This report is prepared to study the listed companies of Maldives. This report is prepared for evaluating the financial performance of the listed companies in order to recommend the investor for the purpose of investment in the best three companies of Maldives. For this purpose, all the quantitative and qualitative factors of every listed company are considered by viewing published annual reports.
Many factors are considered by the investors before making any investment decision. An investment decision is very vital for the investors because it generates sound returns and also helps the investors in making the money in less time. Methodological and practical studies are conducted by the investors before taking an investment decisions. Practical study considers financial circumstances of companies while methodological study is the evaluation of stocks through data from past share prices.
Maldives is an isolated country with a very few companies traded on a Maldives stock exchange (MSE). The primary activities and its income operations of the Maldives are derived from Tourism, fishing and shipping industry. These businesses are the basis of income for the civilians of Maldives. The Gross domestic product rate is 28% from these industries and the wealth of Maldives is sound. Presently the wealth of the Maldives is doing sound (Syaukat, 2012).
Construction and Jewellery manufacturing, solid wastage, soil scouring, dredging of sand, manufacturing of buiding etc will jeopardize the coral reefs and marine life of Maldives. Mining has distressed the marine wild life and thus vigorously affect nature and sea.
Therefore, performance of all the companies traded on MSE has been evaluated and it is observed that company’s financial conditions are sound because of sound economy condition and great foreign direct investments. In addition to this, it has been found that companies are performing well and is expanding swiftly and magnetize the investors for the investment in Maldives market.
Quantitative and qualitative analysis are the different ways of collecting the information about the matter. These are combined for collecting the data. Further, qualitative analysis is a methodological approach which produces detailed and valid data that contribute deep understanding of data. Qualitative analysis method is a multi method which includes elucidation of both analyst and the third party. In this analysis, conclusions are in descriptive form. It can be described as an exploration of what is assumed to be dynamic reality. Thus, qualitative analysis can be said that it is subjective in nature. On the other hand, the main purpose of Quantitative analysis is quantification of data. The sole approach to generate data is numerical and the outcomes take place in form of tabulations that is suited to establishing cause-and-effect relationships. Thus, quantitative analysis can be said that it is objective in nature.
Therefore, both qualitative and quantitative analysis has been done for all the listed companies of Maldives for the purpose of investment in three best companies.
Housing Development finance corporation Plc (HDFC) is founded in 2004 and its head office is located in Male, Maldives. HDFC is an institution providing mortgage loans for housing needs of families in Maldives. It provides loans to families and people for developing property, loan improvement, project schemes for finance, credit facility etc. It provides loans for buying a property, land and residential investment property. (Bloomberg, 2017).
The qualitative analysis has been performed and it is observed that the company has very strong strategies. The company is continuously improving its performance for enhancing the market position. In addition to this, its outlook for future years is to follow the ambition towards excellence and also focus on cost control, advancements in technologies, assets quality and increasing the equity base and internal control.
In this analysis, figures and data of the company are considered. Observing the Statement of financial position, statement of cash flows and statement of income it has been examined that revenue has been increased by 6.20% that is revenue in 2015 was 114146641 whereas in 2016 it was 121228951. Further, operating income was also increased from 2015 because of less operating expenses which depicts that the net income has increased from last year by 19.43%.
In addition to above, it has been found that total loans and advances improved by 20% over 2015. Further, the total loans sanctioned during the year were Mvr 261 million as compared to Mvr 453 million in 2015because of end user project and disbursements also recorded a growth of 38%. The total assets quality also enhanced substantially from the last year. Debt-equity ratio is also increased which denotes that debt has enhanced more than equity for raising the funds (Annual Report, 2016).
By observing the statement of cash flows, it has been observed that cash and cash equivalents during 2016 was declined tremendously from 2015 which impacted a overall performance of the company still it is doing well in the market.
Maldives transport and Contracting Company (MTCC) was founded in 1980 and its head office is situated in Male, Maldives. It is the first company listed in Maldives stock exchange. It provides a best marine and transportation and infrastructure services including civil and sea services. Further its other activities also include management and contracting services which includes services of dredging, trading services which includes supplying of spare parts to fishing yachts, docking and engineering services which includes refurbishing of yachts, real-estate and logistics services for transporting sand and rock stones. Its Business policies are to become most trusted company by providing reliable and affordable services in transportation and construction in both domestic and international markets. Thus it is the provider of diverse business activities (Annual Report, 2017).
