Institute of Business Administration

(IBA-JU)

A Report On
FIN 502: Investment Analysis & Portfolio
Management
Submitted to:

Ratul Kumar Saha

Lecturer

Institute of Business Administration

 Submitted by:

Name ID

FERDOWSY HOSSAN 201703007

SAIFUR RAHMAN 201703058

MD REAJ UDDIN 201703034

JAHID HASSAN 201702040

ASMA AKTAR 201702007

Submission date: 17-08-2019

Introduction:
Origin of the Term Paper:
This report is prepared to fulfill the course requirement of the course named Investment Analysis & Portfolio
Management

Background of the Study:

Valuation is the process of determining the value of an asset. There are many approaches and estimating the
inputs for a valuation model can be quite challenging. Investment success, however, can depend crucially on the
analyst's ability to determine the values of securities. Singer Bangladesh Ltd. is one of the listed companies in
Bangladesh. It is in the engineering sector.

Objectives of the report:

The main objective of the study is to show the equity valuation of Singer BD Ltd. However the study covers
the following supportive objects:
 To know about the Valuation theory.
 To show the sample company’s overall financial scenario.
 To calculate the ratio of Singer BD over the year.
 To show the equity valuation of the company.

Methodology of the Study:

The report is both descriptive & calculative by nature. The report is based on information collected from
primary as well secondary sources.
I have emphasized on quantitative and qualitative data to analyze the financial performance of the company &
equity valuation. All the quantitative data are extracted from Dhaka Stock Exchange website, & Lanka
Bangla.com and qualitative data are collected from published annual reports & research reports.

Data Collection:
In order to make the report more meaningful and presentable, two sources of data and information has been
used.
The Primary Sources are as follows:

 Discuss with company employee.

 Discussion with the respective market participants.

The Secondary Sources of data and information are:

 Annual Reports Singer BD.
 Various publications of LBSL, EBL.
 Publications of LankaBangla Financial portal.
Theory of Valuation:
Valuation

Valuation is the process of determining the value of an asset. There are many approaches and estimating the inputs
for a valuation model can be quite challenging. Investment success, however, can depend crucially on the analyst's
ability to determine the values of securities.

The general steps in the equity valuation process are:

• Understand the business.

• Forecast company performance.

• Select the appropriate valuation model.

• Convert the forecasts into a valuation.

• Apply the valuation conclusions.

When we use the term intrinsic value (IV), we are referring to the valuation of an asset or security by someone
who has complete understanding of the characteristics of the asset or issuing firm. To the extent that stock prices
are not perfect (information ally) efficient, they may diverge from the intrinsic values.

Absolute & Relative Valuation Model

Absolute valuation models. An absolute valuation model is one that estimates an asset's intrinsic value, which its
value is arising from its investment characteristics without regard to the value of other firms. One absolute
valuation approach is to determine the value of a firm today as the discounted or present value of all the cash flows
expected in the future. Dividend discount models estimate the value of a share based on the present value of all
expected dividends discounted at the opportunity cost of capital. Many analysts realize that equity holders are
entitled to more than just the dividends and so expand the measure of cash flow to include all expected cash flow
to the firm that is not payable to senior claims (bondholders, taxing authorities, and senior stockholders). These
models include the free cash flow approach and the residual income approach. Another absolute approach to
valuation is represented by asset-based models. This approach estimates a firm's value as the sum of the market
value of the assets it owns or controls. This approach is commonly used to value firms that own or control natural
resources, such as oil fields, coal deposits, and other mineral claims.

Relative valuation models. Another very common approach to valuation is to determine the value of an asset in
relation to the values of other assets. This is the approach underlying relative valuation models. The most common
models use market price as a multiple of an individual financial factor of the firm, such as earnings per share. The
resulting ratio, price-to-earnings (PIE), is easily compared to that of other firms. If the P /E is higher than that of
comparable firms, it is said to be relatively overvalued, that is, overvalued relative to the other firms (not
necessarily overvalued on an intrinsic value basis). The converse is also true: if the P/E is lower than that of
comparable firms, the firm is said to be relatively undervalued.
Valuation Process

• Two approaches
1. Top-down, three-step approach
2. Bottom-up, stock valuation, stock picking approach

• The difference between the two approaches is the perceived importance of

economic and industry influence on individual firms and stocks

Top-Down, Three-Step Approach

 General economic influences
Decide how to allocate investment funds among countries, and within
countries to bonds, stocks, and cash

 Industry influences
Determine which industries will prosper and which industries will suffer
on a global basis and within countries

 Company analysis
Determine which companies in the selected industries will prosper and
which stocks are undervalued

Valuation of Preferred Stock

The value is simply the stated annual dividend divided by the required rate of
return on preferred stock (kp)
Dividend
V
kp

Discounted Cash-Flow Valuation Techniques

t n
CFt
Vj  
t 1 (1  k ) t

Where:
Vj = value of stock j
n = life of the asset
CFt = cash flow in period t
k = the discount rate that is equal to the investor’s required rate of return for asset j,
which is determined by the uncertainty (risk) of the stock’s cash flows

The Dividend Discount Model (DDM)

The value of a share of common stock is the present value of all future dividends

D1 D2 D3 D
Vj     ... 
(1  k ) (1  k ) 2
(1  k ) 3
(1  k ) 
n
Dt

t 1 (1  k ) t

Valuation Approaches and Specific Techniques

Approaches to Equity Valuation

Discounted Cash Flow Techniques Relative Valuation Techniques

• Present Value of Dividends (DDM)

