Bank and finance sector - best potential counters

I'm thinking of enter into this sector to hold until the beginning of the next year, this is going to be some millions of rupees. I would like to get your idea on this

LoveMoney wrote:Hi guys,

I'm thinking of enter into this sector to hold until the beginning of the next year, this is going to be some millions of rupees. I would like to get your idea on this

- LoveMoney

Dear Lovemoney,
Have you done any home work on this subject? I think you must have analised performance of those institutions individualy and sevtorwise. If it is so why not you share those finding brother. Then we also can make our obsevations. Eventhough the companies in this sector are performing well genaral undestanding is shares are little overvalued at current situation. However this is a good sector for investors who are looking for long term benefits.

I'm just a regular guy with pocketful of money, I'm not trained to be a financial person or an investor, my line of work is different, I haven't technically or fundamentally followed any counters, just follow the market online. So don't hate me

From my analysis, right now, MBSL and NTB looks like undervalued counters compared with rest of the financial institution. Just check it. Not a recommendation

COMB, SAMP and HNB as well. COMB has started an upward trend.. I remember there were several large scale crossings at higher levels.

I did not see such large quantities sold at a loss in recent days...They should pick up at least to that level

Jana1 wrote:From my analysis, right now, MBSL and NTB looks like undervalued counters compared with rest of the financial institution. Just check it. Not a recommendation

How about Asia Capital? They surpassed Rs. One Bln net profit last financial year(ending 31.03.2011) and turned to + accumalative retained earnings position from Negative position last year.

My other choice is CDB. They too performed well and recorded over 500 mln net profit inceasing EPS from Rs.1.63 in previous year(2009/2010) to Rs. 13.35 in last year(2010/20111)

This is only my observation. Pl. consider that this is not a buy/sell/hold recomondation.

Yes , entire banking sector is good.

kam2011 wrote:

Jana1 wrote:From my analysis, right now, MBSL and NTB looks like undervalued counters compared with rest of the financial institution. Just check it. Not a recommendation

How about Asia Capital? They surpassed Rs. One Bln net profit last financial year(ending 31.03.2011) and turned to + accumalative retained earnings position from Negative position last year.

My other choice is CDB. They too performed well and recorded over 500 mln net profit inceasing EPS from Rs.1.63 in previous year(2009/2010) to Rs. 13.35 in last year(2010/20111)

This is only my observation. Pl. consider that this is not a buy/sell/hold recomondation.

In my analysis in banking sector NTB, SAMP, MBSL and COMB are attractive. But if you look at CDB, if you remove mark to market valuation, the profit is minimal. (we have discussed this in the past many times). They have valuated the CINS.N share they hold in their portfolio during the financial year. Next quarter would be very interesting to see how they make profit. They don't have any thing to do mark to market valuation other than SEYB.N shares in listed investments (If I am not mistaken it's cost is higher than the current market price.) Correct me if I am wrong.

Jana1 wrote:From my analysis, right now, MBSL and NTB looks like undervalued counters compared with rest of the financial institution. Just check it. Not a recommendation

Without any hesitation I can say MBSL and NTB are safe and good , will bring profits if you can hold for few months.

Its better if you can invest 40-50% of your money now and gradually collect monitoring up/down in next few months.

Only concern is, depending on overall situation of CSE the prices may move up or down as a whole.

If SEYB goes down more it will become attractive and nice choice for a newcomer who can hold it for some period.

Personally I think that CDB has great potential for growth. I know about the previous discussions on the subject, but an analysis of their financials clearly shows proper business growth, not just capital gains. QoQ their net income from interest alone grew by 48%, YoY it grew by 69%. Deposits have increased, so have assets and its NAV. Kudos to Cse.see who did an interesting analysis last month which can be found here: http://investors.lk/12256/

I am convinced that most of the banking and finance stock will yield positive returns in time to come, the questions is which one will move first. CDB currently trades at a PE of around 6.5, which can be considered undervalued. With an aggressive top management tier running the show, I wouldn't even be surprised about seeing a rights issue take place soon to support further growth.

