AAKASH CAPITAL LIMITED Weekly Newsletter from Aakash Capital Limited for the week ending on 19 th July, 2019 NEPSE UPDATE Indicators 28 th July, 2019 1 st Aug, 2019 change NEPSE 1,252.80 1,263.84 SENSITIVE 270.04 272.53 FLOAT 92.19 92.97 SEN. FLOAT 85.74 86.54 BANKING 1,132.50 1,136.29 HOTELS 2,067.34 2,066.66 DEVELOPMENT BANKS 1,067.71 1,616.90 HYDROPOWER 1,178.76 1,182.77 FINANCE 622.90 630.96 NON LIFE INSURANCE 4,991.85 5,073.53 MANU. & PRO. 2,647.60 2,652.89 OTHERS 715.57 718.39 MICROFINANCE 1,463.45 1,569.65 LIFE INSURANCE 5,949.94 5,894.31 MUTUAL FUND 10.05 10.08 Market Summary Statistics (28 th July to 1 st Aug, 2019) Total Turnover (Rs) 2,086,215,671.00 Total Traded Shares 7,481,445.00 Total Number of Transactions 32,269.00 Scrips Traded 171.00 Market Cap at Week start 1,559,878.46 Millions Market cap at Week end 1,574,284.82 Millions Floated Market Cap at Week start 556,908.46 Millions Floated Market Cap at Week end 561,899.39 Millions Bullion Update As on 2 nd August, 2019 Hallmark Gold Rs.65,800/tola Worked Gold Rs.65,000/tola Silver Rs.770/tola Quote for the week “The broker said the stock was poised to move. Silly me, I thought he meant up” -Randy Thurman The market gained a minimal 0.63% (7.86 points) in the trading week between 28 th July and 1 st August 2019. The sensitive index, which measures the performance of the companies classified under group “A”, also registered a gain of 0.52% (1.42 points). Similarly, float index which measures the performance of securities which are floated to public also went up by 0.58% and sensitive float followed the suit by rising 0.46%. This week the market opened at 1266.63 on Sunday and went down 13.83 points to sit at 1252.80. The market climbed for the following three days, but went down marginally in final trading day. The market added 3.18, 3.39 and 6.20 points on Monday, Tuesday and Wednesday respectively. However, on Thursday, the last trading day of the week, the index lost 1.73 points to end the week at 1263.84. In this review period, most of the sectors closed marginally higher, mirroring the market. All the sectors except hotels registered gains during the trading week. Microfinance sub-index ascended 5.57% as it added large points day after day for all the days during the week. Similarly, the insurance sectors i.e. non-life and life were the only sectors that gained more than 1% during the week; they added 1.61% and 1.03% respectively. Finance, manufacturing and processing, development banks, mutual fund, banking and others managed to gain 0.46%, 0.36%, 0.34%, 0.30%, 0.11% and 0.1% respectively. The only losing sector, hotel went down 0.03%. The market witnessed inactivity during the review period as the total turnover stood at Rs 2.09 Billion, averaging just Rs 417 million a day. The total market value increased by Rs. 14,406.36 million as the market capitalization went up 0.92%. Similarly, floating market cap saw a decline of 0.90% this trading week.
