Term Paper-Bangas (FSAV)
Term Paper-Bangas (FSAV)
Term Paper-Bangas (FSAV)
TERM PAPER
CORPORATE
ON
FINANCE
PREPARED
FOR
OF FINANCE
OF DHAKA
PREPARED
BY
Letter of Transmittal
April 28, 2014
Prof. Dr. Md. Osman Imam
Department of Finance,
University of Dhaka
I.
Corporate Goal:
Every firm has a corporate goal but the goals are not same for all firm. Some
firms want to enhance the value of the stockholder, some want to become a
profitable organization etc. The chosen company is Bangas Limited that lies in
pharmaceutical sector. Its mission is to provide maximum value to their
customers & communities that they belong.
In my point of view the goal of the firm that they mentioned in their annual
report is not well defined. The firm should focus onto the value of their equity
holders.
Philosophy of Bangas Limited:
Business is and always has been dynamic and diversification process.
We strive to be at the fore front of change in fashion and trend setting while in
continuous pursuit of quality and commitments through total customer focus in
all operational areas.
Products to be of best available quality. Products for premium market segments
integrated diversification/product range expansion.
Care for value of money.
Faith in individual potential and respect for human values.
Encouraging innovation for constant improvements and research for quality
product and better packaging.
Accepting changing as a way of life.
Strict adherence to financial and administrative principles.
That is why we have based our production and marketing philosophy on three
basic principles Stability, Quality and Efficiency.
Bangas Limited is on the right course to becoming more diversified, more
customer-oriented and, in particular, more profitable. We are accepting the
challenges posed by a changing world economy and making use of the
opportunities. In doing so, we are building on our proven strengths of new
product development and diversification to increase market share. For
shareholders, customers and employees, Bangas stands for innovation, knowhow and a strong business ethics. The company has the core skills and
technologies that will allow it both to maximize the opportunities available in the
food sector, in doing s to earn for the shareholders an even returns for their
investment.
II. Valuation
Computation of FCF & Evaluation of price of stock of Bangas
Limited
3%
2010
2011
(106)
1,09
2
287
1,45
5
1,13
4
1,05
8
(106)
1,05
8
855
322
-1,283
0
WACC
3.24%
201
5
2,12
7
106
201
6
2,54
7
80
(993
)
(935
)
(998
)
(939
)
(51)
305
690
1,174
18,69
6
(51)
305
690
1,174
2012
2013
2014
1,238
252
1,483
189
1,776
142
(1,002
)
(1,013
)
(856)
(955)
(695)
(186)
(695)
(186)
-832
(1,353
)
Terminal Value
FCF+Terminal Value
Enterprise Value
Debt Value
Equity Value
No of Equity Shares
20,885
15,815
5,070
12
Share Value
438.2
0
2017
3,051
60
(998)
(938)
31-Dec-08
31-Dec-09
31-Dec-10
31-Dec-11
31-Dec-12
1506.07
1313.39
959.41
1643.1
1409.73
1075.31
2081.68
1869.56
1303.64
2464.13
3385.85
1585.1
3310.22
2876.86
1986.74
1500.1
1644.09
2142.46
3732.99
4682.6
1662.07
2207.28
2971.47
3958.61
5070.48
733.48
969.52
1312.32
1708.14
2161.1
609.92
1662.07
823.03
2207.28
1129.61
2971.47
1438.84
3958.61
1712.38
5070.48
9010.45
15.34
17426.28
21.37
23393.67
30.19
27225.17
38.51
20884.87
43.83
11.57
14.46
18.07
22.59
28.24
764.81
1016.46
1404.69
1886.18
2379.96
609.92
433.15
823.03
603.52
1129.61
851.43
1438.84
1090.63
1712.38
1247.28
1.147
0.416
1.166
0.403
1.113
0.416
0.728
0.260
1.151
0.460
344.23
3089.75
343.87
3900.73
478.36
5090.32
640.2
6519.64
843.23
7671.57
1526.51
1820.5
2405.36
3619.61
3099.36
3162.23
3851.37
5113.93
7691.6
9753.08
207.01
265.2
310.68
50.17
41.21
133.01
3.17
171.93
3.96
220.86
5.16
326.94
6.55
272.57
7.91
343.19
441.09
536.7
383.66
321.69
A/R Period
40.665
229.402
29.479
180.49
6
0.861
31.311
145.65
0
1.102
35.290
210.32
1
1.297
0.522
32.194
203.97
5
0.660
229.402
40.665
82.059
203.975
32.194
78.622
180.496
29.479
74.187
145.650
31.311
46.404
210.321
35.290
41.533
188.008
157.54
135.78
130.55
204.07
days)
Bangas Limited
(c) Solvency:
0.903
0.474
0.4890
0.745
0.427
0.5897
0.721
0.419
0.6125
0.943
0.485
0.4576
0.924
0.480
0.4615
0.2374
0.1402
0.1370
0.2606
0.2485
0.1547
0.1567
0.2734
0.2578
0.1673
0.1665
0.2865
0.2620
0.1673
0.1418
0.2755
0.2817
0.1626
0.1279
0.2460
0.1845
16.870
0.1267
25.030
0.1270
27.480
0.1454
28.870
0.2428
20.800
Tobin's Q ratio
2.849
4.525
4.574
3.540
2.141
4.1700
4.1959
4.3974
4.8282
4.9502
Bangas Limited
Particulars
31-Dec-08
31-Dec-09
31-Dec-10
31-Dec-11
778.92
7.50
0.03
1205.15
8.50
1294.27
8.50
1205.00
8.50
Cost of Equity
0.04
0.03
0.03
0.03
1886.18
3732.99
31-Dec12
739.50
8.50
0.04
2379.9
6
4682.6
764.81
1500.16
1016.46
1644.09
1404.69
2142.46
154.89
193.43
275.08
447.34
609.92
176.77
10.32%
28.98%
823.03
219.51
11.77%
26.67%
1129.61
277.02
12.84%
24.52%
1438.84
351.12
11.98%
24.40%
667.58
1712.3
8
474.45
14.26%
27.71%
10.3
1%
Cost of Debt
7.33%
8.63%
9.69%
9.06%
1662.07
2207.28
2971.47
3958.61
9010.45
0.184
0.166
17426.28
0.127
0.094
23393.67
0.127
0.092
27225.17
0.145
0.137
5070.4
8
20884.
