, Energy Minister inaugurate Upper Trishuli 3A hydropower project

Prime Minister KP Sharma Oli and Minister for Energy, Water Resources and Irrigation Barsaman Pun jointly inaugurated the Upper Trishuli 3A hydropower project on Monday.....Read More

Dahal to lead party front, Oli to serve as PM whole five years

The secretariat meeting of the ruling Nepal Communist Party on Wednesday afternoon has decided to hand over all the executive powers of the party to co-chairman Pushpa Kamal Dahal.....Read More

Market Announcements

Muktinath Bikas Bank Limited is selling its 1,02,516.32 units promoter share and 3,00,703.93 units ordinary share in an auction to the general public from (8th to 15th Mangsir, 2076).

United Insurance Company (Nepal) Limited is selling its 1,57,649.60 units promoter share and 3,41,543 units ordinary share in an auction to the general public from (10th to 17th Mangsir, 2076).

Laxmi Bank Limited has allotted its (20,00,000 units @ Rs.1000 per unit) "10% Laxmi Debenture 2086" to the general public on 1st Mangsir, 2076.

Agricultural Development Bank Limited urges its shareholders to collect uncollected due dividends.

Tinau Mission Development Bank Limited and Nepal Community Development Bank Limited have received final approval from NRB to commence their joint transaction (after Acquisition) in the name of Tinau Mission Development Bank Limited from 22nd Mangsir, 2076.

Upakar Laghubitta Bittiya Sanstha Limited has posted a net profit of Rs 4.56 million during the 1st quarter of the fiscal year 2076/77.

Siddhartha Insurance Limited has posted a net profit of Rs 47.95 million and published its 1st quarter company analysis of the fiscal year 2076/77.

Sahara Bikash Bank Limited has posted a net profit of Rs 2.40 million and published its 1st quarter company analysis of the fiscal year 2076/77.

Soaltee Hotel Limited has posted a net profit of Rs 29.52 million and published its 1st quarter company analysis of the fiscal year 2076/77.

Shivam Cements Limited has published its 4th AGM minute.

Sangay Hydropower Company Limited has announced its Annual General Meeting going to be held on 2nd Poush, 2076.

Garima Bikas Bank Limited has announced its 13th AGM going to be held on 27th Mangsir, 2076.

Himalayan Distillery Limited has announced its 19th AGM going to be held on 1st Poush, 2076 and its audited financial highlights of the fiscal year 2075/76.

Muktinath Bikas Bank Limited has announced its 13th AGM going to be held on 30th Mangsir, 2076.

Nepal SBI Bank Limited has announced its 26th AGM going to be held on 29th Mangsir, 2076.

NEPSE - TECHNICAL ANALYSIS

The Nepalese stock market declined continuously after it made its top on 27th of July, 2016. The market had shown short term

bull in the month of March-April (during Nepali New Year 2076 BS) and reached the height of 1349 on 30th May 2019 but could

not close above the resistance level of 1340. Currently, the index is at 1120 level after falling from 1147 level last week. However,

in a weekly line chart the index is trading around the support zone of 1120 level. This week the market closed at 1120.60 forming

a red candle. This week NEPSE opened at 1135.95 and formed a red candle by closing at 1131.36, losing 4.59 points during the

day. The overall market lost 15.35 points during the week. This week the average turnover has decreased to Rs.314 million from

345 million of previous week. As of weekly line chart the short term support is at around 1105 after 1120 level.

Technical Indicators

Indicators Value Signal

Support (S1) 1105 -

Resistance (R1) 1132 -

Relative Strength Index (RSI) 35.07 Moderate zone

Moving Average Convergence Divergence (MACD) -5.79 Bearish

5-Day Exponential Moving Average (EMA) 1127.64 Bearish

20-Day Exponential Moving Average (EMA) 1135.21 Bearish

180-Day Exponential Moving Average (EMA) 1181.24 Bearish

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.

