Pros sanima:
– way higher distributable profit
– lower NPL
– better net int inc growth in last year
Notes:
– Similar net int inc and net profit
– PCBL 184 vs SANIMA 289. Sanima is 57% more expensive in price per share. But adjusting for no of shares, there is not much difference.
– Both are similar sized banks with similar performance in past. But recent NPL and thus performance of PCBL is not good.
– Sanima has less gap between peak nepse price / current price (agree past doesn’t equal to future) compared to PCBL. So PCBL might have easier time to rise.
View on r/NepalStock by roshamns
I was also attracted towards PCBL at first glance looking at their operational efficiency and capital adequacy. However, SANIMA looks better in every way compared to PCBL. The problem with PCBL is deposit growth and composition of deposits; they can grow the loan above the industry average; but they are facing hard times collecting deposits; thus the tight CD and tight growth possibilities. If you check the recent month-over-month deposit compositions…their FD has risen so rapidly means you’ll be tied up with the higher cost for at least a few months moving forward; may be in 1-2 months they will collect enough deposit to grow at least 4-5% loan book this year. So I’m expecting not much growth for PCBL this year constrained by Deposits.
While on the flip side; SANIMA can grow their books with comfortable capital and deposit levels; plus their bonus shares won’t dilute their performance; as it loooks like they can grow their bottom line more than the bonus shares they are giving. So imagine; if they maintain the same EPS next year; and you’re paying the current price which includes the dividend as well (Cum dividend); that would be around 13-14, PE right ?
Now Distributable EPS for Sanima; they dont’ have to put much redemption reserve this year; next year we might see some redemption reserve which may dilute the distributable. But with NBA recovery and less accured interest; dilution of DEPS due to redemption reserve will be balanced out.
So I’ll definitely go for SANIMA at this difficult credit environemnt also considering the Assets Quality. But remember one thing; if credit situation improves like crazy; which is not happening anytime soon….PCBL will go wild interms of their loan expansiiion and Assets recovery.
PCBL is most likely will give no dividend this year so go for Sanima.
Just bought Sanima.
Buy PCBL