LOLC HOLDINGS PLC (LOLC.N0000)

thaNX MILLIONS guys.. I guess all your comments cover the aspect of portfolio diversification..
@Tubal, If you are talking about adviser`s comment regarding LOLC moving to 250 in the medium run, he would have been drunk..BUT if its about selling CARS and making my portfolio 100% LOLC, then it was me who was drunk ..

I did not do any calculations on LOLC personally. But I have got the news from an expert who gives me correct information all the time(so far), I believe it would go up. Just wanted to know what you guys think about it.. With strong past performance and future strategies (specially the hotel sector), I think LOLC would do better.. I saw fairly large quantities being traded on Thursday and Friday..So there is a demand for that. Lets hope LOLC would have its run soon..

Good luck with LOLC.. lets hope it runs soon.. If my analysis would be correct this has to break the silence within this week though I cant stress it out with higher confidence.. I've seen a lot of bull factors for a run last few weeks around 138.. I might be right or wrong, after all this is CSE.. ;-)

smallville wrote:Good luck with LOLC.. lets hope it runs soon.. If my analysis would be correct this has to break the silence within this week though I cant stress it out with higher confidence.. I've seen a lot of bull factors for a run last few weeks around 138.. I might be right or wrong, after all this is CSE.. ;-)

dude, not now. i'm looking at ASI chart.
RSI 86.25
MFI 72.10

this has 2 options. either 7800 ASI or 7385 ASI. seem bulls may control first half of the week and bears may took over the control from bulls. if BFI cannot initiate its movement before end of feb, it will postpone to April. this is my view only.

for your early reply,

yes, you should have to good stomach to put all eggs on one basket rather having a head. i think every investor should taste bit of risk in stock market upon their capacity. it is trilling! isn't it?

it is not undervalued
see this
http://www.bloomberg.com/apps/quote?ticker=LOLC:SL

shaankh wrote:it is not undervalued
see this
http://www.bloomberg.com/apps/quote?ticker=LOLC:SL

Would you be able to interpret more ?

Earnings	3.876
Price/Earnings (Trailing)	35.372
Relative P/E	1.508

PER of >18 is overvalued
RPE of >1 indicate risk investment since the companey is unlikely to achive significant performance in earnings.

shaankh wrote:

Earnings	3.876
Price/Earnings (Trailing)	35.372
Relative P/E	1.508

PER of >18 is overvalued
RPE of >1 indicate risk investment since the companey is unlikely to achive significant performance in earnings.

bloomberg dosn't provide actual figures. most of the time, this is not updated. better to check with their annual, quarter reports.

http://www.cse.lk/cmt/upload_report_file/378_1297767464560.pdf

EPS 1.51

hmm...

good results. so they should be able to make around 8 for the year.

mono wrote:hmm...

good results. so they should be able to make around 8 for the year.

I believe that current share price is fair. I would say that it is not undervalued.

Lets have a quick recap...

Huge increase in profits.. which brought three months EPS of 1.51, Nine months EPS of 6.82.

If we assume the yearly EPS as 8 * 20.90 (BFI PER) = 167.2.. so at the current price this is undervalued.

Going thru their report, I found the following positive facts;
* They've reduced Real estate stocks this year and entered Timber and rubber stocks.
* Gained a substantial amt on Investment properties and increased their interest in investment of
associated companies.
* Increase of deposits from customers. Increased Reserves & Retained Earnings.

Some negatives as I see it;
* Bank overdrafts increased
* Insurance & Leisure segments have not performed well but others had..

These entities were among the top 20 share holder list;
Sri Lanka Insurance Corporation - Life Fund
Perpetual Asset Management (Pvt) Limited
Employees Provident Fund
Employees Trust Fund Board
Bank of Ceylon - No 2 A/C

We can see that state entities have some interest in LOLC too..

Up to u to decide

Is there any scope for LOLC to go pass 167 in the medium run?? Maybe to touch 200??

