AAKASH CAPITAL LIMITED Weekly Newsletter from Aakash Capital Limited for the week ending on 25 th October, 2019 NEPSE UPDATE Indicators 20 th Oct, 2019 24 th Oct, 2019 (+)/(-) Change % NEPSE 1137.75 1149.34 1.02% SENSITIVE 249.12 252.05 1.18% FLOAT 84.29 85.21 1.09% SEN. FLOAT 79.98 80.93 1.19% BANKING 1044.79 1056.66 1.14% TRADING HOTELS 1791.33 1814.34 1.28% DEVELOPMENT BANKS 1556.79 1562.97 0.40% HYDROPOWER 945.83 957.77 1.26% FINANCE 570.17 576.3 1.08% NON LIFE INSURANCE 4243.39 4219.18 -0.57% MANU. & PRO. 2417.61 2414 -0.15% OTHERS 640.58 649.39 1.38% MICROFINANCE 1459.52 1474.16 1.00% LIFE INSURANCE 5005.06 5093.04 1.76% MUTUAL FUND 9.51 9.34 -1.79% Market Summary Statistics (20 th Oct to 24 th Oct, 2019) Total Turnover (Rs) 934,395,602.00 Total Traded Shares 3,484,271.00 Total Number of Transactions 17,260.00 Scrips Traded 155.00 Market Cap at Week start 1,440,453.95 Millions Market cap at Week end 1,460,531.06 Millions Floated Market Cap at Week start 521,378.82 Millions Floated Market Cap at Week end 529,136.23 Millions Bullion Update As on 24 th October, 2019 Hallmark Gold Rs.71,000/tola Worked Gold Rs.70,700/tola Silver Rs.860/tola Quote for the week "Wide diversification is only required when investors Don’t understand what they are doing." - Warren Buffett The market increased 1.02% (11.59 points) in the trading week between 20 th October and 24 th October 2019. The sensitive index, which measures the performance of the companies classified under group “A”, also registered a rise of 1.18% (2.93 points). Similarly, float index which measures the performance of securities which are floated to public also went up by 1.09% and sensitive float followed the trend by increasing 1.19%. This week the market opened at 1137.75 on Sunday and went down 4.04 points to sit at 1133.71. The market followed the falling trend on Monday with 10.42 points and closed at 1132.40. But the market retraced by 2.39 points on Tuesday followed by 7.81 points on Wednesday and 6.74 points on Thursday to end week at 1149. In this review period, all the sectors closed higher except the Non-Life Insurance, Manu & Pro and Mutual Fund sub-index. Life Insurance sub-index gained the most and closed 1.76% higher. Similarly, the others sub-index gained 1.38% followed by Hotels and Hydropower sub-index. Hydropower sector was in continuous falling trend when the trading of newly listed Sanjen and Rasuwagadhi Hydropower began. Hotels sub-index registered the gain of 1.28% followed by 1.26% of Hydropower sub-index. Most of the sub-index registered the gain this week. Banking, Development Banks, Finance and Microfinance registered the gain of 1.145, 0.40%, 1.08% and 1% respectively. However, the Non-Life Insurance, Man & Prod and Mutual Fund sub-index registered the loss of 0.57%, 0.15% and 1.79% respectively. The market witnessed comparatively less volume of transaction turnover this week as compared to recent weeks. The total turnover stood at Rs.934 million with average of Rs.186 million a day. The total market value increased by Rs.14,971 million as the market capitalization went up by 1.04%. Similarly, float market cap registered a gain of 1.11% this trading week.
