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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » # CDB - Most under valued & high Potential share in the Banking Sector. It values more than 150 due to….

# CDB - Most under valued & high Potential share in the Banking Sector. It values more than 150 due to….

+3
hasi84
smallville
Sudesh
7 posters

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Sudesh


Stock Analytic
Stock Analytic

1) Increasing pattern in EPS, 1Q- 0.87 , 2Q- 1.65 , 3Q- 5.31
2) Annualized EPS = 10.44, PE = 8.14
3) Forward EPS = 21.2 , PE = 4
4) Healthy PEG Ratio - Shows strongest buy signal due to more than 1000% of EPS Growth
5) Brilliant performance recorded in last Qtr * Income growth by 63% up to 609m *Interst income by 29% * EPS by 1942% upto 5.31
6) Total deposit base has increased by 39% to Rs. 6.7 Bn during last 9 months
7) Total asset base has grown by 33% up to 9 Bn During last 9 months
Cool Pre-tax profit has gone up by 1197% to record Rs. 310.7 mn compared with last corresponding 9 month period
9) Industry diversification with a lot of Financial Products including business loans, housing loans, leasing, hire purchase, trade finance, foreign currency exchange, foreign remittances, fixed deposits, savings and pawning
10) CDB is the first company to promote and commence operations in foreign currency encashment (authorised money dealership)
11) CDB is ranked as the 7th largest player in terms of Total Assets among 36 financial institutions
12) CDB was recently assigned BBB-/P3 credit rating by RAM Rating (Lanka) Ltd.
13) Overall NPL ratio stood at 4.48% at 31 December 2010
14) Online connected 33 of branch network around the country with recently started 4 Branches..

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Good post Sudesh.. u've shown the potential with reasons. I'm sure others would find this useful and follow the similar pattern in future to highlight the shares with reasoning..
I'll give u a + if what u've posted is true once I analyse this ;-)

Great work.. keep up..

hasi84

hasi84
Moderator
Moderator

Sudesh wrote:1) Increasing pattern in EPS, 1Q- 0.87 , 2Q- 1.65 , 3Q- 5.31
2) Annualized EPS = 10.44, PE = 8.14
3) Forward EPS = 21.2 , PE = 4
4) Healthy PEG Ratio - Shows strongest buy signal due to more than 1000% of EPS Growth
5) Brilliant performance recorded in last Qtr * Income growth by 63% up to 609m *Interst income by 29% * EPS by 1942% upto 5.31
6) Total deposit base has increased by 39% to Rs. 6.7 Bn during last 9 months
7) Total asset base has grown by 33% up to 9 Bn During last 9 months
Cool Pre-tax profit has gone up by 1197% to record Rs. 310.7 mn compared with last corresponding 9 month period
9) Industry diversification with a lot of Financial Products including business loans, housing loans, leasing, hire purchase, trade finance, foreign currency exchange, foreign remittances, fixed deposits, savings and pawning
10) CDB is the first company to promote and commence operations in foreign currency encashment (authorised money dealership)
11) CDB is ranked as the 7th largest player in terms of Total Assets among 36 financial institutions
12) CDB was recently assigned BBB-/P3 credit rating by RAM Rating (Lanka) Ltd.
13) Overall NPL ratio stood at 4.48% at 31 December 2010
14) Online connected 33 of branch network around the country with recently started 4 Branches..

there is no doubt that CDB will perform well in the future for the reasons stated above. But investors should be vary of the following points:
Investors should pay attention to ignore one off capital gains when calculating annualised earnings.
Due to its relatively low earnings base future expansion plans will be a big strain on profits! it will be good to know if there are any plans to open new branches this year! usually it takes around 1-1.5 years for new branches to break even!

jaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Certainty, that will move with financial rally hopefully mid of this week.

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

I posted Like 3 weeks back the potential of this stock as a great medium term stock! At that time it was trading around Rs 70! Few of the senior members of the forum disagree with me at that time and I had to prove the real earnings of them as well ! BTW great post. I also believe the share should be over Rs 150 and most probably Rs 150-300 range at the end of the year! I just wish I have more cash with me Sad

hasi84

hasi84
Moderator
Moderator

Rajitha wrote: I posted Like 3 weeks back the potential of this stock as a great medium term stock! At that time it was trading around Rs 70! Few of the senior members of the forum disagree with me at that time and I had to prove the real earnings of them as well ! BTW great post. I also believe the share should be over Rs 150 and most probably Rs 150-300 range at the end of the year! I just wish I have more cash with me Sad

@ Rajitha:

Can you please elaborate or give more details on the valuation you followed to obtain a price of 150-300?
It would be great if you can provide more details on the expected NAV and EPS in 12 months.
It isn't best practice to post a prediction without any financial justification!



Last edited by hasi84 on Sun Feb 20, 2011 9:03 pm; edited 1 time in total (Reason for editing : Typo)

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Here is a an analysis I did right after there quartely reports!

