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Newsletter Published on 31st July 2020

Index Value

NEPSE 1,439.06

SENSITIVE 300.95

FLOAT 100.99

SEN. FLOAT 99.35

Your companion to Nepal Stock Market

AAKASH CAPITAL LIMITED Weekly Newsletter from Aakash Capital Limited for the week ending on 31st July, 2020

NEPSE UPDATE

Indicators 26th July, 2020

30th July, (+)/(-)

2020 Change %

NEPSE 1442.61 1439.06 -0.25%

SENSITIVE 303.9 300.95 -0.97%

FLOAT 101.45 100.99 -0.45%

SEN. FLOAT 100.44 99.35 -1.09%

BANKING 1246.73 1238.53 -0.66%

TRADING 873.95 850.52 -2.68%

HOTELS 1673.35 1589.54 -5.01%

DEVELOPMENT BANKS 1831.03 1807.03 -1.31%

HYDROPOWER 972.15 968.9 -0.33%

FINANCE 669.81 671.86 0.31%

NON LIFE INSURANCE 6634.38 6576.59 -0.87%

MANU. & PRO. 2833.13 2783.03 -1.77%

OTHERS 789.18 810.54 2.71%

MICROFINANCE 2456.78 2448 -0.36%

LIFE INSURANCE 8552.44 8616.63 0.75%

MUTUAL FUND 10.59 10.61 0.19%

Market Summary Statistics (26th to 30th July, 2020)

Total Turnover (Rs) 8,022,340,744

Total Traded Shares 19,275,035 Total Number of Transactions 129,178 Scrips Traded 190

Market Cap at Week start 1,898,954.52 Millions

Market Cap at Week end 1,894,521.71 Millions

Floated Market Cap at Week start 678,450.47 Millions

Floated Market Cap at Week end 674,360.57 Millions

Bullion Update

As on 31st July 2020 Hallmark Gold Rs.99,300/tola

Worked Gold Rs.98,865/tola

Silver Rs.1,200/tola

Quote for the week

“We don’t have to be smarter than the rest,

we have to be more disciplined than the rest.”

– Warren Buffett

The market decreased by 0.25% (3.55 points) in the

trading week between 26th and 30rd July 2020. The

sensitive index, which measures the performance of

the companies classified under group “A”, also

registered the fall of 0.97% (2.95 points). Similarly,

float index which measures the performance of

securities which are floated to public also went down

by 0.45% and sensitive float followed the trend by

decreasing 1.09%.

This week market opened at 1442.61 on Sunday and

went up 22.49 points to sit at 1465.10 level. Market

couldn’t continue its positive trend on Monday,

Tuesday and Wednesday. Correction of 2.62 points

was seen on Monday which was followed by negative

7.59 and 23.37 points on Tuesday and Wednesday

respectively to sit at 1431.52 level. However, market

gained 7.54 points on Thursday to end the week at

1439.06 level.

In this review period, most sub-index closed lower

except Finance, Life Insurance, Mutual Fund and

Others sub-index. Hotels sub-index which gained the

most last week, registered highest fall of 5.01% in the

review week. Trading sub-index declined by 2.68%

which was followed by Manu. & Pro. with 1.77%.

Similarly, Banking, Development Banks, Hydropower,

Non-Life Insurance and Microfinance sub-index also

registered the fall with 0.66%, 1.31%, 0.33%, 0.87%

and 0.36% respectively. However, Finance, Life

Insurance, Mutual Fund and Others sub-index

registered the gain with 0.31%, 0.75%, 0.19% and

2.71% respectively.

The market witnessed stable volume of transaction

turnover this week. The total turnover stood at

Rs.8.022 billion with average of Rs.1.6 billion a day.

However, total market value decreased by Rs.4,432.81

million as the market capitalization went down by

0.23%. Similarly, floated market cap also registered the

fall of 0.6% this trading week.

.

Market Announcements

NRN Infrastructure and Development Limited has published an offer letter to issue 33,98,046 units IPO shares the

general public from (16th to 21st Shrawan, 2077).

Laxmi Capital Market Limited is issuing 80 million units of Rs 10 face value each mutual fund scheme worth Rs 800

million (Laxmi Unnati Kosh) to the general public from (11thShrawan, 2077).

Prudential Insurance Company Limited is selling its 54,631 units ordinary share in an auction to the general public

from (12th to 19th Shrawan, 2077).

Liberty Energy Company Limited is issuing its 15,00,000 units IPO shares the project affected local residents of

Besisahar Rural Municipality, Dordi Municipality Ward No. 11, and Lamjung District from (Shrawan 7-21, 2077).

Prabhu Bank Limited has published an offer letter to issue (20,00,000 units @ Rs.1000 per unit) "10% Prabhu Bank

Debenture 2084" to the general public from (19th to 23 Shrawan, 2077).

