AAKASH CAPITAL LIMITED Weekly Newsletter from Aakash Capital Limited for the week ending on 3rd January, 2020

NEPSE UPDATE

Indicators 29th Dec, 2019

2nd Jan, 2020

(+)/(-)

Change %

NEPSE 1167.41 1166.21 -0.10%

SENSITIVE 254.36 252.18 -0.86%

FLOAT 86.53 86.41 -0.14%

SEN. FLOAT 81.96 81.68 -0.34%

BANKING 1043.66 1036.01 -0.73%

TRADING 606.05 682.77 12.66%

HOTELS 1802.18 1920.99 6.59%

DEVELOPMENT BANKS 1588.23 1590.57 0.15%

HYDROPOWER 936.7 934.53 -0.23%

FINANCE 576.08 569.47 -1.15%

NON LIFE INSURANCE 4530.55 4524.18 -0.14%

MANU. & PRO. 2328.32 2412.33 3.61%

OTHERS 685.63 651.71 -4.95%

MICROFINANCE 1624.33 1679.48 3.40%

LIFE INSURANCE 5661.34 5862.58 3.55%

MUTUAL FUND 9.26 9.28 0.22%

Market Summary Statistics (29th Dec to 2nd Jan, 2020)

Total Turnover (Rs) 2,392,273,065

Total Traded Shares 7,184,639 Total Number of Transactions 33,277 Scrips Traded 181

Market Cap at Week start 1,482,203.69 Millions

Market cap at Week end 1,486,519.37 Millions

Floated Market Cap at Week start 537,615.42 Millions

Floated Market Cap at Week end 539,837.72 Millions

Bullion Update

As on 3rd January 2020 Hallmark Gold Rs.74,500/tola

Worked Gold Rs.74,200/tola

Silver Rs.900/tola

Quote for the week

“One of the funny things about the stock market is

that Every time one person buys, another sells, and

both think they are astute” - William Feather

The market decreased by 0.10% (1.20 points) in the

trading week between 29th December 2019 and 2nd

January 2020. The sensitive index, which measures the

performance of the companies classified under group

“A”, also registered the fall of 0.86% (2.18 points).

Similarly, float index which measures the performance

of securities which are floated to public also went

down by 0.14% and sensitive float followed the trend

by decreasing 0.34%.

This week the market opened at 1167.41 on Sunday

and went down 4.98 points to sit at 1162.43 The

market showed positive sentiment on Monday by

increasing 5.52 points. But it continued its falling trend

on Tuesday. Investors were confused on the remaining

trading days, as the market went 3.47 points up on

Wednesday and again 3.29 points down on Thursday

to end the week at 1166.21 level.

In this review period, among 12 sub-index, only 7 sub-

index were able to close higher. Trading sub-index

which gained 7.10% last week continued its increasing

trend with the highest gain of 12.66% in the reviewed

week. Similarly, Hotels sub-index also registered the

gain of 6.59%. The positive sentiment in the hotel

sector was due to the beginning of Visit Nepal 2020,

which aims to bring 2 million tourist in the country.

Development Banks, Manu & prod, Microfinance, Life

Insurance and Mutual Fund sub-index registered the

gain of 0.15%, 3.61%, 3.40%, 3.55% and 0.22%

respectively. However, the Banking, Hydropower,

Finance, Non-Life Insurance, and Others sub-index

registered the fall of 0.73%, 0.23%, 1.15%, 0.14%, and

4.95% respectively which have let the market to fall by

0.10%

The market witnessed normal volume of transaction

turnover this week. The total turnover stood at Rs.2.39

billion with average of Rs.478.45 million a day. The

total market value increased by Rs.3,577.52 million as

the market capitalization went up by 0.24%. Similarly,

floating market cap also registered the rise of 0.43%

this trading week.

.

Market Announcements

Kumari Bank Limited has extended its (30,00,000 units @ Rs.1000 per unit) 10.25% K.B.L. Debenture 2086 to the general public till (14th Magh, 2076).

United Insurance Company (Nepal) Limited has allotted its 1,57,649.60 units Promoter share in auction to the general public on 15th Poush, 2076 and refunding money to non-allottee investors from (17th Poush, 2076).

Srijana Finance Limited has published a notice regarding bid opening date of 2,08,523 units promoter share and 1,12,219 units ordinary share in auction to the general public on (17th Poush, 2076).