13
Embed
AAKASH CAPITAL LIMITEDaakashcapital.com.np/uploads/reports/Newsletter_(Aug_2nd).pdf · Stock Analysis: Shikhar Insurance Company Limited (SICL) Shikhar Insurance Company Ltd. (SICL)
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
AAKASH CAPITAL LIMITED
Weekly Newsletter from Aakash Capital Limited for the week ending on 19th July, 2019
NEPSE UPDATE
Indicators 28th July,
2019 1st Aug,
2019
% change
NEPSE 1,252.80 1,263.84 0.63%
SENSITIVE 270.04 272.53 0.52%
FLOAT 92.19 92.97 0.58%
SEN. FLOAT 85.74 86.54 0.46%
BANKING 1,132.50 1,136.29 0.11%
HOTELS 2,067.34 2,066.66 -0.03%
DEVELOPMENT BANKS 1,067.71 1,616.90 0.34%
HYDROPOWER 1,178.76 1,182.77 0.21%
FINANCE 622.90 630.96 0.46%
NON LIFE INSURANCE 4,991.85 5,073.53 1.61%
MANU. & PRO. 2,647.60 2,652.89 0.36%
OTHERS 715.57 718.39 0.10%
MICROFINANCE 1,463.45 1,569.65 5.57%
LIFE INSURANCE 5,949.94 5,894.31 1.03%
MUTUAL FUND 10.05 10.08 0.30%
Market Summary Statistics (28th July to 1st Aug, 2019)
Total Turnover (Rs) 2,086,215,671.00
Total Traded Shares 7,481,445.00
Total Number of Transactions 32,269.00
Scrips Traded 171.00
Market Cap at Week start 1,559,878.46 Millions
Market cap at Week end 1,574,284.82 Millions
Floated Market Cap at Week start 556,908.46 Millions
Floated Market Cap at Week end 561,899.39 Millions
Bullion Update
As on 2nd August, 2019 Hallmark Gold Rs.65,800/tola
Worked Gold Rs.65,000/tola
Silver Rs.770/tola
Quote for the week
“The broker said the stock was poised to move. Silly me, I thought he meant up” -Randy Thurman
The market gained a minimal 0.63% (7.86 points) in the
trading week between 28th July and 1st August 2019.
The sensitive index, which measures the performance
of the companies classified under group “A”, also
registered a gain of 0.52% (1.42 points). Similarly, float
index which measures the performance of securities
which are floated to public also went up by 0.58% and
sensitive float followed the suit by rising 0.46%.
This week the market opened at 1266.63 on Sunday
and went down 13.83 points to sit at 1252.80. The
market climbed for the following three days, but went
down marginally in final trading day. The market added
3.18, 3.39 and 6.20 points on Monday, Tuesday and
Wednesday respectively. However, on Thursday, the
last trading day of the week, the index lost 1.73 points
to end the week at 1263.84.
In this review period, most of the sectors closed
marginally higher, mirroring the market. All the sectors
except hotels registered gains during the trading week.
Microfinance sub-index ascended 5.57% as it added
large points day after day for all the days during the
week. Similarly, the insurance sectors i.e. non-life and
life were the only sectors that gained more than 1%
during the week; they added 1.61% and 1.03%
respectively. Finance, manufacturing and processing,
development banks, mutual fund, banking and others
managed to gain 0.46%, 0.36%, 0.34%, 0.30%, 0.11%
and 0.1% respectively. The only losing sector, hotel
went down 0.03%.
The market witnessed inactivity during the review
period as the total turnover stood at Rs 2.09 Billion,
averaging just Rs 417 million a day. The total market
value increased by Rs. 14,406.36 million as the market
capitalization went up 0.92%. Similarly, floating market
cap saw a decline of 0.90% this trading week.
.
News Update
The Monetary Policy may not help stabilise interest rates, analysts say
The Monetary Policy 2019-20 recently unveiled by Nepal Rastra Bank might not help stabilize interest rates in the long run as it
has failed to introduce new measures and only focused on making minor changes in the existing policy tools…Read More
Nepalese are consuming 38 percent more electricity than two years ago
Two years ago, a Nepali household used to consume 117 kilowatt-hours of electricity every year. Now, each household utilizes
245 kilowatt-hours per year, 38 percent more than in the fiscal year 2017-18, a recent study shows. The surge in electricity
demand is largely driven by a reliable supply of power and increased use of gadgets and electrical appliances indicating a growth
in the purchasing power of Nepali households…Read More
Alarm bells are ringing as agro imports bill reaches Rs220 billion
Nepal’s agricultural goods import bill ballooned to an all-time high of Rs220 billion in the last fiscal year, ringing the alarm bell
loudly that the country is progressively becoming a net importer of farm products. The latest statistics of the Department of
Customs show that Nepal imported farm products worth Rs220 billion in the last fiscal year that ended July 16. The share of agro
products in the total import bill has swelled to 15.51 percent…Read More
175,909 unemployed benefited from PM Employment Program
The government has provided employment to nearly 175,909 people through 6,864 projects across the country run by various
local units under the Prime Minister Employment Program in FY 2018/19. According to the Ministry of Labor, Employment and
Social Security (MoLESS), these projects provided employment for 13 days per person in average…Read More
Market Announcements
United Insurance Company Nepal Limited is issuing it's 1:2.4 ratio 72,57,600 units right share to its shareholders from
3rd Bhadra to 6th Ashwin, 2076.
