You are on page 1of 3

Introduction Commercial Credit Limited

May - 2011

Commercial Credit Limited


Key Features
Total No of Shares CSE Listing Issue Type 218,074,365 Dirisavi Board Introduction
Commercial Credit Limited (CCL) is a registered finance company 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

CCL was incorporated in 1982 & registered under the Finance Companies Act No 78 of 1988. The company initially started business with lending to the agricultural sector which accounted for over 50% of its lending portfolio. Further, CCL currently

2%

12% 13% 53%

operates in 36 locations, including key agricultural regions of the country. The company mainly focuses on the Finance Leasing business which accounts nearly 60% of the total interest income. Further, company provides wide range of financial solutions such as hire purchasing, term loans, pawning, and consumer credit

4% 7%
Leasing - vehicle Consumer credit loans Long-term loans Personal loans Motor finance CCL Cash loans Short-term investments Leasing - machinery Motor credit loans Short-term loans Pawning Motor plus Land finance

loans.CCL also offers various fixed & savings deposit products and enhanced its client base to over 10,000 customers.

Future Business Plans CCL intends to expand the current branch network by another 25 branches and 50 service locations within next three years. Further, company will focus more on

Board Of Directors Mrs. V. W. Fernando Mr. R.S Egodage Mrs. G. R. Egodage Mr. G G Hemachandra Mr. C Perera Mr. S. K. Gunarathne Mr. T Someshwaran
Major Shareholders B G Investements Pvt Ltd Mrs. Vagdevi Wimalangi Fernando Mr. George Ginendra Hemachandra Ms Deegala Nilanthi Keerthisinghe Mr. Sri Deva Kumara Semage Pedrison Limited Stake % 77.09 7.11 3.41 1.57 1.18 1.10

Pawning business and planed to penetrate the pawing business aggressively within next three years.

Key Financials - CCL


LKR Mn Interest Income Net Interest Income Profit Before Tax Profit After Tax Loans & Advances Total Assets Deposits Shareholders Funds EPS (LKR) NAVPS (LKR) 31.12.2010 642 381 186 178 2,679 4,205 3,203 502 30.01 34.50 31.03.2010 347 140 (26) 45 915 2,301 1,733 227 9.33 46.82 31.03.2009 314 127 (1) 7.1 270 1,389 1,733 224 1.46 57.2 31.03.2008 212 103 33 29.0 242 1,191 713 251 8.83 52.7

Asha Phillip Securities Ltd Equity Research Division

Introduction Commercial Credit Limited

May - 2011

RFC Industry
Registered finance companies (RFC) in Sri Lanka are presently undergoing a rapid transformation phase fueled by the competition between industry incumbents and 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.

Asset Quality of RFC Industry


18 16 14 12
Rs.billion

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

10 8 6 4 2 0

Gross NPA's (Rs Bn)

Asha Phillip Securities Ltd Equity Research Division

Introduction Commercial Credit Limited

May - 2011

Competitor Analysis
Mercentile Investments 2009/2010 LKR Interest 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 1,563,999,000 772,691,000 487,970,000 426,948,000 316,504,000 8,279,375,000 3,531,883,000 31.20% 20.24% 8.96% 105.5 4.60 43% 1,177 The Finance Company 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 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

Commercial Credit 2009/2010 LKR 346,843,191 140,142,197 7,823,352 (25,942,410) 45,190,103 2,300,686,646 226,924,740 2.26% 13.03% 19.91% 9.33 10% 46.82

Multi Finance 2009/2010 LKR 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 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

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

Un Audited Financials as at 31st December 2010


Mercentile Investments 9 M Ended 31/12/2010 LKR Interest Income Net Interest Income Operating profit Profit/ (loss) before tax Net Profit Total assets Total equity EPS Net Assets value per share 1,030,125,000 546,701,000 785,352,000 777,373,000 656,973,000 11,249,167,000 4,684,883,000 218.99 1,558

Commercial Credit 9 M Ended 31/12/2010 LKR 642,111,223 380,775,362 203,604,712 186,013,342 177,772,951 4,205,213,985 501,619,630 30.01 34.50

Multi Finance 9 M Ended 31/12/2010 LKR 92,648,644 58,848,357 74,010,993 24,363,457 18,697,986 689,421,103 265,748,656 1.04 14.78

Swarnamahal 9 M Ended 31/12/2010 LKR 465,566,587 203,520,217 85,148,071 72,118,485 52,118,485 3,810,322,177 283,103,338 2.08 11.32

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.
Asha Phillip Securities Ltd Equity Research Division 3