I deeply value the evaluation of smallvillie..Thanks.

following is general Q-Q revenue growth analysis;

Variable ----------------- As at 30.06.10--As at 30.09.10---As at 31.12.10

Financial Services -------1,494 Mn ----3,626Mn----------5,533Mn
[b]Plantation ----------------- 193 Mn------1,359 Mn--------1,766Mn
[b]Trading ----------------- --113 Mn--------372 Mn-----------585Mn
Leisure -------------------------7 Mn--------( 114) Mn---------(32Mn)
Power & Energy ----------------12 Mn-------8.535 Mn----------43Mn
Others -----------------------(716) Mn------(758)Mn-----------(758Mn)
Insurance -------------------- (0.8)Mn------(4.049) Mn--------(2.7Mn)

Total ------------------1,150 Mn-----4,529 Mn----------7,134Mn


I would like to add some more points;

1. Consider the GP in financial services. A healthy level of 65%. This is an extremely good when compared to other institutes in the financial sector and LOLC ability to borrow at low cost. Also their strategies to market Low cost funds effectively. They have an effective product mix to cater the bottom of the pyramid as well as Cream of the market which is represented through results. Financial Services growth rate almost 53% when compared to last quarter.

2. During recent past we have observed a mega price hike in Plantation products which will have a highly positive contribution in coming quarters towards Plantation Revenue of LOLC .(Pussallawa Plantation and Gal Oya will contribute in large numbers to the Top line in coming Quarters)

3. Although the Leisure sector indicates a loss it will be streamlined with the recent developments in the Tourism industry. Yield will be generated in last 2-3 quarters in 2011. It may be the refurbishment cost of of their hotels.It is important to consider the decrease in Q-Q Loss in the sector. With improved tourism we can expect them to become the Gold mine in LOLC.

4.Also as we expect an increase Revenue in Power & Energy sector as well due to the need and emphasis made by the Government on Hydro Power energy.

5.The trading arm is silently showing up some impressive results Q-Q.(Growth of 57%)

6. However Insurance and other sector continues to run at loss.

7. LOLC is a highly geared organisation.That is why their bank borrowings has been increased.But I think even they borrow at high cost their investment mix is fundamentally strong being an emergent diversified company.

8. Also the minority interest eats a greater portion of profits of LOLC it is important to identify the true value of profits generated even though it is not distributed among shareholders.

9 Also as you have correctly noted they have made a new investment on Timer and Rubber stock.(Rs 2,996Mn)It is interesting identify at what price they have purchased?When they are going to dispose it?However considering the current market price of Rubber it is a wise decision.

We must buy and sell shares based on a reason.Following crowd is really dangerous.We have witness it in last couple of days with CARS,CINV,GURD.


Gud Luck

smallville wrote:Lets have a quick recap...

Huge increase in profits.. which brought three months EPS of 1.51, Nine months EPS of 6.82.

If we assume the yearly EPS as 8 * 20.90 (BFI PER) = 167.2.. so at the current price this is undervalued.

Going thru their report, I found the following positive facts;
* They've reduced Real estate stocks this year and entered Timber and rubber stocks.
* Gained a substantial amt on Investment properties and increased their interest in investment of
associated companies.
* Increase of deposits from customers. Increased Reserves & Retained Earnings.

Some negatives as I see it;
* Bank overdrafts increased
* Insurance & Leisure segments have not performed well but others had..

These entities were among the top 20 share holder list;
Sri Lanka Insurance Corporation - Life Fund
Perpetual Asset Management (Pvt) Limited
Employees Provident Fund
Employees Trust Fund Board
Bank of Ceylon - No 2 A/C

We can see that state entities have some interest in LOLC too..

Up to u to decide

Agreed with smallville.. But i don't see investing in leisure sector a weakness. The earnings of leisure sector will reflect on next Q reports with the increase of foreigners and booming tourism in this year.

when looking at LOLC it's better to analyze on forward P/E. Because of their leisure projects.
LOLC is surely undervalued @ current price on fundamentals and future potential..

