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Sri Lanka Equity Forum » Stock Market Talk » Commercial Bank of Ceylon PLC - Riding through challenges

Commercial Bank of Ceylon PLC - Riding through challenges

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EquityChamp

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Moderator
Background
COMB is the largest private lender in Sri Lanka having a total asset base of 927 billion as at 31st March. The bank is expected to reach 1 trillion asset base milestone by next year, which will be the first in the private sector.

Summary financial performance
The bank grew its Net II in Q1 16 by 2% QoQ despite the challenges faced in Q1 16 but PAT was declined by 5% QoQ mainly due to increased interest cost pressure due to increase in interest rates. However both the NII and PAT grew considerably on YoY basis in Q1.
MnQ1 15Q2 15Q3 15Q4 15FY 15Q1 16Q2-Q4 16FY 16 F
Net II     7,286    7,589    7,681    8,011    30,567      8,173       25,009      33,182
PAT     2,537    2,647    3,251    3,425    11,860      3,264          9,504      12,768
EPS               3.7            14.3
ROE15%    17% 17%
Further the bank has been able to increase their ROE in Q1 16 compared to Q1 15. Though the QoQ growth seen a negative the FY 16 is likely produce a growth in NII of 9% YoY as well as growth in PAT of 8% despite the many challenges foresee in 2016.

Stock Performance
COMB-N stock is in a bearish condition as indicated by daily and monthly technical charts where the indication is a Strong SELL. This is principally attributable to the investors' perception of the impact of macro economic conditions on bank performance as well as the selling pressure from foreign shareholders. As at 11th of May foreigners have sold a net of 12mn shares so far this year.

The stock has down by 6% YTD 16 as at 11th of May. However at CMP of 130/- the stock is trading @ a forward PE multiple of 9.0x which is still at a discount compared to both sector as well as market PE multiple.

Recommendation
Though the macro economic conditions are going to tough the bank can manage the risk and still stand strong given its resilience to such situations in the past. Also it is important to note that the foreign shareholding has gone down by only 4% in YTD basis which can be set-off if the overall market turns into positive territory during the months to come. Therefore you are advisable to study the stock price behaviour in coming days and weeks and try to accumulate when the daily technical indicators indicate a BUY signal.
Note: The current CMP of 130/- seems a tough resistance level to break hence could be the base for bouncing back.

jayathu


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Even though commercial bank is the biggest and most profitable private commercial bank in sri lanka there forward PE multiple of 9 worries me. When you compare that with other top 2 banks such as HNB and SAMP it has a PE multiple below 7. Even NAV of those two shares are close to CMP. 

Even saying that Commercial bank share is stock which has given investors real value upto now. So cant bet against them also.

Teller

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Moderator
COMB is not bad at these levels. It's a medium to long term investment other wise rupee should be stablize soon against dollar.

Winner123


Senior Equity Analytic
Senior Equity Analytic
HNB WILL DEFNT BYPASS COM.

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
selling at 130.normal and crossings.

EquityChamp

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Moderator
Still trading around 130, just above. It has been such a resistance level now for COMB. Today it has been witnessed a further foreign selling of 2.7mn shares but interesting thing to note is locals are there ready to grab whatever dumping by foreigners. Amassing support this is.

VALUEPICK

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Expert
Expert
Just like local investors, there are different types of foreigners such as long term, short term (traders) and mid term traders or investors. In COMB, there are lot of foreign investors including institutional investors. Some portfolio mangers adjust their portfolio periodically as well.
 
When compare with HNB, DFCC and NDB, It has become attractive. Am I correct?
 
Out of above four, which one will become top winner during next two years to 10 years?
 
If it passes Rs.140 with big breakout lot of market participants will try to chase this stock.

EquityChamp

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Moderator
Commercial Bank has seen a reduction in foreign shareholding by 9.2mn in this week. Yet it holds the ground above Rs130. Its a very strong support level I would say.

VALUEPICK

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Expert
Expert
@EquityChamp wrote:Commercial Bank has seen a reduction in foreign shareholding by 9.2mn in this week. Yet it holds the ground above Rs130. Its a very strong support level I would say.
EC 

I agree with you.