Shikhar Insurance Company Limited has allotted it's 10:3 Ratio right share to its shareholders on Shrawan 12, 2077.

Shikhar Insurance Company Limited is selling its 87,412.8 units ordinary share in an auction to the general public from

(Shrawan 21-28, 2077).

Life Insurance Corporation (Nepal) Limited is selling its 50,000 units Promoter shares of (Citizens Investment Trust) in

the auction to the Financial Institutions and Insurance Companies from (Shrawan 12-19, 2077).

NLG Insurance Company Limited has allotted it's 10:6 Ratio right share to its shareholders on 9th Shrawan, 2077.

NLG Insurance Company Limited is selling its 81,224.75 units promoter share and 79,853.25 units ordinary share in an

auction to the general public from (Shrawan 22-29, 2077).

AJOD Insurance Limited has appointed NIBL Ace Capital Limited as its share registrar.

NIBL Ace Capital Limited has published a notice to pay an annual operating fee for the DEMAT account.

Samata Laghubitta Bittiya Sanstha Limited is distributing 5% bonus shares directly to DEMAT accounts of its

shareholders and has urged to dematerialize their shares.

Aarambha Laghubitta Bittiya Sanstha Limited and Chautari Laghubitta Bittiya Sanstha Limited have commenced

trading (after merger) in the name of Aarambha Chautari Laghubitta Bittiya Sanstha Limited and urged former

shareholders to dematerialize their shares in the name of Aarambha Chautari Laghubitta Bittiya Sanstha Limited.

Jyoti Bikas Bank Limited has published a notice regarding the interest rate on the various deposit and loan products

and its effective from 11th Shrawan, 2077.

Tinau Mission Development Bank Limited has posted a net profit of Rs 196.80 million and published its 4th quarter

company analysis of the fiscal year 2076/77.

Nepal Rastra Bank has published the monthly balance sheet for the month of Ashad, 2076.

NIC Asia Capital Limited has published (NIC Asia Growth Fund) Net Assets Value (NAV) till Ashad, 2077.

NIBL Ace Capital Limited has published “NIBL Pragati Fund” Net Assets Value (NAV) till Ashad, 2077.

Nabil Investment Banking Limited has published "Nabil Balanced Fund-2" Net Assets Value (NAV) till Ashad, 2077.

Sanima Capital Limited has published “Sanima Equity Fund” Net Asset Value (NAV) till Ashad, 2077.

Nabil Investment Banking Limited has published the "Nabil Equity Fund" Net Assets Value (NAV) till Ashad, 2077.

Laxmi Capital Market Limited has published “Laxmi Equity Fund” Net Asset Value (NAV) till Ashad, 2077.

NMB Capital Limited has published (NMB 50) Net Assets Value (NAV) till Ashad, 2077.

Siddhartha Capital Limited has published “Siddhartha Equity Fund” Net Asset Value (NAV) till Ashad, 2077.

Kasuwa Khola Hydropower Limited has announced its Annual General Meeting going to be held on 32nd Shrawan,

2077.

NEPSE - TECHNICAL ANALYSIS

The Nepalese stock market (NEPSE) has ended its three and half years of bearish trend in mid-Jan 2020 as seen from weekly

trend line perspective. The bearish trend was started in July 2016 when index was at 1881 level. Currently, Market is retracing

from support level of 1188 after falling from 1632 level. In the review week, NEPSE opened at 1442.61 and formed a green candle

by closing at 1465.10 gaining 22.49 points during the day. The overall market declined 3.55 points as it closed at 1439.06 level

on Thursday. In daily line chart, market seems to be at support zone of 1433 level and retracing towards resistance zone of 1466

to 1480 level. Supportive turnover was seen in the review week as the average turnover has increased to Rs.1.6 billion from

Rs.1.51 million of previous week. As of weekly line chart 1632 level might be the resistance level.

TECHNICAL INDICATORS

Indicators Value Signal

Support (S1) 1433 -

Resistance (R1) 1466 -

Relative Strength Index (RSI) 57.62 Moderate Zone

Moving Average Convergence Divergence (MACD) 31.20 Bullish

5-Day Exponential Moving Average (EMA) 1443.26 Bearish

20-Day Exponential Moving Average (EMA) 1406.57 Bullish

180-Day Exponential Moving Average (EMA) 1270.39 Bullish

Relative Strength Index (RSI) Analysis

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 57.62 which indicates that the market is at moderate zone. There seems to be a formation of bullish

divergence in daily chart which indicates the probability to retrace towards resistance level of 1466.

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 1521.62, 1393.39 and 1265.16 respectively. The market is trading in between upper

band and middle band which indicates the bullish trend.

