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Finance companies snapshot

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Post by First Guy on Sat Jun 27, 2015 7:32 pm

Please suggest addition and deletions to this list.

HUNTER, how about a BFI specific formula? Wink
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Post by First Guy on Wed Jul 01, 2015 3:08 pm

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That's a nice piece of graph, isn't it?

As for the numbers, VFIN has the lowest ratio of Loans+Leases vs. Deposits+Borrowings. They've grown the deposit base faster than the loan book in the past year and the money has ended up in REPOs as at end of the period. VFIN is also the smallest among the above companies.
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Post by HUNTER on Wed Jul 01, 2015 9:22 pm

First Guy wrote:Please suggest addition and deletions to this list.

HUNTER, how about a BFI specific formula? Wink

Just noticed the thread, very late (As usual Very Happy ).

Like your presentation and the approach with multiple parameters and angles for analysis. ++

Usually, I am a bit reluctant (in fact lazy) to go for sector specific analysis, but will give a try from my end in this case.

(In order to do that...)

Would like to know if there are any sector specific parameters a 'buyer' might look at when consider a BFI share to buy.

Also would like to study how (with what parameters) we can judge the degree of success of a BFI company.

Also would like to study what make a BFI company different from other industries from an investors point of view.

(Now only I understand there is a lot to study...)
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Post by First Guy on Wed Jul 01, 2015 9:26 pm

There is always a LOT to study Very Happy

I'm no expert, but I share things that I analyze which may not be a norm or a standard. (This one is a norm though). Different investors will look at the same stock differently and have different values. It's when all of them meet (at a place like this), everyone can benefit and learn Smile Your formula is one such item.

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Post by First Guy on Wed Jul 01, 2015 9:31 pm

As for BFI companies, the simplest explanation is the net interest income and the margin. I have not compared the margin as some of them don't report it in the reports (Banks do). Then the income from fees, trading etc., It's good to have a higher portion of these revenues specially during times of interest rate volatility.

When analyzing BFI companies, we need to check the amount of loans given vs. deposits (and/or borrowings). If they have not managed to grow the credit in line with deposits continuously, there could be a cause for concern.

Some might grow the loan book but not the deposit base, in which case the companies would look at higher cost borrowings. Another point to note is the maturity profiles of loans, deposits and debt. Most finance companies would have short term deposits which they hope would get renewed while attracting newer deposits.
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Post by Backstage on Wed Jul 01, 2015 10:02 pm

Wouldn't it be better to do BF as "I" will make a common formula more complex.
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Post by HUNTER on Thu Jul 02, 2015 8:55 am

OK

It seems, even in BFI sector, when looked at minute details, different companies have reported the financial statements slightly differently.

However, I also feel, with everyone's help, we can come up with a 'common' tool to compare them successfully.

I would like to start the analysis with a top-down approach.

I propose, the main objective of the analysis would be to identify the following aspects of the company.

1. Growth potential (identify how fast the company can increase its value and increase benefits to owners)
2. Risk (what are the chances that the company would fail to achieve the above (Growth) )

Please propose any other 'basic' aspects we might take in to account.

In order to do the the above, we shall gather information from the following.

1. Published quarterly financial reports.

Right now I am limited to the above. Any other sources you propose?

In the reports, we will consider the following statements.

1. Income statements (Quarterly Group)
2. Financial position (Group)
3. Cash Flow (Group)

Anything else you like to propose?


In the above statements, we can consider the following line items for our calculations. Please suggest your view for removing or adding any items.

1. Income statements (Quarterly Group):

a)Total Equity attributable to equity holders of the parent
b) Interest Income
c) Interest Expenses


2. Financial position (Group)

a) Total equity attributable to equity holders of the
parent
b) Deposits From Customers
c) Loans and Receivables to Customers

3. Cash Flow (Group)

a) Net Cash Generated / (used in) from operating Activities
b) Interest Receipts
c) Interest Payments
d) Net Funds Advanced to Customers
e) Deposits from Customers


What do you feel?
Do you think this is good OR should we try adopting a different approach?









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Post by yellow knife on Thu Jul 02, 2015 9:11 am

When evaluating BFIs capital adequacy ratios are important..

If your are growing faster your T1 and T2 ratios will get affected making you to go for a rights issue..

Once after rights issue a company will face new set of problems..