• Present Value of Operating Cash Flow
• Present Value of Free Cash Flow
• Price/Earnings Ratio (PE)
• Price/Cash flow ratio (P/CF)
• Price/Book Value Ratio (P/BV)
• Price/Sales Ratio (P/S)
Equity Valuation of Singer BD LTD:
CompanyFundamentals SingerBangladeshLimitedmanufacturesandmarketscolortelevisions,refrig
MarketCap(BDTmn) 14,963.0 erators,homeappliance,furniture,sewingmachine.Thecompanyisalsoenga
Marketweight 0.4% gedinmarketingofelectriccables,computerandinstantpowersupply,kitche
Paid-upCapital(BDT mn) 766.9 nappliances,otherconsumerelectronicsandhousehold appliances of other
No.ofShareOutstanding(inmn) 76.7 brands.
Free-floatShares(Inst.+For.+Public) 37.8% Robustgrowthinconsumerdurablesindustryandsteadyeconomicgrowth
1yearCapitalGain 2.5% willacceleratethegrowthofSinger:TheGovernmentofBangladeshtargeted
1yearAvg.DailyTurnover (BDT mn) 50.9 thatBangladeshwillbeamiddleincomecountryby2021.Consequently,theG
DPofBangladeshisexpectedtogrowmorethan7%intheupcomingyear.Cons
1yearAvg.DailyVolume 257,896.0
umerdurableindustryisexpectedtogrowatthesamepacewitheconomy.AsSI
CurrentP/E 22.2 NGERBDbelongstothisindustry,thecompanyisexpectedtogrowwiththegro
CurrentP/NAV 8.4 wthoftheindustry.
52-weekpricerange(BDT) 175.5-228.9
Majorrevenuegeneratingsegmentscontinuedtorecordlucrativegrowthin
2017Act. 2018Act. 2019Exp. 2020Exp. topline:Majorrevenueearningsegmentsairconditioner(12.07%),television
(21.04%)andhomeappliance(56.94%)haveexperiencedafiveyearsalesCAG
Financial Information(BDT mln) Rof23.6%,13.7%and10.3%respectively.SingerBangladeshhasrecorded49
%salesgrowthofpaneltelevision,47%salesgrowthofwashingmachines,42%
NetSales 6,911 9,007 11,504 14,443
salesgrowthofrefrigerators,40%salesgrowthoffurnitureand36%salesgrow
GrossProfit 1,843 2,593 3,312 4,158 thofairconditioner inQ2of2017.Withthefuturegrowth
EBITDA 626 1,001 1,359 1,693 ofconsumerdurablesindustry,profitability of Singer Bangladesh Limited
OperatingProfit 557 933 1,290 1,620 islikely toincrease.
ProfitAfterTax 369 547 788 1,066 Incomefromassociatewillgrowupfurtherwhileservingasabackwardlinka
TotalAssets 3,652 5,700 7,241 7,517 geforthecompany:InternationalAppliancesLimited,a73.85%ownedassoci
ateofSingerBangladeshLimitedhasstartedcommercialoperationinJuly201
TotalDebt 19 1,130 1,983 1,364
7withaproductioncapacityof250,000units.TheCompanyhasturnedintoapr
TotalEquity 1,417 1,947 2,204 2,510 ofitableonein2017Q3.SingerBangladeshLimitedhasearnedBDT10millionfr
RetainedEarnings 228 595 852 1,158 omthisassociateinthistime.Itisexpected that theassociate will generate
Cash 104 152 103 159 more profit inthefuture.
Dividend(C/B)% 65/- 70/- 100/- 100/- Additionofnewproductintheproductportfoliowillincreasetherevenueoft
Margin hecompany:SingerBangladeshLimitedaddsagoodnumberofproductsinitsp
roductportfolioeachyear.Newproductintheproduct portfolio helps
GrossProfit 26.7% 28.8% 28.8% 28.8% thecompany to generateadditional revenueeach year.
EBITDA 9.1% 11.1% 11.8% 11.7%
MajorportionofrevenuecomesinEIDfestivalandSummerSeason:SingerBa
OperatingProfit 8.1% 10.4% 11.2% 11.2% ngladeshearnsmajorportionofrevenuefromsellingtelevisionandrefrigerat
PretaxProfit 7.9% 9.1% 9.8% 10.6% orduringtheEIDfestivalandfromsellingairconditionerduringthesummer
season.
NetProfit 5.3% 6.1% 6.9% 7.4%
Growth
WeinitiatedavaluationbasedonDiscountedCashFlowmethod
Sales -4.8% 30.3% 27.7% 25.6%
andRelativeValuationmethodwhileassumingnext5-
GrossProfit 0.2% 40.7% 27.7% 25.6% Years’CAGRofrevenuewillbe17.39%.Currently,SINGERBDi
OperatingProfit -7.2% 67.5% 38.3% 25.6% stradedatBDT195.5.Inourvaluation,thetargetpricebasedon
NetProfit 1.8% 48.1% 44.1% 35.3% FreeCash
Profitability FlowandResidualEarningsisdeterminedatBDT221.8pershar
ROA 9.9% 11.7% 12.2% 14.4% e.
ROE 25.1% 32.5% 38.0% 45.2%
PayoutRatio 135.1% 98.2% 97.3% 71.9% PriceVolume Movement
Volume Price
PEGratio 0.1% 1.8% 2.4% 2.6% 240
Leverage
DebtRatio 0.5% 19.8% 27.4% 18.1% 200
Debt-Equity 1.3% 58.0% 90.0% 54.3%
AltmanZ-Score 6.3 5.2 4.7 5.2 160

Valuation
EPS (BDT) 4.8 7.1 10.3 13.9 120
1
NAVPS(BDT) 18.5 25.4 28.7 32.7
P/E 35.7 27.1 18.2 13.5
P/NAV(x) 9.3 7.6 6.5 5.7
EV/EBITDA 20.9 15.8 12.0 9.2
EV/Sales 1.9 1.8 1.4 1.1
 Current Price (BDT): 175.9 TargetPrice(BDT):221.8
IndustryOverview
IntheboomingconsumerindustryofBangladesh,television,refrigeratorandairconditionercomprises
majorportion.Currentlyin Bangladesh,thereisademandof1millionunits oftelevisionevery
year.LocalTVmanufacturerincludesWalton,Myone,Singerwhoarecompetingagainstbrandedtelevis
ionlikeSony,Samsungetc.Intherefrigeratorsegment,thereisayearlydemandof1.1millionunitsofrefri
geratorwherethelocalmanufacturerpossessthecapacitytoproduce2.3millionunitsofrefrigerator.Walt
onisthemarketleaderoftherefrigeratorsegment.LGandSingerBangladeshsecures2ndand3rdposition
basedontheirmarketshare.OtherrefrigeratormanufacturerincludeMiniter,Myone,Marceletc.Topro
motethelocalmanufacturerofconsumerdurablesindustry,thegovernmentofBangladeshhasdeclared1
5%cashrebateontheimportedrefrigeratorandairconditionerfor thelocalmanufacturer1.

CompanyProfile
Manufacturerand SingerBangladeshLimitedisengagedinmanufacturingandmarketingofcolortelevisions,refrigerators
Marketer: ,homeappliance,domesticfurniture,sewingmachineofSingerBrand.Thecompanyisalsoengagedinma
TV,Refrigerator,Home rketingoftelevisions,airconditionersofotherbrand.Italsodistributeselectriccables,computerandinsta
appliance,SewingMach ntpowersupply,kitchenappliancesandotherconsumerelectronicsandhouseholdappliances.SingerBa
ine,Airconditioneretc. ngladeshLimitedholds10%ofthemarketsharesinconsumerdurablesindustrywhichisthesecondlarges
tmarketshareintheindustry(Source:DailyStar).
Currently,thecompanyhas374salescentersinallthe64districtsofBangladesh.Theirsalescentersarena
medasSingerMegaandSingerPlus.Apartfromthat,theCompanyhas425dealerswhoworkasdistributor
sforthecompany.ThecompanyalsohasfiveservicescentersinDhaka,Chittagong,Jessore,BorgraandS
ylhet.
Incorporation:In4thSeptember, 1979asaprivatelimitedcompany
Conversionintopubliclimitedcompany: 1983
Listing:DhakaStockexchange:In1983Chittag
ongStockExchange:In2001
GroupStructure:
UCLAsiaPa RetailHol GavinWalker
rtnersLLP dings NV (SewkoCEO)
41.1% 4.8%
54.1%