Current RSI value of NEPSE is 35.07 which indicates that the market is at moderate zone. In a weekly chart while comparing from

22nd September to 21st November 2019, there seems the formation of bullish divergence if the market retrace from the support

level of 1120.

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 MACD and signal line is at -5.79 and -4.82 respectively. MACD line is below the signal line and both are below the base

line. MACD has shown bearish signal for the market.

Moving Average Analysis

Moving average is a technical analysis tool that smooth 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) green line is at 1127.64 and EMA (20, 0) red line is at 1135.21 The index is currently trading below 5 and 20 days

Exponential Moving Average. This indicates that the overall market is at correction phase.

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 1149.64, 1136.20 and 1122.77 respectively. The market is trading around the lower

band which indicates the support signal.

Stock Analysis: Muktinath Bikas Bank Limited (MNBBL)

Muktinath Bikas Bank Limited (MNBBL) was established on 19th Poush 2063 B.S. (3rd January 2007 A.D.) The Bank is licensed

by the Central Bank of Nepal to operate as a “B” Class National Level financial institution with its Central Office at Kamaladi,

Kathmandu, Nepal.

The Bank offers inclusive financial services to customer segments covering Corporates, SMEs, Agriculture Retail Businesses and Microfinance. It has a special wing for Small and Micro-financing which is a model for micro banking activities throughout the development banks in Nepal. The Bank is committed to good corporate governance practices and banking activities with prudent banking culture. It has been offering various products and services for its customers with competitive pricing in the market. It has been able to provide diversified service (Modern Banking, Rural Banking, and Micro Banking) backed by the latest banking technologies.

Board of Directors

Name Designation

Khim Prakash Malla Chairman

Narayan Kumar Shrestha Director

Narayan Prasad Paudel Director

Gajendra Man Shrestha Director

Churamoni Kandel Director

(Source: https://www.muktinathbank.com.np/)

Chief Executive Officer: Pradyuman Pokharel

Capital Structure (As on 31st Asadh 2075)

Authorized Capital (Rs.) 3,000,000,000.00

Issued Capital (Rs.) 2,591,763,317.00

Paid Up Capital (Rs.) 2,591,763,317.00

Shareholding Pattern (As on 31st Asadh 2075)

S.N. Particulars Amount (Rs.) Percent (%)

1 Domestic Ownership 2,591,763,317.00 100.00%

1.1 Nepal Government - -

1.2 “A” Class Licensed Institutions - -

1.3 Other Licensed Institutions - -

1.4 Other Institutions - -

1.5 Public (Public) 1,269,965,691.00 49.00%

1.6 Other (Promoters) 1,321,797,626.00 51.00%

2 Foreign Ownership - -

Total 2,591,763,317.00 100.00%

Financial Highlights (Yearly Analysis)

Year 2071/72 2072/73 2073/74 2074/75 2075/76* CAGR

Share Capital (Rs.000) 838,432.75 1,123,499.89 1,977,798.41 3,064,760.12 3,064,760.12 38.27%

Reserves & Surplus (Rs.000) 133,613.21 220,805.68 312,010.83 450,073.96 670,295.42 49.66%

Deposit Liabilities (Rs.000) 7,781,557.59 11,276,653.13 16,775,223.46 30,354,844.68 41,645,378.72 52.10%

Total Assets (Rs.000) 9,000,471.56 12,936,752.31 19,592,340.00 34,649,257.22 52,033,604.48 55.06%

Loans (Rs.000) 6,625,259.81 9,798,613.58 15,159,394.99 25,003,027.78 37,945,434.35 54.70%

Interest Income (Rs.000) 836,242.93 1,174,796.01 1,881,952.81 3,100,549.47 5,142,774.03 57.48%

Net Interest Income (Rs.000) 485,446.70 690,890.58 1,031,814.91 1,258,139.38 1,918,945.47 41.00%

Total Operating Income (Rs.000) 588,883.72 853,527.12 1,253,252.54 1,664,560.45 2,538,909.83 44.10%