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AAKASH CAPITAL LIMITED
Weekly Newsletter from Aakash Capital Limited for the week ending on 25th October, 2019
NEPSE UPDATE
Indicators 20th Oct, 2019
24th Oct, 2019
(+)/(-)
Change %
NEPSE 1137.75 1149.34 1.02%
SENSITIVE 249.12 252.05 1.18%
FLOAT 84.29 85.21 1.09%
SEN. FLOAT 79.98 80.93 1.19%
BANKING 1044.79 1056.66 1.14%
TRADING
HOTELS 1791.33 1814.34 1.28%
DEVELOPMENT BANKS 1556.79 1562.97 0.40%
HYDROPOWER 945.83 957.77 1.26%
FINANCE 570.17 576.3 1.08%
NON LIFE INSURANCE 4243.39 4219.18 -0.57%
MANU. & PRO. 2417.61 2414 -0.15%
OTHERS 640.58 649.39 1.38%
MICROFINANCE 1459.52 1474.16 1.00%
LIFE INSURANCE 5005.06 5093.04 1.76%
MUTUAL FUND 9.51 9.34 -1.79%
Market Summary Statistics (20th Oct to 24th Oct, 2019)
Total Turnover (Rs) 934,395,602.00
Total Traded Shares 3,484,271.00
Total Number of Transactions 17,260.00
Scrips Traded 155.00
Market Cap at Week start 1,440,453.95 Millions
Market cap at Week end 1,460,531.06 Millions
Floated Market Cap at Week start 521,378.82 Millions
Floated Market Cap at Week end 529,136.23 Millions
Bullion Update
As on 24th October, 2019 Hallmark Gold Rs.71,000/tola
Worked Gold Rs.70,700/tola
Silver Rs.860/tola
Quote for the week
"Wide diversification is only required when investors
Don’t understand what they are doing."
- Warren Buffett
The market increased 1.02% (11.59 points) in the
trading week between 20th October and 24th October
2019. The sensitive index, which measures the
performance of the companies classified under group
“A”, also registered a rise of 1.18% (2.93 points).
Similarly, float index which measures the
performance of securities which are floated to public
also went up by 1.09% and sensitive float followed
the trend by increasing 1.19%.
This week the market opened at 1137.75 on Sunday
and went down 4.04 points to sit at 1133.71. The
market followed the falling trend on Monday with
10.42 points and closed at 1132.40. But the market
retraced by 2.39 points on Tuesday followed by 7.81
points on Wednesday and 6.74 points on Thursday to
end week at 1149.
In this review period, all the sectors closed higher
except the Non-Life Insurance, Manu & Pro and
Mutual Fund sub-index. Life Insurance sub-index
gained the most and closed 1.76% higher. Similarly,
the others sub-index gained 1.38% followed by Hotels
and Hydropower sub-index. Hydropower sector was
in continuous falling trend when the trading of newly
listed Sanjen and Rasuwagadhi Hydropower began.
Hotels sub-index registered the gain of 1.28%
followed by 1.26% of Hydropower sub-index. Most of
the sub-index registered the gain this week. Banking,
Development Banks, Finance and Microfinance
registered the gain of 1.145, 0.40%, 1.08% and 1%
respectively. However, the Non-Life Insurance, Man &
Prod and Mutual Fund sub-index registered the loss of
0.57%, 0.15% and 1.79% respectively.
The market witnessed comparatively less volume of
transaction turnover this week as compared to recent
weeks. The total turnover stood at Rs.934 million with
average of Rs.186 million a day. The total market
value increased by Rs.14,971 million as the market
capitalization went up by 1.04%. Similarly, float
market cap registered a gain of 1.11% this trading
week.
.
News Update
After a massive revenue shortfall, officials find the culprit: overambitious target
The government has suffered a revenue shortfall of Rs70 billion, 28 percent below the target for the first quarter of the
current fiscal year, a result of both a slump in imports and the government’s failure to raise adequate revenue through
domestic economic activities.....Read More
Generation survey for the construction of the Upper Arun Hydroelectric Project to be done
The Department of Electricity Development has issued a permit to Upper Arun Hydroelectric to conduct a generation survey for the construction of the Upper Arun Hydroelectric Project.The company, a subsidiary of the Nepal Electricity Authority, received a two-year survey licence for the 1,061-megawatt.....Read More
Marigold prices likely to rise this season, say merchants
Householders planning to decorate their houses with marigold flowers this festival season should be prepared to open their
wallets wider. Traders said the price of the golden yellow blossoms could swell by more than 15 percent this Tihar because the
cost of growing them has increased.....Read More
Mobile banking users increase by over 4.5 times in 4 years
The number of mobile banking users has increased by over 4.5 times in the past four years. According to a report recently
published by Nepal Rastra Bank – Situation of Access to Finance in Nepal 2019 – the number of mobile banking users has gone
up from 1.75 million to 8.35 million.....Read More
Nepal to achieve 6.5 percent growth, World Bank says
Nepal's economy is estimated to grow at 6.5 percent in this fiscal year 2019-20, way below the ambitious 8.5 percent target set by the government, according to the World Bank.....Read More
Market Announcements
• Sunrise Bank Limited has published an offer letter to issue (30,00,000 units @ Rs.1000 per unit) 10.25% Sunrise Debenture 2083 to the general public from (20th to 24th Kartik, 2076).
