CFIN - Buy recommendation from CAL

hariesha Tue Sep 24, 2013 10:08 pm

CFIN reported 1QFY14 net earnings at LKR 827mn (+2% YoY) amidst core profits* rising 17% YoY to LKR3.6bn. An LKR 120mn impairment charge originating from a growing NPL book (c.3% in 1QFY14 vs. 2.5% in FY13) led to the deterioration in earnings growth. The company's loan book grew 2.8% April-June 2013 on the back of an avg. disbursement of LKR 2.5bn/month. CFIN's aggressive rollout of c.30 low-cost branch models during FY14E may exert pressure on FY14E cost-to-income ratios. CAL anticipates CFIN's FY14E's core profits to grow 10% YoY to LKR 11.1bn while net earnings to grow marginally by 4% YoY to LKR 3.3bn, translating into a PER of 5.8x and PBV of 1.0x. CAL's 1-year fair value for CFIN is LKR 209 (+14%), which may bring an overall 1-yr total return of 16%.

Attachments

: CFIN - 1QFY14 Earnings Note - BUY - 24 Sep 2013.pdf You don't have permission to download attachments.(560 Kb) Downloaded 49 times