NEPSE 2016: A Year In Review

Nepal Stock Exchange went through numerous ups and downs in 2016. While it went mostly up, it has been in a bearish mood lately. It opened at 1151.38 points on the first day of 2016 and closed positively at 1443.38 on the last trading day of 2016 on December 29, a growth of 25.36%. It also reached the highest point of 1881.45 on July 27.

NEPSE signals positive growth

A 5-year trend comparison of the NEPSE index signals a positive growth. Prices of major companies have come down to the values when the NEPSE index was just at 1100 points. This means that the prices of these companies will further increase, and this might be a good time for new investors to enter into the market safely.

The year-on-year growths of market indices are presented below:




Index measuring development banks has risen the highest by 40.42%, while Hydropower has plunged 11.04%

Charm in commercial banks seems to have been shifted to development banks. The sub-index measuring development banks increased by 40.42% while the commercial bank rose by 30.50%. Hotels, Finance, Insurance and Manufacturing & Production all posted a positive growth while Hydropower plunged a further 11%. 2015 was also not a good year for hydropower with only Sanima Hydropower reporting a positive growth in market price.



Similarly, Trading and Others sector also decreased slightly in 2016. A number of hydropower companies are coming up with IPOs. Api Power is expanding by developing solar power projects and building one more hydropower project. One of the most anticipated hydropower companies, Upper Tamakoshi, has yet to float IPO for the general public – which should increase attraction towards hydropower sector.


Central Depository System came into full-fledged operation in 2016

Although the implementation of CDS was done in 2015, it came into a full operation in 2016. Central Depository System made it possible to transfer the ownership of shares within 4 days instead of 2-3 months. High turnovers of almost Rs. 3 billion were possible only because of CDS.

Heading into 2017

The first trading day of 2017 closed on a positive note. Number of improvements in the stock market are in pipeline for 2017. ASBA system and online trading system will immensely help investors which are going to attract more investors and NRNs in the stock market. Brokers have also reacted positively to decentralize the secondary market and open branch offices throughout the nation, which will further benefit the industry. If the regulatory authorities are able to make better decisions for the betterment of the investors and the industry, the market is sure to reach new heights in 2017 as well.


source: sharesansar

NMB Bank announce 20% bonus shares, 1% cash dividend for tax purpose

NMB Bank Ltd has announced 20 percent bonus shares and 1 percent cash dividend for its shareholders.

A senior management executive confirmed that the board of directors meeting of the NMB Bank held on Tuesday decided to recommend 20 percent bonus shares to its shareholders and 1 percent cash dividend for the tax purposes.

With the announcement, NMB Bank has joined the list of top commercial banks of the country to offer the high dividend to its shareholders. The decision of the BoD is, however, subject to the approval of its upcoming annual general meeting and the NRB.

According to the unaudited financial report of the bank, its net profit has risen to Rs 43.37 crore in last fiscal year 2070/71, up from Rs 36.66 crore at the end of the previous fiscal year 2069/70.

The bank had distributed 15 percent cash dividend to its shareholders in the previous year.

After the adjustment of 20 percent bonus shares, the paid-up capital of the bank will surge to Rs 2.4 arba from Rs 2 arba.

source: sharesansar

Laxmi Capital’s debutant mutual fund gets good ICRA credit rating

Laxmi Capital Market Limited has got ICRA credit rating for its mutual fund scheme Laxmi Value Fund, which is a five-year closed-end balanced fund worth Rs 40 crore.

“We have just received [ICRANP] AMC Quality 3 (AMCs),” a high ranking Laxmi Capital officer told ShareSansar today. “Since getting credit rating usually takes the longest time to bring a mutual fund, we are now upbeat about launching Laxmi Value Fund at the earliest. All we need now is Sebon’s final approval.”

NIBL Capital is also waiting for the final approval from Sebon to float a closed-end seven year scheme that comes to the tune of Rs 80 crore at the earliest. It will be launching its first Mutual Fund called Sambriddhi Fund-I close end, equity oriented fund of the size of Rs 80 crores very soon as it has already received Fund Management Quality Rating of AMC Quality 3 from ICRA Nepal.

Now there are four mutual funds that have already been launched – two of Siddhartha group and one each of Nabil and NMB groups, and two more of the aforementioned schemes, which are about to the launched.

Moreover, Nabil is planning to launch yet another mutual fund while Global IME is also planning a scheme identical to Nabil Balanced Fund-1.

NMB’s debut mutual fund- ‘NMB Sulav Investment Fund-I’ has been recently floated to the public, and has already been oversubscribed.

NMB Sulav Investment Fund – I is a closed end fund with an initial corpus of Rs 60 crore, and may exceed up to Rs 75 crore. The mutual fund was floated at the face value of Rs 10. NMB Sulav Investment Fund has received [ICRANP] AMC Quality 3 (AMCs.

