Mongolian Market Updates | March 5th

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🌄 Good morning!

The extended Lunar New Year holidays have ended—it's time to roll up our sleeves and get back to work! Trade Development Bank [MSE:TDB] successfully issued an additional $100 million bond in the international market.

🗞️ In this week’s newsletter:

• Market Update

• CMM Guide

• Market News

🟣 Market Update

Trade and Development Bank [MSE:TDB] successfully issued a $200 million bond on the international market in December last year and just issued another $100 million bond this week, making it a total of $300 million bond issuance.

This bond matures by the end of 2027 and carries a coupon rate of 8.5%. In the last week, the government had successfully raised $500 million through issuing bonds. The successive success in foreign investment could be an implication of positive sentiment on the part of foreign investors.

Business loans constitute the lion's share of the Trade and Development Bank's loan portfolio, with recent studies showing that 74% of the total loans are business-related. Further, rising dollar-denominated investments from the international market will also enable the growth of business loan releases.

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🟣 CMM Update

Under the initiative of the President of Mongolia, the White Gold program is being implemented this year, with plans to provide ₮788 billion in concessional loans to the light industry sector.

Darkhan Nekhii JSC [MSE:NEH] became the first to benefit from a loan under this program, with finance being provided by Khan Bank [MSE:KHAN]. The loan will be utilized to acquire the technology and equipment necessary for compress felt and leather shoe production. Consequently, Darkhan Nekhii JSC aims to boost its supply of work clothing and shoes on the domestic market and substitute imported products in various industries. The equipment is energy-efficient and generates minimal waste, thereby creating prospects for enhancing the company's profitability.

From the beginning of the year, the stock price of Darkhan Nekhii JSC has increased by 26%. The P/E ratio of the company is 15.71 as of February 26, and it has announced a dividend of ₮0.226 per share.

The White Gold program has been launched to assist the light industry, enabling Darkhan Nekhii JSC to increase its production capacity. It is yet to be seen if Gobi JSC [MSE:GOV] will receive funding under this program. Gobi JSC has depended on loans in the past few years to sustain its operations, with 73% of its total assets financed through debt as of 2024.

🏛️ Market News

• According to banking sector research, XacBank JSC [MSE:XAC] has the lowest non-performing loan (NPL) ratio among banks, standing at 2%. The majority of XacBank’s loan portfolio consists of personal loans, accounting for 86% of its total loan portfolio.

• State Bank JSC [MSE:SBM] has released its 2024 operational report. Last year, the bank successfully secured a $70 million investment through a partnership with Cargill Financial Services International. Additionally, Moody’s has upgraded State Bank’s credit rating to B2+ (Stable).

• Khan Bank JSC [MSE:KHAN] exceeded its 2024 net profit target by 62%. Initially, the bank projected a net profit of ₮394.5 billion for the year but achieved ₮638.5 billion. For 2025, Khan Bank has announced a profit target of ₮421.5 billion in the prospectus for its IPO.

• Baganuur JSC [MSE:BAN] has declared a dividend of ₮23.62 per share. This marks the first dividend payout by Baganuur JSC in 20 years, since 2005.

🟣CMM Services

Capital Markets Mongolia (CMM) specializes in providing strategic advisory to public companies on optimizing investor relations (IR) and advising on upcoming IPOs, bond issuances, and effective participation in the capital markets with a focus on efficiency and reputation. Additionally, we undertake market research and provide financial PR services.