LOLC Dev. Finance rockets up most valued board

Tuesday, 29 June 2021 02:28 - - {{hitsCtrl.values.hits}}

Illiquid company now ranked 4th, up from 46th; market capitalisation now at Rs. 117.7 b, up from Rs. 17.3 b at end-May
Despite gaining 235% over 2 weeks, only yesterday did CSE see fit to inquire from company over reasons for unusual price hike

LOLC Development Finance PLC (NIFL) has rocketed its way up in the most valued league of the Colombo Stock Exchange (CSE) to rank fourth, up from 46th position at the end of May.

The meteoric rise has baffled investors and analysts. Yesterday, NIFL rose by Rs. 94.75, or 23.6%, to Rs. 495. This was on top of last week's gain of 114%, or Rs. 236.25, to Rs. 400.25, whilst in the previous week it gained by 121%, or Rs. 89.80, to Rs. 164.

By yesterday its market capitalisation was Rs. 117.78 billion, only behind parent LOLC – which remains at number one with a market value of Rs. 198.6 billion – and the former most valued stocks, JKH and Ceylon Tobacco. NIFL’s net assets per share as of 31 March was Rs. 11.82, up from Rs. 11.19 a year earlier.

In May, its stock closed at Rs. 73 with a market capitalisation of Rs. 17.36 billion, and was ranked at number 46. In the whole of May, only 1,277 shares changed hands via 17 trades for Rs. 78,320. Shares closed at Rs. 73, up by 73% or Rs. 19.87.

Last week, only 76,065 shares changed hands via 1,114 trades for Rs. 23.7 million, whilst the previous week 40,853 shares changed hands via 509 trades for Rs. 4.9 million.

For the quarter ended 31 March, the highest price was Rs. 133 and lowest was Rs. 44.50 before closing at Rs. 69.90.

Though NIFL has been on the rise – by over 235% for over two weeks – the CSE only yesterday found it relevant to inquire from the company over the unusual gains.

The company said there was no undisclosed price sensitive information being withheld by the company.

"We presume that the year-end performance of the Company and that of the LOLC Group may have led to speculation in the market which would have resulted in the unusual trading activities in the securities of the company," NIFL Chairman Kapila Jayawardena said in response to the CSE inquiry.

Formerly, BRAC Lanka Finance PLC, NIFL’s total assets are worth Rs. 18.58 billion with Rs. 15.7 billion in liabilities.

For FY21, net interest income rose by 8% to Rs. 2.8 billion and net operating income was down by 9% to Rs. 2.1 billion. Pre-tax profit grew by 48% to Rs. 260.7 million, whilst after tax profit figure was Rs. 155.2 million, as against Rs. 109.3 million in FY20.

NIFL is among the non-compliant category in terms of minimum public holding requirements. Its public float is just 0.11% held by 243 shareholders. LOLC Holdings owns 55.55% stake and subsidiary CLC owns 44.34%.

The company has maintained that subject to requisite regulatory approvals, the board proposes to list debt securities and remove all equity securities, to ensure that the company is not in violation of listing rules of the CSE, whilst complying with directions of the Central Bank.

A fortnight ago, NIFL emerged as the most valuable finance company, surpassing the traditionally sound and bigger entities such its own parent Commercial Leasing and Finance, LB Finance and Peoples Leasing and Finance.

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