Hydropower companies continue domination at stock market

Hydropower companies continue to dominate the weekly trading for this week too.

With the hydro sub-group gaining 4.37 per cent over the week to close at 2024.24 points on Thursday, stocks of three hydropower companies were traded the most among the five top traded stocks.

Arun Valley hydropower saw Rs 168.81 million, Chilime Hydropower Rs 73.40 million and National Hydropower Rs 59.84 million are among the five largest grosser in a week.

Among them too, Butwal Power Company closed at Rs 930, whereas Chilime Hydropower gained Rs 51 to close at Rs 1,560 per unit.

The stock market index jumped by 17.32 points or 2.2 per cent over the five-day week trading on rising investors' confidence.

The index that opened at 785.78 points on Sunday closed at 803.1 points on Thursday, the last trading day of the week.

As the stock market remained vibrant, stocks worth Rs 1.60 billion were traded this week, up by 32.23 per cent compared to last week’s Rs 1.21 billion.

Blue chip companies on rise

Despite poor performance of the secondary market, number of blue chip companies has increased by four times to 117 from 31 in last one decade.
Nepal Stock Exchange (Nepse) has added 28 companies in its Class-A category making it to a total of 117 listed companies in the elite group of companies ranking.
"Of the 28 new entrants in the Class-A category, seven are commercial banks, nine development banks, five insurance companies, six finance companies and one hydropower company," said Shankar Man Singh, chief executive officer and general manager of the Nepse.
Of the total 176 listed companies by the end of 2009-10, some 117 companies are ranked in the Class-A companies, he said, adding that the secondary market has also declassified five companies from the elite group.
The Class-A companies, also called blue-chip companies in the domestic secondary market, have to register profits from last three consecutive years to be classified in this class.
"A company that has minimum 1,000 share holders, paid up capital of Rs 20 million, has been in profit for last three consecutive years, has paid up value of share not less than its book value and submitted its reports to the Nespe within six months of the completion after the fiscal year will be ranked in the Class-A companies," according to the regulation.
"The five companies do not comply with the regulation prompting the Nepse to declassify from Class-A," according to the Nepse. "The Nepse has been classifying the listed companies according to the international norms."
The global credit rating firms like Standard and Poor and ICICI rank the listed companies globally.
Of the total 24 listed commercial banks, 22 made it to the Class-A, whereas of the 69 listed finance companies, 47 are classified in the class.
One each from hotel subgroup (Soaltee Hotel), others subgroup (Nepal Telecom), manufacturing subgroup (Unilever Nepal Ltd) and two (Chilime Hydropower and Arun Valley Hydropower) from hydropower subgroup are in the Class-A. There are four listed hotels, Taragaon (Hyatt hotel), Oriental (Radisson Hotel), Hotel Yak n Yeti and Hotel Soalte. There are 18 companies under the manufacturing subgroup but only Unilever Nepal Ltd is classified under Class-A.
Similarly, there are four listed hydropower companies: Chilime Hydropower, National Hydropower, Butwal Hydropower and Arun Valley Hydropower but only two are classified under Class-A.
Interestingly, not a single company from the trading subgroup made it to the elite group.
"Of the total 20 listed insurance companies under inusrance subgroup 15 are classified under Class-A, whereas of the total 52 development banks only 28 made it to the Class-A," according to the Nepse.

The blue-chip companies
2009-10 -- 117
2008-09 -- 94
2007-08 -- 78
2006-07 -- 71
2005-06 -- 66
2004-05 -- 56
2003-04 -- 48
2002-03 -- 43
2001-02 -- 36
2000-01 -- 31
1999-00 -- 26
1998-99 -- 23
1997-98 -- 18
1996-97 -- 15
1995-96 -- 07

Commercial banks, hydro companies propel Nepse

The share holders of commercial banks and hydropower companies gained today as except for the two sub groups all others lost.

The banks sub group propelled the secondary market by 3.84 points to close at 486.6 points after it saw heavy trading in some of the commercial banks. Sunrise Bank (12,340-unit), Lumbini Bank (5,379-unit), Bank of Kathmandu (4,268-unit), Prime Commercial Bank (3,343-unit), Nepal Investment Bank (2,879-unit), NIC Bank (2,255-unit), Kumari Bank (1,469-unit) and Laxmi Bank (1,104-unit) pushed the banking index up by 5.94 points to close the banks sub group at 468.92 points.

Similarly, Butwal Hydropower (2,196-unit) and Arun Valley Hydropower (1,294-unit) along with Chilime Hydropower (400-unit) shares were traded at the market, pushing the sub group by 2.04 points to 726.13 points.