"Hi guys keep an eye on CDB. Saying this because not of a rally but had the chance to look in to it after their amazing quarterly report that came last Friday.
Company has declared EPS for quarter of Rs. 5.31 (Annualized EPS 21.24). Although this includes some mark to mark evaluations and if you even completely remove these investments it’s EPS for quarter of Rs. 2.4 is 45.45% increase to its last quarter EPS of Rs.1.64.
I could only see up to three quarterly earnings as only two financial statements out and the EPS for the 3 stands as Rs. 0.87, 1.65, 2.4 over 50% growth quarterly to quarterly with the least EPS accounted. The company has a Forward PE of 80/9.6= 8.33. This means the PEG Ratio for company stands at a mere 0.16 where 1 is the in line with market. So a HUGE undervalued share.
The sector PE ratio is also around over 20. This means even if you forget the huge growth the company is having you can see its trading at below 50% of its potential value with a mere 8.3 PE at worst case. OFC the value of this share goes up exponentially when you add in Mark to mark valued EPS of Rs. 5.31 per quarter. Also if I can remember right the singer finance that just enter the market in same sector have only Rs. 1.2 EPS annually while the share is trading at Rs50 now !!
Another thing to consider is that on the starting day of the share it went up to Rs.160 and settled down around Rs. 90 as I can see. (I was not in the market then). This means there are a huge number of people that bought this share really high.
Anyway this is just my opinion and I’m a bit bullish on the share and I thought I will share this. PLZ do you own studies before buying anything and you can find all these information at www.CSE.lk site"

hasi84

hasi84
Moderator
Moderator

Rajitha wrote:Here is a an analysis I did right after there quartely reports!

"Hi guys keep an eye on CDB. Saying this because not of a rally but had the chance to look in to it after their amazing quarterly report that came last Friday.
Company has declared EPS for quarter of Rs. 5.31 (Annualized EPS 21.24). Although this includes some mark to mark evaluations and if you even completely remove these investments it’s EPS for quarter of Rs. 2.4 is 45.45% increase to its last quarter EPS of Rs.1.64.
I could only see up to three quarterly earnings as only two financial statements out and the EPS for the 3 stands as Rs. 0.87, 1.65, 2.4 over 50% growth quarterly to quarterly with the least EPS accounted. The company has a Forward PE of 80/9.6= 8.33. This means the PEG Ratio for company stands at a mere 0.16 where 1 is the in line with market. So a HUGE undervalued share.
The sector PE ratio is also around over 20. This means even if you forget the huge growth the company is having you can see its trading at below 50% of its potential value with a mere 8.3 PE at worst case. OFC the value of this share goes up exponentially when you add in Mark to mark valued EPS of Rs. 5.31 per quarter. Also if I can remember right the singer finance that just enter the market in same sector have only Rs. 1.2 EPS annually while the share is trading at Rs50 now !!
Another thing to consider is that on the starting day of the share it went up to Rs.160 and settled down around Rs. 90 as I can see. (I was not in the market then). This means there are a huge number of people that bought this share really high.
Anyway this is just my opinion and I’m a bit bullish on the share and I thought I will share this. PLZ do you own studies before buying anything and you can find all these information at www.CSE.lk site"

Thanks for that Rajitha.
Good to see that you have excluded the one off mark to market valuation from your forward earnings calculation.
I would also consider accounting for NPLs due to the expanding loan book. Last quarter the company recovered some loans previously written off to the Ceylinco group, therefore the NPLs were positive: going forward we should expect NPLs to be a strain on the bottom line!
If we can estimate NPLs we can estimate the EPS going forward...gross NPLs for CDB is around 5% so we can use this to estimate future NPLs!

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

hasi84 wrote:

Thanks for that Rajitha.
Good to see that you have excluded the one off mark to market valuation from your forward earnings calculation.
I would also consider accounting for NPLs due to the expanding loan book. Last quarter the company recovered some loans previously written off to the Ceylinco group, therefore the NPLs were positive: going forward we should expect NPLs to be a strain on the bottom line!
If we can estimate NPLs we can estimate the EPS going forward...gross NPLs for CDB is around 5% so we can use this to estimate future NPLs!

There is an article about CDB from its director I think on todays Lankadeepa paper! Go read if possible. They are trying to expand in north and east a lot and are focusing more on gold loans!

beginner

beginner
Equity Analytic
Equity Analytic

as i observed.
this was shot up to 70 level then trade 70-80 levels sometime.
then came down to 70, then shot up to over 100...
then next few days came to down to 90 levels & then 80 levels.

will this come to 70 level again or shot up like SFL.

Sudesh


Stock Analytic
Stock Analytic

@biginner, CDB may not reach 150 at once.there may be no of rallys in that journey.its a volatile share in nature.. But its a fundamentally strong share( Fwd PE & PEG Ratios show strong buy signal) . We observed so many rallys in last few weeks like 70-83,83-104, again 78-89.. now @ 85.. I hope next resistant level is 120...

beginner

beginner
Equity Analytic
Equity Analytic

Thanks.
no rally mean, lot of people no attention in this share or still no manipulators there?

beginner

beginner
Equity Analytic
Equity Analytic

sorry about saying manipulation.
but what i osberved last few weeks. all shares went up like rockets.
but even with good results, some shares not going up.

Sudesh


Stock Analytic
Stock Analytic

its Number of rally...
Other thing is banking sector is still not rocketed... most probably monday FR will come out...NDB & SAMP also potential.. will c.

SilverHawk


Equity Analytic
Equity Analytic

few useful details about the stock.

http://forum.srilankaequity.com/t148-cdb-bull-run-again

http://www.ft.lk/2011/01/28/cdb-tops-rs-300-m-in-9-month-net-profit/

http://www.dailynews.lk/2011/01/07/bus20.asp

For me, this is the collecting period.

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