Personnel Expenses (Rs.000) 133,491.66 153,830.62 257,902.32 348,961.03 715,513.60 52.16%

Net Profit (Rs.000) 217,644.33 361,368.50 486,933.78 575,528.63 853,201.03 40.71%

Growth % - 66.04% 34.75% 18.19% 48.25%

Net Interest Income to Total Operating Profit %

82.44% 80.95% 82.33% 75.58% 75.58%

Return on Equity (ROE) 23.72% 26.75% 21.38% 16.26% 13.10%

Return on Assets (ROA) 2.60% 2.75% 2.51% 1.65% 2.19%

EPS (Rs.) 35.99 43.10 32.09 22.20 29.86

DPS % 32.63% 34.00% 21.05% 19.21% 18.53%

Book Value Per share (Rs.) 152.02 160.34 148.43 135.62 151.77

Market Value per share (Rs.) 564 1307 971 378 310

Price Earnings Ratio 15.67 30.32 30.26 17.03 10.38

Capital Fund to RWA (CAR) % 13.17% 12.28% 14.71% 14.20% 12.97%

Non-Performing Loan(NPL) to Total Loan %

0.19% 0.09% 0.02% 0.0044% 0.13%

Total Staff number 479 541 698 965 -

Base on the data presented above, the bank has made consistent growth in almost all the fundamentals in last five years. As of unaudited report of 2075/76 the company has reported share capital of Rs.3.06 billion. It has already met the paid-up capital of Rs.2 billion as directed by Nepal Rastra Bank in fiscal year 2074/75. The company has reported healthy growth in Reserve & Surplus with 49% Compounded Annual Growth Rate (CAGR) including highest growth of 65% in the year 2072/73 in the review period. Deposit liabilities has reached to 41.64 billion with 37% growth. Similarly, the bank has reported the CAGR of 55% in Total Assets, 54% in Loans, 57% in Interest Income, which have resulted the CAGR of 40% in Net Income.

Analyzing the important fundamental ratios like Capital Adequacy ratio (CAR) and Non-performing loan to Total loan, they seems to be in a stable position in the review period. As of 2075/76 CAR stand at 12.97% which indicates the safer side as directed by NRB and NPL to Total loan is 0.13%. Most of the fundamentals of the bank are operating above the industry average which indicates the benefit of competitive advantage in national level development bank sector. Currently the bank is providing financial services through 134 branches mobilizing more than 950 employees in all seven provinces. The company has sound fundamentals and possess huge potential in the Nepalese emerging financial market.

The bank is providing consistent dividend either in the form of cash or bonus. Bank has practice of giving bonus dividend than cash to its shareholders. The bank will distribute 17.60% bonus to its shareholders from the earnings of 2075/76 after 13thAGM which is going to held on 30th Mangsir 2076.

Snapshot of Performance

83.84112.35

197.78

306.48 306.48

13.36 22.08 31.20 45.01 67.03

0.00

100.00

200.00

300.00

400.00

2071/72 2072/73 2073/74 2074/75 2075/76*

Share Capital & Reserve and Surplus

Share Capital (Rs.crores) Reserves & Surplus (Rs.crores)

778.161,127.67

1,677.52

3,035.48

4,164.54

662.53 979.86

1,515.942,500.30

3,794.54

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

2071/72 2072/73 2073/74 2074/75 2075/76*

Deposit & Loans

Deposit Liabilities (Rs.crores) Loans (Rs.crores)

21.7636.14

48.6957.55

85.32

35.99 43.10

32.0922.20

29.86

0.00

20.00

40.00

60.00

80.00

100.00

2071/72 2072/73 2073/74 2074/75 2075/76*

Net Profit vs EPS

Net Profit (Rs.crores) EPS (Rs.)

35.9943.10

32.09 22.20 29.86

564

1307

971

378 310

0.00

500.00

1000.00

1500.00

2071/72 2072/73 2073/74 2074/75 2075/76*

EPS vs MPPS

EPS (Rs.) Market Value per share (Rs.)