Nepal Insurance Company Limited has announced its 70th AGM going to be held on 8th Bhadra, 2076.
Neco Insurance Limited has announced its 23rd AGM going to be held on 14th Bhadra, 2076.
Reliance Life Insurance Limited has announced its 2nd AGM going to be held on 31st Shrawan, 2076.
Prudential Insurance Company Limited has announced its 17th AGM going to be held on 1st Bhadra, 2076.
Terhathum Power Company Limited has announced its AGM going to be held on 32nd Shrawan, 2076.
Himalayan General Insurance Company Limited proclaim its 25th AGM going to be held on Ashwin 06, 2076.
NMB Bank Limited has announced its Special General Meeting going to be held on 28th Shrawan, 2076.
Gurans Life Insurance Company Limited has allotted its 90,571 unit promoter shares in auction to the general public on
15th Shrawan, 2076 and refunding money to non-allottee investors from 19th Shrawan, 2076.
Janautthan Samudayic Laghubitta Bittiya Sanstha Limited is closing it's 1:1 ratio 2,88,000 units right share to its
shareholders from 15th Shrawan, 2076.
NMB Capital Limited has issued 120 million units of Rs 10 face value each mutual fund scheme worth Rs 1.20 billion
(NMB 50) to the general public from 13th Shrawan, 2076.
NIC Asia Capital Limited has extended the date of its "NIC ASIA Balance Fund " (10,62,50,000 units @ Rs.10 per unit) to
the general public till (Bhadra 05, 2076.)
Deva Bikas Bank Limited has urged its shareholders to pay tax amount for 5.5% bonus share distribution purpose.
Net Profit 131,127,131 219,618,856 306,611,312 360,003,789 431,613,620 34.69%
Change Period on Period (%)
67.49% 39.61% 17.41% 19.89%
Net Profit to Gross Premium (%)
29.14 34.12 29.68 25.44 12.78
ROA (%) - 15.65 10.48 10.5 10.47
ROE (%) - 30.01 20.61 20.89 19.58
EPS (Rs.) 44.04 61.4 60.13 44.03 40.82
MPPS (Rs.) 940 690 3,249 1,941 985
PE 21.34 11.24 54.03 44.08 24.13
Book Value per Share (Rs.) 196.51 223.23 279.14 216.75 208.46
Solvency Margin (%) 2.37 3.2 5.02 5.09 -
Total no. of Policies 101,242 155,272 231,018 264,711 293,875
No. of Claims Paid - 2995 2,897 7,119 9,152
No. of Unpaid Claims - 2490 2,981 6,698 3,087
No. of Unpaid Claims/No. of Policies
- 1.60% 1.29% 2.53% 1.05%
Total Employees 173 229 284 385 -
Total No. of office 18 30 34 54 -
Insurance Agents 50 65 64 64 -
Based on the data presented above from 2070 to 2075 BS, the company has shown consistent growth in most of its fundamentals. Paid up capital, has already reached over Rs.1 billion in 2074/75 as directed by Insurance Board where most of the non-life companies are still unable to meet their minimum paid-up capital directed by the regulatory body. As per the unaudited report of fourth quarter 2074/75, the company has 33.96% rise in Insurance Fund to Rs.851.19 million, 154.58% rise in Long-term Investment, 138.66% rise in Gross Premium and 19.89% rise in Net Profit. The company has compounded annual growth rate (CAGR) of 34.69% in Net Profit and most of the fundamentals are growing in higher rates than that of industry average. However, the company had negative growth in its reserve and surplus in 2073/74 by 36.66% and followed by 8.94% in 2074/75 due to devastating earthquake in 2072. As a part of business company was successful in making most of the claims during that period. As of 2073/74 company is providing non-life insurance service through 54 offices mobilizing its 64 agents.
