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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » ORIENT FINANCE PLC (BFN.N0000)

ORIENT FINANCE PLC (BFN.N0000)

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1ORIENT FINANCE PLC (BFN.N0000) Empty ORIENT FINANCE PLC (BFN.N0000) Tue Jan 07, 2014 7:55 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Sri Lanka based Orient Finance PLC’s outlook has been revised to Negative from Stable, while its rating of [SL] BBB- has been affirmed by the ICRA Lanka.

Below is the full rating release issued by ICRA
ICRA Lanka has revised the outlook on the long term rating of Orient Finance PLC (OFP) from Stable to Negative while reaffirming the Issuer Rating at [SL] BBB- (pronounced SL triple B minus)[1]. The revision in the outlook reflects OFP’s deteriorating asset quality due to  considerable rise in NPAs, which combined with the significant increase in the cost of funds, have resulted in the decline in profitability levels. Given the persistent pressure in the operating environment, ICRA expects the Asset Quality of the NBFI sector would remain weak in the immediate future; thereby pressure on OFP’s asset quality, earnings and capitalization is likely to persist.  The rating continues to derive strength from the financial, operational and management support OFP is expected to receive from the Janashakthi group. The rating also factors in the experienced and professional management team coupled with the improvements in risk management systems. ICRA has taken note of the reduction in earnings as a result of falling margins. Despite an increase, gearing remains moderate at 3.9x in September 2013. OFP’s Liquidity position remains comfortable aided by relatively medium-to-long term public deposits, which OFP has been mobilizing in the past year. The Key Rating Sensitivities for OFP going forward would be arresting asset quality deterioration at the earliest and improvement in profitability levels, through higher lending margins.

OFP’s core lending operations continue to be focused on auto financing (83% of total portfolio), however during FY2013 OFP added pawning to its product offering. As of end Sep-13 pawning accounts for less than 1% of OFP’s total portfolio. OFP plans to discontinue its equipment financing business due to high portfolio losses incurred in this business segment, OFP’s Equipment finance portfolio accounted for approximately 2% of its total portfolio as of end Sep-13, whilst Factoring business accounted for the remaining 14% of OFP’s total portfolio. The company is likely to focus mainly on auto financing and factoring going ahead. OFP’s auto financing business comprises mainly of car financing (36% of total Portfolio as of Sep-13) and 2-wheelers and 3 wheeler financing (30%) while Heavy Commercial Vehicles accounted for 18%. OFP’s business continues to carry interest rate risk, as 100% of OFP’s lending is on fixed rates, though its factoring portfolio carries re-pricing flexibility due to the short term nature of the business, while bank funding (56% of total borrowings) carry variable interest rates.  ICRA notes that OFP would need to tie-up longer term borrowings to address these gaps. ICRA also notes that OFP’s factoring portfolio continues to carry high concentration risk with the top 10 customers accounting for more than 38% of the total factoring portfolio (28.5% of Net worth as of end Mar-13).

Asset quality deterioration has been the key credit challenge for OFP with Gross NPA Ratios increasing from 4.48% as of Mar-13 (Mar-12 – 4.57%) to 6.61% as of Sep-13. This is marginally lower than the NBFI Industry, which also registered a decline from 5 % (Dec-12) to 6.1% (Oct-13). Thus the decline of OFP has been considerable compared to the NBFI industry and peers. OFP’s NPAs are predominantly from the SME sector stemming from the slowdown in the economy directly affecting business in these segments. OFP’s net NPA ratio also declined from 1.58% as of Mar-13 (1.23% – Mar-12) to 2.55% as of end Sep-13. OFP has maintained a provision of 61% for its NPAs as of Sep-13 down from 65% maintained as of end Mar-13. Incremental asset quality is likely to be guided by the evolving economic scenario. The forecasted improvement in economic growth in CY2014 could aid in improvement in the asset quality for NBFIs.

