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Introduction The Multi Finance Company Limited

May - 2011

The Multi Finance Company Limited


The Multi Finance Company Limited (MFCL) is a registered finance company & a

Key Features
Total No of Shares CSE Listing Issue Type 17,976,325 Dirisavi Board Introduction

specialized leasing establishment under the Central Bank of Sri Lanka (CBSL). The company is to list their ordinary shares on the Diri Savi Board of the CSE with the objective of compliance with the mandatory listing requirement of CBSL prior to end of June 2011 in order to broad base the share ownership structure and to improve the transparency of the firm.

Company Profile
Major Revenue Streams

MFCL was incorporated in 1974 under the Companies Act No 17 of 1978 as a subsidiary of Entrust Limited. MFCL is a mid scale registered finance company (RFC) with 5 fully fledged branches operating in key cities in the island.

3% 2% 8% 5% 15%

The companys major business interests are in the areas of Finance Leasing, Hire Purchase Financing, Consumer loans/ Business loans including Mortgage Loans & Pawning. Future Business Plans

67% Lease Finance Loans Treasury Bonds Hir Purchase Treasury Bills Pawning

MFCL intends to increase the present branch network including pawning centers to capitalize the future growth in economic activities in the country. Further the company plans to introduce new products such as real estate financing so that the company can venture in to the real estate business. The company plans to further increase its activity in the pawing segment of the business and therefore plans to move in to new locations to cover a larger geographic location. The company intends to introduce Shariah Compliant products & services in near future.

Top 05 Shareholders

Shareholder Entrust Limited Mrs. Jayanthi Kalubowila Mr. Vageesha Ranepura Dr. Nihal Wilfred Karunaratne Capital Alliance Holdings Ltd

% Stake 86.30 1.70 1.20 0.70 0.60

Key Financials - MFCL


LKR Mn Interest Income Net Interest Income Profit Before Tax Profit After Tax Loans & Advances Total Assets Deposits Shareholders Funds EPS (LKR) NAVPS (LKR) * Annualized EPS 31.12.2010 92.6 58.8 24.3 18.6 596.8 689.4 146.1 265.7 1.38* 14.7 31.03.2010 73.8 57.2 8.1 5.9 321.7 423.3 129.4 247.9 0.33 13.7 31.03.2009 41.8 30.6 0.25 (3.8) 193.8 343.1 61.5 242.1 (0.39) 13.5 31.03.2008 25.9 16.8 6.9 3.4 54.0 222 64 141 1.64 7.8

Asha Phillip Securities Ltd Equity Research Division

Introduction The Multi Finance Company Limited

May - 2011

Board Of Directors Dr. Asoka Nimal Jinadasa Mr. Abdul Hassan Mohamed Riyaz Mrs. Thirugnanam Kanagasabai Mr. Chanuka Upendra Ratwatte Mrs. Romesha Dushyanthi Senerath Mrs. Lakmali Priyani Ann Ratwatte Wickremasooriya

Key Ratios
Key Ratios Gross NPL Ratio Capital Adequacy Ratio ROE ROA 31-Mar-10 1.22% 53.33% 2.41 2% 31-Mar-09 2.84% 78.51% -2.01% -1%

RFC Industry

Mr. Kangara Pathirannehelage Nadika Sanjeewa Dayarathne Registered finance companies (RFC) in Sri Lanka are presently undergoing a rapid Mr. Balapuwaduge Niloshan Romelo Mendis transformation phase fueled by the competition between industry incumbents and Mr. Isira Dharmapriya Bandara Dassanayake
stringent regulatory barriers by the Central Bank of Sri Lanka. Presently, the industry possesses LKR 233.6 billion worth assets accounting for 3.4% of the financial sector assets. The industry had been a duopoly earlier recording 50% of the industry assets shared amongst the largest two firms ,The Finance PLC & the Central Finance PLC, dropped down to 37% in 2009.Further, largest 9 RFCs account for approximately 73% of the total assets, while 18 medium size RFCs record only 24% of total assets.

Finance Companies business had to face difficulties in 2009 due to high interest rates and the increased credit and liquidity risks caused due to the collapse of certain unregulated finance companies, leading to a loss of investor confidence, which spread across the entire sector. The sector is steadily recovering as a result of the good governance and well adapted business practices undertaken by the RFCs together with the stringent regulations and supervision undertaken by the CBSL.

18 16

12 10 8 6 4 2 0 2006 2007 2008 Gross NPA Ratio(%) 2009 2010 Net NPA Ratio(%)
%

Asset Quality of RFC Industry


Rs.billion

14 12 10 8 6 4 2 0

Gross NPA's (Rs Bn)

Asha Phillip Securities Ltd Equity Research Division

Introduction The Multi Finance Company Limited

May - 2011

Competitor Analysis

Multi Finance 2009/2010 LKR Income Net Interest Income Operating profit Profit/ (loss) before tax Net Profit Total assets Total equity Operating Profit Margin Net Profit Margin Return on Equity EPS DPS Equity/Total Assets Net Assets value per share 80,643,915 57,185,344 13,517,112 13,589,126 5,896,930 423,290,818 247,949,486 16.76% 7.31% 2.38% 0.33 59% 13.79

Swarnamahal 2009/2010 LKR 425,680,931 143,750,578 25,676,676 23,392,952 16,782,611 2,418,684,523 230,984,854 6.03% 3.94% 7.27% 0.72 10% 9.24

Chilaw Finance 2009/2010 LKR 122,217,218 67,473,984 43,042,851 33,974,513 25,975,281 679,610,678 296,621,943 35.22% 21.25% 8.76% 0.95 0.75 44% 10.07

Central Finance The Finance Company 2009/2010 LKR 7,601,262,000 2,664,593,000 1,842,517,000 2,040,094,000 1,124,835,000 35,477,281,000 9,126,954,000 24.24% 14.80% 12.32% 51.53 2.50 26% 449.6 2009/2010 LKR 5,203,999,903 -1,011,656,895 -3,692,079,619 -4,285,937,282 -4,285,937,282 27,454,894,383 -2,916,806,296 -70.95% -82.36% 146.94% -209.9 -11% -142.85

L B Finance 2009/2010 LKR 4,130,993,392 1,703,227,212 1,038,033,655 878,290,108 500,161,124 17,185,262,704 1,756,432,609 25.13% 12.11% 28.48% 14.44 5.00 10% 50.72

Softlogic Finance 2009/2010 LKR 346,881,422 144,508,859 34,217,600 26,162,207 23,604,647 1,867,708,068 217,520,802 9.86% 6.80% 10.85% 1.18 1.00 12% 10.84

This document has been prepared and issued by Asha Phillip Securities Ltd, on the basis of publicly available information, internally developed data and other sources, believed to be reliable. Whilst all responsible care has been taken to ensure that the facts stated are accurate and the opinions given are fair and reasonable neither Asha Phillip Securities Ltd, nor any Director, Officer or employee, shall in any way be responsible for the contents. Asha Phillip Securities Ltd may act as a Broker in the investments which are the subject of this document or related investments and may have acted upon or used the information contained in this document, or the research or analysis on which it is based, before its publication. Asha Phillip Securities Ltd., Its Directors, Officers or Employees may also have a position or be otherwise interested in the investments referred to in this document. This is not an offer to sell or buy the investments referred to in this document.
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