CEDB Hydropower (CHDC)'s Actual Earnings Never Made It To Its Quarterly Report

Careful analysis of publicly available information reveals that CEDB Hydropower Development Company Limited (CHDC) should be on a path to unveiling an incredible financial report in the near future.

There are multiple convincing records. 

1) Income Growth from Sale of Stake in RADHI

Gandaki Energy Limited is a subsidiary of CEDB Hydropower Development Company Limited (CHDC). CHDC has 100% ownership of Gandaki Energy Limited.

Effectively, Gandaki Energy Limited is CHDC.

Gandaki Energy Limited has an 84.19% stake in Lamjung Electricity Development Company Limited.

Lamjung Electricity Development Company Limited is a majority shareholder of Radhi Bidyut Company Limited (RADHI). According to the annual report of RADHI for FY 2076/77, Lamjung Electricity Development Company Limited had a 47.62% stake in RADHI at the end of Ashar, 2077.

Sharesansar's sources reported that Lamjung Electricity Development Company sold more than 10 lakh shares of RADHI at an average price higher than Rs. 1,000 per share. The sale is believed to have taken place in the time period of June-July last year. 

Assuming the average price to be Rs. 1,000 and the sold amount to be 10 lakh units from a conservative standpoint, the sale brought a whopping Rs. 1 Arba for the company. 

Since CHDC has an 85.19% stake in the seller company, one would assume that the proceeds would be reflected in CHDC's quarterly reports. However, this income hasn't been reported in any of the quarterly reports of CHDC.

It is difficult to extract information from Lamjung Electricity Development Company since it is not a publicly listed company.

In order to confirm the sale, or gain supportive evidence, Sharesansar called RADHI and CHDC, which have been listed in NEPSE.

CHDC's office assistant said her seniors said their shareholding data can't be disclosed to the general public. CHDC is a public company, 30% of it is owned by the general public.

2) If the subsidiary hasn't sold RADHI, the investment has yielded a good dividend return anyway

Discarding the possible scenario that Lamjung Electricity Development Company hasn't diluted its investment in RADHI, the argument still favors that CHDC has benefitted from the investment of its subsidiary into RADHI. 

RADHI declared a 36.5% dividend for the fiscal year 2076/77. The entirety of the dividend was proposed in bonus shares. This has further increased the shareholding quantity of Lamjung Electricity Development Company. 

On the other hand, assuming that at least 10 lakh shares are sold anyway, there are still 12,55,153 shares remaining from the initial investment. This rose to 17,13,283.845 shares after 36.5% bonus adjustment. RADHI has an LTP of Rs. 713 in the secondary market at the time of writing. Thus, the shareholding is worth Rs. 1.22 Arba in RADHI today.

3) Income From Potential Sale of UPCL Shares

According to its annual report, CHDC had a 2.26% stake in Universal Power Company Limited (UPCL) at the time of reporting. This equates to 4,75,000 shares.

As mentioned earlier, CHDC has a significant stake in RADHI through subsidiaries Gandaki Energy Limited which has a controlling stake in Lamjung Electricity Development Company.

Now, RADHI also owns 5,55,926 shares of UPCL. 

In simpler words, CHDC has ownership in UPCL one way or another. 

The IPO allotment of UPCL concluded on Feb 27, 2019. Thus, the shares of locals, employees, and promoters of the company are on verge of completing their locking period. 

When Sharesansar called UPCL, the company representative informed us that the locking period will conclude on Feb 26, 2022. Thus, the shares will be tradable from the very next day (Feb 27, 2022), i.e. less than a month from now. 

As of writing, UPCL has an LTP of Rs. 403.50 in the secondary market. Thus, the sale of UPCL shares will yield a good return for CHDC if the company decides to sell them after the completion of the locking period. 

4) These Companies Are Structured Like a Complex Web That Ultimately Points Back to (and profits) CHDC

An example has already been explained in the previous sub-heading. CHDC has a direct stake in UPCL.

Additionally, CHDC indirectly has a majority stake in Lamjung Electricity Development Company, which has a majority stake in RADHI. Meanwhile, RADHI also has its own investment in UPCL. 

Along the same lines, the financial reports of RADHI point out that it has significant investments in the same companies that have investments from CHDC and Lamjung Electricity Development Company.

In the report above, for instance, it is revealed that RADHI has investments in Rapti Hydro & General
Construction Limited and Dordi Khola Jal Bidyut Company Limited, which can be directly or indirectly traced back to CHDC. 

More Information About CEDB Hydropower Development Company Limited (CHDC)

CEDB Hydropower Development Company Limited (CHDC) is a public limited company incorporated in Mangsir 15, 2066 (November 30, 2009). The company was established under the prevalent laws of Nepal. CEDB hydropower Development Company Limited was founded by the Clean Energy Development Bank to provide equity investment for hydropower projects to meet the energy needs of the nation.

The company has been operating 3 hydropower projects which have a combined electricity generation capacity of 8.583 MW. Additionally, the company has invested in various other hydropower projects which have a combined capacity of 103 MW.

The company floated 2,518,230 units of ordinary shares worth Rs. 25.18 crores to the general public from Baisakh-17. This is 30% of the company's capital.

The company posted a net profit of Rs 41.39 million in the first quarter of the fiscal year 2078/79. In the fourth quarter of the previous fiscal year, it had posted a net profit of Rs 161.45 million.

As of writing, CHDC has an LTP of Rs. 1,032. This is a significant gain in a short span, given that the IPO shares opened at Rs. 416. The stock is in an uptrend since December with an impressive gain higher than 55%.