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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Commercial Leasing Company Ltd (CLC) Introduction - A first glance..

Commercial Leasing Company Ltd (CLC) Introduction - A first glance..

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smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
The Commercial Leasing Company Ltd (CLC) has got Central Bank approval to operate as a finance company, and also plans to list its shares in the Colombo Stock exchange in line with the rules.
Accordingly its holding company Lanka ORIX Leasing Company (LOLC) will divest 10% of its shareholding in compliance with the mandatory listing rules for finance companies. The company name is also expected to be changed to Commercial Leasing & Finance Ltd in the near future while retaining the brand as ‘CLC’, according to a company press release.

A wholly-owned subsidiary of the LOLC Group since 2008, CLC was delisted in 2009 by the parent company, which took over the entire shareholding at the time. The company possesses a strong foundation of 24 years, backed by the might of its founders – Commercial Bank, Singer Sri Lanka and Chemanex, before its takeover by the LOLC Group.

Looking to the future, Mr Jayawardena said they have given special attention to developing both the micro and SME sectors of the country through innovative financial solutions. “The company is well positioned to take advantage of the exponential growth prospects of these sectors which we believe will contribute immensely to the country’s overall economic growth.

We have made notable progress in the agriculture sector, and we have implemented region-specific micro loans schemes with a view of uplifting the living conditions of the rual community by way of promoting income generating activitiesm,” he said.

Source - Sunday Times

I just got the intro docs and had a small glance at this..

As per the docs;
Financially the company revenue and PAT has been increasing and COS was also reduced in 2011.
During the year, the Company was further capitalized by Rs. 1 Bn enabling the company to maintain its rapid growth. The Company’s debt to equity ratio was at 4.2 times as at year end 2011, the interest income of the Company increased by 36% with interest on Hire purchase continuing to contribute significantly to the Company’s top line.

So I think as a renowned company their financial performance is superb.

The Stated Capital of the Company is Rs. 1,425,946,629/-. The Company on 30th September
2011 subdivided 1 existing issued and fully paid Voting Ordinary Share into 230 Voting Ordinary Shares, resulting in the existing 27,729,179 issued and fully paid Voting Ordinary Shares of the Company being increased to 6,377,711,170 voting ordinary shares.

Profit after tax (as @ 31st March) = 414,809(2009), 354,171 (2010), 664,445 (2011)
Total number of shares (issued and fully paid) = 6,377,711,170
Net asset value per share (as of 30th Sep 2011) = LKR 1.003
EPS as of 30th Sep 2011 (Six months) = LKR 0.434
Percentage for the private placement = 10%
Number of shares for the private placement = 637,771,117

NAV = 1.003 (@ 30 September)
Lets say the Asset value increased at a 10% rate for a fiscal year So NAV also grow at 10% for the same fiscal year, then NAV will be 1.003*10% = 1.10
Since the issue price is 5, PBV = 5/1.10 = 4.5, so this is going to be issued @ 4.5X of PBV
Usually we say 3X could be taken as the Max trading figure of a Financial Institute and at a rate of 4.5X this looks over valued.
Also 637Mn of shares on public release is no small amount. And over 6Bil issued shares at total (OK we know that LOLC is not going to sell) means its a massive quantity Wink

As you guys can see, we have been making so much of hype on PLC IPO cuz it was over 300+ mn shares, we wonder to whom these are gonna be sold???
Then again I have the same question regarding the CLC's introduction..

Just my thoughts, not a recommendation.. Pls share your thoughts..



Last edited by smallville on Wed Nov 16, 2011 5:50 am; edited 1 time in total

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
They will pre-arrange a buyer, at the same time some retailers will be victimized as happened in LOFC introduction which propelled to Rs 20. I think LOLC will become more attractive with CLC growth, and at the same time they will be able to reduce part of their huge debt by selling a stake

tj


Equity Analytic
Equity Analytic
@smallville

in your post you say
"NAV = 1.003 (I hope this is six months)
Lets say the NAV for a fiscal year as 1.003*2 = 2"

Can i know the reason for multiplying 1.003 by 2?

tj

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@tj wrote:@smallville

in your post you say
"NAV = 1.003 (I hope this is six months)
Lets say the NAV for a fiscal year as 1.003*2 = 2"

Can i know the reason for multiplying 1.003 by 2?

tj

The NAV describes the company's current asset and liability position. Investors might believe that the company has significant growth prospects, in which case they would be prepared to pay more for the company than its NAV.

So my calc was just to indicate if their assets grow rapidly in another 6 months, its fairly valued for the price they come up with..

But I've changed it now cuz we're applying for this considering the current performance and thinking that it will perform bertter in future, so its better go with the current valuation.

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