However, the Asian Life Insurance that saw 6,220-unit of its shares being traded could not lift the insurance sub group as the sub group lost 0.37 point to close at 569.58 points.

Meanwhile, the year on year (y-o-y) Nepse index declined by 32.74 per cent to 444.76 points in the nine months of 2009-10. The index stood at 661.27 in the same period last year.

Likewise, Nepse sensitive index (based on July 2006) stood at 108.65 points in mid April, which was 176.17 points in the same period last year.

The float index -- calculated on the basis of final transaction as of August 24, 2008 as base market value -- remained at 41.88 in mid-April, a contraction of 35.15 per cent compared to the same period last year, according to the central bank's data.

The y-o-y market capitalisation also declined by 18.21 per cent to Rs 344 billion in mid-April. The ratio of market capitalisation to GDP stood at 31.80 per cent, said the central bank. "It was 43.87 per cent in the same period last year."

Of the total market capitalisation, bank and financial institutions accounted for 74 per cent followed by manufacturing and processing companies (1.8 per cent), hotels (1.1 per cent), business entities (0.3 per cent), hydropower (four per cent) and other economic sectors (18.7 per cent).

Total paid up capital of the listed companies stood at Rs 74.26 billion in mid-April -- an increase of 35.82 per cent over a period of one year. The increase was largely due to the additional listing of securities at the secondary market.

In the ninth month of current fiscal, additional securities worth Rs 20.15 billion -- ordinary share of Rs 3.59 billion, bonus share of Rs 3.43 billion, right share of Rs 5.96 billion and government securities of Rs 7.25 billion -- were listed at the Nepse.

The total number of companies listed at the Nepse has increased to 168 in mid-April compared to 157 in the same period last year.

Arun valley increases paid up capital

KATHMANDU: As per the decision of 14th AGM of Arun Valley Hydropower Development Company on December 29, 2009, the company has distributed 40 per cent of the paid up capital that is 686,000-unitbonus shares. The bonus share has been listed on the Nepse on June 9. After the bonus shares, the total paid up capital of the company is Rs 240.1 million. The company is also making a detailed study for a proposed hydro power project at Kabeli B-1, with a capacity of 25 MW. -- HNS

Nepse lists 95 firms under Class-A category

Five development banks, two insurance companies, 10 finance companies, two hotels, National Hydropower Company and Nepal Telecom (NT) -- a total of 21 listed companies -- made it to the prestigious Class-A category in this fiscal year, according to the Nepal Stock Exchange (Nespe).
"The Nepse has listed 95 companies under Class-A category, out of the total 149-listed companies at the sole secondary market," said the sole secondary market here today.
A company that has atleast Rs 20 million paid up capital, minimum of 1,000 common share holders, operating in profit since last three years, must have floated shares to public under the by-laws 9, book value per share must not be less than its paid up value and has been submitting its financial statement within six months from the closure of the fiscal year is qualified to be listed under the Class-A category, according to the Nepse.
The number of companies listed under Group-A category has been continuously increasing since 1996-97, when there were only seven companies under the category.
"In the year 2009-10, Nepse also delisted three companies from under the Class-A category apart from adding 21 to it," the Nepse said adding that two companies merged to get entry into the prestigious category. "United Insurance, Bhajuratna Finance and Everest Finance are delisted from under the Class-A category as they didnot abide by the regulation," it added. However, Nepse listed five development banks, two insurance companies, 10 finance companies, two hotels, one hydropower company and Nepal Telecom (NT) under the Class-A companies in this fiscal year," said secondary market that has been witnessing a sluggish performance in the last three months.
Nepal Stock Exchange, according to the international norms, classifies the listed companies under the Class-A category according to their performances.
According to the Nepse, 15 commercial banks are under the Class-A category, whereas only one company each -- Unilever Nepal Ltd and Nepal Telecom -- from the manufacturing group and Others group are under the Class-A, two each from hydropower companies group and hotels group, 11 from insurance companies group, 43 finance companies, 20 development banks fall under the Class-A category.