OntheMoney.. Nice analysis.. I gave u a + for that nice interpretation

YEs Investing in leisure sector is not a weakness.. Only thing it takes time for a ROI...
And a highly potential company like LOLC would find a way to convert their weaknesses to oppertunities..;-)

My valuation was under the impression that LOLC was BFI sector entity, but if we put it in DIV sector and calculate;

Ann. EPS as 8 * 35.5 (DIV PER) = 284. is the expected value...
Even at abt 30% discount to DIV sector PE the price arrives at arund 198.. sO at the current price this is very much undervalued.

I think the guy who converted 100% LOLC is gonna be a real winner now..

smallville wrote:OntheMoney.. Nice analysis.. I gave u a + for that nice interpretation

YEs Investing in leisure sector is not a weakness.. Only thing it takes time for a ROI...
And a highly potential company like LOLC would find a way to convert their weaknesses to oppertunities..;-)

My valuation was under the impression that LOLC was BFI sector entity, but if we put it in DIV sector and calculate;

Ann. EPS as 8 * 35.5 (DIV PER) = 284. is the expected value...
Even at abt 30% discount to DIV sector PE the price arrives at arund 198.. sO at the current price this is very much undervalued.

I think the guy who converted 100% LOLC is gonna be a real winner now..

I read all your guys comments. Nice presenting of facts. In my opinion LOLC cannot be treated as in BFI sector. Yes DIV section is appropriate as their ventures are diversified now. Their core business is attractive. Some other ventures have not fired yet but they will eventually and this counter will be more attractive in medium to long term.

For short term am not sure how much it will shoot up but given nature of CSE it can.

This is a conglomorate to eye for the future for sure.

http://www.mtiworldwide.com/index.php/news-and-events/item/211-lolc-turnaround-case-study-%E2%80%93-mti-commended

I think the guy who converted 100% LOLC is gonna be a real winner now..

[/quote]

Itz me

ok guys one other thing I need to ask you all.. We have been talking about the Banking Rally for the last month..IF LOLC does not fall under BFI sector, will LOLC have a positive impact if the Banking Rally happens at any point??

ashlee wrote:ok guys one other thing I need to ask you all.. We have been talking about the Banking Rally for the last month..IF LOLC does not fall under BFI sector, will LOLC have a positive impact if the Banking Rally happens at any point??

isn't LOLC in BFI. It's diversified but that doesn't mean it isn't BFI

Thanks for your post academic. I find myself often talking about QoQ growth but didn't bother to check it with LOLC because YoY was pretty impressive. Having said that I don't think the price will decline, this stock seems to have good support at the 136 levels. At the same time these earnings wouldn't justify a breakout.

xmart wrote:

shaankh wrote:

Earnings	3.876
Price/Earnings (Trailing)	35.372
Relative P/E	1.508

PER of >18 is overvalued
RPE of >1 indicate risk investment since the companey is unlikely to achive significant performance in earnings.

bloomberg dosn't provide actual figures. most of the time, this is not updated. better to check with their annual, quarter reports.

Correct.. u can check with the stocastics charts whether this is oversold or overbought but not the undervalue status.. u gotta do some fundamental studies for that..
However with the current results and expected future earnings, this has much potential than most of the counters we talk these days..

that 3.779 involves a capital gain from disposing SEYB shares.

I don't think it's the wisest decision to look at LOLC simply by looking at PE, i don't think thier operating EPS for year will exceed 6. but the thing with LOLC is that they have aggressively expanded over past 6-9 months and are under good management. There is a general impression among the corporate community here that LOLC will do well in the future and that's why it's attracting big investors.

Academic wrote:

Right or wrong, I’m not afraid to express my opinion even which goes against the all others or majority.

See quarterly performance of LOLC (After adjusting for split)
Q1 --> 1.528
Q2 --> 3.779
Q3 --> 1.51 (Latest)

Tell me who can see a growth here?

The EPS for 9 months is 6.82, if this is annualized EPS is 9.09.

Current sector PE 21 is . Which is tailing PE ratio not leading. It can be easily understood if you have basic mathematical knowledge, when economy is expected to grow, tailing PE is greater that leading PE (as EPS is expected to grow). Thus BFI’s leading PE should be less than tailing PE ratio.

If we take the conservative figure 15, then the LOLC price would be 15*9.09=136.4.
However considering current market situation, and the fact that investors expected LOLC EPS to grow than what is reported here, I expect the downward pressure for LOLC would be severe on Friday.