SEWKO
HoldingsLtd
100.0%

SINGERASIA

58.3%

SINGER
BangladeshLtd

73.9%

International
AppliancesLtd

Source:SingerBDWebsite
 Current Price (BDT): 175.9 TargetPrice(BDT):221.8
Keypersonnel:
Chairman Mr.GavinJ.Walker
ManagingDirector&CEO Mr.MohamedHaniffaMohamedFairoz
Director Mr. StephenH.Goodman
Director Mr.PeterJames O’Donnell
Director Mr.GelmartM.Gellecanao
Director Mr.NayanaJagathKumarDissanayake
IndependentDirector A.F.Nesaruddin
IndependentDirector Dr.SyedFerhatAnwar
Secretary Mr.MohammadSanaullah
ManufacturingPlantLocation:Rajfulbaria,Jhamur,Savar
DistributionNetwork
SingerPlus:Thisisthemainretailformatwiththestoresizeof123squaremeteronanaverage.Therearecu
rrently354SingerPlusoperatinginthecountry.
Singer Mega:Average store sizeis230 square meter. Singermegatargets affluent class
people.Therearecurrently20SingerMegaoperatinginthecountry.
SignerPro:WholesaledealersarenamedasSingerPro.Theirstoresizeis100squaremeteronanaverage.T
hereare425 Singer Prooperatinginthecountry.

YearlyProductionCapacity: AssociateCompany:InternationalApplianceLimited(IAL)
250,000refrigerators SingerBangladeshLimitedhasinvested40%inthesharesofInternationalApplianceLimitedin2014.Ina
nagreement withSunman,SINGERBDinvestedanother
CommercialOperation: 33.85%inInternationalApplianceLimitedwhichhaspreviouslyheldbySunman.Accordingtoagreemen
26thJuly2017 t,SingerBangladesh grantedSunman an irrevocable and continuing call option toacquire 33.85%
sharesofInternationalApplianceLimited,exercisableinonetrancheonlyforthefullamounteffectiveand
SINGERBD’sshare:73.85% enforceable up to1stMarch 2023,with60dayswrittennotice.Theexercisepriceofthe
calloptionwillbeequaltofacevalueof33.85%sharesplus12%compoundedannualinterestonthevalueof
theshareslessanydividendreceivedfromtheseshares.TheAssociatehasyearlycapacitytoproduce250,0
00refrigerators.Thecompanystarteditscommercialoperationin26thJuly,2017.
KeyGrowthDriversforSingerBangladeshLimited
1. Robusteconomicgrowth:Bangladeshisoneofthefastestgrowingeconomiesintheworld.Inthefiscal
year2017-17,BangladeshhasachievedaGDPgrowthrateof7.28%accordingtoBangladeshBureau
Futureeconomic growth islikely
ofStatistics.TheGovernmentofBangladesh hassetup
todrivethe consumption aGDPgrowthtargetof7.4%forthefiscalyear2017-
ofhouseholddurables 18.WordBankpredictsthatBangladeshwillachieveaGDPgrowth rateof 6.4%to6.8%inthe year2017
and2018.Withtherapidgrowth of economy,thehouseholdconsumerdurables
industryisexpectedtoachieveasignificantgrowthinthefuture.

Peoplehavemore
incometoconsumeasincomeincrea
sed.Increasedpopulationdrivesthe
demandofhouseholdappliances
Growthoflocalconsumermarketcou
pledwithincreasedpurchasingpower
willincreasetheconsumptionofconsu
mer durables
SuperiorqualitymakesSingerBDatr
ustedbrand
2. Growthofaverageincomelevelandgrowthofpopulation:Currently,thereare165millionpeoplein
Bangladeshwithanannualgrowthrate1.1%2.Increasedpopulationislikelytodrivetheconsumptionofho
useholddurables.Thedemandofconsumerdurablesalsodependsonincomelevelofpeople.PercapitaGN
IofBangladeshisUSD1,610inthefiscalyear2017-2017whereitwasUSD1,466inthefiscalyear2015-
163.Theaverageincomelevelofpeopleisshowinganincreasingtrend.Incomeandpopulationgrowthislik
elytodrivethedemandofhouseholdappliances.
3. GrowthinLocalConsumerMarket:
BostonConsultingGroup(BCG)initsreport,titled‘Bangladesh:TheSurgingConsumerMarketNobody
SawComing’statedthatBangladeshistheone of thefastestgrowing consumer marketsin the
world.BCGstatesthat within2025,
middleandaffluentclassBangladeshis(individualswithannualhouseholdincomeof$5000ormore)will
accountfor17%ofthepopulation4.ThegrowthoflocalconsumermarketislikelytodrivethegrowthofSing
erBangladeshLimited.
3. Strongbrand&reputation:Singerisoneofthemostrecognizedbrandsfortelevision,refrigeratoran
dairconditioner.SingerBangladeshhasbeenoperatinginBangladeshsince1905.Strongbrandbaseislike
lytohelpSingerBangladeshtosellitsproductstothecustomerinagreaterquantity.

2
http://www.worldometers.info/world-population/bangladesh-population/
3
http://www.dhakatribune.com/business/economy/2017/11/14/per-capita-income-rises/
4
https://www.bcgperspectives.com/content/articles/center-customer-insight-go-to-market-strategy-bangladesh-surging-consumer-market/
 Current Price (BDT): 175.9
SingerBDdiversifieditsportfoliotoge
neraterevenuefromdifferentsources
Singerpossessalargedistributionnet
worksothat
customercanreachtothemeasily
HirepurchasesystemmakesSingerB
D’sproduct lucrative in
theeyeofthe consumers
TargetPrice(BDT):221.8
4. Extensiveproductportfolio:SingerBangladeshLimitedhasextensiveproductportfolio.Therearem
ultiplenumbersofmodelsfortelevision,airconditionerandrefrigerators.Consumershavevarietyofoptio
nstochoosefromdiversifiedmodel.Apartfromthis,thecompanyhasalsofurniture,electronichousehold
productinitsportfolio.Extensivenumberofproductsgivesthecompanytheopportunitytoproducerevenu
efrommultiplesources.
5. Extensivedistribution:SingerBangladeshhasoneofthelargestretaildistributionnetworksinBangla
desh.TheCompanyhas374retailoutletsand425dealerstodistributetheirproductsason30June2017.Sin
gerBangladeshhaslaunchedSingerMegaoutletwhichtargetsaffluentclassofthecountry.Thecompanyh
as9servicecentersindifferentdistrictstoprovideaftersalesservice.Extensivedistributionnetworkhelpst
hecompanytosmoothlydistributeproductinaccordancewiththeneedoftheconsumers.
5. Multiplefinancialservicesofferings:TheCompanyprovidesretailandconsumerfinancetocustome
rs.Hirepurchaseaccountsincreasedby50.8%intheyear2017.Hirepurchaseaccountedfor67%oftotalret
ailsalesin2017.Offeringsfinancialserviceshelpthecompanytoincrease footfalltothestore.Atthe same
time, hire purchasesystemhelps the company toselltheirproductsextensively.