NEA mulls power tariff hike

Nepal Electricity Authority (NEA) might increase the electricity tariff to gradually recover accumulated losses, loss reduction, creation of fund for hydropower development and for addressing future inflation.
"A 15 per cent hike in electricity tariff may balance the losses," Arjun Kumar Karki, managing director of NEA said adding that NEA is yet to be allowed to adjust the tariff to make up for the increased cost of operation.
According to a provisional analysis, NEA power system endured a loss of 25.15 per cent in the fiscal year 2007-08. In the preceding year, the final loss figure stood at 26.71 per cent. "NEA earned Rs 15,405.03 million from sale of electricity in 2007-08, which is 6.61 per cent higher than last year's figure. Similarly, NEA earned Rs 655.24 million as other income," he added.
NEA has incurred a net loss of Rs 1312.16 million after deducting interest, foreign exchange loss and provisions. However, it has earned a profit of Rs 314.19 million the preceding year. "Accumulated loss by the end of 2007-08 has reached Rs 7133.77 million," Karki said.
Analysis shows that NEA's cost of service per KHh stands at Rs 7.4 against Rs 6.7 per KWh revenue rate. After adjustment of the contribution of Rs 0.28 per KWh from miscellaneous sources of income, NEA suffered loss of Rs 0.42 for every KWh of energy served by it.
Presenting NEA's brief accounts during its 23rd anniversary, Karki regretted that there were long spells of load shedding. Energy demand over the fiscal year totalled 3,490.12 GWh. As this amount of energy was not available with the system, the deficit amounting to 309.46 GWh, had to be offloaded to keep the electricity service running.
"At present, there is a growth of 11.31 per cent during peak power demand and 10.76 per cent growth in the energy demand last year aggravated the situation," he added. In dry months, NEA imposed 48 hours a week load shedding.
At the end of fiscal year 2007-08, NEA has 1,524,610 customers, an increase of 9.07 per cent over that of the previous year. Of the total customers, 95.66 per cent belong to the domestic category accounting for 40.52 per cent of total energy sales that earned NEA 40.66 per cent of the total revenue.
Industrial customers represent only 1.67 per cent of total customers, but contributed 38.81 per cent of the total energy sales that is 35.93 per cent of total revenue earned by the NEA.
Power and energy demand grew by 11.31 per cent and 10.76 per cent respectively in the reviews period, he said.
During the period, major overhauling and maintenance works like servicing of turbines at the Marsyangdi, Trishuli, Sunkoshi and Puwa Khola hydropower stations were also done. The damaged generator of unit 1 of Kulekhani-II hydropower station was repaired under the supervision of experts from Fuji Electric Sytems Co Ltd (Japan) and brought into operation since the last week of March. Overhaul and repairs at Kali Gandaki, the biggest power station of Nepal, was also completed successfully by the NEA engineers.
"Though our present is troubled with supply shortage, the prognosis for the future is not bleak," Shankar Prasad Koirala, water resource secretary said, adding that NEA would be able to undertake a number of generation, transmission and distribution projects. It has also intensified efforts to develop an internal system with backbone at 220 KV. Elimination of existing transmission bottlenecks will be NEA's first priority. It is also planning cross border transmission links.
"Within five years, NEA plans to produce 525 MW electricity that needs a total of Rs 65 billion cost," Karki said.

The future is bright
Future projects that are in different stages of development are expected to be commissioned within five years, so that by the time 592 MW power will be inducted into the system.

NEA projects on anvil
Upper Tamakoshi (309MW)
Chamilya (30MW)
Kulekhani-III, Rahughat (27 MW)
Upper Trishuli-3A (60 MW)
Upper Trishuli (40MW)
Upper Modi-A (42 MW)

From subsidiary Chilime
Sanjen Upper (11 MW)
Sanjen (35 MW)
Middle Bhotekosi (80 MW)
Rasuwagadhi (75 MW)
From private sector
Kableli-A (30 MW)
Upper Marsyangdi (50 MW)

Others
Upper Seti (128 MW)
Nalsyagu GAD (400 MW)
Budhi Gandaki storage projects (600 MW)