Chautari Laghubitta Bittiya Sanstha Limited is distributing 10.893% cash dividend directly to bank accounts to its shareholders and urged its shareholders to dematerialize their shares.

Nirdhan Utthan Laghubitta Bittiya Sanstha Limited is distributing 15.53% cash dividend directly to bank accounts to its shareholders and urged its shareholders to dematerialize their shares.

Shree Investment Finance Company Limited is distributing 10.65% cash dividend directly to bank accounts to its shareholders and urged its shareholders to dematerialize their shares.

Global IME Bank Limited is distributing 12.75% cash dividend directly to bank accounts to its shareholders and urged its shareholders to dematerialize their shares.

Chilime Hydropower Company Limited is distributing 5% cash dividend directly to bank accounts to its shareholders and urged its shareholders to dematerialize their shares.

Laxmi Bank Limited is distributing 10% bonus share directly to DEMAT accounts and 5% cash dividend directly to bank accounts to its shareholders.

Nepal Rastra Bank has published the monthly balance sheet for the month of Mangsir, 2076.

Jansewi Laghubitta Bittiya Sanstha Limited and Kalika Laghubitta Bittiya Sanstha Limited have received final merger approval f from NRB to commence their joint transaction in the name of Kalika Laghubitta Bittiya Sanstha Limited from 23rd Poush, 2076.

Barun Hydropower Company Limited has posted a net profit of Rs 15.81 million and published its 1st quarter company analysis of the fiscal year 2076/77.

Global IME Capital Limited has published (Global IME Samunnat Scheme-1) Net Assets Value (NAV) till Mangsir, 2076.

Sunrise Capital Limited has published (Sunrise Frist Mutual Fund) Net Assets Value (NAV) till Mangsir, 2076.

CBIL Capital Limited has published “Citizens Mutual Fund-1” Net Asset Value (NAV) till Mangsir, 2076.

CBIL Capital Limited has published “Citizens Mutual Fund-2” Net Asset Value (NAV) till Mangsir, 2076.

Laxmi Capital Market Limited has published “Laxmi Equity Fund” Net Asset Value (NAV) till Mangsir, 2076.

Sanima Capital Limited has published “Sanima Equity Fund” Net Asset Value (NAV) till Mangsir, 2076.

NIBL Ace Capital Limited has published “NIBL Pragati Fund” Net Assets Value (NAV) till Mangsir, 2076.

NIBL Ace Capital Limited has published “NIBL Samriddhi Fund-1” Net Assets Value (NAV) till Mangsir, 2076.

NIC Asia Capital Limited has published (NIC Asia Growth Fund) Net Assets Value (NAV) till Mangsir, 2076.

Mero Microfinance Bittiya Sanstha Limited has changed its name to Mero Microfinance Laghubitta Bittiya Sanstha Limited.

Siddhartha Bank Limited has published a notice regarding new interest rate and its effective from 14th Poush, 2076.

Sunrise Bank Limited has published a notice regarding new interest rate and its effective from 14th Poush, 2076.

Everest Bank Limited has published a notice regarding new interest rate and its effective from 15th Poush, 2076.

Nabil Bank Limited has published a notice regarding new interest rate and its effective from 15th Poush, 2076.

NMB Bank Limited has published a notice regarding new interest rate and its effective from 15th Poush, 2076.

Prabhu Bank Limited has published a notice regarding new interest rate and its effective from 15th Poush, 2076.

Swabhimaan Laghubitta Bittiya Sanstha Limited has announced its 3rd AGM going to be held on 10th Magh, 2076.

ICFC Finance Limited has announced its 16th AGM going to be held on 29th Poush, 2076 and published its audited financial highlights of the fiscal year 2075/76.

Srijana Finance Limited has announced its 18th AGM going to be held on 11th Magh, 2076.

Prabhu Capital Limited has announced its Special General Meeting going to be held on 25th Poush, 2076.

Surikhola Hydropower Limited has announced its Annual General Meeting going to be held on 22nd Poush, 2076.

NEPSE - TECHNICAL ANALYSIS

The Nepalese stock market seems to be in a bearish trend 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 resistance zone of 1172 after retracing from

1149 level. This week the market closed at 1166.21 forming a red candle. This week NEPSE opened at 1167.41 and formed a red

candle by closing at 1162.43, losing 4.98 points during the day. The overall market lost 1.20 points during the week. This week

the average turnover has decreased to Rs.478.45 million from 563.77 million of previous week. As of weekly line chart resistance

after 1172 level might be at around 1185 level.

