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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Finance and Leasing Sector

Finance and Leasing Sector

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41Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Sun Apr 17, 2016 10:48 pm

SLFINANCEWATCH


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Good Night Friends..Happy Trading on Tomorrow..

42Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Sun Apr 17, 2016 10:48 pm

karuna


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
When I post bli equity champ blamed to me from something words over value like that . Now asking questions ?

 IT'S TIME WASTE  FOR ME

43Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Sun Apr 17, 2016 10:48 pm

SLFINANCEWATCH


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Good Night Friends..Happy Trading on Tomorrow..

44Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Sun Apr 17, 2016 11:01 pm

EquityChamp


Moderator
Moderator
I sense the making of another Touchwood after initial screening of financials. and for the betterment of the majority did a detailed analysis and really find some useful content. But when highlight it here this is the response I have got. Thank you very much who participated. But finally I can sleep well because I did the best possible awareness I can do. The rest is in your hand.
Thank you.

45Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Sun Apr 17, 2016 11:04 pm

karuna


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@EquityChamp wrote:Thought it is good to compare these two companies since these two are subjected to very hot discussion in this forum. A summary of the comparison given below.


  • BLI has shown a double or triple growth in their loan book as well as interest income while SFL is just normal growth.
  • Also both BLI & SFL have same amount of loan book but BLI earns twice as much as interest income compared to SFL, how come is a question to me.
  • On the other hand both companies have similar amount of interest expenses but BLI finances its loan book mainly from borrowings which are supposed to be higher than customer deposits while SFL mainly finances through customer deposits. In fact SFL's deposit base is more than 100% higher than BLI. Therefore ideally SFLs interest cost should be much less than BLI but it is not the case, why is another question to me.
  • BLI generates much superior ROE compared to SFL and BLI's share price also trading on the floor very aggressively compared to SFL. In fact BLI have very high negative valuation gap whereas SFL has a positive valuation gap. So comparatively BLI is expensive than SFL at the moment.
  • So now my feeling is there is some thing wrong either in BLI or SFL. Now I will open this discussion for the forum members to express more views. In fact that will help to understand true state of affairs of this two.

       
2014/159M 2015/16
BLISFLBLISFL
Rs mnGrowthRs mnGrowthRs mnGrowthRs mnGrowth
Interest income672143%         1,051 6%         1,546 207%            817 4%
Interest expense174110%            620 -7%            421 223%            444 -5%
PAT144125%27.5-67%            514 376%               84 307%
Deposits         1,066 95%         5,379 19%         2,025 90%         5,667 5%
U have a bli share otherwise why u posted as well u going to sell tomorrow .u mislead bli members  after u brought low prices now again going to sell.

Api dannathi kos gadi

46Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Sun Apr 17, 2016 11:15 pm

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@SLFINANCEWATCH wrote:Good Night Friends..Happy Trading on Tomorrow..
aniwa.

47Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Mon Apr 18, 2016 3:48 am

charith666lk


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Unbelievably unethical uneducated jokers all over the place. .

48Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Mon Apr 18, 2016 4:04 am

Joe007


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Dear EC,
I agree with you.

Long time ago,I wrote about the planned manupulation on the financial statements of SFL with proof. SFL is a good share but its credibility is completely zero because they have been doing manupulation for long time. I was criticised at that time but finally most of them accepted my points.
On the other hand, BLI is well known for manupulation because of the availability in the market.

Conclusion is SFL is better than BLI but both are very very risky and expensive comparing other shares in the sector.

49Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Mon Apr 18, 2016 6:12 am

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
BLI and SFL are very very risky and expensive comparing other shares in the sector.


Risk free shares - LFIN CDB , VFIN, CFIN...

50Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Mon Apr 18, 2016 8:26 am

SLFINANCEWATCH

SLFINANCEWATCH
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@charith666lk wrote:Unbelievably unethical uneducated jokers all over the place. .

Laughing Laughing Laughing
Thank you Mr.Ethical, Clever , Educated Investor..
You are a real gem for this forum.
But i haven't see any analysis from you...

51Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 7:35 am

EquityChamp

EquityChamp
Moderator
Moderator
Is there anyone who really bothered of this. To make the discussion more interesting I have done another analysis comparing not only BLI & SFL but 8 more non commercial banking entities. I have found a really interesting piece of information to share with you. Please refer below table for details.
Rs mnCFINLFINVFINHDFCSFINAFSLBLISFLLOFCCDB
Loans & advances and rental receivable 31st March 2015         55,499          55,959          12,569          23,454          7,841          3,540          3,115          5,041          49,797          29,620
Loans & advances and rental receivable 31st December 2015         61,813          68,067          16,967          26,688          9,509          4,489          5,423          5,349          66,553          38,222
Average loans & advances and rental receivable         58,656          62,013          14,768          25,071          8,675          4,015          4,269          5,195          58,175          33,921
Annualised interest income         12,496          14,020            3,140            6,212          1,941          1,172          2,061          1,089          12,465            6,568
Average Interest Yield (IY)21.30%22.6%21.26%24.8%22.4%29.2%48.3%21.0%21.4%19.4%
IY Rank64735219810
I have collected all the information from the released quarterly financial reports. Interest Yield is calculated by dividing annualised interest income by average loans and advances. Further to simplify the calculation I have assumed the total interest income of these companies generated from loans and advances and lease rentals given to customers.

Now you can look at the IY rank at the last raw. BLI is at the number one followed by AFSL and then HDFC. If you look at the absolute IY% in the proceeding immediate raw you can see BLI is way above the other guys. The gap between no 1 and no 2 is 19.1pp and the gap between no 2 and no 10 is only 9.8pp.

Further you can refer the average for this entire set of companies in below table.
Average for the total 10 companies
Average total loans & advances (Rs mn)         27,476
Average annualized interest income (Rs mn)           6,117
Average IY %22.3%

The average yield is standing @ 22.3% while BLI alone is 48.3%, more than double the average rate. Can you believe this??. According to the published data this is the situation.

Now the main question is how only BLI can generate double the revenue from same class of assets compared to all the peers and even more than double to their sister company, SFL.

In my original post I concluded with a statement that there is something wrong either in SFL or BLI. And this analysis confirms to me SFL is doing normal course of business because their margins are within the average range but BLI is way over. Now I am asking the question whether BLI doing some thing wrong or manipulation here? Are they are following the path of TWOD?

I would like to know the opinion of the BLI lovers on this finding. Especially I want to know the view of Teller who are very favourable on BLI. If this performance of BLI is real and genuine they are far better than other finance companies and every investor should have that share in his/her portfolio. Is it should be the case really??

Experts of BLI, please substantiate.

Thanks

52Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 8:04 am

troy

troy
Moderator
Moderator
Hi EC...
 
I cant see the table fully..,.. only possible up to HDFC. Pls check whether you can do some thing...

Anyway u make this forum worth to follow... thanks.

53Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 8:57 am

EquityChamp

EquityChamp
Moderator
Moderator
Ok. I have reproduced the table below. Lets see whether it is ok now.
CompanyAverage loans & advances and rental receivable (Rs mn)Annualised interest income (Rs mn)Average Interest Yield (IY)IY Rank
CFIN                          58,656                       12,496 21.3%6
LFIN                          62,013                       14,020 22.6%4
VFIN                          14,768                         3,140 21.3%7
HDFC                          25,071                         6,212 24.8%3
SFIN                            8,675                         1,941 22.4%5
AFSL                            4,015                         1,172 29.2%2
BLI                            4,269                         2,061 48.3%1
SFL                            5,195                         1,089 21.0%9
LOFC                          58,175                       12,465 21.4%8
CDB                          33,921                         6,568 19.4%10

54Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 9:46 am

troy

troy
Moderator
Moderator
IMO, avg. interest yield should be moderate for a sustainable business... Therefore, BLI is out for me considering the avg. interest as per your calculation... 

However, we have to check whether the extraordinary expansion we saw in BLI last year has a role here(for 48% yield) which is hard to believe..

55Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 10:11 am

Yahapalanaya

Yahapalanaya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@EquityChamp wrote:Is there anyone who really bothered of this. To make the discussion more interesting I have done another analysis comparing not only BLI & SFL but 8 more non commercial banking entities. I have found a really interesting piece of information to share with you. Please refer below table for details.
 