• NMB Laghubitta Bittiya Sanstha Limited is issuing it's 1:1.5 ratio 24,30,093.75 units right share to its shareholders from (24th Kartik to 29th Mangsir, 2076).
• Surya Life Insurance Company Limited has allotted it's 10:7 Ratio right share to its shareholders on 6th Kartik, 2076 and refunding money to non-allottee investors from (13th Kartik, 2076).
• Womi Laghubitta Bittiya Sanstha Limited has allotted its 14,520 units promoter shares and 46,509.20 units ordinary shares in auction to the general public on 30th Ashwin, 2076 and refunding money to non-allottee investors from (3rd Kartik, 2076).
• First Microfinance Laghubitta Bittiya Sanstha Limited has posted a net profit of Rs 26.83 million and published its 1st quarter company analysis of the fiscal year 2076/77.
• Kanchan Development Bank Limited has posted a net profit of Rs 13.99 million and published its 1st quarter company analysis of the fiscal year 2076/77.
• Chautari Laghubitta Bittiya Sanstha Limited has posted a net profit of Rs 12.37 million and published its 1st quarter company analysis of the fiscal year 2076/77.
• Mega Bank Nepal Limited has announced its 9th AGM going to be held on 29th Kartik, 2076 and its audited financial highlights of the fiscal year 2075/76.
• Nyadi Hydropower Limited has announced its 12th AGM going to be held on 6th Mangsir, 2076.
• Mero Micfinance Bittiya Sanstha Limited has announced its 7th AGM going to be held on 29th Kartik, 2076.
• Bottlers Nepal Limited (Balaju) has announced its 41st AGM going to be held on 28th Kartik, 2076.
• Bottlers Nepal (Terai) Limited has announced its 33rd AGM going to be held on 28th Kartik, 2076.
RSI is a moment indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions
in the price of a stock. RSI is typically used on a 14-day time frame, measured on a scale from 0 to 100, where a value above 70
represents overbought and below 30 represents oversold condition.
Current RSI value of NEPSE is 49.97 which indicates that the market is at moderate zone. In a weekly chart while comparing
from 24th February to 29thSeptember 2019, there seems the formation of regular bullish divergence as it is retracing from 1129
level.
Moving Average Convergence Divergence (MACD)
MACD is a momentum oscillator formed by using two different moving averages, typically a 26 day EMA and 12 day EMA, which
provides specific buy/sell signal. When the MACD line crosses signal line from above, it is considered bearish, indicating a sell
signal and vice-versa.
Currently MACD and signal line is at -7.92 and -11.04 respectively. MACD line is above the signal line and both are below the
base line. MACD has shown bullish signal for the overall market.
Moving Average Analysis
Moving average is a technical analysis tool that smooth out price data by creating a constantly updated average price. It is used
to identify the trend direction, support or resistance levels and also to generate potential buy/sell signals. Price crossover and
MA crossover are some of the strategies that can be used to buy/sell a stock.
The EMA (5, 0) green line is at 1138.56 and EMA (20, 0) red line is at 1138.41 The index is currently trading above 5 and 20 days
Exponential Moving Average. This indicates that the overall market is retracing from support zone.
Bollinger Band
Bollinger band is a technical indicator that consists of a set of lines plotted two standard deviations up and below a 21-day
simple moving average. The bands are an indication of volatility; a widening gap indicates higher volatility and vice-versa.
Prices are relatively high when above the upper band and low when below the lower band.
The upper, middle and the lower bands are at 1151.41, 1138.41 and 1125.41 respectively. The market is trading in between the
lower and upper band. The indicates the market is moving towards resistance zone.
Stock Analysis:Himalayan General Insurance Co. Ltd. (HGI) Himalayan General Insurance Co. Ltd. commenced operations in December 1993 to write Insurance Policies after
obtaining license from the Insurance Board of Nepal to underwrite General Insurance (Non-life). The company issued first
fire Insurance policy on 1st November, 1993. It worked with Swire Blanch Asia Ltd., Singapore, through a technical service
agreement for the initial five years in order to arrange reinsurance with the world’s best reinsurers.