Thus I expect LOLC to go down at least by Rs 2 to 4 on Friday.

An opinion can be right or wrong. Anyway we will see by Friday evening.

Thus is not an investment advice or recommendation

Its good to have different views as further analysis could be done in many angels then.. Thanks..

I think we should wait a bit to invest in LOLC now.. may come down further as results are out.

mono wrote:that 3.779 involves a capital gain from disposing SEYB shares.

I don't think it's the wisest decision to look at LOLC simply by looking at PE, i don't think thier operating EPS for year will exceed 6. but the thing with LOLC is that they have aggressively expanded over past 6-9 months and are under good management. There is a general impression among the corporate community here that LOLC will do well in the future and that's why it's attracting big investors.

Thanks Mono for pointing out an important fact that I have missed.

However your point is in-supportive of my argument. As it hinders operating profit reported.

After removing the gain of disposing SEYB (Rs 1.7 billion), Q2 EPS hangs around 1.5 - 1.6, making this year's adjusted profit around 6-7. Thus Q3 result is not drastic change in performance.

In principle I agree with you that leading PE is the important factor not tailing (reported).

Nevertheless, finance being the core-business of LOLC this is a bit stagnating situation, as I perceive. It is my thinking that market expected something more than this (it is some-other matter that what the market should have expected from LOLC).

By considering current market condition also, I still expect price of LOLC to go down.

Academic wrote:

mono wrote:that 3.779 involves a capital gain from disposing SEYB shares.

I don't think it's the wisest decision to look at LOLC simply by looking at PE, i don't think thier operating EPS for year will exceed 6. but the thing with LOLC is that they have aggressively expanded over past 6-9 months and are under good management. There is a general impression among the corporate community here that LOLC will do well in the future and that's why it's attracting big investors.

Thanks Mono for pointing out an important fact that I have missed.

However your point is in-supportive of my argument. As it hinders operating profit reported.

After removing the gain of disposing SEYB (Rs 1.7 billion), Q2 EPS hangs around 1.5 - 1.6, making this year's adjusted profit around 6-7. Thus Q3 result is not drastic change in performance.

In principle I agree with you that leading PE is the important factor not tailing (reported).

Nevertheless, finance being the core-business of LOLC this is a bit stagnating situation, as I perceive. It is my thinking that market expected something more than this (it is some-other matter that what the market should have expected from LOLC).

By considering current market condition also, I still expect price of LOLC to go down.

Further it was disappointing to read following line on 30.9.2010 (q2) report note.

"The adjustment to bring the investment [SEYB] to market value resulted in the group recognizing a gain of Rs.1.7Bn in the Consolidated financial statements."

Two implications are there
1. This (1.7 billion) is not a realized gain (not a dispose as Mono pointed out, anyway credit should go to Mono for bringing this out). It is a result of reclassification. No cash in flow.

2. Since SEYB was 114 end September and which had declined to 97.8 by end December, for q3 they may have reported unrealized loss on SEYB (reversing part of this unrealized gain).

Berryfund wrote:

mono wrote:hmm...

good results. so they should be able to make around 8 for the year.

I believe that current share price is fair. I would say that it is not undervalued.

Totally agree with Berryfund. This is not undervalue & good for medium/long term.

Price appreciated from Rs 400 to Rs 1400 within few months (before the 1:10 split) .

Most investors in Sri Lanka have extremely high expectations & they all looking for fast cash. unbelievable..!!!!
We all like profits but i have no words to explain the situation in sl market. SHOCKING...

LOLC results outstanding
http://www.dailynews.lk/2011/02/18/bus01.asp

Profits top Rs 7.1 billion in nine months:
LOLC has continued to show exceptional performance recording outstanding pre-tax profits of Rs 7.1 billion for the nine months to December. This is a 485 percent growth over last year, with the financial services sector, trading sector and the other sectors contributing exceptionally well. The financial services sector showed excellent performance with pre-tax profits of Rs 5.5 billion, a growth of 354 percent over last year.


