Why CHCL scrip will continue to rise in days ahead (EXCLUSIVE)
ShareSansar, May 26:
Chilime Hydropower Company Limited (CHCL) is one of the blue chip companies, widely sought after by all sorts of investors among the all 237 listed companies at Nepal Stock Exchange Limited (NEPSE).
It is probably the best scrip when it comes to the daily turnover in terms of liquidity. From around half a year CHCL has always been one of the top companies in terms of turnover at NEPSE, which is the clearest indication as how solid its growth has been.
One of the obvious reasons behind the craze of this scrip is that CHCL, which issued its IPO shares at a premium rate of Rs 308.36 to the general public merely three years ago, has already distributed 40, 30 and 30 percent bonus shares respectively over the past three years-- besides 70 percent cash dividend over the same period.
Is it just its handsome annual returns and good corporate governance or its future prospect which is fueling this scrip so much?
Actually it’s a combination of both, according to the stakeholders, who have been keeping a close tab on the scrip.
“One of the reasons for the popularity of Chilime’s scrip is that the company not only gives good returns, but holds its AGM on time and gives dividend on time,” says Ananta Poudel, one of the leading brokers (number 49). “It is also among a very few companies which has never failed to give good dividend ever since floating its IPO. People have both good hopes from and faith in this company.”
Talking about the trust, another reason people have high hopes from the scrip is its corporate good governance. Locals of the project area as well as the company staff had even taken to the street when CHCL’s CEO Kul Man Khising was forced to resign a few months back owing to political intervention in the company. Khising was eventually restored.
“Good dividend and corporate governance are definitely major factors to be taken into account when anyone plans to invest in scrip,” says Nitesh Sanghai (Broker number 17). “In case of CHCL, however, the single most compelling factor that has been wooing more and more investors to the scrip is the prospect of its growth.”
One of the established share investors, Tulsi Ram Dhakal, who is also the public director of CHCL, agrees.
“With such a sound track record and four more projects in the pipeline, it’s the prospect of Chilime’s growth more than anything that is luring investors to the scrip,” says Dhakal. “Here we should also remember that unlike other hydropower companies which opt for issuance of right shares to shore up their capital for project construction or expansion, CHCL has been posted a good capital gain from the dividend paid to the shareholders.”
The four projects in the pipeline include Sanjen Jalavidhyut Company Limited (SJCL), Madhya Bhotekoshi Jalavidhyut Company Limited (MBJCL), Rasuwagadhi Hydropower Company Limited (RGHPCL) and a Bemdang Khola hydropower project.
Dhakal further claims that 90 percent of investors have so much expectation from CHCL that very few are actually trading the scrip.
“It is interesting to note that Chilime shares being traded in the market are overwhelming those disposed by the locals of the project area,” he says, adding that the locals may be squaring off the scrip as they have received very good returns already – though it cannot be ruled out that some thugs might have encouraged some of the locals to sell the scrip.
In any case, one who got 100 units of CHCL primary scrip now has 136 scrip, besides handsome cash dividend over the years.
Expect similar dividend, but no right shares this time around
Obviously the share investors are pretty upbeat about the returns from CHCL for the current fiscal year, too.
But the million-dollar question is how much dividend is in the offing?
Highly placed source at CHCL only said that since the company has been earmarking and distributing a sum to the tune of Rs 68 crore every year for the dividend, we can expect similar dividend for the current fiscal year, too.
“There is no reason as to why we should not be pledging anything less,” he added.
One of the big investors in the company, Gyanendra Lal Pradhan has shared on his facebook account that the shareholders can expect 25 percent bonus and 10 percent cash this time around.
But there is also rumor in the market that CHCL is planning to float right shares to shore up its capital for the upcoming four projects.
The CHCL source, however, ruled out the possibility of right shares anytime in near future.
“The reason we do not need a right issue is pretty simple,” says the source. “We already have Rs 4.2 arba in the reserve fund, and have already invested around Rs 2 arba out of Rs 5.83 arba we have to invest in these new projects. As we do not have to invest the rest of the money immediately, there is no urgency to float the right shares.”
Moreover, Initial Public Offering (IPO) are also to be issued to raise money for the projects.
Out of the four projects, SJCL is a subsidiary of Chilime and was incorporated in March 2010 as a public limited company. SJCL has planned to develop two new projects–Sanjen Hydroelectric Project (SHEP) having capacity of 42.5 MW and Sanjen(Upper) Hydroelectric Project (SUHEP) of capacity 14.8 MW in Rasuwa district of Central Development Region.
The company will manage the debt requirement of the project from the EPF for which tri-partite loan arrangement has been signed between EPF, Chilime and SJCL. The equity investment will be made through 51 percent promoter share and 49 percent public share. Chilime has 38 percent shareholding in SJCL. The promoter share will be raised first then after public share.
Likewise, MBJCL is a subsidiary company of Chilime, registered as public company in july 2010. MBJCL has planned to develop Middle Bhotekoshi Hydroelectric Project (MBKHEP) with an installed capacity of 102 MW in Sindhupalchowk district of Central Development Region.
Tri-partite loan agreement has been signed between EPF, Chilime and MBJCL for debt portion. The equity investment will be made through 51 percent promoter share and 49 percent public share. Chilime is a leading company with 38 percent share.
RGHPCL is also a subsidiary of Chilime Hydropower Company Limited (CHPCL) and was incorporated in August 2011 as a public limited company. It has planned to develop a new project - Rasuwagadhi Hydroelectric Project (RGHEP) having capacity of 111MW in Rasuwa district of Central Development Region.
The cost of the project is estimated to be Rs. 1 arba 36 crore 84.2 lakh excluding financial cost. A 50:50 debt-equity structure will be employed for financing this project.
The company will manage the debt requirement of the project from the Employer's Provident Fund (EPF) for which tri-partite loan arrangement has been signed between EPF, CHCPL and RGHPCL on December 8, 2011. The equity investment will be made through 51 percent promoter share and 49 percent public share. Chilime has 33 percent shareholding in RGHCL. The promoter share will be raised first then after public share.
However, the details of Bemdang Khola hydropower project was not immediately available.
Having stated all the factors that have been fueling the CHCL scrip over the recent months, it has become an essential part of portfolio of most of the institutional as well as retail investors who have sound understanding of the market.
No wonder the scrip was lasted traded at a high as Rs 2,235 with net change of Rs 137 in a single day.
