Did you get this news?

]size=18]Expropriation act hits finance company[/size]
Post by CSE.SAS on Tue Jul 10, 2012 8:40 pm
* Rating downgraded after govt. takes over sugar factory
* 30% of Bimputh Lanka Investments’ deposits placed by Gamage family
* Family concern moves to finance loans for paddy, maize and peanuts

A listed finance company has seen a downgrade in its credit rating because of the controversial expropriation act.

RAM Ratings Lanka has downgraded the long-term financial institution rating of Bimputh Lanka Investments PLC, from BB to BB-. At the same time, the short-term rating has been reaffirmed at NP. Meanwhile, the Rating Watch (with a negative outlook) on the Company has been lifted and the stable outlook on the long-term rating has been reinstated.

"The downgrade reflects the loss of financial and operational synergies derived from Sevanagala Sugar Industries (Pvt) Ltd (Sevanagala), previously one of Bimputh’s significant counterparties. Meanwhile, Bimputh’s ratings are weighed down by its weak funding, moderate performance, small stature and the lack of seasoning for its new loan products. Nonetheless, the ratings are supported by the Company’s good liquidity and strong capitalisation levels, along with the financial flexibility derived from its ultimate parent, Daya Group (Pvt) Ltd," the ratings agency said in a statement.

"Bimputh’s long-term rating was placed on a Rating Watch (with a negative outlook) in November 2011, premised on our concerns over the Company’s future asset quality, performance and direction following the passing of a bill by Parliament to allow the Government of Sri Lanka (GOSL) to expropriate Sevanagala’s land and building.

"Sevanagala is currently non-operational," RAM Ratings said.

Bimputh, a small licensed finance company (LFC), is part of the Daya Group - a family-held concern with diversified operations focusing on the eastern region of Sri Lanka; Sevanagala had previously been part of the same group.

"Sevanagala, a sugar manufacturer, had formerly acted as an agent of Bimputh in its loan disbursements and collections for sugarcane cultivators; these loans had also been guaranteed by Sevanagala. With the expropriation of Sevanagala, the Company has now moved into other segments such as paddy, maize and peanut, personal loans, pawnbroking and leasing while reducing its exposure to sugarcane-related loans.

"Although loans to sugarcane cultivators declined in the first 9 months of FYE 31 March 2012 (9M FY Mar 2012) - from around 50% to 25.12% - Bimputh had successfully expanded its other loan products. That said, RAM Ratings Lanka opines that the quality of the new loans has yet to be tested as they lack seasoning.

"Bimputh’s asset quality is moderate. Although its loan base has historically been dominated by cultivation loans, the share of general loans – comprising personal, housing and other business loans - increased to 43.12% of its total gross loans as at end-December 2011 (end-December 2010: 24.43%). At the same time, the Company’s non-performing loans (NPLs) worsened by LKR 5.40 million to LKR 11.39 million, driven by few loans to finance agricultural equipment and paddy cultivation. This translated into a gross NPL ratio of 3.24% (end-FY Mar 2011: 2.49%). RAM Ratings Lanka acknowledges that although Bimputh has ventured into other segments, the quality of these new loans has yet to be proven.

"Meanwhile, performance is deemed moderate. On the back of an almost 35% year-on-year loan growth, interest income surged 27.30% in 9M FY Mar 2012, i.e. faster than in fiscal 2011, while interest expenses grew at a slower 7.36% y-o-y (FY Mar 2011: +78.36%) amid receding interest rates. Bimputh’s net interest margin (NIM) remained relatively stable at 9.04% (FY Mar 2011: 9.09%), and broadly in line with those of its similarly rated peers while its cost-to-income ratio at 78.69% is among the highest for LFCs.

"The Company’s funding is weak owing to its limited ability to garner deposits due to its weak franchise and high deposit concentration. Although the Company’s funding composition has historically been dominated by shareholders’ funds, this has now tilted towards deposits. More than 30% of this constitutes deposits placed by members of the Gamage family.

"Meanwhile, Bimputh’s liquidity is considered good; its statutory liquid asset ratio declined to 21.86% as at end-December 2011 (end-FY Mar 2011: 36.03%) on the back of loan growth. Elsewhere, capitalization remains strong; as at end-December 2011, Bimputh’s tier-1 and overall risk-weighted capital-adequacy ratios clocked in at 54%, (end-FY Mar 2011: 55.43%), comparing well above peers," RAM Ratings said.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=56491

TortoizePlus wrote:Personally, I don’t like to spread rumors but I got this news from several contacts. "A family owned financial company is looking for a run again since some of those shareholders are looking for an exit. Target is 200% appreciation".

Please don’t argue me with fundamentals

TortoizePlus wrote:They are famous for GOLD

TortoizePlus wrote:They are famous for GOLD

TortoizePlus wrote:Actually I don’t want to be another Joker here by spreading rumors but I got the news in very confirm manner. I cannot reveal the source and also not 100% guaranteed. Please check with your sources and confirm. Everyone is expecting another short rally at around 4700 level. Shares appreciated at the previous rally like GREG, HVA, KAPI and REEF may not perform again (may be they can do it again). There will be new set of shares in the next rally and manipulators can pick some hidden picks. Risk takers… take the opportunity.

godswen wrote:Too bad, No one talks about the reversal at 4866.7

aliasjjj wrote:"A family owned financial company"??CAN YOU GIVE MORE HINTS !!

sureshot wrote:If GOLD = SFS
If GOLD mine = Greg
if GOLD Tree =

TortoizePlus wrote:Personally, I don’t like to spread rumors but I got this news from several contacts. "A family owned financial company is looking for a run again since some of those shareholders are looking for an exit. Target is 200% appreciation".

Please don’t argue me with fundamentals

TortoizePlus wrote:Actually I don’t want to be another Joker here by spreading rumors but I got the news in very confirm manner. I cannot reveal the source and also not 100% guaranteed. Please check with your sources and confirm. Everyone is expecting another short rally at around 4700 level. Shares appreciated at the previous rally like GREG, HVA, KAPI and REEF may not perform again (may be they can do it again). There will be new set of shares in the next rally and manipulators can pick some hidden picks. Risk takers… take the opportunity.

TortoizePlus wrote:Personally, I don’t like to spread rumors but I got this news from several contacts. "A family owned financial company is looking for a run again since some of those shareholders are looking for an exit. Target is 200% appreciation".

Please don’t argue me with fundamentals

prabath wrote:

TortoizePlus wrote:Personally, I don’t like to spread rumors but I got this news from several contacts. "A family owned financial company is looking for a run again since some of those shareholders are looking for an exit. Target is 200% appreciation".

Please don’t argue me with fundamentals

Ohh I just remembered you

TortoizePlus wrote:

prabath wrote:

TortoizePlus wrote:Personally, I don’t like to spread rumors but I got this news from several contacts. "A family owned financial company is looking for a run again since some of those shareholders are looking for an exit. Target is 200% appreciation".

Please don’t argue me with fundamentals

Ohh I just remembered you

Collection is going on with large volumes.. better to watch..