COMB/COMB.X Research paper by CT CLSA SECURITIES
BUY
12M N:
Price Target : Rs.103.7
±% Potential : +31.63Q2020 Results Update
❑ COMB reported a 3Q2020 net profit of Rs.3,693mn (EPS of Rs.3.5; -25% YoY) broadly in
line with our expected EPS of Rs.3.6, YoY earnings were slightly impacted due to relatively
higher impairment charges. Capital gains on FI Trading for 3Q2020 stood at Rs.2.5bn.
❑ On 17 Nov 2020, through its fiscal budget for 2021E, the Gov’t of Sri Lanka proposed to
enact the corporate income tax reduction for banks by -400bps to 24% for banks w.e.f. 1
Jan 2020 whilst also proposing a 0.25% Covid tax on revenue for corporates.
❑ COMB’s NP forecasts for 2020E and 2021E are revised up by +8% and +4% to
Rs.14,915mn (-18% YoY EPS contraction) and to Rs.21,692mn (+43% YoY EPS growth, off a
low base) respectively. Revisions are largely attributable to revised spreads, fund growth,
ETR, impairment and opex assumptions.
❑ During October 2020, COMB received new capital worth Rs.9.22bn into its CET-I capital
with freshly issued 115mn shares to IFC (and its related parties) making its cumulative
shareholding increase to ~14.7%.
❑ The Voting share of COMB underperformed the ASPI during the past month, three months
and YoY by -3%, -19% and -21% (non voting underperformed by -3%, -18% and -22%)
respectively.
❑ On revised earnings, COMB voting share trades on par with the sector on PE (and book)
multiples of 5.7X (PBV - 0.59X) for 2020E and 4.0X (PBV - 0.54X) for 2021E. The less liquid
non voting share trades at a 15% discount to the voting share.
❑ We maintain COMB’s rating at a Buy with target price set at Rs.103.7 for its Voting share
based on average of estimated PBV and Residual Income models which indicate a 12M
upside potential of +31.6%
![:black_small_square: ▪](https://cdn.jsdelivr.net/emojione/assets/png/25aa.png?v=2.2.7)
COMB-N share is valued at Rs.110.3 based on residual income model with target cost
of equity set at 18.0%. On a PBV basis we derive a value of Rs.97.2 on a forward PBV
multiple of 0.72X.
» CCS.N0000 ( Ceylon Cold Stores)
» Sri Lanka plans to allow tourists from August, no mandatory quarantine
» When Will It Be Safe To Invest In The Stock Market Again?
» Dividend Announcements
» MAINTENANCE NOTICE / නඩත්තු දැනුම්දීම
» ඩොලර් මිලියනයක මුදල් සම්මානයක් සහ “ෆීල්ඩ්ස් පදක්කම” පිළිගැනීම ප්රතික්ෂේප කළ ගණිතඥයා
» SEYB.N0000 (Seylan Bank PLC)
» Here's what blind prophet Baba Vanga predicted for 2016 and beyond: It's not good
» The Korean Way !
» In the Meantime Within Our Shores!
» What is Known as Dementia?
» SRI LANKA TELECOM PLC (SLTL.N0000)
» THE LANKA HOSPITALS CORPORATION PLC (LHCL.N0000)
» Equinox ( වසන්ත විෂුවය ) !
» COMB.N0000 (Commercial Bank of Ceylon PLC)
» REXP.N0000 (Richard Pieris Exports PLC)
» RICH.N0000 (Richard Pieris and Company PLC)
» Do You Have Computer Vision Syndrome?
» LAXAPANA BATTERIES PLC (LITE.N0000)
» What a Bank Run ?
» 104 Technical trading experiments by HUNTER
» GLAS.N0000 (Piramal Glass Ceylon PLC)
» Cboe Volatility Index
» AHPL.N0000
» TJL.N0000 (Tee Jey Lanka PLC.)
» CTBL.N0000 ( CEYLON TEA BROKERS PLC)
» COMMERCIAL DEVELOPMENT COMPANY PLC (COMD. N.0000))
» Bitcoin and Cryptocurrency
» CSD.N0000 (Seylan Developments PLC)
» PLC.N0000 (People's Leasing and Finance PLC)
» Bakery Products ?
» NTB.N0000 (Nations Trust Bank PLC)
» Going South
» When Seagulls Follow the Trawler
» Re-activating
» අපි තමයි හොඳටම කරේ !
» මේ අර් බුධය කිසිසේත්ම මා විසින් නිර්මාණය කල එකක් නොවේ
» SAMP.N0000 (Sampath Bank PLC)
» APLA.N0000 (ACL Plastics PLC)
» AVOID FALLING INTO ALLURING WEEKEND FAMILY PACKAGES.
» Banks, Finance & Insurance Sector Chart
» VPEL.N0000 (Vallibel Power Erathna PLC)
» DEADLY COCKTAIL OF ISLAND MENTALITY AND PARANOID PERSONALITY DISORDER MIX.
» WATA - Watawala
» KFP.N0000(Keels Food Products PLC)
» Capital Trust Broker in difficulty?
» IS PIRATING INTELLECTUAL PROPERTY A BOON OR BANE?
» What Industry Would You Choose to Focus?
» Should I Stick Around, or Should I Follow Others' Lead?