Qualitative analysis of MTCC has been performed and it is examined that the financial wealth of the company is not sound. There are many problems faced by the company due to internal reasons. Inadequate policies of the company do not lead to expansion in business and had to suffer a declination in earnings. Further, the industry performance is also not sound. The future strategies of the company will be service excellence, diversification and to respond towards market challenges and opportunities.
In this analysis, figures and data of the company are considered. Observing the Statement of financial position, statement of cash flows and statement of income it has been examined that there are huge differences. The revenues have been increased by 26.07% which means revenue was Mvr 1040297266 in 2015 whereas in 2016 it was Mvr 1311517885. Further, it was also observed that operating profit has decreased in 2016 due to high operating expenses as compared to 2015 which ultimately declined net earnings of the company from 2015. Therefore, due to this EPS has also decreased (Annual report, 2016).
In addition to above, it has been observed from statement of financial position that total assets and total liabilities have increased in 2016 over 2015 but the growth percentages of liabilities are more than assets. There were no changes in Share capital of the company from last year. The debt-equity ratio was also enhanced which depicts that company has raised its funds from borrowings. Return on Equity provided to investors in 2016 was only 19% as compared to 30% in 2015.
By observing the statement of cash flows, it has been observed that cash and cash equivalents during 2016 was declined tremendously from 2015 which impacted an overall performance of the company. Cash balances have been decreased from last year which signifies that the financial performance of the company was un-satisfactory.
Maldives Tourism Development Corporation (MTDC) is based in Male, Maldives. Its primary business activity is enlargement of tourism industry. It is engaged in expanding of resorts ventures (Bloomberg, 2017).
It has been analyzed that the strategy of Maldives Tourism Development Corporation Plc is normal by performing Qualitative analysis. Further another thing noticed was that the executive members of the Board are frequently getting change which impacted the performance of the company. The industry performance is also not performing sound (Bloomberg, 2017). The purpose of this company is to bring wealth from Tourism Industry to every Maldivian citizen.
In this analysis, figures and data of the company are considered. Observing the Statement of financial position, statement of cash flows and statement of income it has been examined that there are huge differences. The revenues have been decreased by 4.95% which means revenue was Mvr 14341936 in 2014 whereas in 2015 it was Mvr 13664851. Further, it was also observed that operating profit has increased in 2015 due to other reasons as compared to 2014 which ultimately inclined net earnings of the company from 2014. Therefore, due to this EPS has also increased (Annual report, 2016).
In addition to above, it has been observed from statement of financial position that total assets and total liabilities have decreased in 2015 over 2014 but the growth percentages of liabilities are more than assets. There were no changes in Share capital of the company from last year but the total equity has decreased from last year due to decrement in accumulated losses. The debt-equity ratio was also enhanced which depicts that company has raised its funds from borrowings.
By observing the statement of cash flows, it has been observed that cash and cash equivalents during 2015 was inclined tremendously from 2014 which impacted an overall performance of the company. Cash balances have been decreased from last year which signifies that the financial performance of the company was un-satisfactory.
Earlier STO was called as Athireemaafannu Trading Agency in 1969. State Trading Organization Plc (STO) was founded in 1964 and its head office is located in Male, Maldives. It is engaged in the business of distribution, wholesale, import of petroleum, cooking gas, construction materials, medical supplies, home appliances, electronics, super market products and insurance.
It has been analyzed that the strategy of State Trade Organization Plc is average by performing Qualitative analysis. Further another thing noticed was that the company was facing many issues due to internal reasons which impacted the performance of the company. The industry performance is also not performing sound (Bloomberg, 2017). The future strategy of the company is to improve customer value by delivering new and attractive products and services
In this analysis, figures and data of the company are considered. Observing the Statement of financial position, statement of cash flows and statement of income it has been examined that there are huge differences. The revenues have been decreased by 5.10% which means revenue was Mvr 7313 millions in 2015 whereas in 2016 it was Mvr 6939 millions. Further, it was also observed that operating profit has decreased in 2016 due to high operating expenditures as compared to 2015 which ultimately declined net earnings of the company from 2015. Further, both finance income and finance costs have decreased from the last year. EPS is the indicator of profitability position of the company and therefore due to decrement in the net income, EPS has also decreased (Annual report, 2016).
