Marico Bangladesh

Analyst:

Khandakar Safwan Saad [email protected]

(880) 173 035 7779

Strong Long Run Growth to Drive Value

Marico Bangladesh Limited (MBL; Marico BD) is engaged in manufacturing and

marketing of branded Fast Moving Consumer Goods (FMCG) under the brand name

of Parachute, Beliphool, Aromatic Gold, Camellia, Saffola Gold, etc.

Marico achieved staggering growth in the recent past - annual revenue growth was

almost 50% over the last six years; annual earnings growth was about 30% in the

same period. Although it may be difficult to achieve such extraordinary growth in the

future, Marico can still achieve higher double-digit growth. Rural economy is largely

untapped and access to the rural area has been improving with infrastructural

development, providing good opportunity of growth for Marico.

Marico is also engaged in product innovation; they launched a number of new

products over the years to diversify their revenue generating source. These new

products will generate opportunities for revenue growth in the coming years. The

company also recently planned for capacity expansion. It extended the capacity of the

current production facility and also acquired new land to built another factory. New

plant is expected to be completed by the middle of this year.

We initiate coverage of Marico Bangladesh Limited with an OUTPERFORM

rating and a 12-month fair value of BDT 475.00 per share. Our valuation is

based on Discounted Cash Flow and relative valuation method. Our fair value

implies a P/E multiple of 20.1x over 2013E EPS and EV/EBITDA multiple of 10.0x

relative to 2013E EBITDA. With current market price of BDT 416.90 per share,

our fair value will provide a total return of 15.6%, including expected dividend

yield of 1.7%.

However, we do expect some price correction of the share price of Marico in the short

run. Earnings outlook for the year ending March 2012 is relatively weak. With the

steep decline in BDT:USD exchange rate, Marico incurred significant higher cost for

importing raw materials and experienced substantial loss in gross margin through out

last year. However, we expect Marico to rebound from the situation and gradually

pass on the cost to their end consumers - gross margin will improve in the future. We

expect the growth story to resume from 2013 onwards which will generate value in

the long run.

Company Summary

52-week Price Range (BDT) 328.00–665.00

Current Price (BDT) [Jan 11, 2012] 416.90

9-month Fair Value (BDT) 475.00

Price Return 13.9%

Dividend Yield 1.7%

Total Return 15.6%

Number of Shares MM 31.5

Market Cap BDT MM 13,132.4

Free Float 10%

Average Daily Turnover BDT MM (2011) 8.9

Revenue & Profit (BDT MM) 2011A 2012E 2013E

Total Revenue 5,691.4 6,374.3 7,649.2

Operating Income 776.9 735.8 794.4

Net Income 714.5 716.3 742.7

Source: Company Data, BRAC EPL Research, January 2012

Margin 2011A 2012E 2013E

Gross Margin 26.7% 23.0% 23.0%

Operating Margin 13.7% 11.5% 10.4%

Net Margin 12.6% 11.2% 9.7%

Growth 2011A 2012E 2013E

Revenue Growth 6.2% 12.0% 20.0%

Gross Profit Growth -5.2% -3.5% 20.0%

Operating Profit Growth 2.8% -5.3% 8.0%

Earning Growth 5.8% 0.2% 3.7%

Per Share (BDT) 2011A 2012E 2013E

EPS 22.68 22.74 23.58

DPS 2.00 7.00 7.50

BVPS 78.18 98.92 115.49

NOCF/share (21.86) 21.96 35.00

Cash Flow (BDT MM) 2011A 2012E 2013E

Operating 691.6 1,102.6 1,493.7

Investing (180.0) (500.0) (300.0)

Financial (63.0) (220.5) (236.3)

Valuation 2011A 2012E 2013E

P/E 18.4x 18.3x 17.7x

P/B 5.3x 4.2x 3.6x

EV/EBITDA 11.8x 11.9x 11.2x

Miscellaneous 2011A 2012E 2013E

ROE 35.9% 30.7% 25.7%

ROA 21.5% 17.1% 14.8%

Debt/Equity 31.5% 9.6% 5.5%

Net Cash (BDT MM) 413.9 1,198.9 2,569.1

Payout Ratio 17.6% 30.8% 31.8%

Capacity Utilization 85% 85% NA

Sector: Consumer Goods Initiating Coverage January 11, 2012

Marico Bangladesh Limited Fair Value Estimate (Dec 2012): BDT 475 per share

Rating: OUTPERFORM

Figure: Price Performance of Marico since 2010

Source: DSE, BRAC EPL Research, January 2012

Please note that 2011 numbers and ratios have been annual-ized wherever possible as there were only six months in operation in 2011, from October 2010 to March 2011. The shortened period is a result of change in accounting year, from October-September to April-March

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Marico Bangladesh Limited (DSE: MARICO; Bloomberg: MBL:BD)

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Company Description

Marico Bangladesh Limited (MBL) was incorporated on 6 September 1999 in

Bangladesh under the Companies Act 1994 as a private company limited. The

company converted to “Public Company” and was listed with both the Dhaka

Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) in 2009. The

company is a subsidiary of Marico Limited, India. The parent company has

presence in more than 25 countries across Asia and Africa, recording INR

31.3b (USD 695.0m) in turnover in 2010-2011.

Marico in Bangladesh has developed itself as a leading Fast Moving Consumer

Goods (FMCG) company over the years. MBL recorded a turnover of BDT 5.4b

(USD 73.4m) in 12 months ended on 30th September, 2010 and BDT 2.9b

(USD 39.0m) in 6 months ended on 31st March, 2011.

Company Operation

Marico Bangladesh is engaged in manufacturing and marketing of branded

FMCG under the brand name of Parachute, Beliphool, Aromatic Gold, Camellia,

Saffola Gold, etc in Bangladesh. The Company sells its products with its own

managed depot from Gazipur, Chittagong, Bogra and Jessore. The Company

started its commercial operations on 30 January 2000. It stated with importing

finished product and then moved to manufacturing through sub-contract. Later

Marico set up their own factory and started own manufacturing. Currently, most

of the products are manufactured in their factory, located at Gazipur. However,

the raw material are still heavily imported, largely from India.

Marico has set up a wide distribution network to reach the mass population of

the country. MBL’s products reach out to more than 500,000 outlets in

Bangladesh. The products of Marico reach one out of every three people in the

country. Most of the brands of the company enjoy leadership positions with

significant market shares in respective categories.