13.35 15.38 25.79 34.90

479 541

698

965

0.00

500.00

1,000.00

1,500.00

2071/72 2072/73 2073/74 2074/75

Total staff vs Personnel Expenses

Personnel Expenses (Rs.crores) Total Staff number

13.35 15.38 25.7934.90

71.55

21.76

36.1448.69 57.55

85.32

0.00

20.00

40.00

60.00

80.00

100.00

2071/72 2072/73 2073/74 2074/75 2075/76*

Personnel Expenses vs Net Profit

Personnel Expenses (Rs.crores) Net Profit (Rs.crores)

152.02 160.34 148.43 135.62 151.77

564

1307

971

378310

0

500

1000

1500

2071/72 2072/73 2073/74 2074/75 2075/76*

BVPS vs MPPS

Book Value Per share (Rs.)

Market Value per share (Rs.)

23.72%26.75%

21.38%

16.26%13.10%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2071/72 2072/73 2073/74 2074/75 2075/76*

Return on Equity (ROE)

Technical Analysis of MNBBL as on November 21, 2019

(Source: https://pro.sharesansar.com)s

Day Candle

Open 315

High 316

Low 310

Close 313

Pattern Analysis

Chart Pattern Short term sideways

Resistance R1: 318 R2: 323

Support S1: 309 S2: 300

Higher Breakout Level 338

Particulars Points Remarks

Volume 3,448 The daily volume of stock is lower than 1 week’s

and 1 month’s average volume. Avg. Volume (1 week) 7,314.80

Avg. Volume (1 month) 6,615.29

No. of Transaction 35 The daily number of transaction is lower than 1 week’s but higher than 1 month’s average no of transaction.

Avg. no. of Transaction (1 week) 37.40

Avg. no. of Transaction (1 month) 34.19

180 days Average (Rs.) 348.56 The price of the stock is trading below both the 180 day’s 360 day’s average. 360 days Average (Rs.) 362.48

52 Weeks High Price (Rs.) 420 The stock is currently trading in between 52 week’s low and high price. 52 Weeks Low Price (Rs.) 298

Nepse Index 1 year Change -5.24% The overall market has declined but the industry has gained in the last 12 months. The stock has gained in the past one month and even more in last one year.

Industry Index 1year Change 4.57%

Stock 1-Month Change 2.29%

Stock 1-Year Change -22.91%

Total Holdings of Mutual Funds (Ashwin 2076) 456,490 The Mutual Funds are holding less number of shares of the company as compared to other companies.

Auction Notice

The company is selling its 300,703.93 units’ ordinary and 102,516.32 units’ promoter shares through auction from 8th Mangsir

to 15th Mangsir 2076 (24th November to 1st December 2019). The company has appointed Muktinath Capital as the issue

manager for the auction. Interested individuals can bid for the auction above Rs.100 per share with minimum units of 100 units.

Concluding Remarks

Muktinath Bikas Bank Limited is a national level development bank serving its customer from 134 locations through more than

950 employees. From the above analysis, it is clear that the company has enjoyed a healthy growth in business and its

operations. Most of the fundamental indicators of the company are growing and has potential to grow further in the Nepalese

emerging market where only 45% of total population have access to the banking system. In Overall, company seems to be in a

stable position and can become one of the catalyst for the economic development of the country.

Indicators Points Remarks

RSI (14) 47.66 MNBBL is at moderate zone.

MACD (12,26,9) -1.59 The MACD line is above the signal line but both are above the baseline.

Signal Line (12,26,9) -2.05

Histogram (12,26,9) 0.45

EMA (5,0) 314.90 The price is below the EMA 5 and EMA 20.

EMA (20,0) 314.73

+DMI(13,8) 16.16 The -DMI is dominant over +DMI and ADX is at 15.61.

-DMI(13,8) 17.41

ADX (13,8) 15.61

Chaikin Money Flow (20) -0.16 CMF is below the baseline which shows selling pressure for the stock in the market.

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