Stock analysts believe that the entry of mutual fund helps to stabilize the volatility of the stock market.

source: sharesansar

Liquidity surplus problem yet to go away: NRB holding another deposit auction Rs 10 arba within a week

Liquidity surplus is yet to go away.

Though a huge amount of money stacked in the banks and financial institutions (BFIs) is likely to enter in the market for the Dashain and Tihar celebration, the NRB is once again absorbing Rs 10 arba from the banking system through its newly introduced monetary instrument ‘Deposit Auction’.

The central bank called the bids from the BFIs for the deposit this time within a week of deposit collection held last time.

According to central bank officials, the current liquidity surplus in the BFIs currently stands at Rs 23 arba. Earlier, the time difference between the first and second auctions was a month.

This is the third time that the central regulatory bank is mopping up the liquidity from the banking system through this instrument introduced in the Monetary Policy of 2071/72. The NRB has already soaked Rs 30 arba from the banking system within two months period.

According to the senior level official of the NRB, the deposit auction was going to be held within the short period of time as the last call deposit collection was oversubscribed by 2.5 times. “The oversubscription of the deposit auction showed that the problem of liquidity still grips the BFIs.

Since the BFIs are still awash with excessive cash, we have decided to go for another deposit collection of Rs 10 arba,” said the senior level official. The deposit collection was oversubscribed by 2.5 times, drawing 209 bids from 31 BFIs.

The weighted interest rate had gone down in the second deposit collection in comparison to the first collection, signaling the banks’ tight competition to quote less interest rate to park their excessive cash in the central bank. The weighted interest rate plunged to 0.585 percent from 0.6911 percent.

The NRB is also in no mood to issue another deposit auction for the time-being. “With absorbing Rs 10 arba more, the liquidity surplus problem will be addressed to an extent.

Now the BFIs should also make their attempts to increase lending rather than depending always on the NRB instrument,” the senior level official added. “However, that does not mean that we will not collect the deposit now. We will assess the liqduity situation and hold another auction only if the problem is very serious now.”

While bankers agree that the only solution to the problem is the expansion of the lending, they lament the lack of demands for the investment.

“Bidding on the auction which does not even meet our cost of the bidding is not a choice to us. We also want to expand lending. However, there are no major demands for the lending,” NMB Bank’s CEO Upendra Poudyal said.

According to the bankers, the deposits in the BFIs will rise significantly as the remittance flow increases in the festival season.

source: sharesansar

Finally majority of NHPC BoD unite; AGM expected by Poush

In what may be dubbed as a significant step toward resolving the festering crisis in National Hydropower Company Limited (NHPC), a majority of the members of the Board of Directors of the public company have finally come together.

Chairman of the company Kumar Pandey explains how.

“Out of the total seven elected directors approved by the last AGM and a financial director nominated by the elected Directors, three have stepped down, and we have added one director,” says Pandey. “Out of the six existing members of NHPC Board of Directors, five are with us.”

According to him, the five BoD members who have finally come together are Kumar Pandey himself, Prakash Rajaure, Bishweshor Subedi, Ram Tamang and Shiva Ram Pradhan.

The sixth director Dipak Karki complains that he feels by-passed by the other BoD members.

Nevertheless, the fact that the majority of BoD members stand united is a big achievement in itself, and instill hope that this fully public company can overcome the crisis in days ahead.

NHPC Chairman Pandey further informed that they have begun the process of conducting the audit for the last fiscal year, and are planning to hold the 16th and 17th Annual General Meeting by Poush.

NHPC had held its 14th and 15th AGM around 20 months ago.

No dividend this time around, may be from next year

However, Pandey made it clear that the AGM this time around will not be able to offer any dividend owing to the festering scam in Lower Sunkoshi hydropower project, the other project of the company.

Around Rs 40 crore of equity collected through the rights issue of NHPC for this project was reportedly swindled by NB Group soon after the rights issue. And the loan issued for the project by a group of banks led by Nabil stands at around Rs 25 crore.

Though some directors as well as shareholders ShareSansar talked to over the recent weeks doubt if the loan amount has also been properly invested in the project, Pandey said that it has been invested properly.

However, a leading hydropower investor and expert Gyanendra Lal Pradhan says that NHPC may not be in a position to offer any dividend for the next few years. He was citing the recent move of the Commission for the Investigation of Abuse of Authority (CIAA) to initiate action against NHPC over the Lower Indrawoti project for the irregularities there.

But, Pandey insists that they are expecting to offer some dividend from the next fiscal year 2072/73.

“We will repay most of the loan by this fiscal year alone, and clear the rest by the first or second quarter of the next fiscal year,” Pandey said. “Then a portion of whatever profit we generate from NHPC can be offered as dividend to the shareholders.”

“Even if this project is scrapped, which we don’t think will happen at all, NHPC will be able to pledge dividend from the next fiscal year,” Pandey reiterated.