FMCG Industry in Bangladesh

FMCG includes personal care, house hold care, packaged food and beverages,

tobacco etc. which are frequently purchased. In Bangladesh, FMCG sector is

one of the largest sectors in the economy which is currently growing at double

digit growth rate and is expected to maintain a high growth rate. The industry is

mainly dominated by a few large Multinational Companies (MNCs). However,

growing entrepreneurship among local operators has seen newer entrants

thereby making the market competitive. Moreover, low capital requirements,

simple manufacturing processes and sub-contracting of manufacturing activities

are typical characteristics of the Industry. As a result, several small local brands

tend to compete with well established large MNCs. In order to maintain top

position in the market, the leading FMCG companies focus on branding,

product differentiation, distribution and innovation, which helps them to build a

loyal consumer franchise.

The demographic profile of Bangladesh presents good growth opportunity for

consumer companies. A large population base of 166.8 million, with median

age around mid to late twenties, provides FMCG companies with a large and

young consumer base. With increasing focus on education and empowerment

of women, the lifestyle and propensity to consume is undergoing a change; they

are becoming more fashion conscious and open to experimenting with new

products.

Marico is engaged in manufacturing

and marketing of branded FMCG

products. It has set up a wide

distribution network to reach the

mass population of the country

Marico Bangladesh is one of the

leading FMCG companies in

the country. It is a subsidiary

of Marico Limited, India, and has

been in operation for over a decade


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The FMCG market can be divided into two segments – urban and rural. The

urban segment is characterized by high penetration levels and high spending

propensity of the urban resident. The rural economy is largely agrarian –

directly or indirectly dependent on agriculture as a means of livelihood – with

relatively lower levels of penetration and a large unorganized sector.

Urban economy in the country has flourished in the recent past generating

much of the growth of the sector. But the high growth trajectory has shown

some slowdown on account of the global economic crisis, particularly for

discretionary spending. With rural economy largely untapped, and access to the

rural economy gradually improving with investments in physical infrastructure, it

provides FMCG companies with the potential to continue to grow their franchise

of consumers in the rural parts. Increased spending power of the rural people

coupled with relatively lower degree of penetration of branded FMCG products

in these markets, have provided Marico and other Industry players with an

opportunity to drive growth.

Economy and its impact on Marico

The economy of Bangladesh has been growing at a steady rate of 5%-6% over

the last decade. Even during the global economic recession in 2007-08, there

was little impact in the GDP growth of Bangladesh, which highlights the

robustness of the economy. Bangladesh recently found its place in the

Goldman Sachs N11 (Next 11) list of economies with high potential.

Despite the steady growth in the economy, per capita consumption for the

FMCG product in Bangladesh still remains amongst the lowest in the world,

presenting ample growth opportunity for the FMCG sector. Moreover, growing

disposable incomes and increased media exposure along with population

growth are contributing to revolution in consumer behavior. People are shifting

from using unbranded low grade products to branded FMCG products. Coupled

with the growing demand in the rural areas, Marico is presented with exciting

growth opportunities.

Growth Story of Marico

Marico Bangladesh achieved staggering 48.4% annual revenue growth rate and

28.9% annual earnings growth rate over the last six years, till September 2010.

It recently changed the accounting year from October-September to April-

March. In the last twelve months, from October 2010 to September 2011, the

company recorded 18.8% revenue growth and 16.6% earnings growth.

Parachute coconut oil accounted for much of the growth with over 90%

contribution to the company’s total revenue. MBL diversified its portfolio of

products over the years to include soap, edible oil, skin-care, hair color and

various value-added coconut oils. Although the contribution of each of the other

products is minimal (none exceeding more than 2% each) to the total revenue

at present, they will generate future growth for the company. Chart 1 (in the

next page) shows the contribution of all the products to the total revenue.

Change of Accounting Year

As said earlier, Marico Bangladesh changed the accounting year to align with

the reporting period of the parent company. In doing so, the company published

Annual Report 2011 covering 18 months, from October 1, 2009 to March 31,

2011, separating into 12 months and 6 months performance.

Marico changed the reporting period

from Oct-Dec to Apr-Mar

Marico achieved almost 50% annual

growth in revenue over the last six

years; annual earnings growth was

about 30% during the same period

Urban economy flourished to drive

growth of FMCG companies in the

recent past . Rural economy now

presents good opportunity for the

growth to continue as it is largely

untapped and access to rural areas

are gradually improving


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Diversified Portfolio of Products

Parachute - the flagship product

Parachute is the flagship product of the company. It is the leader in branded

coconut oil segment having a market share of over 70%. It contributed 91% to

the company’s total revenue in 2011. It has developed into one of the most

trusted brands in the country. Recently it was ranked the 3rd Best Brand

amongst FMCG and the Best Brand in the Coconut Oil category by Bangladesh

Brand Forum. Parachute enjoys good loyalty among both the urban and rural

population of Bangladesh.

Soap - A loosing concern

Marico acquired two leading local soap brands of Bangladesh in 2005 -

Aromatic and Camelia. Aromatic was later re-branded as Aromatic Gold. MBL

acquired both the companies for strategic reasoning which was aimed at

developing brand awareness of Marico and setting up own distribution network.

Marico was successful in implementing both.

Soap unit has been performing poorly over the last two and a half years.

Contribution of soap to the total revenue went down from 13% in 2007 to 2% in

2011. In 2008, it recorded 51% growth in revenue, followed by 38% and 15%

fall in 2009 and 2010. In the six months, up to March, 2011, it lost further 24%

(with six month data annualized). The fall in revenue of soap unit coincided with

launching of other new products. With more emphasis given on new products,

the soap unit suffered from competition and lack of focus. According to the

management, the soap unit is likely to continue as long as the project still yields

good return on investment (ROI).

Saffola

Marico launched Saffola Gold in Bangladesh on April, 2010. It is the first ever

blended edible vegetable oil being branded as a healthy cooking oil to its

consumers. The brand positions itself as a “good for heart” product; Marico

collects a good premium for this “healthy” branding. Selling price of Saffola is

2.5 times more than the price of other general cooking oils. Although the market

share is very small, the company makes business with the very high margin.

Currently MBL imports the product from India and markets it throughout

Bangladesh. However, they will soon establish a Saffola production line in the

Chart 1: Product Mix of Marico

Source: Annual Report, BRAC EPL Research, January 2012

Much of the growth came from

growth of Parachute coconut oil

which holds over 70% market share

and contributes 90% to the total

revenue of Marico

Soap unit has been performing

poorly in recent times; however it

has strategically played its part in

setting up the distribution channel for

entire Marico operation

Saffola has been branded as “good

for heart” healthy cooking oil; it

enjoys substantial margin over other

general cooking oil

Parachute Coconut Oil

91%

Beli2% Soap

2% Parachute Extension1%

Parachute Advansed0%

Hair Code2%

Saffola1%

Kaya1%


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country and manufacture it here, which will improve the margin further. The

product contributed about 1% to the total turnover in 2011.

