Q3 financials of real sector paint gloomy picture

KATHMANDU:

The dividend payout may be less attractive in the coming year, as the profit growth of the biggest dividend paying real sector companies have cooled down in the third quarter.

The profit earned by listed companies belonging to non-financial sector increased by mere five per cent by the third quarter that ended in mid-April, according to the recently published financials. The net profit of nine companies belonging to real sector that published their third quarter financials show that their collective profit is up by Rs 593.5 billion. Real sector comprise of hydropower, hotels, telecom, trading and manufacturing.

Three hydropower companies, three hotels, one telecom company and two manufacturing companies that are traded actively at Nepal Stock Exchange have published the third quarter financials for the current fiscal. Their net profit stand at Rs 11.6 billion, against Rs 10.9 billion a year ago.

During the third quarter of last fiscal year, the companies had recorded 43 per cent profit growth. The third quarter results are indicative of full year profits, especially in case of real sector companies. Thus, investors look out for financials to assess dividends.

“The real sector companies are one of the best dividend payers, as Unilever, Chilime Hydropower, Soaltee Hotel provide some of the highest returns to investors,” said Raj Kumar Timilsina, president of Nepal Investors’ Forum.

Unilever Nepal, producer of consumer goods such as Sunsilk and Clinic Plus shampoo, had distributed the highest amount — Rs 760 per unit share.

“Although the third quarter indicates the direction of the company, it is still not as reliable as full year result to signal the dividend,” he added.

In terms of subgroup, companies listed under hotels registered highest profit growth in third quarter. The three listed hotels recorded gain of 25 per cent in profit. Among them, Oriental Hotels, promoter of Radisson Hotels in Nepal — earned Rs 150 million, 42 per cent higher than last year.

Among the real sector companies, Himalayan Distillery registered highest growth in profit — of 87 per cent — by earning Rs 90 million. Unilever earned 11 per cent more than it had earned in nine months of last fiscal year.

Hydropower companies — the third-most traded subgroup at stock exchange — registered only 12 per cent growth in profit. Though profits of Arun Valley Hydropower and Butwal Power Company are at 38 per cent and 23 per cent, slow growth in profit of Chilime Hydropower affected overall outlook for the group. Chilime’s profit grew only four per cent in the review period.

In the market once dominated by the financial sector (making 85 per cent), hydropower companies have slowly risen to become the most traded scrip. By the end of the third quarter, hydro stocks comprised 20.3 per cent of the total trading.

Source: THT