87
0.243
0.224
1.89%
0.90
1.24%
0.74
1.31%
0.72
1.73%
0.94
3.24
%
0.92
V. Dividend Policy
Last Five Years Dividend Pattern of Bangas Limited
Earning Price
2008
Share (EPS) in
Taka
Bangas
15.34
Limited
(Major)
ACI Ltd. (Peer) 55.43
Industry
average (based 21.23
on 10 selected
pharmaceutical
companies)
Dividend Per
2008
Share (Taka)
Bangas Limited 7.50
(Major) (Cash)
Bangas Limited
(Major) (Stock
25%
div in %)
Fine Foods (Peer) 12.00
(cash)
Industry average
6.58
(based on 10
selected
pharmaceutical
companies)(cash)
2009
2010
2011
2012
21.37
30.19
38.51
43.83
51.00
30.49
28.83
22.94
23.30
18.85
12.21
12.71
2009
2010
2011
2012
8.50
8.50
8.50
8.50
25%
25%
25%
25%
10.50
12.00
10.00
10.00
6.86
8.17
8.08
8.22
Dividend
payout (In
%)
Bangas
Limited
(Major)
Fine Foods
Ltd. (Peer)
Industry
average
(based on
10 selected
food
companies)
2008
2009
2010
2011
2012
20.03
20.37
18.04
17.66
19.39
21.6
20.6
39.36
34.69
43.58
40.49
39.66
50.50
153.36
161.51
2009
2010
2011
2012
1205.15
1294.27
1205.00
739.50
447.10
372.60
206.60
141.20
1005.98
1057.04
381.91
258.74
Market
2008
Price per
share (Taka)
Bangas
778.92
Limited
(Major)
Fine Foods
521.30
(Peer)
Industry
average
756.57
(based on
10 selected
food
companies)
BV per
2008
share (Taka)
Bangas
73.56
Limited
(Major)
Fine Foods
136.34
Ltd. (Peer)
Industry
average
130.55
(based on
10 selected
foods
companies)
2009
2010
2011
2012
97.70
131.52
175.21
179.54
167.06
229.75
241.98
213.73
106.86
138.10
87.74
82.10
Price
2008
earnings
ratio (times)
Bangas
20.80
Limited
(Major)
Fine Ltd.
9.4
(Peer)
Industry
average
28.13
(based on
10 selected
foods
companies)
2009
2010
2011
2012
28.87
27.48
25.03
16.87
8.8
12.22
7.17
6.20
32.99
42.68
34.14
22.02
2008
2009
2010
2011
2012
9.63
33.24
34.79
39.84
38.50
51.24
36.18
32.16
41.93
25.34
37.48
41.44
16.75
12.11
2008
2009
2010
2011
2012
10.65
9.91
9.87
6.25
11.73
20.54
-3.91
-34.56
2009
2010
2011
2012
28.87
27.48
25.03
16.87
31.53
-51.02
X
Industry
average (based
on 10 selected
food
companies)
(P/E)
28.13
32.99
42.68
34.14
22.02
1.35x
1.14x
1.55x
1.36x
1.31x
2009
2010
2011
2012
0.8
0.82
0.83
0.81
27.34
28.69
27.48
24.41
21.87
23.53
22.81
19.77
Retention
2008
ratio=(EPS%Stock
Div.)/EPS
Bangas
0.8
Limited
(Major)
ROE (Bangas) 26.06
in %
Sustainable
growth rate ,g 20.85
=ROE*Ret
ratio (Bangas)
Inflation Rate
(Annual)
GDP Growth
Rate (Annual)
9.94%
6.2%
6.66%
7.31%
8.80%
10.62%
5.74%
6.07%
6.71%
6.32%