Fundamental Analysis On Islami Bank Bangladesh

1449 words - 6 pages

PAMC Research

SQUARE PHARMACEUTICALS LIMITED
Recommendation: BUY KEY POINTS SUMMARY
Square Pharmaceuticals Ltd. (SPL), the flagship company of Square Group, is holding the strong leadership position in the pharmaceutical industry of Bangladesh and has been consistently in the 1st position among all national and multinational companies since 1985. The pharmaceutical industry is primarily a generics market, producing both patented and offpatent products. In 2007 the market was worth USD 600mn, registering an average growth rate of 12% over the last five years. The industry is dominated by local manufacturers who account for 86% market share. The top two domestic manufacturers, SPL and ...view middle of the document...

When expressed as percentage of revenue, CGS is hovering around 57%, while SGA is around 18%. Stabale inventory turnover ratio and rising A/R ratio bear good sign of working capital efficiency. Over last few years, Operating Profit Margin ranged between 21% and 25%, and can be expected to reach 28% next year. The bottom line, Net Profit Margin, experienced a U-trend recently and aims to register 11% level next year. Debt-asset ratio is about 20%, and is expected to reduce further mainly due to accretion of equity.

150

Quaterly Earnings
2012 2011 1st 2.65 2.63 2nd 2.88 2.83 3rd 2.62 2.55 4th 3.05 0.78

ACTION AND RECOMMENDATION
Expected net profit growth rates will hit double digit in FY12E and FY13E correspond to PER of 17x and 13x respectively while ROE in FY12E and FY13E is 24% and 23%, which is much better than current sector ROE 16% and market ROE of 21%. At a current market price of BDT 172, SPL is currently trading at a PER of 15x, where sector PER is 17x and market PER is 14.37x. SPL is currently trading at a significant discount to the sector. Considering its steady earnings, capacity expansion, and strong support by the Square Group; we believe SPL price should appriciate further. Based on FY12E EPS estimate and sector as well as market multiples, we value SPL to be between 200 Tk and 220 TK. Therefore, we recommend SPL as a ‘BUY’ at its current market price for long term.

Valuation
Based on Sector Average P/E 17.1x Based on Market P/E 14.37X Based on Sector Average P/NAV, 2.7x Based on Market Average P/NAV, 2.7x

in BDT
192 161 195 195

Chart 2: Shareholding structure (as on 15 November 2012)
General Public, 21 %

Institute, 1 7% Foreign, 8 %

Sponsors, 54%

FY 2009 2010 2011 2012E 2013E

Operating Income Tk mn 11,826 16,975 19798 24,945 31,431

Growth % 12 44 17 26 26

NPAT Tk mn 2515 3386 3747 4147 4508

Growth % 48 21 30 11 9

EPS Tk 16.55 16.60 13.66 11.20 10.20

EBIT Margin % 25 24 25 26 26

NPAT ROE Margin % % 14 17 17 20 19 21 22 24 23 23

ROA % 11 14 16 19 19

PER x 25 21 23 17 13

P/BV x 5.0 4.0 3.4 2.5 2.1

PEG 3.1 -3.2 0.6 0.7 0.8

DPS Tk 3.5 3 2.5 -

Div. Yield % 1.4 1.2 1.3 -

Year No. of High-Low stocks Tk mn 379 / 248 151 433 / 295 196 275 / 212 265 286 / 166 371 -

Capital History 30%B 35%B 40%B -

FY = Financial Year, NPAT = Net Profit After Tax, EPS = Earning Per Share, EBIT = Earning before interest and Tax, ROE = Return on Equity, ROA = Return on Asset, PER = Price Earning Ratio, P/BV = Price to Book Value, PEG = Price Earning to Growth Ratio, DPS = Dividend Per Share; FA = Factor Adjustment.

Analyst: Syed Adnan Huda, adnan@pamcbd.com

1

PAMC Research Income Statement
Particulars Total Sales Total Cost of Sales Gross Profit Total Administrative and Other...

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