CDB performance

In the Banking and Finance sector one of the undervalued and steadily growing stock is CDB. I am sharing certain information to get your feed back whether CDB can keep on the momentum going.

From 2001 to 2011, CDB’s total asset base has grown from mere Rs. 276Mn to Rs. 14Bn. The annual revenue has grown from mere Rs. 25Mn to around Rs.2 Bn at present. Net assets which recorded a negative figure in 2001 have been converted to a positive of Rs. 1.91Bn. Deposits from Customers have grown to 6Bn. A loss making entity in 2001, CDB has continuously recorded growth in profitability since 2004. CDB was recently assigned BBB-/P3 credit rating by RAM Rating (Lanka) Ltd. CDB today ranks as the 7th largest player in terms of total assets among 36 financial institutions registered under the Finance Companies Act with Central Bank of Sri Lanka.

Quarterly Performance
Sep'09 Dec'09 Mar'10 Jun'10 Sep'10 Dec'10 Mar'11 Jun'11 Sep'11
Int Income 335 372 370 380 419 443 489 533 597
Other Income 28 30 36 36 46 166 246 40 126
363 402 406 416 465 609 735 573 723

Net Income 129 140 194 199 250 384 481 299 418.5

Oper.Exp 102 106 125 140 161 180 163 198 229

Bad Debt Prov 18 18 25.7 12 10 -15 73.4 7.9 5.1

PAT 3.1 10.3 40.6 34.5 65 211 222 80.2 161

EPS 0.08 0.26 1.02 0.87 1.57 5.31 5.6 2.02 3.58


• Earning from Interest Income shows a steady increase from Qtr to Qtr
• Other Income shows a steady increase and has peaked during the Dec & Mar 2010
• EPS showing a steady growth up to Mar’10 and sliding back

The peak performance of CDB can be seen during Mar’11 Qtr where the Total Income has touched 735Mn, and out of it 246 Mn has come from Other Income and PAT recorded 222Mn.

Other income is a major portion of their Top line and bottom line performance. In the Jun 2011 Qtr Interest income has increased to 533Mn compared to 489Mn in March’11, Since the Other Income portion is very low in June 11, reporting only 40Mn the PAT has come down to 80.2Mn compared to previous Qtr 222Mn.
If we analyze the Other Income portion for the FYE 2010/11

Dividend Income 2.5 Mn
Fees & Comm 150.6 Mn
Disp of Leased Asst 28.3 Mn
Sale of FA 1.6 Mn
Quoted Inv-M2M 311.7 Mn
Total 494.7 Mn

The only Quoted Security Investment CDB has invested is in Ceylinco Insurance. They hold 564,000 shares making them the 7th largest shareholder. The cost of the Investment is 99,909,075, averaging for a price of 178 per share. The market Value as at 30March 2011 reported is 411,600,000 which averages at Rs.730 per share.

I don’t know whether CINS traded at this level during March 2011. Even if the price is correct, have to see what they are going to report at the current price level.


CDB recorded an EPS of 13.32 last FY. Since the other income portion has diminished in value only area they can report a good PAT is through the increasing interest income base. Still if they can report an EPS of 5.50 for the next 02 Qtrs still its undervalued.

Can they achieve

Good analysis.

This is another share in BFI to keep an eye on. Now trading below rights issue price.

Earlier, the main concern was their "other income" value were higher and the the skepticism whether it would not reoccur.

However last quarter report looks healthy and their Interest income also has improve as also Hawkeye pointed out.

The sharehold list also seems tempting ;-)

Am waiting for this quarter report to see the confirmation of their direction from last quarter.

Hi Hawk Eye

Very good analysis.. Thanks. Sofar I did not follow this shares. I just want to know abouth their finacial produts.. Did u analyse?

Is this bank towards to dvelopment banking activities or commercial banking, since interest spred to development bank is very much low than the commercial bank.

If u did the analyse on their product base pls share with us...

Thanks

http://forum.srilankaequity.com/t14634-lfin-financial-highlights-it-is-a-sleeping-giant

Good work Hawk , Thanks for sharing

when JB guys are interested there is usually something interesting.

It is in my Reidar

why this thread is in Prison....

TortoizePlus wrote:why this thread is in Prison....

I too have the same question in my mind.

I've been following CDB for quite a while and have made several posts on it in this forum. In my opinion it's a matter of time until this counter has a run, it's been dragged down by the overall market sentiment. Fair value for this share is Rs100+, but then again, fundamentals don't seem to apply at the CSE. At least not yet. A substantial amount of my portfolio is CDB and I have no intention of selling anytime soon, regardless of what happens.

TortoizePlus wrote:why this thread is in Prison....

Good question.

EPS--------------------8.62
NAVPS----------------39.64
Net Interest income increased by 52% than last year same qtr
PAT increased by 28% than the last year

PER as at today is 5.23 by considering the AEPS as11.49

http://www.cse.lk/cmt/upload_report_file/981_1327635470.pdf - if they concentrate more on the loan recovery process more returns could be expected

Rajaraam wrote:

TortoizePlus wrote:why this thread is in Prison....

I too have the same question in my mind.

May be original poster post it in prison section accidentally.Otherwise any mod would not move this to prison. If moved mover should be in prison
Moved to talk section.

osmand wrote:EPS--------------------8.62
NAVPS----------------39.64
Net Interest income increased by 52% than last year same qtr
PAT increased by 28% than the last year

PER as at today is 5.23 by considering the AEPS as11.49

EPS 8.62 is for Nine Months, 3rd quarter EPS is 3.02. Annualized EPS should be about 11.50-12.00.