My money is on CDB (mid-term, it's not a speculative share), even thought a few forum members disagree, and I have already collected a few over the past few days. Please note that this is not a recommendation to buy CDB. Do your own research before buying or selling.

I think CDB is the most attractive counter at the movement

Monster wrote:

kam2011 wrote:

Jana1 wrote:From my analysis, right now, MBSL and NTB looks like undervalued counters compared with rest of the financial institution. Just check it. Not a recommendation

How about Asia Capital? They surpassed Rs. One Bln net profit last financial year(ending 31.03.2011) and turned to + accumalative retained earnings position from Negative position last year.

My other choice is CDB. They too performed well and recorded over 500 mln net profit inceasing EPS from Rs.1.63 in previous year(2009/2010) to Rs. 13.35 in last year(2010/20111)

This is only my observation. Pl. consider that this is not a buy/sell/hold recomondation.

In my analysis in banking sector NTB, SAMP, MBSL and COMB are attractive. But if you look at CDB, if you remove mark to market valuation, the profit is minimal. (we have discussed this in the past many times). They have valuated the CINS.N share they hold in their portfolio during the financial year. Next quarter would be very interesting to see how they make profit. They don't have any thing to do mark to market valuation other than SEYB.N shares in listed investments (If I am not mistaken it's cost is higher than the current market price.) Correct me if I am wrong.

Dear monster,
I checked financial reports again. Your observations are perfecty correct.Thank you for keeping us with most correct and updated information monster. However even we totaly eliminated the figure reffered in your post, EPS would be around 5.60 and that meens according to present price still PE stands at around 15. Am I correct? PE of many other finance companies are higher than this. pl.see below:

Peopls Leasing price 77.20-- EPS 3.23--PE 23.90
Softlogic price 67.90-- EPS 3.07--PE 22.11
Arpico price 109.00-- EPS 5.69--PE 19.10
valibel Finance price 46.90-- EPS 2.60--PE 18.00
Singer Finance price 31.10-- EPS 1.77--PE 17.50
Central Finance price 1385.00-- EPS86.34--PE 16.00
Sinhaputra price 91.10-- EPS 5.82--PE 15.60
LOLC price 104.50--EPS 8.08--PE 12.09
LB Finance price 175.00--EPS 14.73--PE 11.08
Alliance Finance price 1000.00--EPS109.77--PE 9.17

If you analise the above figures, in PE terms CDB is better than most of other finance companies except for last 3 in the list. Furthermore on 25th of may 2011 alone over one mln shares of CDB has been traded beyond Rs. 100/- That means there is a party interesting in this counter. Isn't it my friend?

kam2011 wrote:

Peopls Leasing price 77.20-- EPS 3.23--PE 23.90
Softlogic price 67.90-- EPS 3.07--PE 22.11
Arpico price 109.00-- EPS 5.69--PE 19.10
valibel Finance price 46.90-- EPS 2.60--PE 18.00
Singer Finance price 31.10-- EPS 1.77--PE 17.50
Central Finance price 1385.00-- EPS86.34--PE 16.00
Sinhaputra price 91.10-- EPS 5.82--PE 15.60
LOLC price 104.50--EPS 8.08--PE 12.09
LB Finance price 175.00--EPS 14.73--PE 11.08
Alliance Finance price 1000.00--EPS109.77--PE 9.17

If you analise the above figures, in PE terms CDB is better than most of other finance companies except for last 3 in the list. Furthermore on 25th of may 2011 alone over one mln shares of CDB has been traded beyond Rs. 100/- That means there is a party interesting in this counter. Isn't it my friend?

CDB Price 83.60 -- EPS 13.43 -- PE 6.23

That means that in pure PE terms, CDB is even much better than LOLC, LFIN and ALLI. And you are absolutely right about the 1mln shares traded, it even touched 109 that day before someone dumped a large amount into the market and brought the price down to end the day at 97.