Spanning a history of over 25 years, the company has been providing clients with stability and confidence of security, and
shareholders with consistent returns. HGI is widely acknowledged for its market leadership in claims services, it services a
Net Profit (Rs.000) 141,675 130,864 121,770 141,859 198,512 8.80%
Change Period on Period (%) -7.63% -6.95% 16.50% 39.94%
Net Profit to Gross Premium (%) 16.92% 12.44% 9.26% 11.94% 13.61%
ROE (%) 15.50% 18.12% 15.78% 8.84% 14.80%
ROA (%) 4.86% 9.30% 8.27% 5.72% 9.16%
EPS (Rs.) 52.96 40.77 31.61 13.81 19.33
DPS (%) 21.05% 21.05% 15.00%
MPPS (Rs.) 378 1,380 745 450 350
Price Earnings ratio 7.14 33.85 23.57 32.59 18.11
Book Value per Share (Rs.) 211.84 215.46 199.33 154.78 174.1
Solvency Margin (%) 2.5 3.25 3.78 1.67
Total no. of Policies 33,935 35,626 44,231 58,387 46,205
No. of Claims Paid 9,839 10,484 5,103 4,760 5,829
No. of Unpaid Claims 1,752 1,266 809 1,271 1,053
No. of Claims/Total No. of Policies (%) 29.30% 28.07% 10.80% 8.15% 8.15%
Insurance Agents 74 66 181 134
Total Employees 91 95 117 148
Total No. of office 9 11 17 22
Based on the data presented above from 2071 to 2076 BS, the company has shown volatility in most of its fundamentals. As of 2075/76 its paid up capital is Rs.1.02 billion which shows that the company has maintained the paid up capital directed by Insurance Board. While most of the non-life companies are still unable to meet their minimum paid-up capital directed by the regulatory body. The company has reported 63% growth in Reserves & surplus which was 202% in 2074/75 but negative 56% in 2073/74. The company has reported 26% growth in Insurance Fund which seems stable as compared to other fundamentals. Similarly, the company has reportednegative growth of 18% in Long Term Investment and 20% in no. of Policies but reported positive growth in Premium collection by 22% which have resulted the growth of Net Profit by 39%. Most of the fundamental’s values are below the industry average, which indicates that the company is lacking the competitive advantage in its sector.
As of 4th Quarter report of 2075/76 company has reported Net Profit of Rs.198 million with EPS of Rs19.33 per share. The company had negative growth in Net Profit by 7% in 2072/73 followed by 6% in 2073/74 which was reflected by its share price. It indicates that the company was affected by the devastating earthquake of 2072 B.S. Similarly, the company has reported solvency margin of 1.67 in 2074/75 which is just above the minimum solvency margin directed by Insurance Board. The company has potential to do better in the Nepalese emerging market with its better operation. Currently it is operating with 134 agents, 148 employees through 22 branches.
The company has given regular dividend to its shareholders except in 2074/75. Looking at the history of dividend
distribution, it seems to be highly focused on distributing bonus share. However, it has given cash dividend of 15% in
2073/74.
Snapshot of Performance
26.75 31.10 38.52
102.72 102.72
11.70 11.89 5.1615.60 25.53
0.00
50.00
100.00
150.00
2071/72 2072/73 2073/74 2074/75 2075/76*
Share Capital and Reserve & Surplus
Share Capital (Rs.crores) Reserves & Surplus (Rs.crores)
18.04
24.5030.53
37.38
47.31
0.00
10.00
20.00
30.00
40.00
50.00
2071/72 2072/73 2073/74 2074/75 2075/76*
Insurance Fund (Rs.crores)
19.81 21.52 20.22 24.15
32.95
5.65 8.43 8.04 9.9613.10
0.00
10.00
20.00
30.00
40.00
2071/72 2072/73 2073/74 2074/75 2075/76*
Revenues vs Expenses
Total Revenue (Rs.crores) Total Expenses (Rs.crores)
5.658.43 8.04
9.9613.10
14.17 13.0912.18
14.19
19.85
0.00
5.00
10.00
15.00
20.00
25.00
2071/72 2072/73 2073/74 2074/75 2075/76*
Expenses vs Net Profit
Total Expenses (Rs.crores) Net Profit (Rs.crores)
14.17 13.09 12.1814.19
19.85
52.96
40.77
31.6113.81 19.33
0.00
10.00
20.00
30.00
40.00
50.00
60.00
2071/72 2072/73 2073/74 2074/75 2075/76*
Net Profit vs EPS
Net Profit (Rs.crores) EPS (Rs.)