Technical Indicators

Indicators Value Signal

Support (S1) 1149 -

Resistance (R1) 1172 -

Relative Strength Index (RSI) 59.60 Moderate zone

Moving Average Convergence Divergence (MACD) 8.18 Bearish

5-Day Exponential Moving Average (EMA) 1166.61 Bearish

20-Day Exponential Moving Average (EMA) 1157.77 Bullish

180-Day Exponential Moving Average (EMA) 1177.71 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 59.60 which indicates that the market is at moderate zone. There is no formation of divergence in

short term chart.

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 1179.09, 1160.09 and 1141.09 respectively. The market is trading in between the

upper and middle band which indicates the market is at short term bull.

Stock Analysis: Multipurpose Finance Company Limited (MPFL)

Established in March 1998, Multipurpose Finance Company Limited (MPFL) is a one-district level class C finance

company operating in Saptari district of Eastern Nepal. The Rajbiraj-based company is promoted by local

individual promoters from different professions. MPFL’s share capital is distributed among the promoters and the

public shareholders in the ratio of 60:40. Its equity shares are listed in the Nepal Stock Exchange.

Board of Directors

Name Designation

Mrs. Ful Mishra Chairman

Mr. Ajit Kumar Mishra Director

Mrs. Arpana Kumari Mishra Director

Mr. Jaya Prakash Thakur Director

Mr. Shivahari Prasad Bhattarai Director

Chief Executive Office: Mr. Ajit Kumar Mishra

Capital Structure (As on 32 Asar 2075)

Authorized Capital (Rs.) 100,000,000.00

Issued Capital (Rs.) 41,473,600.00

Paid Up Capital (Rs.) 41,473,600.00

Shareholding Pattern (As on 32 Asar 2075)

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

1 Domestic Ownership 41,473,600.00 100.00%

1.1 Nepal Government - -

1.2 “A” Class Licensed Institutions - -

1.3 Other Licensed Institutions - -

1.4 Other Institutions - -

1.5 Public 16,589,440.00 40.00%

1.6 Other (Promoter Group) 24,884,160.00 60.00%

2 Foreign Ownership - -

Total 41,473,600.00 100.00%

Financial Analysis (Yearly Analysis)

Year 2073/74 2074/75 2075/76* CAGR

Share Capital (Rs.000) 41,473.60 41,473.60 41,473.60 0.00%

Reserves & Surplus (Rs.000) 8,560.99 15,526.01 9,277.10 4.10%

Deposit Liabilities (Rs.000) 154,934.87 189,681.48 213,198.46 17.31%

Total Assets (Rs.000) 222,591.82 268,931.17 323,503.00 20.55%

Loans (Rs.000) 160,607.40 183,752.70 219,474.00 16.90%

Interest Income (Rs.000) 28,661.25 35,146.53 42,277.00 21.45%

Net Interest Income (Rs.000) 12,545.92 16,081.39 15,731.00 11.98%

Total Operating Income (Rs.000) 13,801.00 17,783.04 18,247.00 14.98%

Personnel Expenses (Rs.000) 3,466.54 3,820.60 3,461.00 -0.08%

Net Profit (Rs.000) 7,397.76 6,965.02 9,052.00 10.62%

Growth % -5.85% 29.96%

Net Interest Income to Total Operating Profit % 90.91% 90.43% 86.21%

Return on Equity (ROE) 10.73% 10.32% 17.84%

Return on Assets (ROA) 8.87% 2.27% 2.80%

EPS (Rs.) 17.84 16.79 21.83

DPS % 0.00% 0.00%

Book Value Per share (Rs.) 120.64 137.44 152.44

Market Value per share (Rs.) 144.98 157 119

Price Earnings Ratio 8.13 9.35 5.45

Capital Fund to RWA (CAR) % 25.97% 24.22% 25.51%

Non-Performing Loan(NPL) to Total Loan % 4.29% 4.63% 4.51%

Total Staff number 8 8

Multipurpose Finance Company Limited (MPFL) is a Saptari based district level finance company operating only in one district. As of

unaudited report of 2075/76* company has reported paid up capital of Rs.41.47 million which indicates it is still unable to maintain

a paid up capital directed by the Central Bank. As per the regulatory body, MPFL have to increase its paid up capital to Rs.400 million

by Poush 2076. The Reserve & Surplus has decreased to Rs.9.27 million from Rs.15.52 million of 2074/75. Similarly, Deposit Liabilities

has increased to Rs.213.19 million with 12.40% growth in 2075/76* which have increased the loans to Rs.219.47 million. As on

