Listed Microfinance Institutions' Shareholder Valuations and their Stocks' Results – Notes on Results to Date

Examining share valuation methodologies
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This note scrutinizes results of the shares from the four publicly-listed MFIs covered in the WSAS MFI SVIX series. It seeks to illustrate the advantages of the WSAS MFI SVIX valuation methodology.

The four MFIs discussed in the note are Banco Compartamos (Mexico), Financiera Independencia (Mexico), Equity Bank (Kenya) and SKS Microfinance (India). WSAS looks at the MFIs’ share price performance across three metrics:

  • Implied returns to investors, as measured by change in share process over time;
  • Valuations paid, as measured by share price multiples to book value by share;
  • Demonstrated liquidity, as measured by volumes of shares traded relative to the total shares issued by the companies.

The note includes charts that provide quick visuals on how stock prices have moved over time, and the volume of trading underlying these price movements. The WSAS MFI SVIX methodology measures changes in shareholder value using accounting data and cash flow to and from investors. The note states that since most of the MFIs covered in the series are unlikely to have shares quoted in public markets and have not demonstrated consistent liquidity, WSAS will continue to use its current valuation methodology.