In addition to above, it has been observed from statement of financial position that Group equity to Mvr 2442 million in 2016 as compared to Mvr 2211 million in 2015. While Return on Equity declined to 18.5% in 2016. Further the net debt increased by 37% which represent the gearing ratio of 61.1% in 2016. This is because of acquisition of MIFCO as a subsidiary company. In addition to this, loans and borrowings were repaid in 2016 of value of Mvr 906 million and for value Mvr 814 million new loans and borrowings were elevated.
By observing the statement of cash flows, it has been observed that cash and cash equivalents during 2016 was declined from 2015 which impacted an overall performance of the company. Cash balances have been decreased from last year which signifies that the financial performance of the company was un-satisfactory.
Bank of Maldives (BML) is the leading nationalized bank in Maldives. Its business activities are to provide banking services including banking and commercial and also offer banking stationeries in Maldives. It was come into existence in 1982. Earlier bank was started joint venture operations with 60% shares held by government of Maldives and balance shares held by IFIC Ltd. Presently, the primary business activity is providing personal, business and corporate financial services. Other services include card services, overdrafts facilities, loan and foreign exchange products, trade finance, project financing services to resorts and vessels, internet banking, financial and advisory services and international trade and merchant services. The company also offers electronic services such as ATM services, Point of sale services, and electronic money transfer services, bill payment services etc.
It has been analyzed that the strategy of Bank of Maldives Plc is good by performing Qualitative analysis. Further another thing noticed was that the company has made many changes in order to enhance the performance of the company. The executive members of the company are performing best for the company for the purpose of improving the performance of the company in Maldives market. The industry has also a very sound performance (Bloomberg, 2017). The future strategy of the company is to participate in expansion of society and to create value for investors by following international best practices.
In the quantitative analysis, figures and data of the company are considered. Observing the Statement of financial position, statement of cash flows and statement of income it has been examined that many differences have occurred from the last year. The net interest income has been increased by 27.10% which means the net interest income was Mvr 989779000 in 2015 whereas in 2016 it was Mvr 1258437000. Further, it was also observed that operating profit has increased in 2016 as compared to 2015 which ultimately inclined net earnings of the company by 38.68%. EPS is an indicator of the profitability position of the company and therefore due to increment in the net income from last year, EPS has also increased (Annual report, 2016).
In addition to above, it has been observed from statement of financial position that in 2016 Group assets have increased but group liabilities have decreased from the last year. Further there were no changes in Share capital but the retained earnings amount has increased from 2015 by 51.68% which ultimately increased its total stockholder’s equity (Annual report, 2016). Debt equity ratio of Bank of Maldives Plc depicts that funds are raised more from shareholders as compared to outsiders. Thus, Net asset value has increased in 2016 from 2015 whereas market value remains same.
By observing the statement of cash flows, it has been observed that cash flows from operating activities in 2016 was higher than 2015 which means company’s business operations are justifiable but at the same time cash flows from investing and financing activities has declined tremendously from 2015 which means the overall cash and cash equivalents during 2016 was declined from 2015 which impacted an overall performance of the company. Hence, financial performance of Bank of Maldives Plc. was good in 2016.
Amana Takaful Plc was established in 2003 and its head office is located in Male, Maldives. It is engaged in general insurance business and provides insurance protections and security in Maldives country. It is the only company listed in Maldives Stock exchange as an insurance company. Its insurance services include compensations and protections in health, travel, personal accident, hotel, fire, marine, hull, guest house, business, home, travel fidelity, theft, protection against currency in transit and business interruption etc.
It has been analyzed that the strategy of Amana Takaful Plc is not good by performing Qualitative analysis. Further another thing noticed was that the company has made many changes which impacted the performance of the company. The industry performance is also not sound due to some internal reasons (Bloomberg, 2017). The executives of the company are frequently changing which has a bad impact on financial wealth. The future strategy of the company is to provide highest values in service through trust and reliability.
