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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » LFIN - 1Q2011 Interim Report

LFIN - 1Q2011 Interim Report

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1LFIN - 1Q2011 Interim Report Empty LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 5:02 pm

Monster

Monster
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
http://www.cse.lk/cmt/upload_report_file/379_1311159710811.6.2011.pdf

Net profit for the period - 351.02 milion
EPS - Rs 5.07
NAV - Rs. 42.84

2LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 5:13 pm

RockStock


Manager - Equity Analytics
Manager - Equity Analytics
Seems Impressive Smile

3LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 6:43 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
it's pretty obvious that this share is worth at least 225

4LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 7:21 pm

sameeramlc

sameeramlc
Equity Analytic
Equity Analytic
@mono wrote:it's pretty obvious that this share is worth at least 225


Yep.

5LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 7:24 pm

sameeramlc

sameeramlc
Equity Analytic
Equity Analytic
LB Finance going to enlarge their businesses as a Commercial bank!
Do u have any idea about this information.

6LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 7:25 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
@sameeramlc wrote:LB Finance going to enlarge their businesses as a Commercial bank!
Do u have any idea about this information.

nope, and I'd be very skeptical about it as well.

7LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 7:34 pm

sameeramlc

sameeramlc
Equity Analytic
Equity Analytic
@mono wrote:
@sameeramlc wrote:LB Finance going to enlarge their businesses as a Commercial bank!
Do u have any idea about this information.

nope, and I'd be very skeptical about it as well.

Thanks bro,but my friend told me that,he is working in LB finance,i also couldn't believe that,that's y I asked.

8LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 7:36 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
@sameeramlc wrote:
@mono wrote:
@sameeramlc wrote:LB Finance going to enlarge their businesses as a Commercial bank!
Do u have any idea about this information.

nope, and I'd be very skeptical about it as well.

Thanks bro,but my friend told me that,he is working in LB finance,i also couldn't believe that,that's y I asked.

if your friend who works at LB finance told you that then there might be something to it.

9LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 7:41 pm

sameeramlc

sameeramlc
Equity Analytic
Equity Analytic
yep,we'll see

10LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 7:57 pm

eeyohan


Manager - Equity Analytics
Manager - Equity Analytics
so go 4 a VONE

11LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 8:16 pm

mark

mark
Expert
Expert
*Price-170(2011/07/20)
*FY12E-EPS-20
*FY12E-Earnings=1.4Bn
*PE-170/20=8.5

Facts to consider.........
*LFIN registered an exceptional 83.2% YoY earnings growth for 4QFY11 surpassing
Rs. 1bn in earnings for FY11. 60% YoY growth recorded in net interest income on the
back of strong volume growth posted in the leasing, hire purchase and gold loans
segments drove earnings higher. This led the company to achieve an ROE and ROA of
39% and 3.6% for FY11 compared to 32.2% and 3.2% in the last year respectively.

*leasing and hire purchases
-Total advances doubled during the year to reach Rs.24bn dominated by leasing and
hire purchases. The leasing and hiring segment’s performance was promising during
FY11 with the portfolio growing by 56% YoY exceeding Rs. 16bn, mainly due to
increased demand for vehicles following the duty reduction coupled with lower interest
rates that increased affordability of vehicle financing products.

*pawning
-The gold loan segment’s performance was also outstanding during the year registering
a loan book growth of 81% compared to the FY10 figure, given the appreciation of gold prices along with the expansion of pawning centres, targeting especially the untapped markets in the Northern and Eastern provinces. Over Rs.2.5bn gold loans were advanced during the year. This resulted in an increase in revenue from gold loans of 60%YoY, which contributed 22.4% of the company revenue for FY11 and 29.6% of operating profits.

*loans and advances
-which are mostly comprised of term loans and mortgage loans, showed a strong 89% YoY growth.The loan book growth was primarily funded by borrowings and deposits which grew by 231% and 57% respectively from FY10 figures. The company raised over Rs.1.9bn in borrowings and mobilised over Rs. 7.1 deposits during the year. A major portion of the borrowings were in the form of bank borrowings and deposits were mainly comprised of fixed deposits. Renewal rates of deposits remained over 80% during FY11. Interest expense grew by only 7% YoY due to lower rates despite a sharp increase in interest bearing liabilities during FY11.

*Other operational income
-doubled during the year mainly due to fee based activities as a result of increased lending operations. Capital gains from investments accounted for Rs.63.5m of operating income.

Developments

*Given the strong demand for vehicles and stable interest rates, the demand for vehicle financing products will remain robust for the coming year as well. Gold loans should continue to grow given lower interest rates and due to an anticipated appreciation of gold prices. In addition, the company expects to broaden its product portfolio by introducing ‘factoring’ during FY12.

*The company is expecting to add 50 centres (including branches and pawning centres) during FY12, especially in rural areas (as currently branches are concentrated around Colombo) with which its network will be extended to 140. This should lead to higher operating expenses during FY12.

