Justification of Issuing Price of RAK Ceramics (Bangladesh) Limited

Prepared for Mr. Manirul Ahsan Foreign Private Equity & Debt Specialist Course Instructor, Financial In or!ation Analysis Prepared by Apon Das "#oll$ %&' Mushtahir A(i( #ah!an "#oll$ )*' Mahbubur #ah!an "#oll$ &)' M+. ,i(bul Si-+er "#oll$ &.' M+. Mohiu++in /ahangir "#oll$ 01' 2anvir ,asan Cho3+hury "#oll$ 04' M5A 06D, I5A "D7'

#A8 at a glance
#A8 Cera!ics 5angla+esh 9i!ite+
Subsi+iary o #A8 Cera!ics PSC, 7AE :perational since ;ove!ber .*, )44< in

5angla+esh
Asset 0,111,%<6,.1. ta-a )$) +ebt=equity capital structure IP: issue price 0< ta-a

S>:2 Analysis
Strength
Strong bran+ na!e "S7PE#5#A;D, M#M business A3ar+, 5ran+ Finance Mi++le

East A3ar+ etc'

In 5angla+esh, every 0th sanitary 3are i?e+ is non #A8 cera!ics an+ every 0th

tile is #A8 cera!ics

Strong supply chain ".1%% global suppliers, 4< +ealer'

>ea-ness
Susceptibility to e?change rate an+ political ris-

2hreats
Stagnating real estate gro3th rate in 5angla+esh "7rban gro3th rate is currently

&.6@'

:pportunity
Aovern!ent policy "Acco!!o+ation or all by .%.), 01@ +uty on i!porte+ tiles,

targete+ ADP gro3th rate o )%@ by .%)6'

PorterBs Five Forces Mo+el

SuppliersB bargaining po3er$ 9o3 ".1%% suppliers' 5uyersB bargaining po3er$ Mo+erate Co!petition$ 9o3 ")) co!petitorsC #A8 has .1@

tiles an+ *6@ sanitary 3are !ar-et share'

Substitute pro+ucts$ Fe3 2hreat o ne3 entrant$ Mo+erate "high capital

require!ent, several co!panies 3ere in pipeline'

Scale$ ..0D1.%

PES2E Analysis
Political$ A:5Bs +iscourage!ent or i!porte+ goo+s in

iscal bu+get=.%%4, Political stability

Econo!ic$ #eal ADP gro3th rate o 1.60@ in .%%4 an+

*.%6@ in .%)%, EFrontier FiveB econo!y "/P Morgan' an+ E;e?t ))B "Aol+!an Sachs',
Social$ Aro3ing !i++le class, Acceptability o

oreign

co!pany pro+ucts a!ong consu!ers

2echnological$ ;o history o non operation, superior

quality ra3 !aterials, international +esign quality, access to appropriate ne3 technology
Environ!ental$ 9arge scale E2P installation on March,

.%%4

#is- Perspective
Interest rate ris-$ lo3 "cash richness, lo3 +ebt to equity ratio' E?change rate ris-$ ,igh In+ustry an+ !ar-et ris-$ Mo+erate Slo3 !oving inventory ris-$ Mo+erate
;ature o the in+ustry )1 +ays sales in inventory

:ther ris-s$ 9o3 supply chain, technology relate+ ris-s,

operational ris-s, !anage!ent an+ labour relate+ ris-s

Cre+it rating$ AAF long ter!, S2=) short ter! by C#IS9

stimated !air "alue

Techniques
NAV/ NTAV P/E Multiple DDM P/BV

Price V

Value "ei#ht $Equal% "ei#ht $Base& 'n ()p'rtance%

12.56 !.25 !.3!

32.31 !.25 !.3!

38.6 !.25 !.2!

.8! !.25 !.2! 32.!6 3!.1

2he Fair Galue o #A8 Stoc- beco!es .0.1*& 3hich 3as sho3n &..&)

2han- Hou