Hair Code

MBL launched Hair Code in Bangladesh in 2008. The product is developed for

covering grey hair. Within six months it gained 6% market share. At present it

has market share of 30%. In the longer term, the management has plan to

establish Hair Code as a leading mens’ hair care brand. In 2011, it had 2%

contribution to the total revenue.

Hair Oils

Apart from basic Parachute Coconut Oil, Marico introduced various value-

added hair oils (VAHO) over the years: Parachute Beliphool, Parachute

Advansed (2009), Hair & Care and most recently, Parachute Advansed Cooling

Hair Oil. The combined weight of these products was about 4% to the total

revenue of Marico in 2011. These various value added coconut oils are aimed

at providing additional features to the basic one of providing hair nourishment.

At present it has a single digit market share in VAHO segment but it is expected

to grow in coming days with strong focus and good marketing.

Kaya

Marico entered cosmetic dermatology segment through Kaya Skin Care Clinic

in 2010. It is currently enjoying first mover advantage in the segment and

launched a second branch last year. Kaya’s product offering are in the nature of

discretionary spending. In 2011, Kaya had 2% contribution to the total revenue.

The benefits of investment in this segment will be realized in the longer run.

Projected Operating Performance

Revenue Growth

We expect the growth of Marico to slow down in coming years. We projected

Marico to achieve 12% revenue growth in the year ending March 2012.

Thereafter we projected revenue to grow at 20% annually for the next five

years, based on the management’s view. The management expects 15%-18%

annual revenue growth during worst case, 20%-25% during moderate case and

around 30% during best case, over the next five years. Growth in 2012 will be

lower because of change in VAT attribution policy in recording revenue.

Much of the growth is expected to generate from other products apart from the

flagship item - Parachute. We expect the contribution of Parachute to the total

revenue to go down from the current contribution of 91% (in 2011) while

contribution of other products will increase. After attaining significant market

share in hair oil market, MBL will be focusing more on other markets:

It has already launched a number of products in value-added hair oil

segment aimed at acquiring market share in this segment.

They are also selling their hair dye product aggressively, which has already

gained top market share within three years of operation.

MBL will also market Saffola Gold aggressively as it plans to manufacture

the product in house from 2013 onwards (it imports the finished good at

present).

Hair Code already attained the top

market share in the segment within

three years

Value added hair oil accounted for

4% of the total revenue last year

We projected Marico to achieve 20%

revenue growth in the next five years

following 2012, based on

management’s view


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More importantly, rise of rural economy will contribute to the future growth of

Marico Bangladesh. Although there is no data available in terms of urban sales

and rural sales for Marico Bangladesh, the parent company - Marico India -

generated significant sales from the rural economy in last couple of years.

Contribution of rural sales for Marico India increased from 26%-27% to 31%-

32% in two years time. The same is expected from Marico Bangladesh - with

the wide distribution network the company will to tap in rural market share.

Moreover Marico has been a pioneer in product innovation, launching new

products regularly to cater to the needs of different consumers. The company

may introduce new products in coming years depending on the market situation

and consumer appetite and focus on growth on that sector. This will also boost

revenue in the coming years.

Gross Profit is projected to grow at 18.1% annually over the next six years and

operating profit at 18.2%. However, in 2012 Marico is likely to post negative

growth in gross profit and operating profit, mainly due to loss in gross margin -

gross margin is projected to shrink to 23.0% in 2012 from 28.1% on average

over the last three and a half years. For the year ending September 2010, gross

margin was 29.9% and COGS to sales was 70.1%. COGS to sales is projected

to increase to 77.0% in 2012 due to:

A depreciating local currency: BDT depreciated 15.5% against USD in

2011; in the last quarter alone it depreciated 7.2%. Chart 3 (in next page)

shows the exchange rate movement of USD against BDT over the last

three years. Since Marico imports most of the raw materials, depreciation

of BDT means higher import payment and higher cost of raw materials

(which account for 97% of COGS)..

Steep rise in price of Copra: Copra (the dried meat, or kernel, of coconut),

accounting for 75% of the total raw material cost, experienced steep rise in

price in the first half of 2010. Chart 2 (in next page) shows the movement of

copra price in the international market. Although the price went down in the

second half, COGS level will still remain high because of depreciating BDT.

The combination of unprecedented currency devaluation and sharp change in

commodity price will lead to a much lower gross margin in 2012. We expect

Marico to gradually pass on the incremental raw material cost (due to higher

2007 2008 2009 2010 2011* 2012E 2013E 2014E 2015E 2016E 2017E

104.3% 83.1% 52.6% 32.1% 6.2% 12.0% 20.0% 20.0% 20.0% 20.0% Revenue 20.0%

107.2% 50.6% 38.3% 48.6% -5.2% -3.5% 20.0% 25.2% 25.0% 22.4% Gross Profit 22.4%

76.9% 91.4% 19.8% 52.7% 2.8% -5.3% 8.0% 30.3% 30.5% 25.5% Operating Profit 24.9%

140.5% 35.7% 76.2% 43.4% 5.8% 0.2% 3.7% 28.5% 27.5% 24.3% Earnings 24.2%

121.2% 91.4% 19.8% 52.7% 2.8% -5.3% 8.0% 30.3% 30.5% 25.5% EBIT 24.9%

103.7% 91.0% 36.3% 76.5% 4.3% -0.9% 6.3% 27.8% 26.0% 23.3% EBITDA 22.9%

Table 1: Growth Ratios


2007 2008 2009 2010 2011* 2012E 2013E 2014E 2015E 2016E 2017E

Gross Margin 35.6% 29.3% 26.6% 29.9% 26.7% 23.0% 23.0% 24.0% 25.0% 25.5% 26.0%

Operating Margin 14.9% 15.5% 12.2% 14.1% 13.7% 11.5% 10.4% 11.3% 12.3% 12.8% 13.3%

Net Income Margin 13.6% 10.1% 11.6% 12.6% 12.6% 11.2% 9.7% 10.4% 11.0% 11.4% 11.8%

EBIT Margin 14.9% 15.5% 12.2% 14.1% 13.7% 11.5% 10.4% 11.3% 12.3% 12.8% 13.3%

EBITDA Margin 16.6% 17.3% 15.5% 20.7% 20.3% 17.9% 15.9% 16.9% 17.8% 18.3% 18.7%

Table 2: Growth Ratios


Gross profit is projected to grow at

15.2% annually over the next six

years and operating profit at 15.1%

*2011 numbers for six months, from October 2010 to March 2011

*2011 numbers for six months, from October 2010 to March 2011


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import cost) in future years as the company holds major market share in most of

the branded products. As a result we expect the gross margin to improve over

time - we projected gross margin at 26.0% by 2017, still lower than historical

average (see Table 1 on page 6).