*Deposits are expected to post a considerable growth due to increased reach and high
renewal rates and will be the major source of funding going forward.


http://forum.srilankaequity.com/t4920-my-pick-1-lfin?highlight=LFIN

FROM-JKSB

12LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 9:03 pm

insidertrader


Manager - Equity Analytics
Manager - Equity Analytics
Some counter-arguments.

JKSB research also said good things about buy SHL.These are expectations.

Price to Book Value is 4.5 (I think around 3 is a fair value for finance sector. That does look bit over valued.)

Current PE ratio is around 11.5

Compared to the immediate quarter profits have gone down by around 10%. I find it a bit reluctant to compare the same last quarter because lots of things have changed. Specially taxes, interest rates and also share prices which has a domino effect when each other of the companies hold them and sell them etc. It could be profits increased partly because of the increase in vehicles sales rush and then it's settling down, a bit like DIMO.

13LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 9:13 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
@insidertrader wrote:Some counter-arguments.

JKSB research also said good things about buy SHL.These are expectations.

Price to Book Value is 4.5 (I think around 3 is a fair value for finance sector. That does look bit over valued.)

Current PE ratio is around 11.5

Compared to the immediate quarter profits have gone down by around 10%. I find it a bit reluctant to compare the same last quarter because lots of things have changed. Specially taxes, interest rates and also share prices which has a domino effect when each other of the companies hold them and sell them etc. It could be profits increased partly because of the increase in vehicles sales rush and then it's settling down, a bit like DIMO.

PBV is quite high. that is very true.
But PE for the last 4 quarters is actually 9.8.
The thing is unlike DIMO these chaps will learn money from their vehicle leasing for years to come. So that comparison is not that valid.

14LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 10:02 pm

duke


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@sameeramlc wrote:
@mono wrote:
@sameeramlc wrote:LB Finance going to enlarge their businesses as a Commercial bank!
Do u have any idea about this information.

nope, and I'd be very skeptical about it as well.

Thanks bro,but my friend told me that,he is working in LB finance,i also couldn't believe that,that's y I asked.

I guess to be a bank you need to have certain capacity of capital. If they would go for it, do they have the capacity or how are they going to find the capital?

15LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 10:07 pm

RockStock


Manager - Equity Analytics
Manager - Equity Analytics
@sameeramlc wrote:
@mono wrote:
@sameeramlc wrote:LB Finance going to enlarge their businesses as a Commercial bank!
Do u have any idea about this information.

nope, and I'd be very skeptical about it as well.

Thanks bro,but my friend told me that,he is working in LB finance,i also couldn't believe that,that's y I asked.

I don't think it's a prudent idea, now as a finance company they have a very good position with substantial market share, I think only second to LOLC. Being a Commercial bank, they have to face strenuous competition. There are are many giants like COMB,HNB,SAMP,BOC

It's good to remain as a giant among finance companies rather than being a lilliput among Banks

16LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 10:23 pm

windi5

windi5
Moderator
Moderator
This is a good sign, other financial institutes will also show good results. Last year budget was a very friendly one for Financial institutes. Now they seem reaping the yield.Most benefited fields in post war SL are Financial and Tourism.

17LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 10:31 pm

windi5

windi5
Moderator
Moderator
But personally i dont like the business model of LFIN.They got lots of small places like boutiques, where they do all the business like leasing, pawning etc,.Interests are very high, they charge even an insurance charge for every pawning transaction, even if is for one day. they are open even on Sunday,targeting poor garments girls.

18LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 10:39 pm

Academic


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@mono wrote:it's pretty obvious that this share is worth at least 225

Any rationality to support this figure? LFIN has only BVP of 42.84. While EPS has gone down to 5.07 from 5.65 in March, with a marginal improvement in operating profit.

Show us how it is "pretty obvious"?

19LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 11:19 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
@Academic wrote:
@mono wrote:it's pretty obvious that this share is worth at least 225

Any rationality to support this figure? LFIN has only BVP of 42.84. While EPS has gone down to 5.07 from 5.65 in March, with a marginal improvement in operating profit.

Show us how it is "pretty obvious"?

Granted that their PBV is very high. But considering the speed at which LFIN is growing or has grown you can't expect low PBV's

EPS for the last 4 quarters is 17.25. are you telling me this company can't trade at a PE of 13. besides, their core business is pretty secure. And as long as that hold they'll keep on earning around 4.5-6 EPS per quarter. It's not like they're using one off gains to show high eps.

That seems pretty obvious to me.

20LFIN - 1Q2011 Interim Report Empty Re: LFIN - 1Q2011 Interim Report Wed Jul 20, 2011 11:31 pm

ashlee


Manager - Equity Analytics
Manager - Equity Analytics
So long as PABC is there, I do not think the management would want another bank in the group.. Rather, they would strenghten PABC as a commercial bank and LFIN as a financial company..

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