52.96 40.77 31.61 13.81 19.33
378
1,380
745
450350
0
500
1000
1500
2071/72 2072/73 2073/74 2074/75 2075/76*
EPS vs MPPS
EPS (Rs.) MPPS (Rs.)
83.72 105.18 131.57 118.78 145.89
33,935 35,62644,231
58,387
46,205
0.00
20000.00
40000.00
60000.00
80000.00
2071/72 2072/73 2073/74 2074/75 2075/76*
No. of Policies vs Gross Premium
Gross Premium (Rs.crores) Total no. of Policies
21.05% 21.05%
15.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2 0 7 1 / 7 2 2 0 7 2 / 7 3 2 0 7 3 / 7 4
DPS (%)
Technical Analysis of HGI as on October 24th, 2019
(Source:https://pro.sharesansar.com)
Day Candle
Open 280
High 280
Low 275
Close 275
Pattern Analysis
Chart Pattern Short term sideways
Resistance R1: 286 R2: 295
Support S1: 263 S2: 259
Higher Breakout Level 287
Particulars Points Remarks
Volume 1,605 The daily volume of stock is higher than 1 week’s
average volume but lower than that of 1 month’s
average volume.
Avg. Volume (1 week) 1,056.40
Avg. Volume (1 month) 2,460.29
No. of Transaction 13 The daily number of transaction is higher than 1 week’s average no. of transaction but lower than that of 1 month’s average no transaction.
Avg. no. of Transaction (1 week) 8.80
Avg. no. of Transaction (1 month) 15.67
180 days Average (Rs.) 353.70 The price of the stock is trading below both 180 day’s 360 day’s average. 360 days Average (Rs.) 390.08
52 Weeks High Price (Rs.) 441 The stock is currently trading around 52 week’s low price. 52 Weeks Low Price (Rs.) 260
Nepse Index 1 year Change -8.05% The overall market and the industry has declined in the last 12 months. The stock has fall in the past one year but has gained 2% in last one month.
Industry Index 1year Change -26.58
Stock 1-Month Change 2.00%
Stock 1-Year Change -134.00%
Total Holdings of Mutual Funds (Bhadra 2076) 73,778 The Mutual Funds are holding very less number of shares (0.72%) of the company as compared to other companies.
As per the Economic survey report 2018/19 by Ministry of finance Insurance industry contributes 2.04% to GDP in Nepal. This industry is facing a lot of criticism as compared to other industry due to less number of people involving in insurance business. Most of the people are unaware about insurance and even educated people are reluctant to buy insurance policy. Most of the people under estimate the return of insurance and lacks knowledge how insurance protects an individual financially. If companies can convince their customers about the risk and reward of their policies, they can do better in this emerging economy.
Himalayan General Insurance Company Limited is an established and experienced insurance company with 25 years of operation with paid up capital of Rs.1.02 billion. As of unaudited report of Q4 2075/76, the company has made positive growth in most of the fundamentals but couldn’t increase the no. of policies which have caused the lack of competitive advantage. However, the company seems eligible to become one of the best in its sector.
Indicators Points Remarks
RSI (14) 48.03 HGI is at moderate zone.
MACD (12,26,9) -6.46 The MACD line is above the signal line and both are below the baseline.
Signal Line (12,26,9) -9.71
Histogram (12,26,9) 3.25
EMA (5,0) 271.47 Both EMA 5 and EMA 20 are below the price.
EMA (20,0) 272.98
+DMI(13,8) 31.05 The +DMI is dominant over -DMI and ADX is at 26.27.
-DMI(13,8) 25.13
ADX (13,8) 26.27
Chaikin Money Flow (20) -0.0212 CMF is below the baseline which shows selling pressure for the stock in the market.
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