The company has shown sound fundamentals in this review period and seems to be a market leader in its sector. Most of the operations are operating above industry average and growing consistently. The performance of the company has been reflected by market price in the stock exchange.
Snapshot of performance
29.78 35.7750.99
81.77105.73
8.42 12.44
42.1026.66 24.28
0.00
50.00
100.00
150.00
2070/71 2071/72 2072/73 2073/74 2074/75*
Paid-up Capital & Reserves and Surplus
Paid-up Capital (Rs.crores) Reserves & Surplus (Rs.crores)
19.7030.60
45.84
63.54
85.12
0.00
20.00
40.00
60.00
80.00
100.00
2070/71 2071/72 2072/73 2073/74 2074/75*
Insurance Fund (Rs.crores)
8.93 11.04
20.8925.63
28.92
13.11
21.96
30.6636.00
43.16
0.00
10.00
20.00
30.00
40.00
50.00
2070/71 2071/72 2072/73 2073/74 2074/75*
Expenses vs Net Profit
Total Expenses (Rs.crores) Net Profit (Rs.crores)
44.04 61.4 60.13 44.03 40.82
940690
3,249
1,941
985
0
500
1000
1500
2000
2500
3000
3500
2070/71 2071/72 2072/73 2073/74 2074/75*
EPS vs MPPS
EPS (Rs.) MPPS (Rs.)
155,272
231,018264,711
293,875
2490 2,981 6,698 3,0870
100,000
200,000
300,000
400,000
2071/72 2072/73 2073/74 2074/75*
Total no. of policies vs No. of unpaid claims
Total no. of Policies 10,242 No. of Unpaid Claims -
21.05%25.26%
63.15%
30.53%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
2070/71 2071/72 2072/73 2073/74
Dividend (%)
Quarter to Quarter Comparison
Particulars Q3 2074/75
Q3 2075/76
Change (%)
Paid-up Capital (Rs.000) 1,057,310 1,057,311 0.00%
Total Expenses (Rs.000) 2,061,130 2,368,818 14.93%
Net Profit (Rs.000) 310,106 336,243 8.43%
Net Premium to Gross Premium (%) 49.97% 49.74% -0.46%
Net Profit to Gross Premium (%) 12.61% 13.45% 6.65%
EPS (Rs.) 39.11 42.40 8.41%
MPS (Rs.) 1,013 874 -13.73%
P/E ratio 25.90 20.61 -20.42%
Book Value per Share (Rs.) 196.97 240.27 21.98%
ROE (%) 19.85% 17.65% -11.08%
ROA (%) 10.06% 9.76% -2.98%
As per Q3 of fiscal year 2075/76, the company has shown outstanding growth in some of its fundamentals. Reserves and surplus has reached to Rs.410.91 million which is 125% higher than that of the corresponding quarter of 2074/75. Similarly, it has shown rise of 28% in Insurance Fund, 8.43% rise in Net income. However, gross premium has increased by just 1.67% which might affect in the long term profit growth. The market price of the company has fallen by 13.73% to Rs.874 per share with P/E ratio of 20.61%. which is below industry P/E indicating that the share price of the company is undervalued as per relative valuation.
Dividend History
Year Dividend
Total
%
Cash % Bonus %
2070/71 1.05% 20% 21.05%
2071/72 1.26% 24% 25.26%
2072/73 3.15% 60% 63.15%
2073/74 1.53% 29% 30.53%
The bank is providing consistent dividend either in the form of cash or bonus. Looking at the history of dividend distribution,
the bank seems to be highly focused on distributing bonus share.