Gross margin will also improve because of change in company’s operating

strategy. For instance, Marico will start manufacturing Saffola in Bangladesh in

couple of years time rather than importing the finished goods directly from India

- this will significantly increase the margin from Saffola. Marico will also look to

increase the local supply of raw materials. Currently about 1% of the total copra

is channeled from local source - Marico will look forward to increase this

number in the coming years. Marico have already started acquiring some of the

raw materials for packaging from the local market, like bottling caps.

Operating Margin

Operating margin will also decline in 2012 mainly because of the lower gross

margin. Operating expense to sales is expected to remain steady in the long

run, in particular selling and distribution expense. Marketing is very essential in

generating sales for FMCG companies. It is even more important for Marico

because of its perception of higher brand value. More than half of the operating

expense relates to sales and distribution expense. General administration

expense to sales is expected to go down with higher sales volume. However,

with increase in capacity expenditure, depreciation expense will be a bit on the

higher end (in initial years).

Net Margin

We projected very minimal net profit growth for Marico in 2012. Net margin will

decline to 11.2% in 2012 from 12.6% in the last year. For the next six years, we

projected a net profit margin of 10.9% on average compared to 12.0% for the

last five and a half years.

Fall in operating profit in 2012, resulting from fall in gross margin and gross

profit, will be compensated by financial income. Marico has been enjoying good

return from their cash reserve. Although there will be cash drainage in the

coming years as a result of capacity expansion and paying out cash dividend,

net financial income from the cash reserve will still be substantial.

Financial Income will compensate for

the fall in operating profit and gross

profit in 2012 , resulting into marginal

growth in NPAT

Operating expense to sales, in

particular selling and distribution

expense, is expected to remain

steady in coming years

Chart 2: International Copra Price

Source: BRAC EPL Research, January 2012

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Chart 3: Historical Exchange Rate for USD:BDT



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Current Tax & Deferred Tax

The actual corporate tax rate is 27.5% for comparable listed companies, with

further 10.0% rebate when the company pays out more than 20% cash

(resulting into 24.8% tax rate). Since Marico is expected to payout the minimum

cash dividend, the tax rate is expected at 24.8%. However, following

management discussion, we have applied effective tax rate of 27.0% in

calculating provision for taxation. The effective tax rate in last three and a half

years averaged 28.4%.

Expansion Program

Investments have been made in building up capacity at Marico. It has already

added around 15,000 square foot of floor space next to their existing Gazipur

factory to augment capacity. New land has also been purchased to expand

production facilities. MBL incurred BDT 125.0m in cost in acquiring the land.

They have started constructing a new factory for manufacturing its existing and

future products. The factory is expected to be operational by this year.

Estimated cost of the new plant is BDT 750.0m, to be financed internally.

Low Pay-Out Ratio and High Retained Earnings

Marico has maintained a low pay-out ratio over the years as they have been

expanding and modifying their operation. The company has upgraded its

business model over the years which includes manufacturing of products rather

than importing finished goods and introduction of new products. Pay-out ratio

averaged only 17.3% over the last seven and a half years.

In the last accounting year, which was extended to 18 months due to change in

reporting period, MBL paid BDT 4.50 per share on face value of BDT 10,

resulting in a pay out of 13.7% and market yield of only 0.69%. As a result of

the low pay-out ratio, the retained earnings balance has increased 11 times in

the last five and a half years - from BDT 170.0m in September 2005 to BDT

1.878.6m in March 2011.

However, in our forecast we assumed that the management will gradually

increase the pay-out ratio. We projected pay-out at 30.0% for the next two

years as MBL will make significant investment in capex during the period.

Afterward, we assumed that the pay-out will increase to 60.0% in four years

time.

Cash Reserve and Financial Income

MBL has build up significant cash balance over the years owing to the low pay-

out ratio. Cash & cash equivalent stood at BDT 2.5b as on March 2011, an

increase of over 15 times over 2007 cash balance of BDT 133.5m. Most of the

cash balance is invested in Fixed Deposit Account from which MBL enjoys

significant financial income. It received BDT 295.1m as interest income in the

last audited accounting year (of 18 months), which is 3.6% of the sales value.

Interest rate went up in recent times which will benefit MBL in terms of receiving

higher return on fixed deposits. The existing cash reserve will be used for

financing upcoming expansions.

Technology in Marico

Marico has invested heavily in technology to smoothen its operation. The entire

sales commercial, factory commercial, finance operation runs through SAP

MBL has had a poor payout

ratio of only 17.3% historically.

However, we expect the payout ratio

to improve to 60% with possible

less investment in new products

Marico enjoys significant interest

income from the cash balance that

the company has retained over the

years

MBL has already acquired new land

for BDT 125.0m for setting up new

factory. Further BDT 750.0m will be

spend for the new factory

We applied effective tax rate of 27%

based on management discussion


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based integrated ERP (Enterprise Resource Planning) system. Use of this

software package makes it possible to track and manage, in real-time, sales,

production, finance & accounting in Marico. In some of the metro cities, the

Distributor’s Sales Men (DBSMs) carry Personal Digital Assistant (PDA), which

makes sales process much more efficient. PDAs are customized with Bengali

interface and are installed with software that makes the sales process easier for

both retailers and DBSMs. They assist the DBSMs in calling on all the brands

and checking for sufficiency of stock at the retail outlet.

Distribution Network

From 2009 onwards, Marico started using their own distribution network.

Distribution facilities and timely reach of products to consumers are amongst

the key strengths of a leading FMCG company. Marico has built a strong

distribution infrastructure. It has four depots, located at Gazipur, Chittagong,

Jessore and Bogra servicing its distribution network throughout the country,

both in rural and urban areas. Marico also has distribution business partners

that ensure adequate and efficient coverage of retail stores across the country.

Their operations are supported and supervised by Marico’s own sales

professionals including Regional Sales Manager (RSM), Area Sales Manager

(ASM) and Territory Sales Manager (TSM).