ShareholdingPattern

Nov 30, 2015 Nov 30,2017 Nov 30,2017 Nov 30 2018

Sponsors 75.00% 75.00% 70.10% 57.00%
Institution 5.17% 7.46% 9.56% 14.56%
Foreign 0.00% 0.00% 0.00% 8.61%
Public 19.83% 17.54% 20.34% 19.83%

ProductsPortfolio

1. AirConditioner 8.Refrigerator
2. ChestFreezer 9.Iron
3. Computer 10.MusicalInstruments
4. IPS 11.PanelTelevision
5. AirCooler 12.SewingMachine
6. GasBurner 13.VoltageStabilizer
7. MicrowaveOven 14.ElectricOven

Quaterly EPS

0.92 2.40 2.02 0.64 1.04 3.28 0.58 0.99 3.24 4.68
0.80 2.65 3.30 0.35

Source:Annual Report 2017 &

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2015 -0.10 2017 2017 2018
Current Price (BDT): 175.9 TargetPrice(BDT):221.8
FinancialPerformance
InordertoanalyzefinancialperformanceofSingerBangladeshLimited,financialinformationfrom2014to2017(9m
onthannualized)has beenconsidered.
LiquidityPosition:Decreased
CurrentRatio QuickRatio
Overthelastfiveyears,currentrat
ioofthecompanyhassignificantl
ydecreasedmainlyduetotheincr
easeofshorttermloanandtradecr
editors.Quickratioofthecompa 4.5 2.8
nyhasalsodecreasedoverthetim 2.9
2.6 1 .5
1.4 1.2
eimplyingthattheliquiditypositi 1.8 0.8 0.7
onofthecompanyhasweaken.
2014 2015 2017 2017 2018
2014 2015 2017 2017 2018 2017A
OperatingEfficiency:Decreased
Overthelast5years,averagecollecti Payables
on period Inventory
PaymentPeriod(Days)
Conversion
hasincreased.Thisimplie Period(Days)
sthatSINGERBDistakingmoreti
meto collectreceivablesfromtheir
customers, 75.4 94 88
therebydecreasingliquidi 6 0.3 5 5.1
49.75 1.8
ty. Atthesame time, 69 69 66
inventoryconversionperi 2014 2015 2017 2017 2018
2014 2015 2017 2017 2018
odhasalsoincreased,implyingthat
thecompanyistakingmoretimetoc Average CashConversionCycle (Days)
onvertitsinventoryintocash.Aver CollectionPeriod(Days)
agecollectionperiodandinventory
turnover
hasincreasedas hire 66

purchaseaccountshasincreasedby 52 50 52 97.0 78.3

50.8%in 45 62.3 58.8 62.2

2017.Theimpactwasvisiblein 2014 2015 2017 2017 2018 2014 2015 2017 2017 2018
2018. Thehire
purchaseaccounthelpsthecompanytogeneratemoresales.Ontheotherhand,thecompanyhasincreaseditspayablep
aymentperiod,meaningthatthecompanyistakingmoretimetopaytoitssuppliers,therebyrequireslessworkingcapit
al.Overall,thecashconversioncycleofthecompanyhasincreasedmeaningthatthecompanytakingmoretimetogetit
scash.Thecompanyhasalsoexperiencedalowertotalassetturnoverratioin2018,meaningthatthecompanyisgenera
tinglesssalesutilizingitstotalassetbase.

Profitability:Ove
rallIncreased
GrossProfitMargin (GPM) OperatingProfitMargin(OPM)
ProfitmarginofSingerBanglade
shLimitedhasshownadecreasin
gtrendfrom 2014to
2018.Grossprofitmarginhasdec
reasedfrom2017to2018(9mont
8.9% 8.3% 8.1% 10.4% 9.9%
hannualized).Operatingprofitm 27.0% 25.3% 26.7% 28.8% 27.4%
arginhasslightlydecreasedfrom
2017to2018.Thecompanyhasa 2014 2014 2015 2017 2017A 2014 2014 2015 20172017 A
chievedhighest
GPandOPmarginintheyear2017duringthefiveyearsperiodfrom2014to201.Although,
Grossprofitandoperatingprofitmarginhasdeclined,netprofitmarginhasincreased.InternationalApplianceLimite
d,anassociateofSingerBangladeshLimitedbecameprofitable.Asaresult,thenetprofitmarginincreased
Current Price (BDT): 175.9 TargetPrice(BDT):221.8
despitethenegativegrowth
NetProfitMargin(NPM) ROA&ROE
ofgrossprofitandoperating
profitmargin. 19.3% 14.8% 17.4% 25.1% 32.5%

Other
profitabilitymeasureslike 10.9% 8.8% 9.0% 9.9% 11.7%
ReturnonequityandRetur
5.8% 5.0% 5.3% 6.1% 6.2%
nonassethasincreasedover
thetimeperiod.

2014 20145 2017 2017 2018

2014 2015 2017 2017 2018

Leverageratio:High
SingerBangladeshLimiteddoesnotrelyonlongtermloan.Howeverthecompanyreliesonshorttimeloanwhenrequir
ed.Thecompanytook shorttermloanofBDT1,130millionin2018.Asaresultdebtto
equityratioanddebttototalassetratiohasincreased.At thesametime,interestcoverageratiohasfallen.

2014 2015 2017 2017 2018

LeverageRatios
TotalDebt toEquity 19.5% 1.0% 14.3% 1.3% 58.0%
DebttoTotalAssets 11.0% 0.6% 5.7% 0.5% 19.8%
CoverageRatios
TimesInterestEarned(TIE) 11.8 14.6 8.5 8.4 9.6

Valuations&Keyassumptions Revenuecontributionfromdifferentsegments
Revenue Airconditionar Television
Airconditioner,home
From2014 to 2017, HomeAppliance(Otherthan air conditionar) Consumerelectronic
appliance (otherthantelevision)SewingMachine Furniture
airconditioner,televisionand
andTelevision Otherconsumerdurables

contributes90%oft Homeapplianceshave 2017 12.07 21.04 56.94 4.76%1.54

otalrevenue Contributedmajorportionofth % % %
2017
ecompany’srevenue. In2017, .85%
11.45% 20.57% 58.94% 5.11%2
those 2015
4.961%.86
itemscontributed 10.54% 21.46% 58.86
90.5%of total %
Revenue.Contributionfrom 2014 8.78% 18.57% 61.30% 4.36%4.56%
differentrevenuesegmentis
presentedinrightside. 2014 7.04% 18.96% 59.42% 4.09% 8.29%