EquityChamp

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Moderator
Guys, for your attention. Today COMB's long standing support level has been broken. Its like Sri Lankan forces broke the Pudu matalan front line of LTTE. I afraid a drop in COMB further and establishing a newer support line. This will create some pressure on ASPI in the run to move 7000 target.

EquityChamp

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Moderator
129 CMP Embarassed

kumarweerarathne

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Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Will it settle near 120?? Then I will sell my assets & buy this :-)

Brinthan

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Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
EC SIr
All daily,5 hours,hourly technical indicaters show strong sell for commercial bank...We know RSI 30 is the  best support level for any stock..
But  which RSI level we have to look before to get our trading decsion either daily or 5 hours or hourly...??

EquityChamp

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Moderator
Daily, five hour etc are very short term indicators. Just watch daily chart and weekly charts which indicates mid term price movements.

COMB has fallen from long established support level and check whether it will come towards 120 in which case weekly charts too will indicates sell signals.

EquityChamp

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Moderator
Commercial bank has strongly held its support levels at 130 though temporarily it fell below that. Even this challenging environment where profit grpwth seems absolutely challenging the price remain solid.
I think it is not a wonder if this jump up to 150 in the event that ASPI resumes its disrupted bull run.

What a stock to have in any one's portfolio.

Mrs Kudabadu Kularthnae

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Stock Analytic
Stock Analytic
Hmmm..i recently bought combank and Sampath..thanks to all memebers who advice me..

EquityChamp

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Moderator
Commercial Bank has shown a steady rooting now. Standing strong around 140/-. It moved from 130 levels but there are lot of value still to be realised. You should look at this stock very seriously.

Brinthan

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Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Short term target Rs.150/- and its 100% risk free...

EquityChamp

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Moderator
COMB has moved up to 142 even the ASPI is bearish. So in medium term this stock should deliver good returns to prudent investors. All what I have said in this entire thread is becoming a reality. Keep your hopes guys and gals.

Good luck.

Mrs Kudabadu Kularthnae

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Stock Analytic
Stock Analytic
what is the expectation of comb samp this quarter?
please let me how about LCEM during this port city development? all constructive shares moving..

kumarweerarathne

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Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
This is about # COMB , :-) anyway TOKYO is the eligible supplier as largest cement manufacturer with quality standards for portcity.

anges


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
good stock was around rs 190 before ! gradually moving towards to those levels ! buy now sell later ! patience is the name of the game

Brinthan

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Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Brinthan wrote:Short term target Rs.150/- and its 100% risk free...
Today close around 147 ...Now we can expect it will touch 150 before end of this week...

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
today went up bit too much for me

Brinthan

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Brinthan wrote:
@Brinthan wrote:Short term target Rs.150/- and its 100% risk free...
Today close around 147 ...Now we can expect it will touch 150 before end of this week...
Wowwww...It touch 150 today....☺

Brinthan

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Next target will be 165/- in short term...It also can achieve very short time...One of the Risk free share @ the moment...

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
keep an eye on HNB.More to come

EquityChamp

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Moderator
You can expect COMB Q3 result by this Friday or next Monday. Expecting a YoY PAT growth of 15%-20% for this quarter. Plus foreign investors have been bullish on COMB once again. In the 1st half we saw a decline in foreign holdings by 26Mn shares but from July to date the foreign holdings gone up by 9Mn shares. The trend is very positive for the biggest listed bank in Sri Lanka.

EquityChamp

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Moderator
Hay, look at this result. They have earned 10.1Bn for 9 months. I am dead sure that they are going to achieve 14Bn PAT for 2016 and will beat my original estimation of 12.7Bn.

COMB.N is currently trading at a forward PE of 9.4x with projected EPS of Rs15.7. This is trading at a discount of 30% to market. I am rating this as an A++ investment stock for mid term investors.

Thanks

omegaplus

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Manager - Equity Analytics
Manager - Equity Analytics
@EquityChamp wrote:Hay, look at this result. They have earned 10.1Bn for 9 months. I am dead sure that they are going to achieve 14Bn PAT for 2016 and will beat my original estimation of 12.7Bn.

COMB.N is currently trading at a forward PE of 9.4x with projected EPS of Rs15.7. This is trading at a discount of 30% to market. I am rating this as an A++ investment stock for mid term investors.

Thanks

Good prediction and it's a winning stock. Although for me , I bought some at higher prices late 2014 :-(

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