Export-oriented projects
Arun-3
Upper Karnali
West Seti

Investment in hydro lucrative

A development bank is taking all the financial charges and acting as an financial consultant apart from being trustee and also look into other matters related to project finance of a hydropower project.
"Ace Development Bank will take charge of the entire financial management of the project and will play the lead role of financial advisor, fund manager and trustee for the 34 Megawatt (MW) Marshyangdi III hydropower project being developed by Keton Hydropower Ltd, a subsidiary company of BPC," Siddhanat Raj Pandey, managing director and chief executive officer of Ace Development Bank, said adding that Ace will raise approximately $78 million from the domestic and international financial markets with 'suitable financial instruments'.
Ace has designed partially convertible debenture with embodied option to raise the required capital. It believes that the instrument will be lucrative for both domestic as well as international investors to invest in.
Ace's hydro power initiative focuses on the hydro sector and is timely and intelligent investment as the country is passing through severe energy crisis. The rising oil prices and load-shedding have hit Nepal. Nepal Oil Corporation (NOC), the sole supplier of the petroleum products in the country, has been asking more money from the government and government has time and agian refused to provide cash to bail it out. The government gave the cash-stripped NOC Rs 6 billion but still, its in loss.
Nepal's dependency on fossile fuel cannot be lessened without the development of hydropower. And the rising global oil price has no other remedy than to shift the dependence from fossile fuel to hydropower.
Chilime Hydropower Company became the model hydro power project for hydropower development through mass participation and paved the way for more private palyers to enter into the business.
It is the first hydropower company to be listed and trade its shares at the Nepal Stock Exchange Ltd (Nespe).
However, the much-taled and appreciated Chilime model has not been replicated as there are only three listed hydropower companies in the secondary market.
Though, the 309-MW Tamakoshi is to follow the Chilime model, Ace has planned another model of raising the required capital. It has planned 'partially convertible debenture with embodied option' to raise capital. Ace's commitment to provide a one window entire financial management facility for the hydropower projects of any size is an example of how Nepali financial institutions can help hydropwer sector.
Ace will pool a team of qualified professionals including hydro technicians, bankers, capital market specialists and network with domestic as well as international investors including global Venture Capital firms. Ace will fulfill the huge capital requirement for the domestic hydro sector to some extent. "It will also be the first of its kind in Nepal's financial market," Pandey claimed.
The investment in hydroelectric power plant is the best inverstment. But still only three hydro power projects are listed and their shares are being traded. The group-wise distribution of the traded shares and amount show that the trading of commercial banks occupies 47 per cent of the total volume. Finance companies, development banks, hydropowers and insurance companies occupied 24 per cent, 13.47 per cent, 13.40 per cent and 2.04 per cent of the total volume, respectively during mid-March to mid-April 2008, according to the Nepse.
Once the dam is built, it will provide with dividends forever. Revenues from dams are inert as a lead weight. You sell your power to utilities in long-term contracts. These contracts might span 30 or 50 years of period. You build in a provision for inflation, check the utility's credit and then you collect your perpetuity. Revenues from hydroelectric power plants don't care about panics on Nepse or recession.


Listed hydel companies

Company ------------Unit shares------------total money
National Hydro Power Co -- 7,000,000 -- Rs 700,000,000
Butwal Power Co Ltd -- 8,390,577 -- Rs 839,057,700
Chilime Hydro power Co -- 7,296,000 -- Rs 729,600,000
Total ---------------------22,686,577 --Rs 2,268,657,700

Nepse sets another record, hits 813.77 points

Nepali shares closed at 813.77 points on the last day of the trading from the opening of 796.34 points on Sunday. On the first day of the trading, the sole secondary market index set a record by crossing 800 points mark for the first time in its 14-year long history, and posted 811.98 points. On the second day, the index registered 828.77 points. The Nepse index saw an increment of 12.12 points on the third day as it posted 833. 56 points.
However, the Nepse index could not continue its growth throughout the week as it posted 811.97 points on the fourth day. Finally, the Nepse index closed only 1.79 points higher on the last day of the trading from Sunday's closing, as one of the current market driver hydropower group registered a loss of 43.62 points.
"Buyers were cautious on the unnatural growth of share prices of the institutions that have negative net worth and profit earning (PE) ratio," said an analyst adding that the unnatural growth also forced Nepse to issue a cautious notice to the investors.
After an initial rally of over 800 points for the first time in its history, the secondary market started to slowdown. Commercial banks' group, the market leader, has posted only a marginal growth of 3.82 points in its index as it registered 910.37 points from the opening 906.55 points.
Similarly, the manufacturing group also posted a growth of 2.34 points this week as its index closed at 350.00 points from 347.66 points.
The hotel group, insurance group, finance group and development banks' group, all saw growth in their respective indices as they posted 280.95 points, 655.62 points, 527.45 points, 689.21 points from 277.79 points, 647.92 points, 511.98 points, and 675.94 points respectively.
Though sensitive index gained only 0.04 point in comparison to last week and posted a total of 208.97 points, it comprises 74.12 per cent of the total transactions.
The Nepse floor remained open for all the five days this week, where the shares of 25 companies saw regular transactions of their shares throughout the week. The government's bonds did not see any transaction this week, too.
Chilime Hydropower Company outshone all others this week in terms of the largest monetary value, as its shares worth Rs 125,610 exchanged hands at Nepse. However, Nepal Bangladesh Bank stood first in terms of transaction with 206 transactions.
Similarly, National Hydropower Company stood first in terms of the largest number of shares units traded for the week. The company's 12,5610 shares were traded this week.