Stock Analysis: NRN Infrastructure and Development Limited

NRN Infrastructure and Development Limited was registered under the Company Act 2063, in Nepal (September 2012) with the main motive of collective investment in hydropower sector in initial phase meanwhile exploring other investment avenues of national priorities too. Initially the company was registered in the name NRN Investment Limited which was changed to NRN Infrastructure & Development Limited in February 2, 2017. With liberalization in the state policies that allows private investors to build and operate hydropower projects and in the context of high demand for power in the country, significant development as expected of the energy sector is yet to happen. Investment in this sector was highly awaited. Promoted by a group of Non-Resident Nepali (NRN), main purpose of NRNIL is to make investment in the infrastructure sectors with collective investment from various groups of people employed in foreign countries thereby mobilizing the remittance income to more productive sectors.

Board of Directors

Name Designation

Mr. Jiba Nath Lamichhane Executive Chairman

Dr. Shesh Ghale Director

Mr. Krishna Prasad Pandey Director

Mr. Mahesh Kumar Shrestha Director

Mr. Rameshwar Shah Director

Mr. Bal Krishna Gurung Director

Chief Executive Officer: Ms. Usha Khatiwada

Share Capital ( Asar end 2076)

Authorized Capital (Rs.) 5,000,000,000

Issued Capital (Rs.) 1,132,682,100

Paid-up Capital (Rs.) 792,877,500

70%

30%

Ownership structure after IPO issuance

Promoters General Public

Financial Analysis

Particulars 2070/71 2071/72 2072/73 2073/74 2074/75 2075/76 CAGR

Share Capital 398,338,988 551,312,900 551,412,900 735,698,900 768,444,700 792,877,500 14.76%

Reserves & Surplus

8,656,103 15,129,246 18,228,689 32,573,567 25,967,705 16,319,222 13.52%

Total Equity 406,995,091 566,442,146 575,641,589 769,397,467 794,412,405 809,196,722 14.73%

Investments 224,816,400 298,860,000 396,239,132 448,844,857 500,344,857 575,098,597 20.67%

Total Assets 406,995,090 566,442,146 575,641,589 769,397,467 794,412,404 809,196,722 14.73%

Total Operating Income

- - - 322,696 833,646 561,840 -

Total Non-Operating

Income 11,105,593 11,320,247 6,920,864 21,487,984 37,326,519 24,594,491 17.24%

Total Income 11,105,593 11,320,247 6,920,864 21,810,680 38,160,165 25,156,331 17.77%

Administrative Expenses

2,278,010 2,508,199 2,608,219 2,683,675 3,731,933 3,476,750 8.82%

Other Expenses 2,341,035 2,338,905 1,213,202 4,782,127 8,460,527 5,503,149 18.64%

Net Profit 6,486,548 6,473,143 3,099,443 14,344,878 25,967,705 16,176,432 20.05%

From the data presented above, NRN Infrastructure and Development Ltd has reported Share Capital of Rs.792.87 million in 75/76.

Share Capital was Rs.398.33 million in 70/71. Reserve & Surplus has increased from Rs.8.65 million in 70/71 to Rs.16.31 million in

75/76 with Compounding Annual Growth Rate (CAGR) of 13.52%. Reserve & Surplus in 75/76 is just 2.06% of its Share Capital.

Similarly, Investment has increased to Rs.575.09 million with CAGR of 20.67%, which includes major portion in hydropower projects.

Initially started as an Investment Company, it was able to create Operating Profit in 2073/74, third year of establishment. However,

Income from Non-Operating activities helped company to maintain positive growth in its Net Profit. In 75/76 company has reported

Net Profit of Rs.16.17 million with CAGR of 20.05% in the review period between 2070/71 to 2075/76.

IPO Notice

NRN Infrastructure and Development Limited is selling its 3,398,046 units Initial Public Offering (IPO) shares to public from 16th to

21st Shrawan 2077 (31st July to 5th August 2020) at Rs.100 per share. Issuance can be extended till 3rd Bhadra 2077 (19th August

2020). Sanima Capital has been appointed as the issue manager.