Technical Analysis of SICL as on August 1st, 2019
Day Candle
Open 815
High 815
Low 796
Close 796
Pattern Analysis
Chart Pattern Short term Uptrend
Resistance R1: 817 R2:
Support S1: 769 S2:
Higher Breakout Level
Particulars Points Remarks
Volume 8,633 The daily volume of the stock is higher than that
of 1 week and 1 month average volume. Avg. Volume (1 week) 5,377.20
Avg. Volume (1 month) 3,061.24
No. of Transaction 47 The daily number of transactions is higher than that of average transaction of the week and month.
Avg. no. of Transaction (1 week) 32.40
Avg. no. of Transaction (1 month) 27.76
180 days Average 857.83 The price of the stock is trading in below 180 days and 360 days average. 360 days Average 918.98
52 Weeks High Price 989 The stock is currently trading between 52 weeks high and low price. 52 Weeks Low Price 726
Nepse Index 1 year Change 5.86% The overall market has increased by 5.86% but the industry has fallen by 14.11%. The stock has fall in the past one year but has gained in 1 month’s period.
Industry Index 1year Change -14.11%
Stock 1-Month Change 8.30%
Stock 1-Year Change -14.13%
Monthly Beta 1.108 The monthly beta of the stock is above the market. Quarterly Beta 0.837
Total Holdings of Mutual Funds (Asad) 157,012 The Mutual Funds are holding good number of shares of the company.
Stock Holdings of Top Broker (from July, 2019) 26,751 The sum of Stock holdings of 5 Brokers is shown with the average of their average buying and selling price.
Top Broker Avg. Buy Price 748.43
Top Broker Avg. Sell Price 776.68
Concluding Remarks
Insurance business contributing 2.04% to the domestic GDP is considered as a forced selling business in Nepal. Due to its low
market penetration of just 18%, this industry is facing a lot of criticism as compared to other sector. Most of the people are
unaware about insurance and even educated people are reluctant to buy insurance policy. Most of the people underestimate
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.
Being a leader in non-life insurance business Shikhar Insurance is successful in creating value for its customers. It has sound
fundamentals and seems to be a blue chip company operating above the industry average which indicates the benefit of
competitive advantage. There seems huge vacuum in this sector and this company can fill that gap through its expansion in
rural parts with more affordable policies and efficient operation.
Indicators Points Remarks
RSI (14) 52.61 SICL is at moderate zone.
MACD (12,26,9) 3.78 Both the MACD and signal line are above the baseline.
Signal Line (12,26,9) 2.64
Histogram (12,26,9) 1.14
EMA (5,0) 799.57 EMA 5 is just above the price level and EMA 20 is below the price.
EMA (20,0) 791.46
+DMI(13,8) 40.76 The +DMI is dominant over -DMI and ADX is at 31.16.
-DMI(13,8) 20.03
ADX (13,8) 31.16
Chaikin Money Flow (20) -0.31 CMF is below the baseline which shows buying pressure for the stock in the market.
Investing Solutions
Investing solutions enable individuals to realize their aspirations by making their money work for them.
Growing our hard-earned money should be simple and accessible to everybody, so that each of us is able to live the life we
desire. With this objective, we ensure we gain an in-depth understanding of each individual’s aspirations and ambitions so that
we are able to recommend the right investment solution. We encourage people to link their investments to specific life goals so
that they are able to realize these goals meticulously and with ease.
Portfolio Management Services
Tailor made solutions to meet your investing needs
Across the world people are turning to specialists Portfolio Management Services for managing their equity investments.
Portfolio Management Services is the Portfolio Management division of Aakash Capital that helps you access the equity market
in Nepal.
Portfolio Management Service brings you a whole range of investment products,
from which your portfolio manager puts together your optimal portfolio. We take
into account your financial goals, time horizon, risk appetite and investment