2075/76* Total Assets of the company has reached to Rs.323 million with Compounded Annual Growth of 20.55% in the review

period. Interest Income has increased by 20.29% in 2075/76* but due to increase in Interest Expenses company has registered 2.18%

decline in Net Interest Income. However, increase in other operating income and decrease in Personnel Expenses, Company has

able to increase its Net Income by 29.96% in last fiscal year. Company has not paid any dividend in the review period and it has not

declared any dividend from the profit of 2075/76.

Analyzing key indicators, Company has reported CAR of 25.51% which is above the minimum CAR directed by the Central Bank and

the Non-Performing Loan (NPL) to Total Loan has decreased to 4.51% from 4.63% in 2074/75. Currently company is operating only

in Saptari district with 8 employees.

Auction Notice

The company is selling its 1,850,721 units’ promoter and 149,657 units’ ordinary shares through auction from 14th to 28th Poush

2076 (30th December to 13th January 2020). The company has appointed Civil Capital Market Limited 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.

Snapshot of Performance

414.74 414.74 414.74

85.61

155.26

92.77

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

2073/74 2074/75 2075/76*

Share Capital and Reserve & Surplus

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

1,549.35

1,896.812,131.98

1,606.07

1,837.53

2,194.74

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

2073/74 2074/75 2075/76*

Deposits & Loans

Deposit Liabilities (Rs.lakhs) Loans (Rs.lakhs)

73.9869.65

90.52

17.84 16.7921.83

0.00

20.00

40.00

60.00

80.00

100.00

2073/74 2074/75 2075/76*

Net Profit vs EPS

Net Profit (Rs.lakhs) EPS (Rs.)

17.84 16.79 21.83

144.98157

119

0

20

40

60

80

100

120

140

160

180

2073/74 2074/75 2075/76*

EPS vs MPPS

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

34.67 38.21

8 8

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

2073/74 2074/75

No of Staff vs Personnel Expenses

Personnel Expenses (Rs.lakhs) Total Staff number

34.67

38.21

34.61

73.9869.65

90.52

0.00

20.00

40.00

60.00

80.00

100.00

2073/74 2074/75 2075/76*

Personnel Expenses vs Net Profit

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

Technical Analysis of MPFL as on January 2, 2020

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

Day Candle

Open 104

High 104

Low 104

Close 104

Pattern Analysis

Resistance R1: 105 R2: 107

Support S1:103 S2:102

Particulars Points Remarks

Volume 30 The daily volume of stock is lower than both 1

week‘s and 1 month’s average volume. Avg. Volume (1 week) 62.20

Avg. Volume (1 month) 121.00

No. of Transaction 1

The daily number of transaction is lower than 1 week’s and 1 month’s average no of transaction.

Avg. no. of Transaction (1 week) 1.60

Avg. no. of Transaction (1 month) 1.95

180 days Average (Rs.) 144.04 The price of the stock is below both the 180 day’s 360 day’s average. 360 days Average (Rs.) 177.76

52 Weeks High Price (Rs.) 262 The stock is currently trading around 52 week’s low price. 52 Weeks Low Price (Rs.) 97

Nepse Index 1 year Change -1.20% The overall market and industry has declined in last 1 year. The stock has also declined in last 12 months but gained in last 1 month.

Industry Index 1year Change -5.97%

Stock 1-Month Change 4.00%

Stock 1-Year Change -39.18%

Total Holdings of Mutual Funds (Kartik, 2076) - The Mutual Funds are not holding shares of the company.