OFP started mobilizing deposits during H2 FY13 subsequent to receiving its LFC license. OFP has raised Rs 666Mn of Fixed Deposits as of end Sep-13 which accounts for 20% of OFP’s total funding profile.  ICRA notes that over 50% of OFP’s fixed deposits carry tenure over 1 year, which gives OFP comfort for its liquidity position. However OFP’s cumulative short term mismatches in the less than 1 year bracket have widened to 19% of total assets compared to 16% recorded as of Sep-12, however OFP’s Liquidity position compares well with the NBFI Industry.
Profitability Levels have declined considerably during H1 FY2014 due to high provisioning costs resulting from declining asset quality and falling NIMs due to high Cost of funds. OFP’s cost of funds increased 39% for FY13 resulting in NIM falling from 14.60% recorded as of Mar-12 to 12.70% as of Mar-13(12.39% – Sep-13). Operating expense levels recorded improvement during FY13 due to comparatively higher growth in assets, however provisioning costs has increased significantly from 0.99% recorded as of Mar-13(-0.05% – Mar-12) to 3.14% as of Sep-13, causing ROAA to fall to 1.97% as of Sep-13 compared to 5.39% as of Mar-13(6.40% – Mar-12). RONW declined to single digits as of Sep-13 to 9.59% compared to 23.27% recorded as of Mar-13 (28.93% – Mar-12).

OFP’s capitalization levels have declined during FY13 with the growth in Portfolio and the declining internal capital generation due to falling profitability. Although OFP’s Regulatory Capital Adequacy Ratio declined to 19.42% as of Sep-13 compared to 22.21% as of Mar-13 (35.62% – Mar-12); it remains comfortably above the minimum regulatory requirements. ICRA expects committed support from the promoter in terms of capital infusions to facilitate growth and maintain gearing at moderate levels.

Company Profile
OFP was initially setup as Orient Financial Services Corporation Limited by Readywear Industries Group as a Specialized Leasing Company in 2003to finance Mitsubishi vehicles sold by its Auto dealership arm-United Motors Lanka PLC (UML). In Feb-11, the Janashakthi Group acquired ownership of OFP through its subsidiary, Orient Capital Limited, as part of the group’s strategy to venture into a fully-fledged financial service outfit through OFP and other subsidiaries. The company acquired its present name following the takeover and listing of the company’s shares on the Dirisavi Board (secondary board) of the CSE in Jun 12. OFP also converted itself into a Licensed Finance Company (LFC) in June 2012, enabling it to mobilize deposits from the public. Leasing and hire purchase of brand new / used motor vehicles, factoring and recently pawning are the main activities of the Company. OFP had a total portfolio of Rs. 4,101.57 Mn on Sep 30, 2013 which comprised Lease and HP (85%), Factoring (14%), and Pawning (1%).

For H1 FY 2014 OFP reported a Net profit of Rs. 38.8 Mn on a total asset base of Rs. 4,239.1 Mn. During the year ended March 2013, the Company reported a net profit of Rs. 168.9 million on a total asset base of Rs. 3,650.10 Mn, compared to a net profit of Rs. 136.5 million on an asset base of 2,613.8 Mn, in the previous financial year.

2ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Jan 07, 2014 9:53 pm

balapas


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Not going to be good for CFVF.

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Orient Finance PLC has achieved another milestone by surpassing the Rs. 2 billion threshold in their deposits during the first week of July.

Having reached Rs. 1 billion in deposits six months ago, doubling the deposit base to trigger 1 billion within a remarkably short span is indeed commendable.

Established as a specialised leasing company in 2003 with Leasing, Hire Purchase and Debt Factoring as its core businesses, the company broadened its product range to include Fixed Deposits and Gold Loans, subsequent to being licensed by the Central Bank as a Finance Company under the Finance Business Act No 42 of 2011, in June 2012.

The full product suite of the company now consists of Leasing and Hire Purchase, Debt Factoring, Gold Loans, and acceptance of Fixed Deposits.

The company is also listed on the Diri Savi Board of the Colombo Stock Exchange, with a BBB- (stable outlook) investor grade rating from Lanka Rating Agency.

- See more at: http://www.dailynews.lk/?q=business/orient-finance-reaches-rs-2-b-deposits-mark#sthash.JxurbZgk.dpuf

4ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Mon Jul 28, 2014 9:54 am

SHARK aka TAH

SHARK aka TAH
Expert
Expert
Harry in fact i was interested on BUYING ORIN but its current trading is at premium, good around 10Rs in my opinion.

5ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Wed Jul 30, 2014 11:48 am

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Embarassed Embarassed 

6ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Thu Jul 31, 2014 12:13 am

Eng Krishantha

Eng Krishantha
Expert
Expert
SHARK wrote:Harry in fact i was interested on BUYING ORIN but its current trading is at premium, good around 10Rs in my opinion.


yeap agreed.

7ORIENT FINANCE PLC (BFN.N0000) Empty ORIENT FINANCE PLC (BFN.N0000) Mon Sep 05, 2016 11:42 pm

EquityChamp

EquityChamp
Moderator
Moderator
Pursuant to the amalgamation with Bartleet Finance, Orient Finance has shown clear signs of growth both in asset base and profitability. The company recorded an income of Rs741mn for Q1 of FY 16/17 with PAT of 73 mn.

The company is seen recording an interest yield of around 20% on its loan portfolio for the last couple of quarters which can be termed as bit below the industry average which is around 22% at the moment. Though the interest yield is somewhat below the industry the company has managed to record a loan book growth of 2.6% during quarter ending Jan-Mar 2016 with a further growth of 4.8% during the quarter ending Apr-Jun 2016.

Based on the current trend we can project their earnings as tabulated below. The earnings of 2015/16 were boosted by one off differed tax reversal hence a decline of earnings YoY is not a surprise though the core business operation growth looks promising.




Rs mn14/1515/1616/17F
Income   1,363    2,363    3,394
PBT
           4
      296       397
PAT            4       607       333
Accordingly the estimated EPS for 16/17 will be Rs2.25. With the current market price of Rs16.50 the stock is trading at a PE of 7.3x and PBV of 1x based on forecasted earnings.

The company doesn't declare any dividend for the last three years owing to low profitability. However with improved performance there is a possibility that shareholders may receive a dividend around Rs1.30 for the FY 16/17.

According to shareholders' list close to 145mn shares of issued capital is with top 5 shareholders and therefore this stock is very illiquid too. Aided by this illiquidity and with another bit of increased aggression in business operations with a view to increase the interest yield would turnout this company to be an absolute profitable venture within a two to three years time similar to Union Bank.

Finally my conclusion is if an investor wants to participate to a future winning business and with an holding capacity of one to two years then Orient Finance will be an ideal investment vessel with lower risk threshold. Holding 5000 to 10000 shares will not be in vain for a mid term investor.

Thanks

8ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Sep 06, 2016 6:19 am

troy

troy
Moderator
Moderator
All good but I feel bad whether its gonna be another disappointing share like VFIN or HDFC.

Anyway as I know about their business, Orient Finance is a blood sucker. Earn high interest from their customers and pay high interest for their corporate investors (they borrow at very high rates through ABSs). Not sure how long they can continue this model.

9ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Sep 06, 2016 6:58 am

EquityChamp

EquityChamp
Moderator
Moderator
@troy wrote:All good but I feel bad whether its gonna be another disappointing share like VFIN or HDFC.

Anyway as I know about their business, Orient Finance is a blood sucker. Earn high interest from their customers and pay high interest for their corporate investors (they borrow at very high rates through ABSs). Not sure how long they can continue this model.

According to their published financials Orient Finance's interest yield is little lower than industry average. So how can we see they are charging higher rates from customers?

10ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Sep 06, 2016 7:22 am

troy

troy
Moderator
Moderator
EC pls let me know the industry yield and Orient yield...

11ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Sep 06, 2016 8:10 am

EquityChamp

EquityChamp
Moderator
Moderator
Haven't you read what I have written above properly?

12ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Sep 06, 2016 9:41 am

Teller

Teller
Moderator
Moderator
See their loan book growth. It's an amazing growth. So we can hope a good interest income for them.
IF they can break 17/ barrier , this share will touch 20 levels.


_________________




Teller said is said..

13ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Sep 06, 2016 10:01 am

fireshelter

fireshelter
Associate Director - Equity Analytics
Associate Director - Equity Analytics
really Very Happy Very Happy Very Happy

14ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Sep 06, 2016 10:19 am

Gainer

Gainer
Associate Director - Equity Analytics
Associate Director - Equity Analytics
BFN Collection for Maga Bull Run cheers cheers cheers

15ORIENT FINANCE PLC (BFN.N0000) Empty This week ... Run Mon Sep 12, 2016 7:59 am

rajico1981


Stock Trader
BFN.N ..........This Week Run

16ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Tue Sep 13, 2016 1:31 am

Teller

Teller
Moderator
Moderator
Wait till next support creation..