Suppliers

Marico imports bulk of the raw materials from India. Copra is bought directly

from the farmers which results into cost benefit (from avoiding any third party

involvement). Marico BD buys from suppliers in India while the parent group,

Marico India, gives third party guarantee to the supplier. Apart from India, some

amount of copra are sourced from Sri Lanka and Indonesia. Only 1% supply

comes from the local sources in Bangladesh, which Marico will look to increase

in future years to lower currency exposure.

Investment Risks

There are a number of risks associated with Marico Bangladesh:

Raw material price: Raw material (RM) cost accounts for more than 95% of

total COGS. Copra, the major raw material (accounting for 75% of the total

RM cost), experienced steep rise in price in recent times (as shown in chart

2 on page 6). Within February 2011, Copra price almost doubled from its

price level in August 2010 (in six months) and tripled from its price level in

December 2009 (in fourteen months). There is lagged impact of the price

change in the business of Marico, usually by a quarter. Marico’s COGS to

sales increased to 77.3% in the first half of 2012 (six months ending on

September, 2011) compared to 70.9% in the same period last year. On a

positive note, international copra price went down by 50% from its peak

value earlier in the year, the impact of which will be reflected in the second

half of MBL’s operation. It is usually difficult to attribute such sharp rise in

RM cost in the pricing strategy, even with top market share, resulting into

loss of gross margin. Any such steep rise in future years may also impact

future gross margin.

Exchange Rate movement: Since most of the raw materials are imported any

adverse movement in the exchange rate will increase the import cost and

lower the gross margin of Marico. MBL already lost 6.4% gross margin in

Marico implemented SAP based

ERP to smoothen operation. It also

provides sales men with PDA to

facilitate sales

Marico BD buys copra directly

from Indian suppliers while Marico

India gives third party guarantee

to those suppliers


10

HY’2012 because of higher import cost. After remaining stable for many

years, USD appreciated 15.5% in 2011. Chart 3 (on page 6) shows the

historical exchange rate for USD:BDT since 2008. Further depreciation of

BDT is expected in 2012 as import growth is expected to out-weight export

growth and remittance inflow in the Bangladeshi economy. This will

continue to keep the cost of import high and gross margin low.

Discretionary spending down-trading: In situations of economic duress,

items which are in the nature of discretionary spending are the first to be

curtailed. This is relevant for the lifestyle solutions offered by companies. In

an extended recession, down trading from branded products to non-

branded ones could also occur and affect the financial performance of the

company.

Regulatory Risk: Changes in Tax, Customs Duty, Supplementary Duty and

VAT laws and rates in Bangladesh is common in nature which makes a

company’s business plan unviable and put pressure on management in

achieving their desire goals. Any upward revisions and especially sudden,

unpredictable changes could adversely impact results of operations and

profitability of the company.

Free Float, Liquidity & Shareholding Structure

Marico Bangladesh has only 10% free float according to the shareholding

structure reported in the latest annual report. However, most of the free floated

shares (over 70%) are held by institutions. General public holds only 2.85% of

Marico shares.

The average daily turnover of MBL was only BDT 8.9m in 2011 compared to

BDT 41.5m in 2010. The turnover value went down in 2011 in line with the

market turnover which went down by 60% in 2011 from BDT 16.4b to BDT 6.6b.

Correlation with market

Movement of share price of Marico is positively correlated (with correlation

value of 0.64) with the change in the General Index of Dhaka Stock Exchange

(DGEN). The chart below shows the relative performance of Marico and DGEN

in 2011. Both Marico and the broader index lost a little more than 36% last year.

For 2012, YTD return of Marico is 7.03% as of today (January 11, 2012),

compared to market return of –0.67%; there are only nine trading sessions in

2012. Beta of Marico has been calculated at 0.98.

Sponsor 90.0%

Institution 7.15%

General Public 2.85%

Table 3: Shareholding Structure

Source: Annual Report, March 2011

50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0

MARICO DGEN

Chart 4: Relative Performance of Marico and DGEN



11

Half Year Performance

Marico disclosed their half yearly result in October last. Revenue growth in the

six month period was only 7.4%. The number was low as the company adopted

a different approach to VAT operation. With previous method, the revenue

growth would have been 21.0% rather than meager 7.4%. COGS was 77.3% in

1H’2012 compared to 70.9% in 1H’2011, which resulted into negative growth of

gross profit. However, better operating performance (due to lower distribution

expense to sales) and higher financial income resulted into slight improvement

in earnings (+4.0%).

Upcoming Events

Third quarter report of Marico, for the quarter ending December 2011, is due

within this month. Even though copra price declined, COGS to sales will remain

high because of exchange rate movement. In the last quarter, USD appreciated

steeply which is likely to impact the COGS. It is likely that the company may

have weak earnings disclosure for the recently completed quarter.

The full accounting year of the company will end on March 2012, followed by

their corporate declaration. Although the local rule permits that the corporate

declaration be made within four months (by July 2012), Marico is likely to make

it much earlier, within May 2012.

Valuation of Marico share

We have estimated 12-month forward fair value of Marico Bangladesh at BDT

475 per share at the end of December 2012. With current market price of BDT

416.90 per share (as on January 11, 2012), the fair value implies 13.9% capital

gain. Together with expected dividend yield of 1.7%, total return will be 15.6%

by December 2012. (Valuation method is given in the following page).

Market Risk

The share price of Marico appreciated 13.6% in the last one month, which is

significantly more than the market return of 7.7% in the same period. From the

recent market bottom on November 15, 2011, the price of Marico increased

23.2% from BDT 338.30 per share to current BDT 416.90 per share. In the

same period DGEN gained 12.3%. However, such rise in share price cannot be

explained by the projected earnings for the year ending 2012.

3Q’2012 report is not likely to show significant growth in earnings. Moreover,

over the last two years, revenue in the fourth quarter was the lowest among all

the quarters. As such the share price of Marico may experience price correction

in the short run following weak earnings disclosure. However, we expect the

company to rebound from the situation and outperform in the long run.