The good thing about NHPC is that it has already cleared most of its loan for its 7.5 MW Indrawoti III project.  () A large part of the loan for the 4.5 MW Lower Indrawoti project due despite the factionalism largely due to the arrangement to handover the earning from electricity directly to Nabil.

Back in March, shortly after Nepal Stock Exchange Limited (Nepse), on the basis of a court verdict, issued a stern warning to NHPC for failing to renew RTS agreement.  The board then, was divided in factionalism among directors.

Though the  SEBON  was not been able to take a bold stance on the festering issues, and Nepse had even withdrawn the trading suspension of NHPC shares since June last year following the Patan Appellate Court’s decree, the brokers had not been trading the shares.

But the compnay  apparently reached some understanding to appoint the RTS. Consequently the trading in the scrip of NHPC resumed after a long hiatus at Nepse, much to the respite of the shareholders.

Grow More Merchant Banker Ltd officials had then informed ShareSansar  that they had inked RTS agreement with “the majority group” of the NHPC. The market then responded positively to the development, and the price of scrip increased.

Then toward June end, NHPC scrip witnessed the highest turnover. One of the reasons, according to sources is that the Commerce bench of the Appellate Court Patan ruled in favor of majority directors and management, and said that the Dirctors supported by NB Group, which is primarily responsible for the crisis NHPC, is not bonafide.

The company whose shares traded at as high as Rs. 600 when stock market was surging to an unprecedented level around eight years back, went on a free fall when the company ran into rough weather and could not even publish its financial reports, or hold its regular AGMs for years due to extremely poor and non-transparent corporate governance on the part of NB Group, which was running the company initially.

NB Group had established NHPC in joint venture with Lyse Kraft AS of Norway in 1996. NHPC had commissioned the  Indrawati III Hydro Power Project back in 1999.

source: sharesansar

Janaki Finance pledges 70% bonus share plus cash dividend for tax purpose

Janaki Finance Company Limited has pledged 70 percent bonus share plus cash dividend for tax purposes from the massive net profit it posted in the last fiscal year.

A meeting of Board of Directors took the decision to this effect yesterday, a highly placed source at the finance company based in Janakpurdham told ShareSansar today.

Talking to ShareSansar earlier this month, Ram Nritya Shama, the Chief Executive Officer of the finance company had said that they were planning to distribute around 65 percent bonus share as well as cash dividend also because they have a reserve of dividend that the central bank did not allow them to distribute in the previous fiscal year 2069/70.

CEO Sharma also informed that they are also planning to hold the AGM toward Mangshir end or Poush.

CEO Sharma, however, refuted rumors in the market that Janaki Finance will pledge around 100 percent bonus share this time also because its paid-up capital stands at just Rs 14.62 crore.

It may be noted that the central bank had blocked dividend proposed by the finance company for the previous fiscal year, citing high non-performing loan.

Janaki Finance Company Limited posted 125 percent increase in the net profit in the quarterly report published today for the fiscal year 2070/71.

In comparison to the corresponding quarter of last fiscal year the net profit increased from Rs 3.97 crore to Rs 8.95 crore in the fourth quarter of the fiscal year 2070/71.

The finance company accumulated deposits of Rs 1.20 arba and the loan flow was Rs 91.17 crore in the fourth quarter. As compared to the corresponding quarter of last fiscal year the deposit and loan was Rs 1.01 arba and Rs 70.50 crore respectively.

Write back of provision for possible loss has also increased to Rs 8.01 crore up from Rs 2.36 crore in the fourth quarter.

The rise in the net profit is also due to the increase in the core business of the finance company as the net interest income has surged to Rs 10.71 crore from Rs 7.71 crore in comparison to the corresponding quarter.

The NPL of the finance company also dropped to 4.89 percent by the end of the fourth quarter, down from 11.82 percent at the end of the previous fiscal year 2069/70.

Likewise the EPS of the finance is Rs 61.20, per share net worth is Rs 272.01 and the P/E ratio is 8.17 times.

source: sharesansar

Taragaun Regency urges preferential shareholders to collect principle and interest

Taragaun Regency Hotels Limited has urged its preference shareholders who are yet to claim the principle and interest to collect their principle and interest warrants immediately.

Issuing a notice, the company that operates Hyatt Regency Hotel at Baudha, Kathmandu has stated that the principle and interest can be collected from NMB Capital Limited at Babarmahal, Kathmandu.

Taragaun Regency has been distributing the principle and interests for up to August 31 (Shrawan end) since August 18.

For the first time the company, which has started to post profit, has decided to give principle and interest — including 18 percent interest rate adjusted up to April 15, 2006 — to the preference shareholders collectively.

It has also urged the preferential shareholders who have not yet collected their share certificates to do so from the Share Department of the company at Baudha at the earliest.

Certificate distribution notice.FH11

source: sharesansar