Profitability

Particulars 2070/71 2071/72 2072/73 2073/74 2074/75 2075/76 CAGR

Earnings Per Share (Rs.) 1.63 1.17 0.56 1.95 3.38 2.04 4.61%

Book Value Per share (Rs.) 102.17 102.74 104.39 104.58 103.38 102.06 -0.02%

Return on Assets (%) 1.59% 1.14% 0.54% 1.86% 3.27% 2.00% 4.64%

Return on Equity (%) 1.59% 1.33% 0.54% 2.13% 3.32% 2.02% 4.83%

Total Operating Income to Total Income (%)

0.00% 0.00% 0.00% 1.48% 2.18% 2.23% -

Administrative Expenses to Total Income (%)

20.51% 22.16% 37.69% 12.30% 9.78% 13.82% -7.59%

Net Profit Ratio (%) 58.41% 57.18% 44.78% 65.77% 68.05% 64.30% 1.94%

As of 75/76, company’s EPS stand at Rs.2.04. EPS was 1.63 in 70/71. Along with increase in share capital injected by NRN

promoters, share outstanding has also increased. Similarly, its Book Value per Share stands at Rs.102.06 per share which was

102.17 per share in 2070/71. As most investments are made in hydropower projects, returns are expected in long run. Company

started to generate Operating Profit from 73/74 which was 1.48% of Total Income in the same fiscal year. However, Total

Operating Income to Total Income ratio has increased to 2.23% in 75/76. Administrative Expenses which includes major portion

of expenses was just 13% of Total Income in 75/76, which have let Net Profit Ratio to 64.30%.

Financial Highlights

398.34

551.31 551.41

735.70 768.44 792.88

8.66 15.13 18.23 32.57 25.97 16.32 -

200.00

400.00

600.00

800.00

1,000.00

2070/71 2071/72 2072/73 2073/74 2074/75 2075/76

Share Capital and Reserve & Surplus

Share Capital (Rs.millions) Reserves & Surplus (Rs.millions)

407.00

566.44 575.64

769.40 794.41 809.20

-

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

900.00

2070/71 2071/72 2072/73 2073/74 2074/75 2075/76

T O T A L A S S E T S ( R S . M I L L I O N S )

224.82 298.86

396.24 448.84

500.34 575.10

6.49 6.47 3.10 14.34 25.97 16.18 -

100.00

200.00

300.00

400.00

500.00

600.00

700.00

2070/71 2071/72 2072/73 2073/74 2074/75 2075/76

Investment vs Net Profit

Investments (Rs.millions) Net Profit (Rs.millions)

2.28 2.51 2.61

2.68 3.73 3.48

6.49 6.47 3.10

14.34

25.97

16.18

-

5.00

10.00

15.00

20.00

25.00

30.00

2070/71 2071/72 2072/73 2073/74 2074/75 2075/76

Administrative Expenses vs Net Profit

Administrative Expenses (Rs.millions)

Net Profit (Rs.millions)

Concluding Remarks

NRN Infrastructure and Development Limited, promoted by 795 Non-Resident Nepalese was incorporated in Bhadra 2069 B.S

to promote infrastructure development in the country. Currently, invested in hydropower projects wish to invest in other

infrastructures in future. It is selling Rs.339,804,600 worth IPO share to public to maintain its share capital of Rs.1.13 billion.

After the issuance, promoter-public shareholding will be in the ratio of 70:30. With more than 7 years of experience, company

seems more focused on long term infrastructure projects which can contribute in the economic development of the country.

1,004 1,021

1,157

922

752

1,568

1,713

1,440

718

1,505

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

DBBL GBBL GDBL JBBL KSBBL LBBL MLBL MNBBL SADBL SHINE

National Level Development Banks, Rreserve & Surplus (millions)

The following table shows the total dividend declared by Development Banks from the profit of 2075/76

Symbol Company Name Dividend

Total Dividend (%) Bonus (%) Cash (%)

MDB Miteri Development Bank Limited 18.53 0.98 19.50

GBBL Garima Bikas Bank Limited 16.15 0.85 17.00

JBBL Jyoti Bikash Bank Limited 12.75 0.00 12.75

GDBL Gandaki Bikas Bank Limited 0.00 17.32 17.32

SBBLJ Sahayogi Vikas Bank Limited 0.00 18.72 18.72

EDBL Excel Development Bank Limited 17.10 0.90 18.00

SADBL Shangrila Development Bank Limited 0.00 8.96 8.96

MNBBL Muktinath Bikas Bank Limited 17.60 0.93 18.53

SINDU Sindhu Bikas Bank Limited 11.49 0.60 12.09

KADBL Kanchan Development Bank Limited 10.00 6.00 16.00

SHINE Shine Resunga Development Bank Limited 15.00 0.00 15.00

DBBL Deva Bikas Bank Limited 8.55 0.00 8.55

MLBL Mahalaxmi Bikas Bank Limited 8.00 9.89 17.89

KSBBL Kamana Sewa Bikas Bank Limited 0.00 6.80 6.80

LBBL Lumbini Bikas Bank Limited 5.00 15.00 20.00

TMDBL Tinau Mission Development Bank Limited 12.00 0.00 12.00

SAPDBL Saptakoshi Development Bank Limited 6.00 0.00 6.00

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Disclaimer and important information: This document has been prepared by Aakash Capital Limited for information and

illustration purpose only. The information provided in this document is subject to change. While this information has been

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