1H'2011 1H'2012 2012E

Revenue Growth 32.3% 7.4% 12.0%

COGS 70.9% 77.3% 77.0%

Gross Margin 29.1% 22.7% 23.0%

Operating Expense to Sales 13.7% 9.8% 11.5%

Operation Margin 15.4% 12.9% 11.5%

Earnigns Growth 73.5% 4.0% 0.2%

Net Margin 12.6% 12.2% 11.2%

Table 5: Comparison of Half-Year Result with Full Year Projection

Source: Quarterly Report, October 2011; BRAC EPL Research, January 2012

2010 2011

First Quarter 24.3% 24.3%

Second Quarter 30.1% 29.2%

Third Quarter 25.9% 27.0%

Fourth Quarter 19.7% 19.4%

Table 4: Quarter wise Revenue



12

Valuation Method

We have used Discounted Cash Flow (DCF) and relative valuation in deriving

the fair value of the Marico Bangladesh. Our DCF valuation gave us a fair value

of BDT 481.52 per share the end of 2012. We used a WACC of 15.25%

(discount rate) and a terminal growth rate of 6.0%. In calculating cost of

equity, we used 10-year Government Treasury Bond rate of 9.55% as risk-free

rate and Equity Risk Premium of 6%. Beta was calculated at 0.98.

For relative valuation, we have looked at P/E multiple of FMCG companies both

in the domestic market as well as in other regions. Apart from Marico BD, there

are four FMCG companies listed in DSE. Average P/E of these companies is

24.4x (see table 9 on the next page). For regional companies, the average is a

bit higher at 26.7x. We have also included the multiples of the parent company

in regional analysis (see table 10 on the next page). The average P/E multiple

of all the companies combined is 25.8x. Usually the FMCG companies trade at

a higher multiple compared to the overall market, mainly due to the growth

potential. Countries with large population base and lower development in rural

economy are likely to have more growth potential in the future, and hence the

higher P/E multiple. In valuating Marico BD we used a P/E multiple of 20.0x

over 2013E EPS of BDT 23.58; this gave us a fair value of BDT 471.53 per

share. The parent company - Marico India - is trading at a multiple of 30.5x in

India.

Averaging the two values, we get a fair value of BDT 475.00 per share for

Marico Bangladesh. Our estimated fair price implies a P/E multiple of 20.1x

over 2013E earnings (with year ending on March 2013), and P/B multiple of

4.1x over 2013E book value. With current price of BDT 416.90, the fair price

implies 13.9% price return in the next twelve months. Dividend for 2012 is

projected at BDT 7 per share, which will provide 1.7% dividend yield at the

current market price. Combining the two, the total return is expected to be

15.6% in the next twelve months.

Marico started trading from September 2009 onwards. As such there is not

much historical data available to observe historical trend in P/E movement.

(BDT million) 2012 2013 2014 2015 2016 2017

EBIT 735.8 794.4 1,035.2 1,350.6 1,694.6 2,116.8

Cash Income Tax 198.7 214.5 279.5 364.7 457.5 571.5

Add Depreciation 120.1 163.5 227.0 278.6 330.2 381.8

Change in working capital (144.8) 196.5 312.2 (84.3) (101.1) (121.3)

Cash Flow from operation 512.5 939.8 1,294.9 1,180.3 1,466.2 1,805.8

Capital Expenditure (500.0) (500.0) (300.0) (300.0) (300.0) (300.0)

FCFF 12.5 439.8 994.9 880.3 1,166.2 1,505.8

Terminal Value 17,255.5

Net Cash Flow 12.5 439.8 994.9 880.3 1,166.2 18,761.3

Discount rate 15.25% NPV (March 2011): 10,070.4

Terminal growth rate 6.0% Cash & Cash Equivalent: 2,536.6

No. of shares (millions) 31.50 Interest bearing Debt 775.3 NPV per share (Dec 2012) 481.52

Total Equity Value (March 2011) 11,831.8

Table 6: Discounted FCF

Using DCF and relative valuation, we arrived at a fair value of BDT 720 per

share at June 2012. With projected dividend yield of 1.6%, our fair price

will yield a total return of 15.3% in nine months, based on the current

market price


Table 7: Relative Valuation

2013 Estimates EPS 23.58

Multiple used 20.0x

Relative Price 471.53

Table 8: Fair Value and Return

Fair Value (Dec 2012) 475.00 Current Market Price (Jan 9, 2012) 416.90

Price Return 13.9%

DPS 7.00

Dividend Yield 1.7%

Total Return 15.6%




13

However, we have shown the historical P/E in chart 5 using trailing 12 months

profit for every quarter to calculate the P/E ratio. Average P/E over the entire

period is 19.5x.

Sensitivities

We have assessed sensitivities of our valuation to key assumptions. DCF value

is most sensitive to change in terminal growth rate and discount rate. With our

key inputs (Terminal Growth of 6% & Discount Factor of 15.25%), per share

value ranges from BDT 336 to BDT 1,292 for different combinations of terminal

growth (4%-8%) and discount rate (11%-19%) as shown in the table 11in the

next page.

In case of P/E multiple valuation, we used 2013E EPS and 20.0x multiple. For

various range of P/E multiple (12.0x - 28.0x) and different level of earnings

estimate, per share price ranges from BDT 262 to BDT 710 as shown in table

12 in the next page. The different level of earnings around the base EPS of BDT

23.58 is given by 2.5% and 5.0% standard deviation of the projected earnings.

10.0

13.0

16.0

19.0

22.0

25.0

28.0

31.0

34.0

37.0

40.0

43.0

Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11

Source: BRAC EPL Research, December 2012

Chart 5: PE band (Trailing) for Marico

Companies MCAP (BDT mm) Market Price (BDT) P/E P/B

KEYACOSMET 5,438.6 73.50 19.3x 3.6x

KOHINOOR 1,079.0 215.80 27.5x 138.3x

RECKITTBEN 3,807.9 805.90 28.0x 16.7x

GLAXOSMITH 8,528.9 708.00 22.8x 6.2x

24.4x 41.2x Average of Multiples:

Table 9: Comparative companies in DSE

Source: DSE, January 2012

Companies Region P/E P/S P/B Net Profit

Margin

Marico Limited India 30.5x 3.0x 10.2x 9.2%

Unilever Indonesia Indonesia 38.0x 6.6x 33.1x 17.2%

Godrej Consumer Products India 19.8x 3.3x 7.2x 13.0%

Unilever Pakistan Pakistan 18.9x 1.4x 25.1x 7.4%

Hemas Holdings PlLc Sri Lanka 13.3x 0.7x 1.6x 6.7%

Hindustan Unilever India 37.6x 4.3x 32.0x 11.5%

Dabur India Ltd India 28.5x 4.2x 10.6x 13.7%

Average of Multiples: 22.2x 2.82 10.9x

Table 10: Regional Comparison

Source: Bloomberg, Businessweek, January 2012


14

We also did sensitivity analysis of our fair value with two other key factors -

revenue growth and COGS to sales. We assumed annual revenue growth of

20% from 2013 onwards till 2017 in our forecast. We projected COGS to sales

at 77% in 2012 and 2013 and declining afterwards. The table below shows the

range of fair values for different revenue growth forecast and COGS to sales.

