Alliance Finance Debenture Issue at a glance

sriranga · 1 Debenture Issue - Alliance Finance Tue Aug 27, 2013 5:07 pm

sriranga

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Alliance Finance Debenture Issue at a glance Alli10

http://www.cse.lk/cmt/upload_cse_announcements/5001377601799_.pdf

Last edited by sriranga on Tue Sep 03, 2013 10:17 am; edited 1 time in total

salt · 2 Re: Alliance Finance Debenture Issue at a glance Tue Aug 27, 2013 5:25 pm

salt

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It's midsize (large) firm with LKR 18.7 billion of assets & LKR 9.5 billion of deposits

Plan to raise LKR 1.7 billion
Its quite risky to invest in mid-low size finance companies now. My recommendation to anybody who plan to invest in debt products, not advisable to go for finance companies except top 2, CFIN & PLC.

I qualify, this is personal opinion

Slstock · 3 Re: Alliance Finance Debenture Issue at a glance Tue Aug 27, 2013 5:39 pm

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Why ?

salt wrote:

Its quite risky to invest in mid-low size finance companies now.

Fresher · 4 Re: Alliance Finance Debenture Issue at a glance Tue Aug 27, 2013 6:58 pm

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so this is their 2nd debenture issue within one year.

salt · 5 Re: Alliance Finance Debenture Issue at a glance Tue Aug 27, 2013 7:06 pm

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You may see pressure on margins from two sides
Slow down in business
Increase in defaults of sub prime borrowers

Additionally,
Lost of pawning business
Raising funds in low rates environment
Tightening regulation may squeeze margins

Slstock · 6 Re: Alliance Finance Debenture Issue at a glance Tue Aug 27, 2013 7:47 pm

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Actually don't you think the worst period in this financial crunch is behind us. Unless for the unforseen not sure why Govn should tighten policies more?

Selected companies with good management can withstand these issues like they have done in the past.

Just take Alli and have a look at Quarter report and what they say about Gold issue in annual report.

If not for impairment see where ALLI eps would be.

If gold price stabilize around $1300 this year , with 10% tax, it will be roughly less than 10% from March 3st price. Right now it is almost march 31st prices.

Some Fin companies have very low exposure to Gold. Other like ALLI has about 15%. If this is managed well , i don't see big issue in loss of business. These gold loans are mainly for short term basis and for urgent financial needs.

Raising funds : Let see whether this Debenture gets fully subscribed. So far raising fund have not been an issue right?

salt wrote:You may see pressure on margins from two sides
Slow down in business
Increase in defaults of sub prime borrowers

Additionally,
Lost of pawning business
Raising funds in low rates environment
Tightening regulation may squeeze margins

salt · 7 Re: Alliance Finance Debenture Issue at a glance Wed Aug 28, 2013 1:21 am

salt

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Unfortunately, we never learn any lesson.
We were unable to select better shares, same way we are unable to select better debts. End of the day, all are pledges, wether it is fixed or not fixed. You make a judgement on the future capacity to pay returns.

Lets blame later on like we blame today.... For over priced IPOs, looting money through public offers..... EXPO, SHL, .... I may not remember all... Only to name a few

Slstock · 8 Re: Alliance Finance Debenture Issue at a glance Wed Aug 28, 2013 7:25 am

Slstock

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Salt,

Just like in life, we know share market will not perform always. though we can try we cannot beat the market always with very share we hold. Any reason why positive earning companies last quarter are sold at a bargain prices now ( with the speculative going for a hit)?

The issue is good will get caught with the bad, when thigns are negative. We need to identify the good and be patient with them. Dividend paying shares are a bonus during these period as we get something.

One thing about finance companies, we can study there 5-10 year history to get an idea how strong the management is. Some of the issues we have now have been in the past and they got through them with time.

Collectively here we can identuy companies in trouble. How many of us predicted a Crisis for CIFL when it was Rs 7-9 even. How many warning we gave.

I am not saying all listed Fin companies at CSE are good. But we cna identify the one with growth potential right even during these bad times.

When there was fraud at CFVF and when it hit Rs 7 no one bought. Now it is the talk of forum.

Sometimes these crisis gives us opportunities.

BTw, a share ( not fin) you and I talked about is trading at bargains now.

salt wrote:Unfortunately, we never learn any lesson.
We were unable to select better shares, same way we are unable to select better debts. End of the day, all are pledges, wether it is fixed or not fixed. You make a judgement on the future capacity to pay returns.

Lets blame later on like we blame today.... For over priced IPOs, looting money through public offers..... EXPO, SHL, .... I may not remember all... Only to name a few

sriranga · 9 Alliance Finance Debenture Issue at a glance Tue Sep 03, 2013 10:12 am

sriranga

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Alliance Finance Debenture Issue at a glance Alli110

Alliance Finance Debenture Issue at a glance Alli210

Alliance Finance Debenture Issue at a glance All310

Alliance Finance Debenture Issue at a glance All1410

http://www.cse.lk/pdf/Alliance_Pros.pdf

salt · 10 Re: Alliance Finance Debenture Issue at a glance Tue Sep 03, 2013 11:08 am

salt

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5 year Zero coupon nominal rate of 23% , yield of 16.5%
Looks very good. In fact excellent compared to their rival ... SFIN 3 year rate was 14.25% with BBB ratings