Source:Annualreport2017,EBLSLResearch
Airconditioner GrowthofSales ofAirConditioner
:
Airconditionercontributesasignificantportionofrevenue.Intheyear2017,airconditionercontributed12.07%tototalsales.
Overthetime,contributionfromairconditionerisincreasing.Theaveragesales growthrateofair
conditionerwas29%excludingthatof2017,wheresalesexperiencedalow-
growthof3%duetothepoliticalinstability.Currentriseoftemperaturewillcontributetothesalesgrowthofairconditionerinth
efuture.Recentpressreleasestatesthatairconditionerunithasachieved36%salesgrowthinthefirstsix monthof
2018.Therefore, wehaveassumed30%growth rate
in2017and25%growthrate2018,followedby3%growthin2019consideringthatnational
electionmayheldinearly2019.Again,thesalesgrowthrateofair-conditionerisassumedas15%intheyear2020and2021.
Television:TelevisioncontributessignificantportionintherevenueofSingerBangladeshLimited.Intheyear2017,televisio
ncontributed
Current Price (BDT): 175.9 TargetPrice(BDT):221.8
Periodis29%.Thesalesoftelevisionsufferedde-
growthin2014and2015duetopoliticalissues.Increasedincomeofpeoplewillattributetothesalesgrowthoftelevisio
ninthefuture.Itisassumedthatthecompanywill experience 30%sales growth of television in2017 and 20%
growth rate in2018 followed
by6%growthintheyear2019.Thesalesoftelevisionwillthenexperienceagrowthrateof15%intheyear2020and202
1.
HomeAppliances:Homeappliancecontributesmajorportionoftherev GrowthofSales
enue.Intheyear2017,homeappliancecontributed56.94%oftotalreven ofHomeAppliance(otherthanai
rconditioner)
ue.Accordingtotheannualreport,about95%ofhomeappliancesoldbySi
27% 26%
ngerBangladeshisrefrigerator.Thecompanyhasinvested73.85%inInt
ernationalAppliancesLimited(IAL)withaproductioncapacityof250,0
00unitwhichmanufacturesSingerbrandedrefrigerators,deepfreezersa 6%
ndotherappliances.InternationalApplianceLimitedhasstartedcomme 2%

rcial operationfrom 26thJuly, 2017 (Source: Prothom

2014 2015 2017 2017 2018
Alo).Accordingtorecentpressrelease,refrigeratorunithasachieved
-5%

Source:Annualreport
42%ofsalesgrowthinthefirstsixmonthof2017.Theaveragegrowthrateofhomeappliancewas26%duringthepoliti
callystableperiod.Increasedincomeofpeopleandrapidurbanizationwillattributetothesalesgrowthofhomeapplia
nceinthefuture.AsInternationalApplianceLimitedhasstarteditscommercialoperation,itisexpectedthatsalesofref
rigeratorwillincrease.Itisassumedthatthesalesofhomeappliancewillgrowattherateof
30%2017and2018,followedby6%growthin2019.Thesales
growthofrefrigeratorwillrevertto15%intheyear2020and2021.
SewingMachine:Sewingmachinecontributesminorparttothetotalre
GrowthofSales ofSewingMachine
venueofSingerBangladeshLimited.In2017,sewingmachinecontrib
uted4.76%oftotalrevenue.Theaveragesalesgrowthrateofsewingma 25%
chinewas23%duringthepoliticallystableperiod.Itisassumedthatsale
sofsewingmachinewillcontinuetogrowattherateof15%peryearin20
22% 22%
17and2018,followedbyde- 5%
growthof1%in2019.Thesalesgrowthofsewing
Machinewillrevertto 10%intheyear2020and2021. 2012 2014 2014 2017
2015
-2%
Furniture:FurniturecontributesminorparttothetotalrevenueofSing Source:Annualreport
erBangladeshLimited.Intheyear2017,furniturecontributed1.75%to
thetotalrevenue.TheCompanyinitiatedfurnitureunitintheyear2014. GrowthofSales offurniture
Sincethenfurnitureunithasexperiencedmassiveyearonyeargrowth.
Accordingtotherecentpressrelease,thecompanyhasachieved40%sa
lesgrowthinfurnituresectorinthefirstsixmonthof2017.Itisassumedt 242% 185% 114% 40%

hatsalesoffurniturewillgrowattherateof20%ineachoftheyear2017a
nd2018,followedby de-growthof1%
in2019.Thesalesgrowthoffurniturewillrevertto10%in2020and202 2014 2015 2017 2017(6
1. Month)
Source:Annualreport
Current Price (BDT): 175.9 TargetPrice(BDT):221.8
Revenuedecreasedasthesalesofconsumerdurablesdecreased.TheCompanyhad
thefollowingamountofconsumer durablessales in the lastfour years.
(Amount inMillion)
Year2012 Year2014 Year2014 Year2015 Year2017
555 301 135 197 139
Thesalesofconsumerdurableshasexperiencedde-
growthoverthefouryears.Itisassumedthattheconsumerdurableswillexperience
29%degrowthoverthenextfiveyearsperiod.
Assumedrate: CostofGoodsSold
Historicaltrendshowsthatthecostof
71%ofTotal goodssoldwasconsistentaspercentageofs HistoricalCostsas% of revenue
Sales alesfrom2012to2017.Thistrendcontinues 72%CostofGoodsSold OperatingExpenses
18%
toprevailinthefirstsixmonthof2017.Thec
ostofgoodssoldrangesfrom71%to75%for 2018 71% 18%
theperiod2012to2017(annualized).Avera 2017
73% 19%
gecostof goods
soldwas73%.AsSingerBangladeshhasest 2016
75% 17%
ablishedanassociateforbackwardlinkage( 2015
Previouslyrawmaterial wasimported for 73% 18%

refrigerator),itisexpectedthatthecostofra 2014
73% 16%
wmaterialwilldecrease.Thus, 2013
Consideringthefactthatcostofgoodssold Source:Annualreport
willdecreasefromthislevelinfuture,costof
goodssoldhasbeen
assumedas71%ofsalesfortheforecastedyears.
OperatingExpense
Assumedrate:
18%ofTotalSal Averagehistoricaloperatingexpensehasbeenaccountedfor18%oftotalsales.From2012to2017period,operatinge
es xpensehadarangeof17%to18%.Latest20176monthannualizedinformationshowsthatselling &
distributionexpense was18%of total sales.Consideringtheaverage rateoperating expensehasbeen setas
18%oftotalsalesfor theforecastedyears.
Assumedrate: OtherIncome:
0.02% Thesourcesofnon-
ofTotalSales operatingincomeforSingerBangladeshLimitedaresalesofscrappedinventories,dividendincomefromCentralDe
positoryofBangladeshandGainfromsellofdiscardedfixedassets.Otherincomecontributes0.055%tototalrevenue
onanaverage.In2015,otherincomecontributed0.95%tototalrevenue.Otherincomeincreasedin2017duetotherev
ersalofinterestaccruedonnon-
remittabledividend.Howeverin2017,otherincomecametonormallevelandcontributed0.02%tototalrevenue.Thi
Assumedrate:1 sratehasbeenassumedfortheforecastedperiods.
0% FinanceExpense
ofTotalShortter Theaverageinterestrateoflastfiveyearswas13.10%.However,consideringthedeclininginterestrate,interestrate1
mdebt 0%hasbeenassumedonthe shorttermloanfortheforecastedyears.

Assumedrate:5
ProvisionforWPPF
%ofprofitbefor
From2012to2017period,ProvisionforWPPFwas5%ofprofitbeforeWPPF&taxes.Thisratewillprevailintheforec
eWPPF&taxes
astedyears.