A full set of financial statement (income statement, cash flow statement and

balance sheet) is given in the following pages.

Table 11: Implied Per Share Value at different Terminal Growth & Discount Rate

Terminal Growth Rate

Discount Rate

Legend: XXX Price within 52 weeks High-Low range

XXX Price range within key inputs

52 week high-low: 328.00 – 665.00

Current Price: 416.90

4% 5% 6% 7% 8%

11% 644 725 838 1,009 1,292

12% 570 629 708 818 984

13% 513 558 615 692 799

14% 468 503 546 602 677

15.25% 424 450 482 521 571

16% 401 424 451 483 524

17% 376 394 416 442 474

18% 354 370 388 409 434

19% 336 349 364 381 402

Table 12: Implied Per Share Value at different projected EPS and P/E multiple

2013 EPS

P/E Mutiple

Legend:

XXX Price within 52 weeks High-Low range

XXX Price range within key inputs

52 week high-low: 328.00 – 665.00

Current Price: 416.90

22.40 22.99 23.58 24.17 24.76

12.0x 269 276 283 290 297

14.0x 314 322 330 338 347

16.0x 358 368 377 387 396

18.0x 403 414 424 435 446

20.0x 448 460 472 483 495

22.0x 493 506 519 532 545

24.0x 538 552 566 580 594

26.0x 582 598 613 628 644

28.0x 627 644 660 677 693

Table 13: Implied Per Share Value at different level of Revenue Growth and COGS

Revenue Growth

COGS to Sales

15% 18% 20% 22% 25%

75% 501 529 548 569 602

76% 468 494 512 531 561

77% 435 458 475 493 520

78% 401 423 438 454 480

79% 368 388 402 416 439

80% 335 352 365 378 398


15

Income Statement



2009A 2010A 2011A 2012E 2013E 2014E

Sales BDT m 4,056.7 5,358.3 2,845.7 6,374.3 7,649.2 9,179.0

Cost of goods sold BDT m 2,979.0 3,756.6 2,086.3 4,908.2 5,889.9 6,976.0

Gross Profit BDT m 1,077.7 1,601.7 759.4 1,466.1 1,759.3 2,203.0

Operating Expenses BDT m 582.7 845.8 370.9 730.3 964.9 1,167.8

Operating Profit BDT m 495.0 756.0 388.4 735.8 794.4 1,035.2

Financial Expenses BDT m (6.9) (33.9) (12.0) (42.0) (35.0) (19.5)

BDT m 488.1 722.0 376.4 693.8 759.4 1,015.7

Other Income BDT m 91.4 204.2 134.6 287.4 257.9 291.8

EBT 579.5 926.3 511.0 981.2 1,017.3 1,307.4

Current Tax (117.5) (280.5) (166.5) (264.9) (274.7) (353.0)

Deferred Tax 8.9 29.4 12.7 0.0 0.0 0.0

PAT BDT m 470.9 675.1 357.3 716.3 742.7 954.4

EBIT (Operating) BDT m 495.0 756.0 388.4 735.8 794.4 1,035.2

EBIT (including other income) BDT m 586.4 960.2 523.0 1,023.2 1,052.3 1,326.9

EBITDA BDT m 627.1 1,106.8 576.9 1,143.3 1,215.8 1,554.0

Number of shares MM 31.5 31.5 31.5 31.5 31.5 31.5

EPS BDT 16.45 21.43 22.68 22.74 23.58 30.30

DPS BDT 2.50 2.50 2.00 7.00 7.50 16.00

Pay-out Ratio % 17% 12% 18% 31% 32% 53%

Operating Cash Flow 2009A 2010A 2011A 2012E 2013E 2014E

Net Income BDT m 716.3 742.7 954.4

Add back non cash expense BDT m 120.1 163.5 227.0

Change in working capital BDT m (144.8) 196.5 312.2

Cash Flow from operations BDT m 682.0 1414.7 (688.6) 691.6 1102.6 1493.7

Investing Activity

Other investments BDT m 320.0 0.0 0.0

Capital Expenditure BDT m (500.0) (500.0) (300.0)

Cash Flow from Investing BDT m (829.2) (1580.4) 341.6 (180.0) (500.0) (300.0)

Financing Acitivity

Increase/(reduction) in debt BDT m (475.3) (475.3) (100.0)

Dividend Paid BDT m (63.0) (220.5) (236.3)

Cash flow from Financing BDT m 221.2 33.7 506.9 (538.3) (695.8) (336.3)

Net cash BDT m 74.0 (132.0) 159.9 (26.6) (93.2) 857.4

Beginning Balance BDT m 133.5 164.7 238.7 106.7 266.6 240.0

Cash in Hand BDT m 207.5 32.7 398.6 80.1 173.4 1,097.4

Operating Cash Flow per share BDT 21.65 44.91 (21.86) 21.96 35.00 47.42

Cash Flow Statement

* 2011 numbers given for six months, from October 2011 to March 2012


16

MM BDT 2009A 2010A 2011A 2012E 2013E 2014E

Non-current Assets

PPE (including Capital WIP) 336.0 242.5 229.0 608.9 945.4 1,018.4

Intangible Asset 12.6 9.0 6.7 6.7 6.7 6.7

Deferred Tax Asset 0.6 30.0 42.7 42.7 42.7 42.7

349.2 281.4 278.3 658.2 994.8 1,067.7

Current Assets

Inventories 455.5 347.8 1,180.8 1,593.6 1,529.8 1,376.9

Accrued Interest 48.4 40.3 34.2 34.2 34.2 34.2

Trade Debtors 0.0 0.0 0.0 0.0 0.0 0.0

Investments 100.0 40.8 29.6 13.9 13.9 13.9

Advance and deposits 41.5 68.1 238.2 255.0 306.0 367.2

Advance Income Tax 86.0 202.9 315.3 315.3 315.3 315.3

Fixed Deposits 1,037.3 2,652.0 2,270.0 1,950.0 1,950.0 1,950.0

Cash and Cash Equivalent 238.7 106.7 266.6 240.0 522.0 1,379.5

2,186.5 3,458.6 4,334.7 4,401.9 4,671.3 5,436.9

Total Assets 2,535.7 3,740.0 4,613.1 5,060.2 5,666.0 6,504.7

Liabilities & Equities:

Current Liabilities:

