The only listed bank on Cambodia’s stock market – ACLEDA Bank Plc – (CSX:ABC) has announced a $49.41 million in third-quarter after-tax-profit, representing a year-on-year increase of 27% as higher lending rates increase interest income and non-performing loans go against expectations and remain steady at 2.89%.
The announcement brings the bank’s year-to-date earnings to $133 million with the company on track to break last year’s record annual profit of $166.67 million in after-tax profit.
In a quarterly statement released to the market ACLEDA Bank Chairman Chhay Soeun commented that Cambodia’s economic outlook has gained momentum and is rebounding faster than expected in 2021. This growth has been driven by effective government measures and significant growth in key economic sectors.
“During this third quarter of 2022, ABC has achieved positive outcomes as total assets increased by $36.96 million or 0.44% compared to Q2-2022. During the same period, total loan assets increased to $6.24 billion from $6 billion in Q2-2022,” Chhay Soeun said.
“The company has reaped a profit attributable to owners for July, August, and September 2022 of $49.41 million whilst Return on Average Assets was 0.59% and Return on Average Equity was 4.01%,” he added.
Stock price remains 35% below IPO
Despite the ongoing record earnings the company’s share price is currently trading at KHR 10,520 a share down over 35% from the company’s much-hyped Initial Public Offering in 2020 at KHR 16,200 a share bought by many first-time investors in Cambodia’s developing stock market.
The low share price is due to the ongoing selling pressure after more than 11,000 members of the ACLEDA Bank staff association were able to partially sell their shares on the open market earlier this year.
There is the potential for ongoing selling pressure, as an additional 89 million shares (20% of total company shares or four times is IPO) may need to be absorbed into the open market over the next few years.
Han Kyung Tae, Managing Director of brokerage house Yuanata Securities has previously told Cambodia Investment Review that under his conservative assumptions ABC should increase both equity and dividend return over the coming years.
“If investors can exit at the current Price-to-book (PB) multiples of 1x PB in the future, this shows that if Acleda maintains its return on equity as at the current range over time, which is quite possible, the investment returns on the current market price for the shareholders will prove to be highly substantial with equity growing between 12% and 15% return on equity plus close to 5% dividend yields,” he said.
“It is hard to find any other investment opportunities in Cambodia that can match the bank’s shares. The assets of the bank are probably the most well-diversified portfolio in Cambodia and the long-term perspective of the bank’s business goes along with the country’s economic prospects,” he added.
Some institutional investors have taken advantage of the low price including Morgan Stanly who purchased $43.23 million of ACLEDA Bank shares through the Cambodia Securities Exchange marking the largest ever Negotiated Trading Method (NTM) buy.
ACLEDA Financial Trust announces share buyback
In August, ACLEDA Bank’s largest shareholder – ACLEDA Financial Trust (AFT) announced it had purchased 3.329 million shares from February to July this year, worth an estimated $8.31 million, as the share price currently trades 36% below IPO.
The AFT already holds over 25% of company stock following the decision of their Board of Trustees and regulator’s internal budget plan and 5-year strategy in February 2022.
According to a statement the AFT said following the decision of its Board of Trustees and regulators, the AFT will buy the shares from 2022 to 2026 based on its internal budget plan and 5-year strategy.
Cambodia Investment Review has previously contacted the AFT but was not provided any additional information on the number of shares or a specific timeframe.