In FBI sector fast growing companies have to undertake very high risk..

Therefore developing a common forumla will be a tricky one than in other industries...

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Post by First Guy on Thu Jul 02, 2015 11:17 pm

Quite true YK. There are a lot to look at from different angles. Capital, loan book, deposit base, credit quality, interest margin etc.,

I assume the "growing faster.." you mentioned is with reference to the credit growth. As profit growth will only improve the ratios (correct me if wrong). How much is paid back as dividends is also something to consider (although in the past even companies which had paid dividends went for rights soon afterwards).
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Post by First Guy on Sun Jul 05, 2015 10:17 pm

I'll update this some time next week or weekend. Let's wait for LFIN to settle.
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Post by Backstage on Mon Jul 06, 2015 2:51 pm

First Guy wrote:I'll update this some time next week or weekend. Let's wait for LFIN to settle.

Subdivision coming up ahead, wont settle down till next week.
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Post by Ethical Trader on Mon Sep 14, 2015 3:30 pm

Thanks FG, YK, Hunter & all who commented. I hope usefull formule would be developed as a result.
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Post by First Guy on Fri Sep 18, 2015 8:17 am

The above graph looks similar now with recent prices (which I will post later). But the trend line has moved down. ASI downtrend as a whole is one reason too.
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Post by First Guy on Fri Sep 18, 2015 9:20 pm

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Post by slstock on Fri Sep 18, 2015 10:45 pm

Thanks. I think some companies have adjusted in price to an attractive level now. Specially considering 2016 dividend yield.


First Guy wrote:
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Post by Hybrid on Sat Sep 19, 2015 8:20 am

Looking at the graphs above it proves a point.
however, we are still left which a heavy decision between P/B or ROE??

I would take the middle path with PLC since it has a good backing and promising new 3rd quarter to pass with an attractive share price of 22.3-22.5!

I have already gone for PLC in a big way. Hope my deductions are correct. let wait and see.

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Post by First Guy on Fri Jan 15, 2016 4:11 pm

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Post by Hybrid on Fri Jan 15, 2016 4:33 pm

I will still prefer PLC as a better investment.
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Post by First Guy on Wed Jun 22, 2016 8:18 am

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Post by Ethical Trader on Wed Jun 22, 2016 10:57 am

Thanks FG.
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Post by xmart on Wed Jun 22, 2016 12:23 pm

wonderful presentation. with rising interest rate how will be the performance of finance over banking?
and less vehicle registration, less leasing. who has a big loan book/ deposit base?

i'm very much poor in analyzing finance sector. 1st guy, if you don't mind can you explain above?

thanks
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Post by HUNTER on Wed Jun 22, 2016 2:46 pm

I like the way you have presented FG.

Are the calculations based on last year's earnings (Last 4 quarters)?
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Post by First Guy on Thu Jun 23, 2016 7:24 am

xmart - what you said is one of the most important things to look at. Must check the segmentation of the loans also. But this detail I don't have ready at hand.

HUNTER - yes last 4 quarters
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Post by xmart on Thu Jun 23, 2016 9:11 am

First Guy wrote:xmart - what you said is one of the most important things to look at. Must check the segmentation of the loans also. But this detail I don't have ready at hand.

HUNTER - yes last 4 quarters

Thanks, i pulled my hair out trying to figure out banking & finance cash flow and finance status. being s self student of finance (never had commerce subject even in O/L, had an engineering accounting in my uni life; but i never paid attention) i found its hard to segmentation of their finance position and cash flow in to tiny pieces.

if possible, please enlighten us with those fragment details.

thanks
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Post by slstock on Thu Jun 23, 2016 10:39 am

Thanks FG.

X,

Analyzing the finance sector is one of the easiert and hardest things.
Few get it right.

Some thought COCR Was god the way they grew initially.
When we warned about the issues they can have some people must have thought
we are jealous or carzy of them holding the super Rs 70 share then.

Same can be said about BLI growth.

I am not going to say much here, but if one Analyzed CFIN in deoth so much can be learnt about stability , growth , share price etc .



xmart wrote:wonderful presentation. with rising interest rate how will be the performance of finance over banking?
and less vehicle registration, less leasing. who has a big loan book/ deposit base?

i'm very much poor in analyzing finance sector. 1st guy, if you don't mind can you explain above?

thanks

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