ShareofProfitandlossfromassociates
InternationalAppliancesLimited,anassociateofSingerBangladeshLimitedhasincurredlossofBDT14millionand
BDT27millionintheyear2015and2017.However,theassociategeneratedBDT140millionrevenueandachievedpr
ofitofBDT24.7millioninthefirstninemonthof2017.InternationalAppliance
Current Price (BDT): 175.9 TargetPrice(BDT):221.8
CapitalExpenditure
CapitalExpenditure(inBDTmillion)
TheHistoricalcapitalexpenditureofSingerBan
gladeshLimitedispresentedinrightside. 2017(6month) 37
Overthelastfiveyearsperiod,SingerBanglades 2017 108
hinvestedBDT90millionfortheacquisitionofp 2015
41
roperty,plantandequipmentwitharangeofBD
2014
T41milliontoBDT119million.Itisassumedtha 119
tthecompanywillspendBDT90millionofcapit 2014
89
al 2012
expenditureintheyear2017with 94
Source:Annualreport
anexpectedgrowthof5%ineachofthefollowing
years.
DividendHistory
CashDividend StockDividend
Dividends:Historicaldividendsofthecompany
25%
isgiveninthechart.ThedividendpayoutratioofSi
ngerBangladeshLimitedis98.2% 25%
25%
in2017.Theassumedpayoutratiofor2017,2018
195%
and2019are97.3%,71.9%and 125% 100%
78.7%respectively. 65% 70%
2012 2014 2014 2015 2017

EffectiveTaxrate: Thehistoricaleffectivetaxrateof SingerBangladeshLimitedisasfollows

2012 2013 2014 2015 2016 2017 Average
26.6% 27.5% 27.7% 28.7% 29.9% 26.5% 27.8%
However,2017-179monthannualizedeffectivetaxrate has been maintained in the forecasted years.
Terminalgrowthrate:ThegrowthofAirconditioner,refrigeratorandhomeapplianceiscloselyrelatedtoaveragein
comelevelofpeople,populationgrowthandeconomicgrowthofthecountry.Theaverageincome level of
peopleofBangladesh is USD 1,610in the fiscal year2017-2017 where it was USD 1,466 inthefiscalyear2015-
16(Source:BangladeshBureauofStatistics).Averageincomeofthepeoplegrewat9.3%inthisperiod.Growthofinc
omelevelofpeopleislikelytoprevailduetotheeconomicgrowthofthecountry.Atthesametime,thereare165million
peoplelivinginthecountrywhoareconsumersoftheproducts(Source:WorldBank).Theannualpopulationgrowthr
ateofBangladeshis1.1%.Meanwhile,World Bankpredicts ahigh GDPgrowth rate of6.4%to6.8%in2017-18.
The economy of BangladeshhasachievedaGDPgrowthrateof7.28%in2017-
17(Source:BangladeshBureauofStatistics)andthetargetedGDPofthegovernmentofBangladeshis7.4%in2017-
17.Itcanbeconcludedthatastheeconomyisexpectedtogrowmorethat7%,itislikelythatelectronicproductsandhom
eappliancewillbecomeaboomingsectorinthefuture.Therefore,terminalgrowthrateisassumedas4.5%forSingerB
angladeshLimited.

TechnicalIndicatorsandperformanceinDSE
FromJanuary2017toDecember2017,SingerBa DSEXvsSINGER
155 DSEX SINGERBD
ngladeshLimitedhasoutperformedtheDSEXind %
BD
ex.However,fromJanuary2017toDecember201
7,SingerBangladeshLimitedshowedamixedper
formancewithDSEX. 135
%
TheresistanceandsupportlevelforSingerBangl
adeshLimitedis212.5and177.3respectively.
115
%

95%
2-Jun-16 2-Sep-16 2-Dec-16 2-Mar-17 2-Jun-17 2-Sep-17
Current Price (BDT): 175.9
InvestmentInsights
InvestmentPositive
 Majorrevenueearningsegments:airconditioner(1
2.07%),television(21.04%)andhomeappliance(
56.94%)haveexperiencedafiveyearsalesCAGRo
f23.6%,13.7%and10.3%respectively.
 SINGERBDhasposted26%YoYgrowthinrevenu
eand22.5%inYoYgrowthinNPATduringtheJan
uarytoJuneperiod of2017.
 Recorded49%salesgrowthofpaneltelevision,47
%salesgrowthofwashingmachines,42%salesgro
wthofrefrigerators,40%salesgrowthoffurniturea
nd36%salesgrowthofairconditionerinQ2of2017
. (In2017,93.59%)Thus,unfavorableforeigne
 Thecompanylauncesagoodnumberofproductsin
eachyear.Thissubstantiallyincreasetherevenueg
rowthofthecompany.
 Intheyear2015,
theSingerBangladeshLimitedhasincreaseditseq
uityparticipationto73.85%from40%inInternatio
nalApplianceLimited.Thecompanyhasstartedits
operationin July2017
withaninitialcapacitytoproduce250,000unitsofr
efrigerator.Thecompanyhasturnedintoaprofitabl
eoneinthefirstsixmonthof2017.InternationalAp
plianceLimitedhasearned19.75millionofnetprof
itduringthisperiod
TargetPrice(BDT):221.8
InvestmentConcern
 SingerBangladeshLimitedhaspossibilitytolo
se33.85% shareof
InternationalApplianceLimitedduetothecall
optiongrantedtoSunman.Theexercisepricefo
rthecalloptionwillbeequaltothefacevalueof3
3.85%sharesplus12%compoundedannually
lessany
dividendordistributionreceivedinrespecttoth
eshares.
 Thecompanyisexposedtoforeignexchangeri
skashugeportionofrawmaterialsareimported
xchangemovementmay hamper
theearningsofthecompany.
 Thecompanyishighlyexposedtoseasonality.
Revenueofthecompanyincreasessignificantl
yduringtheQ2andQ3periodwhileremainsha
kyinothertwoquarters.
 Intensecompetitionfromalargenumberofloc
almanufacturersaswellaslowpricedimported
Chinesegoodsisamajorconcernforthecompa
nytoretainitsmarketshare.

Discountedcashflowvaluation
Freecashflowtofirm
Withdiscountrateof10.7%and terminalgrowthrateof
4.5%.DCFanalysisgivesNetPresentValue(NPV)ofFreeCashFlowtoFirm(FCFF)ofBDT16.98billionasofDece
mber,2017.ThefairvalueusingFCFFmethodstandsatBDT213.41pershareforthecompany,whichimpliesanupsid
eof0.7%fromcurrentmarketprice.