Short term bank loan 77.2 189.6 775.3 300.0 200.0 100.0

Liability for Expenses 275.0 436.5 390.0 446.2 535.4 642.5

Interest Payable 0.2 2.0 5.1 5.1 5.1 5.1

Income tax payable 168.3 448.2 614.7 614.7 614.7 614.7

Trade Creditors 341.1 328.2 225.1 382.5 459.0 550.7

Payable to holding company 70.7 97.1 123.1 155.1 166.7 180.6

Other Liabilities 25.4 35.0 8.4 31.9 38.2 45.9

957.9 1,536.7 2,141.6 1,935.4 2,019.1 2,139.5

Non-current Liabilities:

Provision for Gratuity 7.1 8.1 8.9 8.9 8.9 8.9

Deferred Tax Liability 0.0 0.0 0.0 0.0 0.0 0.0

7.1 8.1 8.9 8.9 8.9 8.9

Total Liabilities 965.0 1,544.8 2,150.5 1,971.8 2,046.9 2,133.0

Shareholder's Equity

Share capital 315.0 315.0 315.0 315.0 315.0 315.0

Retained Earnings 1,003.7 1,600.1 1,878.6 2,531.9 3,054.0 3,772.2

Other Reserves 252.0 280.2 269.0 269.0 269.0 269.0

1,570.7 2,195.2 2,462.6 3,115.9 3,638.0 4,356.2

Total Liabilities & Equities 2,535.7 3,740.0 4,613.1 5,060.2 5,666.0 6,504.7

Book Value per share 49.86 69.69 78.18 98.92 115.49 138.29

Balance Sheet


* 2011 numbers given for six months, from October 2011 to March 2012


17

2009A 2010A 2011A 2012E 2013E 2014E

Margins:

Gross Margin 26.6% 29.9% 26.7% 23.0% 23.0% 24.0%

Operating Margin 12.2% 14.1% 13.7% 11.5% 10.4% 11.3%

Net Income Margin 11.6% 12.6% 12.6% 11.2% 9.7% 10.4%

EBIT Margin 12.2% 14.1% 13.7% 11.5% 10.4% 11.3%

EBITDA Margin 15.5% 20.7% 20.3% 17.9% 15.9% 16.9%

Growth:

Revenue Growth 52.6% 32.1% 6.2% 12.0% 20.0% 20.0%

Gross Profit Growth 38.3% 48.6% -5.2% -3.5% 20.0% 25.2%

Operating Profit Growth 19.8% 52.7% 2.8% -5.3% 8.0% 30.3%

Earning Growth 76.2% 43.4% 5.8% 0.2% 3.7% 28.5%

EBIT Growth 19.8% 52.7% 2.8% -5.3% 8.0% 30.3%

EBITDA Growth 36.3% 76.5% 4.3% -0.9% 6.3% 27.8%

Turnover:

Total Asset Turnover 2.0x 1.7x 1.4x 1.3x 1.4x 1.5x

Inventory Turnover 12.9x 13.3x 7.4x 4.6x 4.9x 6.3x

Return:

ROE 38.9% 35.9% 30.7% 25.7% 22.0% 23.9%

ROA 23.4% 21.5% 17.1% 14.8% 13.8% 15.7%

ROIC 37.3% 33.5% 25.4% 21.5% 20.5% 23.0%

Leverage:

Interest Bearing Debt 77.2 189.6 775.3 300.0 200.0 100.0

Net Debt (1,198.9) (2,569.1) (1,761.4) (1,890.0) (2,272.0) (3,229.5)

Debt to Equity 4.9% 8.6% 31.5% 9.6% 5.5% 2.3%

Debt to Asset 3.0% 5.1% 16.8% 5.9% 3.5% 1.5%

Other:

COGS to sales 73.4% 70.1% 73.3% 77.0% 77.0% 76.0%

Operating Exp to Sales 14.4% 15.8% 13.0% 11.5% 12.6% 12.7%

Effective Tax Rate 18.7% 27.1% 30.1% 27.0% 27.0% 27.0%


Table: Indicators and Ratios


18

IMPORTANT DISCLOSURES

Analyst Certification: Each research analyst and research associate who authored this document and whose name appears herein certifies that the recommendations and opinions expressed in the research report accurately reflect their personal views about any and all of the securities or issuers discussed therein that are within the coverage universe. Disclaimer: Estimates and projections herein are our own and are based on assumptions that we believe to be reasonable. Information presented herein, while obtained from sources we believe to be reliable, is not guaranteed either as to accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any security. As it acts for public companies from time to time, BRAC-EPL may have a relationship with the above mentioned company(s). This report is intended for distribution in only those jurisdictions in which BRAC-EPL is registered and any distribution outside those jurisdictions is strictly prohibited. Compensation of Analysts: The compensation of research analysts is intended to reflect the value of the services they provide to the clients of BRAC-EPL. As with most other employees, the compensation of research analysts is impacted by the overall profitability of the firm, which may include revenues from corporate finance activities of the firm's Corporate Finance department. However, Research analysts' compensation is not directly related to specific corporate finance transaction. General Risk Factors: BRAC-EPL will conduct a comprehensive risk assessment for each company under coverage at the time of initiating research coverage and also revisit this assessment when subsequent update reports are published or material company events occur. Following are some general risks that can impact future operational and financial performance: (1) Industry fundamentals with respect to customer demand or product / service pricing could change expected revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes; (3) Unforeseen developments with respect to the management, financial condition or accounting policies alter the prospective valuation; or (4) Interest rates, currency or major segments of the economy could alter investor confidence and investment prospects.

BRAC EPL Stock Brokerage Capital Markets Group

Sajid Huq Amit Senior Research Analyst [email protected] 01755 541 254

Parvez Morshed Chowdhury Research Analyst [email protected] 01730 357 154

Ali Imam Investment Analyst [email protected] 01730 357 153

Khandakar Safwan Saad Research Associate [email protected] 01730 357 779

Aasim Tajwaar Matin Research Associate [email protected] 01730 727 913

M M Shahnewaz Kabir Shawon Research Associate [email protected] 01730 727 918

Farjad Siddiqui Research Associate [email protected] 01730 727 924

BRAC EPL Research www.bracepl.com 121/B Gulshan Avenue Gulshan-2, Dhaka Phone: +880 2 881 9421-5 Fax: +880 2 881 9426 E-Mail: [email protected]

Institutional Sales and Trading

Delwar Hussain (Del) Head of Institutional Sales and Trading

[email protected] 01755 541 252

mailto:[email protected]



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Marico Bangladesh

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