Rs mnCFINLFINVFINHDFCSFINAFSLBLISFLLOFCCDB
Loans & advances and rental receivable 31st March 2015         55,499          55,959          12,569          23,454          7,841          3,540          3,115          5,041          49,797          29,620
Loans & advances and rental receivable 31st December 2015         61,813          68,067          16,967          26,688          9,509          4,489          5,423          5,349          66,553          38,222
Average loans & advances and rental receivable         58,656          62,013          14,768          25,071          8,675          4,015          4,269          5,195          58,175          33,921
Annualised interest income         12,496          14,020            3,140            6,212          1,941          1,172          2,061          1,089          12,465            6,568
Average Interest Yield (IY)21.30%22.6%21.26%24.8%22.4%29.2%48.3%21.0%21.4%19.4%
IY Rank64735219810
I have collected all the information from the released quarterly financial reports. Interest Yield is calculated by dividing annualised interest income by average loans and advances. Further to simplify the calculation I have assumed the total interest income of these companies generated from loans and advances and lease rentals given to customers.

Now you can look at the IY rank at the last raw. BLI is at the number one followed by AFSL and then HDFC. If you look at the absolute IY% in the proceeding immediate raw you can see BLI is way above the other guys. The gap between no 1 and no 2 is 19.1pp and the gap between no 2 and no 10 is only 9.8pp.

Further you can refer the average for this entire set of companies in below table.
Average for the total 10 companies
Average total loans & advances (Rs mn)         27,476
Average annualized interest income (Rs mn)           6,117
Average IY %22.3%

The average yield is standing @ 22.3% while BLI alone is 48.3%, more than double the average rate. Can you believe this??. According to the published data this is the situation.

Now the main question is how only BLI can generate double the revenue from same class of assets compared to all the peers and even more than double to their sister company, SFL.

In my original post I concluded with a statement that there is something wrong either in SFL or BLI. And this analysis confirms to me SFL is doing normal course of business because their margins are within the average range but BLI is way over. Now I am asking the question whether BLI doing some thing wrong or manipulation here? Are they are following the path of TWOD?

I would like to know the opinion of the BLI lovers on this finding. Especially I want to know the view of Teller who are very favourable on BLI. If this performance of BLI is real and genuine they are far better than other finance companies and every investor should have that share in his/her portfolio. Is it should be the case really??

Experts of BLI, please substantiate.

Thanks
Good one. +rep

56Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 10:16 am

Yahapalanaya

Yahapalanaya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@EquityChamp wrote:Can you guys read again what I have said here and my last comment. And try to enrich the discussion only if you have valid points to my questions I raised here. if not please don't comment. This is the last I will say.

Thought it is good to compare these two companies since these two are subjected to very hot discussion in this forum. A summary of the comparison given below.



  • BLI has shown a double or triple growth in their loan book as well as interest income while SFL is just normal growth.

  • Also both BLI & SFL have same amount of loan book but BLI earns twice as much as interest income compared to SFL, how come is a question to me.

  • On the other hand both companies have similar amount of interest expenses but BLI finances its loan book mainly from borrowings which are supposed to be higher than customer deposits while SFL mainly finances through customer deposits. In fact SFL's deposit base is more than 100% higher than BLI. Therefore ideally SFLs interest cost should be much less than BLI but it is not the case, why is another question to me.

  • BLI generates much superior ROE compared to SFL and BLI's share price also trading on the floor very aggressively compared to SFL. In fact BLI have very high negative valuation gap whereas SFL has a positive valuation gap. So comparatively BLI is expensive than SFL at the moment.

  • So now my feeling is there is some thing wrong either in BLI or SFL. Now I will open this discussion for the forum members to express more views. In fact that will help to understand true state of affairs of this two.

Good explaination.I also misunderstood that you are justifying SFL and BLI prices.

57Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 12:58 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Also both BLI & SFL have same amount of loan book but BLI earns twice as much as interest income compared to SFL, how come is a question to me.

මීට මාස 3 කට පමණ පෙර මේ ගැන යම් හෝඩුවාවක් ගත හැකි දෙයක් පළ වූව ඉතා සුලු පිරිසක් කියවන අඩවියක​.
ඔවුන් සමාගමේ ක්‍ෂුද්‍රු ණය ගත්ත ගැමියකු ගේ බිලක් ස්කෑන් කර දමා තිබුනා.