Quarterly Analysis

Particulars Q1 2075/76 Q1 2076/77 Growth (%)

Paid-up Capital (Rs.000) 41,473.60 151,093.44 264.31%

Reserves & Surplus (Rs.000) 26,000.57 30,755.46 18.29%

Deposits from customers (Rs.000) 210,963.88 257,751.48 22.18%

Total Assets 313,724.66 480,294.79 53.09%

Loans & advances to customers (Rs.000) 210,801.06 243,152.77 15.35%

Net Interest Income (Rs.000) 3,889.28 1,827.96 -53.00%

Staff Expenses (Rs.000) 964.95 950.05 -1.54%

Net Profit (Rs.000) 593.66 2,188.86 268.70%

Earnings per share (EPS) 5.72 9.11 59.27%

Net worth per share 162.69 120.36 -26.02%

Credit to Deposit Ratio (%) 75.97% 55.31% -27.19%

Capital fund to RWA (%) 26.20% 53.87% 105.61%

NPL to Total Loan (%) 4.49% 2.85% -36.53%

As of Q1 of fiscal year 2076/77, the paid up capital is Rs.151.09 million. The company is in the process of auctioning its unsold

right share to meet the paid up capital by Poush 2076. It has reported decline in net interest income by 53% as compared to

Q1 of last year, but decline in personnel expenses and NPL to Total Loans, company has able to increase its Net Profit by

268.70%

Concluding Remarks

Multipurpose Finance Company Limited is a district level finance company operating in 1 district mobilizing 8

employees. From the above analysis, it is clear that the company is in the process of auctioning its unsubscribed right share

for the second time to meet the paid up capital directed by the Central Bank. Company needs to focus on its main operation

as Net Interest Income contribution has decreased on its Operating Income. It has been operating only in one district since

1998, for better market share and to gain the competitive advantage it needs to focus on its expansion. 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 financial market. 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) 52.73 MPFL is at moderate zone.

MACD (12,26,9) 0.4358 The MACD line is below the signal line and both are above the baseline.

Signal Line (12,26,9) 0.4399

Histogram (12,26,9) -0.0041

EMA (5,0) 104.26 The price is in between EMA 5 and EMA 20 days moving average.

EMA (20,0) 103.14

+DMI(13,8) 45.55 The +DMI is dominant over -DMI and ADX is at 19.30.

-DMI(13,8) 29.46

ADX (13,8) 19.30

The following table shows the total Dividend declared by the commercial banks from the profit of 2075/76

S.N Symbol Company Name Dividend

Total Dividend (%) Bonus (%) Cash (%)

1 NMB NMB Bank Limited 21.00 14.00 35.00

2 SBL Siddhartha Bank Limited 10.00 15.26 25.26

3 NCCB Nepal Credit & Commerce Bank Limited 15.00 0.78 15.78

4 KBL Kumari Bank Limited 10.00 0.52 10.52

5 LBL Laxmi Bank Limited 10.00 5.00 15.00

6 MBL Machhapuchchhre Bank Limited 5.00 11.00 16.00

7 EBL Everest Bank Limited 5.00 20.00 25.00

8 NBB Nepal Bangladesh Bank Limited 5.00 7.00 12.00

9 SBI Nepal SBI Bank Limited 6.00 10.84 16.84

10 HBL Himalayan Bank Limited 10.00 12.00 22.00

11 SCB Standard Chartered Bank Nepal Limited 0.00 22.50 22.50

12 NIB Nepal Investment Bank Limited 10.50 8.50 19.00

13 NABIL Nabil Bank Limited 12.00 22.00 34.00

14 CZBIL Citizens Bank International Limited 3.00 12.00 15.00

15 PCBL Prime Commercial Bank Limited 16.00 2.77 16.00

16 SRBL Sunrise Bank Limited 10.00 5.80 15.80

17 ADBL Agricultural Development Bank Limited 6.00 24.00 30.00

18 SANIMA Sanima Bank Limited 10.00 11.05 21.05

19 MEGA Mega Bank Nepal Limited 0.00 11.75 11.75

20 CBL Civil Bank Limited 0.00 6.57 6.57

21 JBNL Janata Bank Nepal Limited 6.00 6.00 12.00

22 NBL Nepal Bank Limited 15.00 10.00 25.00

23 GBIME Global IME Bank Limited 12.75 12.75 25.50

24 NICA NIC Asia Bank Limited 10.00 11.05 21.05

25 PRVU Prabhu Bank Limited 16.00 0.84 16.84

26 BOKL Bank of Kathmandu Limited 6.00 11.00 17.00

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Disclaimer and important information: This document has been prepared by Aakash Capital Limited for information and

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