Why has charm in Chilime stocks declined when the stock market is at all time high?


    The scrips of Chilime Hydropower Company Limited (CHCL) were one of the most sought after blue-chip scrips in the secondary market. Back in the 2014 when NEPSE crossed 1050 level the share price of CHCL reached as high as Rs 2,758 but now when the market is hovering around 1450 points, its share price stands at only Rs 1286.

    Chilime Hydropower Company Limited:

    Chilime Hydropower Company Limited (Chilime) was incorporated in 1995. Nepal Electricity Authority (NEA) holds majority ownership with 51% shareholding. Remaining 49% shares is held by general public ,including 10% equity ownership of local people.

    Chilime has three sister companies:

    Rasuwagadhi Hydropower Company Limited (RGHPCL) which was  incorporated in August 2011 as a public limited company. It has planned to develop a Rasuwagadhi Hydroelectric Project (RGHEP) having capacity of 111MW in Rasuwa district of Central Development Region.

    Chilime Hydropower Company holds 33% of Rasuwagadhi Hydropower Company Limited.

    Madhya Bhotekoshi Jalavidhyut Company Limited (MBJCL),which was 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.

    Chilime Hydropower Company holds 38% of Madhya Bhotekoshi Jalavidhyut Company Limited.

    Sanjen Jalavidhyut Company Limited (SJCL)which 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.

    Chilime has 38% shareholding in Sanjen Jalavidhyut Company Limited.

    An investor who bought 3000unit  shares of Chilime Hydropower Project at Rs 2700 per unit in the expectation that it will reach Rs 3000 per unit says, “he suffered a huge loss and would like to know the reason of such decline in price of scrips of Chilime.”

    Why is the share price of chilime at Rs 1285 when the market is in bullish trend and hovering around 1450 points?

    The reason behind the decline in share price are:

    Though the market is in bullish trend, the hydropower sector at Nepal Stock Exchange is in bearish trend. The charm of investors towards Hydropower sector has decreased from the past.  At this time, investors are more attracted towards the Banking sector, Development Bank sector and Insurance sector.

    Even in the Hydropower Sector itself, the number of Hydropower Companies has increased. Investors now have various alternatives for Chilime at Nepse to invest in.

    Chilime Hydropower had provided a good amount of bonus shares in the past fiscal years, which increased the supply of chilime shares in the market..

    The EPS of chilime has also declined due to the increased amount of its shares.

    The removal of Mr. Kul  ManGhising, the architect of the exemplary ‘Chilime’ model and the man behind expanding Chilime’s business, by setting up four more hydropower projects, has also been a reason for decline in share price of chilime.

    After Ghising was recalled NEA officials Sher Singh Bhat, Hitendra Dev Shakya and Lila NathBhattarai were appointed to the boards of Sanjen, Madhya Bhotekoshi and Rasuwagadhi hydropower projects respectively. Appointment of these many officials not only increased the administrative cost, but also increased the corruption.

    Chilime Hydropower  hadprovided 27% dividend to its shareholders from the net profit earned in the last fiscal year.

    Narayan Acharya, Company Secretary of Chilime Hydropower Limited said, “ all the subsidiary  projects of Chilime will be completed by the year 2020.”

    After the projects are completed, the profit and return of Chilime will increase, which will raise its share price at  secondary market.

    Source : Share Sansar