_________________




Teller said is said..

17ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Wed Sep 14, 2016 4:11 pm

fireshelter

fireshelter
Associate Director - Equity Analytics
Associate Director - Equity Analytics
remaining Sell  Quantity will absorb soon

18ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Fri Sep 16, 2016 1:15 pm

pfxavier


Senior Equity Analytic
Senior Equity Analytic
It will come down to 16.00 - 16.20 before next run start. I am waiting to collect more.

19ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Sat Sep 17, 2016 6:42 am

EquityChamp

EquityChamp
Moderator
Moderator
Orient Finance as well as UBC are great value counters at current price levels for a minimum of two year period investment. It is risky if you select them as vessels for short term gains.

20ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Sat Sep 17, 2016 6:58 pm

Teller

Teller
Moderator
Moderator
BFN come to 15.70 levels & UBC earnings and progress is very slow compare to its Industry si price decline can be expected.


_________________




Teller said is said..

21ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Wed Oct 19, 2016 10:40 am

visvajith


Equity Analytic
Equity Analytic
@EquityChamp wrote:Pursuant to the amalgamation with Bartleet Finance, Orient Finance has shown clear signs of growth both in asset base and profitability. The company recorded an income of Rs741mn for Q1 of FY 16/17 with PAT of 73 mn.

The company is seen recording an interest yield of around 20% on its loan portfolio for the last couple of quarters which can be termed as bit below the industry average which is around 22% at the moment. Though the interest yield is somewhat below the industry the company has managed to record a loan book growth of 2.6% during quarter ending Jan-Mar 2016 with a further growth of 4.8% during the quarter ending Apr-Jun 2016.

Based on the current trend we can project their earnings as tabulated below. The earnings of 2015/16 were boosted by one off differed tax reversal hence a decline of earnings YoY is not a surprise though the core business operation growth looks promising.
Rs mn14/1515/1616/17F
Income   1,363    2,363    3,394
PBT
           4
      296       397
PAT            4       607       333
Accordingly the estimated EPS for 16/17 will be Rs2.25. With the current market price of Rs16.50 the stock is trading at a PE of 7.3x and PBV of 1x based on forecasted earnings.

The company doesn't declare any dividend for the last three years owing to low profitability. However with improved performance there is a possibility that shareholders may receive a dividend around Rs1.30 for the FY 16/17.

According to shareholders' list close to 145mn shares of issued capital is with top 5 shareholders and therefore this stock is very illiquid too. Aided by this illiquidity and with another bit of increased aggression in business operations with a view to increase the interest yield would turnout this company to be an absolute profitable venture within a two to three years time similar to Union Bank.

Finally my conclusion is if an investor wants to participate to a future winning business and with an holding capacity of one to two years then Orient Finance will be an ideal investment vessel with lower risk threshold. Holding 5000 to 10000 shares will not be in vain for a mid term investor.

Thanks

Is it good time to collect BFN at this price EC ? Please advice

22ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Wed Oct 19, 2016 11:10 am

EquityChamp

EquityChamp
Moderator
Moderator
Yes I think. Good price to do your investment.

23ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Wed Oct 19, 2016 11:56 am

visvajith


Equity Analytic
Equity Analytic
@EquityChamp wrote:Yes I think. Good price to do your investment.

Thank You Very much Dear Friend 
Smile

24ORIENT FINANCE PLC (BFN.N0000) Empty Re: ORIENT FINANCE PLC (BFN.N0000) Thu Oct 20, 2016 11:22 pm

sisira.wijeweera


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Teller wrote:See their loan booke growth. It's an amazing growth.  So we can hope a good interest income for them.
IF they can break 17/ barrier , this share will touch 20 levels.
tomorow BFN can be collect 14 level

25ORIENT FINANCE PLC (BFN.N0000) Empty BFN (ORIENT FINANCE PLC) Tue Jul 25, 2017 8:43 pm

worthiness


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Anyone got an analysis done on Orient finance..They offer very attractive FD rates for short term, let us say 3-6 months. High rates being offered over other finance companies raises a question. Also, can a finance company offer interest rate higher than ceiling rates regulated by Central Bank?

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