(FiguresinBDTmillion) 2017 2018 2019 2020 2021 Terminal

ProfitfortheYear 788 1,066 1,169 1,336 1,576
Add: AfterTaxInterestExpenses 146 100 79 94 68
Add:Depreciation&Amortization 69 73 76 80 84
Less:InvestmentinNWC 1,185 -270 214 752 408
Less:CapitalExpenditures 90 95 99 104 110
FreeCashFlowtotheFirm -273 1,415 1,011 654 1,211 20,413

EnterpriseValue 16,985
Plus:Cash&cashequivalent 103
Less:InterestDebt 1,983
EquityValue 15,105
No.ofShareOutstanding 76.7
ValueperShare(BDT)asonDecember2017 196.94
Current Price (BDT): 175.9 TargetPrice(BDT):221.8

SensitivityAnalysis
Wehavealsocheckedthesensitivityanalysisoffreecashflowtofirmvaluepershareondiscountrateandterminalgro
wthrate. Weconsideredadiscountwitharangefrom9.0%to12.0%andterminal
ratewitharangefrom3.5%to6.5%.Asaresult,wegotvaluesrangefrom140.8to497.8
SensitivityAnalysis ofFreeCashflowto
firmDiscountRates
9.0% 9.5% 10.0% 10.70% 10.9% 11.0% 11.7% 12.0%
3.50% 231.8 210.3 192.1 170.9 166.6 163.0 147.5 140.8

TerminalGrowth
4.00% 254.0 228.5 207.3 182.9 178.1 174.0 156.5 149.0
4.50% 281.0 250.4 225.3 196.9 191.3 186.7 166.9 158.4
5.00% 314.9 277.1 246.8 213.4 206.9 201.5 178.7 169.1
6.00% 416.5 353.4 306.1 256.9 247.6 240.0 208.7 195.9
6.50% 497.8 410.7 348.5 286.3 274.9 265.6 228.0 212.9

ResidualEarningsModel
Withdiscountrateof10.7%andterminalgrowthrateof4.5%.ResidualEarningsanalysisgivesNetPresentValue(NP
V)ofResidualEarnings(RE)ofBDT18.93billionasofDecember,2017.ThefairvalueusingREmethodstandsatBD
T246.8pershareforthecompany,whichimpliesanupsideof26.2%fromcurrentmarketprice.
2017 2017 2018 2019 2020 2021
NetProfit 788 1066 1169 1336 1576
Equity 1,947 2,204 2,510 2,919 3,343 4,008
BenchmarkIncome 208 236 269 312 358
ResidualIncome 580 830 900 1024 1218
PVofResidualIncome 580 750 735 755 811
SummationofPV ofresidual income 3051
Continuingvalue 20,536
PVofterminalvalue 13,675
EquityValue 18,930
NumberofShares 76.7
ValuePerShare asonDecember2017 246.8

SensitivityAnalysis
WehavealsocheckedthesensitivityanalysisofResidualEarningsvaluepershareondiscountrateandterminalgrowt
hrate.
Weconsideredadiscountwitharangefrom9.0%to12.0%andterminalratewitharangefrom3.5%to6.5%.Asaresult,
wegotvaluesrangefrom184.5to573.8
SensitivityAnalysis ofResidual
EarningsDiscountRates
9.0% 9.5% 10.0% 10.5% 10.9% 11.0% 11.7% 12.0%
3.50% 293.7 267.9 246.0 220.6 215.4 211.1 192.6 184.5
TerminalGrowth

4.00% 317.0 286.8 261.6 232.7 226.9 222.1 201.4 192.5

4.50% 345.6 309.5 280.0 246.8 240.2 234.8 211.5 201.6
5.00% 381.2 337.3 302.2 263.4 255.8 249.5 223.1 212.0
6.00% 488.2 416.6 363.0 307.1 296.6 287.9 252.5 238.0
6.50% 573.8 476.2 406.4 336.7 324.0 313.5 271.4 254.5
Current Price (BDT): 175.9 TargetPrice(BDT):221.8
DeterminationofTargetPrice
Werecommendequal weight ValuationMethods EstimatedValue Weights
of50%onthevaluethatwederivedfromfree
FreeCashflow tofirm 196.94 50%
cashflowtofirmvaluationandResidualEarn
ingsmodelvaluation.Basedontheweighted ResidualEarningsModel 246.80 50%
averageofthefreecashflowtofirmandresid TargetPrice 221.87 100%
ualearningsvaluationwegetatargetpriceof
BDT221.87forthecompany.
CurrentPrice 195.50
Atcurrentmarketprice,SINGERBD’sshar TargetPrice 221.87
eshaveaP/Emultipleof16.48for2017-
17Q3annualizedearnings.Withourrecom ExpectedCapitalGain 13.49%
mendedtargetpricethestockgivesatotalof1 TargetHoldingPeriod 6 Months
8.6%expectedreturn. ExpectedDividendYield 5.12%
TotalReturn stockatitsprevailing pricelevel.
Wethereforestatean“Overweight” ratingontheSINGERBD’s 18.60%
 Current Price (BDT): 175.9 TargetPrice(BDT):221.8
Appendix1:YearlyFinancialStatementsandAnalysis

StatementofComprehensiveIncome
AmountinBDTmillion(Except OtherwiseStated)

2013 2014 2015 2016 2017 2018 2019 2020

Revenue 6,605 7,261 6,911 9,007 11,504 14,443 15,163 17,416
NetRevenue 6,605 7,261 6,911 9,007 11,504 14,443 15,163 17,416

Cost ofGoodsSold 4,820 5,422 5,068 6,414 8,192 10,285 10,766 12,365
GrossProfit 1,785 1,839 1,843 2,593 3,312 4,158 4,397 5,051

TotalOperatingIncome 1,785 1,839 1,843 2,593 3,312 4,158 4,397 5,051

OperatingExpenses: 1,199 1,239 1,286 1,660 2,022 2,538 2,665 3,061

OperatingProfit 586 600 557 933 1,290 1,620 1,732 1,990

FinancialExpenses 40 71 66 97 198 136 108 128

OtherNon-OperatingIncome 9 (2) 66 2 2 3 3 3
Finance Income 2 10
ShareofProfit and lossfromassociates (14) (27) 35 40 46 48
ProfitBeforeWPPF 555 527 545 821 1,129 1,527 1,674 1,914
ProvisionForWPPF 28 26 27 41 56 76 83 95
ProfitBeforeTax 527 501 518 780 1,072 1,451 1,591 1,818

Incometaxexpense 145 139 148 233 284 384 422 482

TotalTax 145 139 148 233 284 384 422 482

EarningAfterTax 382 362 369 547 788 1,066 1,169 1,336

TotalComprehensiveIncome 382 362 369 547 788 1,066 1,169 1,336

RestatedEPS 5.0 4.7 4.8 7.1 10.3 13.9 15.2 17.4

Current Price (BDT): 175.9 TargetPrice(BDT):221.8

StatementofFinancialPosition
AmountinBDTmillion(ExceptOtherwiseStated)

2013 2014 2015 2016 2017 2018 2019 2020

ASSETS
Non-CurrentAssets 883 936 1,269 1,611 1,772 1,922 2,012 2,147
Property,Plant and Equipment 872 918 829 1,034 1,073 1,102 1,124 1,146
IntangibleAssets 45 37 39 43 46 50
Investment 11 15 184 288 320 360 406 455
Deposits &Prepayments 182 215 303 380 399 459
Deferredtaxasset 3 29 37 37 37 37 37