If you remove part of CDB's profits (e.g. capital gains), you would have to analyze all other counters in the same light. Otherwise we are comparing apples and oranges. For the reader's benefit I thought of re-stating the total CDB EPS for the year in order to make observed and informed choices.

kam2011 wrote:

Monster wrote:

kam2011 wrote:

Jana1 wrote:From my analysis, right now, MBSL and NTB looks like undervalued counters compared with rest of the financial institution. Just check it. Not a recommendation

How about Asia Capital? They surpassed Rs. One Bln net profit last financial year(ending 31.03.2011) and turned to + accumalative retained earnings position from Negative position last year.

My other choice is CDB. They too performed well and recorded over 500 mln net profit inceasing EPS from Rs.1.63 in previous year(2009/2010) to Rs. 13.35 in last year(2010/20111)

This is only my observation. Pl. consider that this is not a buy/sell/hold recomondation.

In my analysis in banking sector NTB, SAMP, MBSL and COMB are attractive. But if you look at CDB, if you remove mark to market valuation, the profit is minimal. (we have discussed this in the past many times). They have valuated the CINS.N share they hold in their portfolio during the financial year. Next quarter would be very interesting to see how they make profit. They don't have any thing to do mark to market valuation other than SEYB.N shares in listed investments (If I am not mistaken it's cost is higher than the current market price.) Correct me if I am wrong.

Dear monster,
I checked financial reports again. Your observations are perfecty correct.Thank you for keeping us with most correct and updated information monster. However even we totaly eliminated the figure reffered in your post, EPS would be around 5.60 and that meens according to present price still PE stands at around 15. Am I correct? PE of many other finance companies are higher than this. pl.see below:

Peopls Leasing price 77.20-- EPS 3.23--PE 23.90
Softlogic price 67.90-- EPS 3.07--PE 22.11
Arpico price 109.00-- EPS 5.69--PE 19.10
valibel Finance price 46.90-- EPS 2.60--PE 18.00
Singer Finance price 31.10-- EPS 1.77--PE 17.50
Central Finance price 1385.00-- EPS86.34--PE 16.00
Sinhaputra price 91.10-- EPS 5.82--PE 15.60
LOLC price 104.50--EPS 8.08--PE 12.09
LB Finance price 175.00--EPS 14.73--PE 11.08
Alliance Finance price 1000.00--EPS109.77--PE 9.17

If you analise the above figures, in PE terms CDB is better than most of other finance companies except for last 3 in the list. Furthermore on 25th of may 2011 alone over one mln shares of CDB has been traded beyond Rs. 100/- That means there is a party interesting in this counter. Isn't it my friend?

Correct. But I would calculate my fair valuation excluding mark to market value adjustment. Hence my EPS for CDB is Rs 5.60/-. As you said, still it's one of the undervalued counter. For a short term gain, I would pick CDB and ALLI. For medium and long term my selections are LOLC and LFIN. Remember, there was a huge collection went on CFIN between 1400 and 1500. It may hit 1600/- again.

ps: This is not a buying recommendation. Pls do your own study. Currently I am holding only NTB in the banking sector.

Can the NDB move up?

kam2011 wrote:

Jana1 wrote:From my analysis, right now, MBSL and NTB looks like undervalued counters compared with rest of the financial institution. Just check it. Not a recommendation

How about Asia Capital? They surpassed Rs. One Bln net profit last financial year(ending 31.03.2011) and turned to + accumalative retained earnings position from Negative position last year.

My other choice is CDB. They too performed well and recorded over 500 mln net profit inceasing EPS from Rs.1.63 in previous year(2009/2010) to Rs. 13.35 in last year(2010/20111)

This is only my observation. Pl. consider that this is not a buy/sell/hold recomondation.

Let me give you my personal investment strategy in which I never failed. NTB and MBSL are very undervalued based on its earning growth, PE and NAVP. So I collected those shares at cheap prices. I can hold it even for 10 years. But CDB also I collected not for long term. If I collected 2000 CDB right now at 83 then I will get exit at least at 92-95 level befr next qtr report. Never hold until qtr report released. SO my cost for rest 1000 is very less. Sometimes if CDB unable to gain from other income its EPS would have been around 1. So definitely shares will bounce back. Again I am safe.

for me MBSL and SEY?B.X

TortoizePlus wrote:for me MBSL and SEY?B.X

Yep Seylan -X will be shown their colours in the very near future