In the quantitative analysis, figures and data of the company are considered. Observing the Statement of financial position, statement of cash flows and statement of income it has been examined that there are huge differences in past years. The revenue income has been increased by 19.29% which means revenue income was Mvr 91102933 in 2015 whereas in 2016 it was Mvr 108681139. Further, it was also observed that operating profit has decreased in 2016 as compared to 2015 due to high operating expenditures which ultimately declined net earnings of the company tremendously by 70.43%. Therefore, due to this EPS has also decreased to 0.08 (Annual report, 2016). Thus, it can be said that Amana Takaful Plc profitability position is not sound.
In addition to above, it has been observed from statement of financial position that in 2016 Group assets and group liabilities have decreased but the ratio of decrement of liabilities are more than the assets. Further there were no changes in issued Share capital (Annual report, 2016). Further, available for sale reserves decreased immensely from 2015. Debt-equity ratio signifies that Amana Takaful Plc has raised funds more from debt as compared to shareholder’s equity. Thus, Net asset value was Mvr 2.36 whereas Market value was Mvr 4 in 2016.
By observing the statement of cash flows, it has been observed that overall cash and cash equivalents during 2016 was inclined from 2015 by 6.56% which impacted an overall performance of the company. Hence, this signifies that the financial position of the company was not sound.
Dhiraagu is the telecommunication company of Maldives. It was founded in 1988. It is offering complete variety of mobile, internet, data and fixed line services to individuals, government, corporate, resorts in Maldives. Also covers the widest range of 199 inhabited islands and industrial islands. Further other business services offered by them are repair and maintenance services, installation services etc. This is the largest company providing 3G, 4G and fixed broadband network in Maldives. Company has around 120 agents, 40 distributors and over 3000 retailers who are providing services and products through retail and distribution network.
It has been analyzed that the strategy of Dhivehi Raajjeyge Gulhun Plc is good by performing Qualitative analysis. Further another thing noticed was that the company has made many changes for the improvement in the performance of the company. The industry performance is also sound due to some internal reasons (Bloomberg, 2017). The executives of the company are working for the growth of the company. The future strategy of the company is to provide highest values in service through trust and reliability (Annual report, 2016).
In this analysis, figures and data of the company are considered. Observing the Statement of financial position, statement of cash flows and statement of income it has been examined that there are huge differences have been occurred from the last year. The revenue income has been increased by 9.92% which means revenue income was Mvr 2275773000 in 2015 whereas in 2016 it was Mvr 2501419000. Further, it was also observed that operating profit has increased in 2016 as compared to 2015 which ultimately inclined net earnings of the company by 15.94%. EPS is an indicator of profitability position of the company and due to increment in the net income, EPS has also increased to 11.05 (Annual report, 2016).
In addition to above, it has been observed from statement of financial position that in 2016 Group assets and liabilities have increased but the ratio of increment in liabilities are more than assets. Further there were no changes in issued Share capital (Annual report, 2016). Debt-equity ratio signifies that company has raised funds through debt more than equity. Thus, ROCE in 2016 was 37.1% as compared to 32.5% in 2015.
By observing the statement of cash flows, it has been observed that overall cash and cash equivalents during 2016 was inclined from 2015 which impacted an overall performance of the company. Therefore, the financial position of the company was quite satisfactory.
Market circumstances signify entire features that affect the economy of the nation and affect the company’s operations.
Corporate tax has been levied by the Maldives Government. 40.2% of total GDP has been spent by the administration in past 3 years. The budget of the country has been devastated by 8.6%.
The exports and imports are equal to 201% of GDP of Maldives economy.
After examining all the listed companies of Maldives, it has been observed that economy of the nation is impressive. Further government interference in the functions of company is very little. Thus, if the investor invests in the companies of Maldives then good amount of returns will be earned by them.
It has been concluded that the performance of Bank of Maldives, HDFC and Dhivehi Raajjeyge Gulhun Plc are the three best companies for the purpose of investment. The qualitative and quantitative analysis has been performed of these companies and can be said that financial wealth of these are very sound. Further profitability position depicts that they offered very satisfactory returns and create a shareholders value. Hence, their diversification and expansion polices are also very attractive which totally signifies that they will earn very sound profits in coming years.
Hence, the conclusion is that the investors should invest in Bank of Maldives, HDFC and Dhivehi Raajjvegye Gulhun Plc to get best returns with minimum risks.
References
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HDFC, 2016, Company overview, viewed on 22 July 2017 from < https://www.hdfc.com.mv/hdfc/index.php/company/about-company>.
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