එම බිලේ ඉහලින්ම  පොලිය 26% ක් ලෙස සටහන් ව තිබුන​. එමෙන්ම ගෙවන වාරික ගනනය කර තියෙනව ඒ ඒ සති 2 න් 2ට ගෙවන්න​. ගෙවූවාම එහි අදාල තිරුවේ අත්සන් කරනව​.
ණය රු ලක්‍ෂයයි නම් එය මාස 6 කින් ගෙවෙන ලෙස දෙන්නෙ. සති 2 න් 2ට නියෝජිතය එනව කලෙක්ට් කරගන්න​. තව ක්‍රමයක් තියෙනව සුලු ව්‍යාපාරිකයන්ට දෙන​. දවසට 500 ක්  එකතු කරනව​. මේ ක්‍රම කුරුණැගල​, අනුරපුර පෙදෙසේ කෙරෙනව  මමත් දැක තියෙනව​.

වාර්ශික පොලිය​26% කියා සටහන් කලාට මාස 6 න් ගෙවන නිසා සත්‍ය පොලිය 52% ක් වෙනව​.
තවද මෙවැනි සමාගම් ඉතුරු ණයට කෙමෙන් අඩුවන පොලිය ගණනයක් නෑ.  ඒ මිනිස්සු (කස්ටමර්ස්ලා)   එහෙම කළ යුතු බව දන්නේවත් නැ. (Int on reducing balance)

උදා: ණය 100,000.00  පොලිය 26% නිසා 26,000 යි.
ගෙවන කාලය මාස 6 යි. (සති 26 යි.)
126,000 / 26 = 4846.
සති 2 කට වරක් 4846 ක් අරන් යන්න කලෙක්ට් කරන අය එනව​.
ඇත්ත ලෙස බැලුවොත් අවසාන වාරිකය වෙන විට ණය තියෙන්නේ 3846 යි. නමුත් එම මුදලට සති 2 ක් සඳහා රුපියල් 1000 ක් පොලිය ගන්නව​.    අනිත් වාරික සඳහාත් මෙය එලෙසම ක්‍රියාත්මකයි.
මෙම ක්‍රමයේ සත්‍ය වාර්ශික පොලිය ගණන් බැලුවොත් කීයක් එයිද ?

මා කළ දල ගණනය අනුව 100,000 සඳහා අඩුවන මුදලට  සති 2 න් 2  මාස 6 න් ගෙවීමට සම්පූර්ණ පොලිය එන්නෙ 6,750 යි.
නමුත් මේ අය 26,000 ක් ගන්නව​.  ඒ කියන්නේ මුදල් සඳහා 26% ගානෙ සමාගමට වැය උනත් (interest expenditure) ඔවුන් ඒ වගේ 4 ගුණයකට සමාන පොලී මුදලක් එකතු කරනව​. (interest income)  

මෙම සූරා කෑම ට බඳුන් වෙන්නෙ පොලී ගණනයන් ගැන​ නිසි වැටහීමක් නැති දුප්පත්ම අඩියේ ඉන්න ලක්‍ෂ ගානක් ගොවි, ස්වයං රැකියා, සුළු වෙළඳ ව්‍යාපාර ආදීය කරන අය​.

මේ ලෙස මුදල් ගෙවීමට මේ මිනිසුන් නිරපරාදේ දවස පුරා වෙහෙසෙනව​. අවසානයේ කිසිම දියුණුවක් නෑ. දිගටම ණය ගන්නව​. ගෙවනව​.

58Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 1:22 pm

charith666lk


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks chinwi. Janatha sewakayo mudhal hamba karana eka kramayak.. Mad...Aththatama lajjai

59Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 1:22 pm

EquityChamp

EquityChamp
Moderator
Moderator
What if they don't pay on time? Have they taking any collateral from these far rural communirt?

60Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 1:48 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@ EC, thank you for smelling this and posting here.

Actually these rural people protect their pride  than we think.
Defaulting is very low. The collectors come daily after them and all others in the vicinity eagerly watch if someone defaults , which is bad for their social status.
(In towns no one knows such things of others)

Most of the loans are bound by group of 4-5  people. Each and every one in the group is responsible for repayment.

Over 90% of the loans are given to females. Even the 'mudalali' take 50,000 to buy some goods to his 'kade' the finance company gyes ask 'hamine' to sign the docs.

They know ladies will somehow save cash for the next payment date and they are scared to go to police or courts.

61Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 2:22 pm

A+


Manager - Equity Analytics
Manager - Equity Analytics
Thanks Chinwi. So now the rates are high because effectively no collateral and to cover the risks. And payments are high because of daily visit of the collectors and the fear of loss of pride.

62Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 2:31 pm

EquityChamp

EquityChamp
Moderator
Moderator
Chinwi, you have highlighted an important aspect. So this business model is low risk and effective as per your explanation. What is your idea.

63Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 3:30 pm

troy

troy
Moderator
Moderator
This is Blood Money... As I raised earlier, how can they sustain their huge yield??? Once people get to know this?

64Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 6:03 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Actually these methods are used by many unlisted FC s and unlisted susbs of some listed FCs also.


Yes, in contrast to popular belief of high risk type, this has become a very low risk lucrative blood sucking business for these Finance companies.

They use very justifiable looking ways to do this.
In addition to 6 month system, another very popular model is One month loan.

---- ---
I am developing a small plantation in Dry zone and used to go to a small 'Tea kade' in that small town.

We used to chat with  Mudalali during tea time and I get chances to observe how these Finance people are hunting in the area.
-----


Another very popular model is get 10,000 pay 500 .
They give 10,000 and you have to pay just 500 per day for one month.

When I asked why pay like this , they always say,
"මේ වැඩේ හරි වාසියි ලේසියි මහත්තය​. දවසට 500 යි නෙ දෙන්න වෙන්නෙ දහදාහකටම. මාසෙන් ගෙවල ඉවරයි. ඒක හරියට ගෙවන නිසා  ඊළඟ මාසෙට තව 10,000 ක්  ගන්න පුලුවන්.  ඇප තියන්න ඕනැත් නෑ. "
But the FC guys were taught to select the places where they can see assets more than the loan amounts.
"ගෙවන්න බැරිම දවසක් ආවොත් බයිසිකලේ තියල ගෙවල පස්සෙ බේරගන්න පුලුවන් "

So you see this is almost no risk.

In this way they use same 10,000 to offer every month.
The gross return p.m. is 500 x 30 = 15,000.
Gross Profit 15,000- 10,000 = 5000 pm.
5000 x 12 = 60,000 per year.

I am scared to write   capital employed, when I see the return. (60,000) . Is it 10,000 or 120,000 ?

I think it is 10,000 because that is the amount released by FC accounts at the beginning of the year.

Then, what is the % of return 60,000 for capital of 10,000 ?

Usually they select at least 20 people in a small town for the scheme. Collector comes in MoBike covering many villages each day.

Hence paying for his transport and salary is well supported by the very high return.


--- --

When I need extra worker or two I ask that Mudalali to send someone.
Most of the times he himself comes to work assigning his wife to look-after the shop.
He works hard whole day in hot Sun  to get 1000/- in the evening.
I was wondering why.
Lated I found , they also have obtained loans and have to pay 5000/- fortnight and also 1000 per day.  Since the earnings from shop are not enough to pay  back loans he has to work as a labourer.
Loans were used to add more goods to the shop. But they are not capable enough to understand 10% return from sales are not matching the very high loan interest.
This is continuing. As soon as they escape from a loan at the end of a period they get another one.

At the beginning I also thought these FCs cannot continue like this , when people came to know they may reject or go for banks etc. But, now I think they can play this some more time due to business models they use.

( මේ වැඩේ හරි වාසියි ලේසියි මහත්තය​. දවසට 500 යි නෙ දෙන්න වෙන්නෙ. දහදාහකටම​. මාසෙන් ගෙවල ඉවරයි. ඒක හරියට ගෙවන නිසා  ඊළඟ මාසෙට තව 10,000 ක්  ගන්න පුලුවන්.  ඇප තියන්න ඕනැත් නෑ. )  ... and I think these interest calculations are bit complex them to understand . So they will go for the easy way. 500 per day . "හවසට අරක්කු බාගයක් ගත්තත් ඊට වඩා යනවනෙ මහත්තයා. "


This is why I do not buy shares of these FC s even I see profit making opportunities because I see how they make money. I feel sorry for the people in those villages.

65Finance and Leasing Sector - Page 3 Empty Re: Finance and Leasing Sector Fri Apr 22, 2016 8:07 pm

EquityChamp

EquityChamp
Moderator
Moderator
Very informative and open up an area that we didn't know happening in another part of the island. Now my concern is how BLI doing this very effectively than the other peer companies. They are far ahead even compared to their sister company, SFL. How they are doing it is a puzzle for me.

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