CurrentAssets 3,353 2,885 2,384 4,089 5,469 5,595 5,860 6,707

Inventories 1,254 1,522 1,127 2,160 2,531 3,177 3,336 3,831
AccountsReceivables 946 881 1,042 1,538 2,432 1,752 1,839 2,113
Advances,Depositsand Prepayments 265 330 108 239 404 507 532 611
CurrentTaxAssets 2
ShortTermInvestment 700 - - -
Cash andCashEquivalents 168 153 104 152 103 159 152 152
Assetsclassified asheld for sale 21 - - - -

TotalAssets 4,236 3,821 3,652 5,700 7,241 7,517 7,872 8,854

EQUITYANDLIABILITIES
Shareholders'Equity 2,633 1,527 1,417 1,947 2,204 2,510 2,919 3,343
ShareCapital 491 614 767 767 767 767 767 767
Reserve 409 395 422 585 585 585 585 585
Retained Earnings/RevenueReserve 1,733 518 228 595 852 1,158 1,567 1,991

Non-CurrentLiabilities: 858 1,181 1,413 1,445 1,633 1,881 2,057 2,314

Net definedbenefitplans 121 120 130 110 140 176 185 212
DeferredTaxLiability 1
OtherNon-CurrentLiabilities 737 1,061 1,283 1,335 1,492 1,705 1,872 2,101

CurrentLiabilities: 745 1,113 823 2,308 3,404 3,126 2,896 3,197

Short TermBankLoans 26 218 19 1,130 1,983 1,364 1,077 1,281
TradeCreditors 668 893 804 1,158 1,307 1,618 1,668 1,742
Current TaxLiabilities 52 2 20 115 144 152 174

TOTALSHAREHOLDERS'EQUITYAND
LIABILITIES 4,236 3,821 3,653 5,700 7,241 7,517 7,872 8,854

Net Asset Value (NAV)pershare 34.3 19.9 18.5 25.4 28.7 32.7 38.1 43.6
No.ofShare Outstanding 77
Current Price (BDT): 175.9 TargetPrice(BDT):221.8
Ratio Analysis

2013 2014 2015 2016 2017 2018 2019 2020

LiquidityRatios:
Current Ratio 4.5 2.6 2.9 1.8 1.6 1.8 2.0 2.1
Quick Ratio 2.8 1.2 1.5 0.8 0.9 0.8 0.9 0.9
Cash Ratio 1.2 0.1 0.1 0.1 0.0 0.1 0.1 0.0

OperatingEfficiencyRatios
InventoryTurnoverRatio 3.8 5.2 5.2 5.5 4.9 5.1 4.7 4.9
ReceivableTurnover Ratio 6.9 8.0 7.2 7.0 5.8 6.9 8.4 8.8
Average CollectionPeriod (Days) 52.3 45.3 50.1 51.6 62.1 52.1 42.6 40.8
InventoryConversionPeriod(Days) 94.4 68.8 69.0 65.7 73.4 71.1 77.3 74.1
Operating Cycle (Days) 146.7 114.1 119.1 117.3 135.5 123.3 120.0 114.9
A/CPayable TurnoverRatio 7.2 7.0 6.0 6.5 6.6 7.0 6.6 7.3
PayablesPaymentPeriod(Days) 49.7 51.8 60.3 55.1 54.2 51.2 54.9 49.6
CashConversionCycle(Days) 97.0 62.3 58.8 62.2 81.4 72.1 65.0 65.3
TotalAssetTurnover 1.51 1.80 1.85 1.93 1.78 1.96 1.97 2.08
FixedAssetTurnover 7.55 8.12 7.91 9.67 10.92 13.28 13.63 15.35

OperatingProfitabilityRatios
GrossProfitMargin(GPM) 27.0% 25.3% 26.7% 28.8% 28.8% 28.8% 29.0% 29.0%
OperatingProfitMargin(OPM) 8.9% 8.3% 8.1% 10.4% 11.2% 11.2% 11.4% 11.4%
Pre TaxProfit Margin 8.0% 7.3% 7.9% 9.1% 9.8% 10.6% 11.0% 11.0%
Net ProfitMargin(NPM) 5.8% 5.0% 5.3% 6.1% 6.9% 7.4% 7.7% 7.7%
Returnon Total Assets (ROA) 8.8% 9.0% 9.9% 11.7% 12.2% 14.4% 15.2% 16.0%
Return onEquity(ROE) 14.8% 17.4% 25.1% 32.5% 38.0% 45.2% 43.1% 42.7%

LeverageRatios
TotalDebtto Equity 1.0% 14.3% 1.3% 58.0% 90.0% 54.3% 36.9% 38.3%
DebttoTotalAssets 0.6% 5.7% 0.5% 19.8% 27.4% 18.1% 13.7% 14.5%

CoverageRatios
TimesInterestEarned(TIE) 14.7 8.5 8.4 9.6 6.5 11.9 16.1 15.5

ValuationRatios
P/B (price tobook) Ratio 5.5 10.9 9.3 7.6 6.5 5.7 4.9 4.3
BookValuePer Share 34.3 19.9 18.5 25.4 28.7 32.7 38.1 43.6
EPS 5.0 4.7 4.8 7.1 10.3 13.9 15.2 17.4
P/ERatio 38.1 46.1 35.7 27.1 18.2 13.5 12.3 10.7
EV/EBITDA 14.4 26.0 20.9 15.8 12.0 9.2 8.5 7.5
EV/Sales 1.4 2.3 1.9 1.8 1.4 1.1 1.0 0.9
Price/Sales 5.5 6.5 4.3 4.1 3.0 2.4 2.3 2.0
Sales/ Share 34.8 33.4 40.2 46.7 61.5 77.2 81.0 93.0
Current Price (BDT): 175.9 TargetPrice(BDT):221.8
ExtendedDUPONTANALYSIS

NetProfit/PretaxProfit 72.49% 72.3% 71.3% 70.1% 73.5% 73.5% 73.5% 73.5%

PretaxProfit/EBIT 89.93% 83.6% 92.9% 83.6% 83.1% 89.6% 91.8% 91.4%
EBIT/Sales 8.87% 8.3% 8.1% 10.4% 11.2% 11.2% 11.4% 11.4%
Sales/Assets 151.42% 180.3% 185.0% 192.6% 177.8% 195.7% 197.1% 208.2%
Assets/Equity 1.7 1.5 2.4 3.3 3.3 3.3 3.1 2.9
ROE 14.8% 17.4% 25.1% 32.5% 38.0% 45.2% 43.1% 42.7%

TERMINOLOGIES
P/E=Price to EarningP/B
=Price to Book Value
P/OCF =Price to Operatingcash flowP/S
=Price to sales
EBIT=Earnings before Interestand Tax
EBITDA =Earningsbefore Interest, tax, depreciationand amortization
Conclusion:
Equity valuation is a fundamental things in Investment analysis. Any want wants to invest in securities
should do the proper valuation to see whether the security is undervalued or over values. From my
analysis & valuation it is found that SingerBD is undervalued. Anyone wants to invest in SingerBd can
invest in it.