Group Deputy Chairman
Ishara Nanayakkara

Managing Director and CEO Kapila Jayawardena
The rest of the group contributed Rs 1.6 billion to the bottom line. With a contribution of taxes of Rs 1.1 billion, the Group recorded post-tax profits of Rs 6 billion, a growth of 647 percent over last year.

LOLC Group Managing Director and CEO Kapila Jayawardena, said ‘Sri Lanka is on the threshold of economic prosperity with new opportunities beckoning from North and East of the country as well.

“LOLC has been able to break new ground in profit diversity with vigorous implementation of initiatives taken in developing its Core business, as well as embracing the quest for new opportunities. This performance, which reflect a quantum leap when compared to the previous year, was due to the implementation of the Group’s road map which enabled us to capture opportunities well ahead of time’, he said.

The increase in total revenue kept its momentum in line with the aggressive growth in the financial services sector and the trading sector. The revenue grew by 172 percent over last year to reach an all time high of Rs 26 billion for the nine months.

The revenue from the financial services sector saw a growth of 41 percent to reach Rs. 13 billion while the contribution from the rest of the sectors was Rs 12.4 billion. The borrowing costs continued to come down in line with the sliding interest rates with the Group raising funds at attractive rates.

LOLC’s ability to source long-term funding from foreign multilateral and bilateral agencies at attractive rates contributed well to the reduction in borrowing costs. The total borrowing costs reached Rs 4.9 billion by December reflecting the lower interest margins demanded by the Group.

LOLC Group’s core business, the lending operations and its strategic investments contributed well to the bottom line positioning the Group on a strong footing to reap steady growth in profitability in the medium to long term. The Group’s expansion strategies augurs well with the economic growth forecasted in the near future.

The balance sheet grew along with the business growth of the Group, with total assets crossing the Rs 100 billion mark reaching Rs 108 billion by December. This is almost a 100 percent growth over last year. The corresponding liabilities grew by 60 percent represented by the borrowings of the Group mainly coming from the financial services cluster and the holding company. The total assets of the financial services cluster reached Rs 68 billion, a growth of 20 percent over last year. The corresponding liability grew by 20 percent. The advances grew by 49 percent to reach Rs 49 billion; this is an indication of the strong portfolio growth as a result of the growth in executions. The newly set up branches in the North and the East contributed significantly to this growth.

UKboy wrote:

Berryfund wrote:

mono wrote:hmm...

good results. so they should be able to make around 8 for the year.

I believe that current share price is fair. I would say that it is not undervalued.

Totally agree with Berryfund. This is not undervalue & good for medium/long term.

Price appreciated from Rs 400 to Rs 1400 within few months (before the 1:10 split) .

Most investors in Sri Lanka have extremely high expectations & they all looking for fast cash. unbelievable..!!!!
We all like profits but i have no words to explain the situation in sl market. SHOCKING...

For an instance, lets take this is not undervalued.. Have u seen Mono's post? I bet u have.. Now u can understand why ppl interested in LOLC.. their business is growing.. main business being leasing could be easily benefited by the vehicles coming in to the market at a pace.. This shows us a more vibrant result for next 2 qtrs.. But in reality if Govt. put a stop to tax freedom, we'll see this declines after teh next 2qtrs.. But it doesn't mean the company is not doing their best to grow their business know? U cant expect a company to perform if the policies are adjust negatively for the industry to grow..

So we have to keep in mind this possibility is a fact for leasing/motor sector business after next 6 months.. we never know how govt. thinks..

Commodity Prices are going up..Inflation is going up.. it cannot be halted for so many months even if a govt. wants.. ultimately they'll have to give up.. now we hear single digit loan interest rates... I thought this would be a reality. .but its not.. how the banks gonna keep the profit margins up if they put down rates drastically? Yes, the Central Bank will brin down lending rates lower to these private banks but can these private banks come up more than a 0.5% reduction to the current interest limits?
Guess we'll have to sit and wait till April to whats gonna happen..

But a management like LOLC will have some trumps on their hands to play if favourable conditions doesn't prevail in long run.. I think this is the reason people are more bullish towards this...