Bidding Recommendation Information

Sl No. Particular
1 Date of Recommendation: Novemver 07, 2018
2 Name of Eligible Investor (EI): Maslin Capital Limited
3 ESS ID of EI: EI-929
4 Name of the issue: ADN TELECOM LIMITED (ADNTEL)
Bidding Recommendation Committee (BRC):
Name of Members: Knowledge, skill, qualification and experience:

He graduated from North South University with Bachelor

i. Mr Minhazur Rahman, CFA
of Science in Computer Science. Mr. Rahman completed
MBA from the same university with major in Finance. He
further studied Master of Science in Quantitative Finance
from The University of Texas at Arlington. He is a CFA®
charterholder.

Mr. Minhazur Rahman is the Chief Investment Officer of

Maslin Capital Limited. As the CIO of the company, his
primary responsibilities are to lead and coordinate the
Investment decision-making processes of the firm. He
works closely with the analysts and researchers to build a
strong investment team. He also helps the CEO in
defining the investment strategy and raising fund for
investment. He started his career in the Banking Sector.
He Joined Eastern Bank Limited (EBL) as a Management
Trainee in 2008. At EBL, he gained experience by
working in areas like Special Asset Management Division
and Financial Institutions. Later he joined Mutual Trust
Bank in 2015 as Assistant Vice President. During his stay
with MTB, he was responsible for Offshore Banking
Business.
5
ii. Mr Md. Mahfuzur Rahman He completed his BBA in Finance from University of
Dhaka and Executive MBA in Finance from Southeast
University. Mr. Mahfuz is also an (ACCA) The Association
of Chartered Certified Accountant, UK partly qualified.

Mr. Md. Mahfuzur Rahman has joined as an Investment

Manager at Maslin Capital Limited on 29 July 2018. Prior
to joining Maslin Capital Limited, Mr. Mahfuz worked as a
Portfolio & Issue Manager at MIDAS Investment Limited
from 31 May 2017 to 28 July 2018. He worked at
BetaOne Investments Limited as an Assistant Manager,
Portfolio Management Department from 16 July 2013 to
30 May 2018. He also worked as an Associate,
Investment Research Department at CAPM Company
Limited from 17 Nov 2011 to 30 June 2013. He started
his career with Chittagong Capital Limited as a Research
Analyst in 2010. Mr. Mahfuz has more than 8 (Eight)
years of diversified experience in renowned Merchant
Banks, Asset Management Company and Brokerage
House with specific expertise in Equity Research,
Dynamic Portfolio Management and Issue Management.
Mr. Mahfuz has participated in various training programs.
He has proficiency in Technical Analysis, Financial
Modelling and Advance MS Excel.
Recommendation of Bidding: (Recommended by BRC and/or EI)
Recommended
Particular Authority
Price per share Quantity
6
Bidding BRC 25.00 285,000
Revise Bidding BRC/EI/Both - -
Offer BRC/EI/ Both 30.00 237,500
 Summary of valuation Method:
Sl
Name of Method Price
No.
1 Net Asset value (NAV) per share at Historical Cost 16.1
2 Net Asset value (NAV) per share at current Cost -
Weighted Earning-based value per share (Considering Avg. Sector P/E and 31.8
3
7 Avg. Market P/E which is lower)
4 Average Market Price of Similar Stocks Based Valuation -
5 Equity DCF Valuation: Dividend Discount Model. -
6 Equity DCF Valuation: Free Cash Flow to Equity Model -
7 P/B based value per share 29.3
8 MVIC to EBITDA based value per share 35.4
9 Weighted Average value per share 25.4
8 Remarks (if any):

Compliance status of BSEC’s Directive No. BSEC/CMRRCD/2009-193/204 dated February 20, 2018

The aforesaid recommended price along with relevant documents has been prepared/seen/approved by us.
We individually and collectively, accept the full responsibility of recommended price and quantity.

We confirm that El and BRC have been exercised due diligence and independent professional judgment and
due care in the decision making for bidding.

We also confirm that we acted fairly, neutrally, honestly and independent in analysis and making decision
without any influence, interference or pressure. We did not disclose or share any information related to the
valuation with the issuer, issue manager, other eligible investors or any other person.

Signature:

1. On behalf of Bidding Recommendation Committee:

Full name: Minhazur Rahman, CFA
Signature:

2. On behalf of EI:
Full name: Maksud Alam
Signature:

Valuation:

Method 1: Net Asset Value (NAV) per share at historical cost

Pre IPO Post IPO

Particulars (BDT Mn)
(30 June 2017) (30 June 2017)
Shareholders equity:
Share capital 448.6 448.6
Share premium 83.0 83.0
Retained earnings 192.2 192.2
IPO proceeds 570.0
Total shareholders' equity 723.8 1,293.8
Increase in shareholders equity (%) 78.8%
No. of shares outstanding 44.9
Post IPO no. of shares 80.2
NAV per share (without revaluation reserve) 16.1

***The company did not do any revaluation from its inception.

Method 2: Weighted Earnings based value per share

We have calculated the consolidated weighted average net profit after tax (NPAT) of the company for the
year ended June 30, 2013 to June 30, 2018 and multiplied by the relevant P/E multiple to derive at the
earning based:

Net profit after Weighted Net Profit

Year No. of Shares Weight
Tax (BDT) After Tax (BDT)
2012-2013 17.4 10% 55.04 5.62
2013-2014 20.9 12% 60.16 7.41
2014-2015 20.9 12% 64.67 7.97
2015-2016 20.9 12% 87.76 10.81
2016-2017 44.9 26% 105.94 27.98
2017-2018 44.9 26% 119.63 31.59
Total 100% 91.39

Fair Value Based on Average Fair Value Based on

Particulars
IT Sector P/E Average Market P/E
Current Number of Shares 44.86 44.86
Weighted Net Profit After Tax (BDT) 91.39 91.39
Weighted Average EPS of ADNTEL 2.04 2.04
**P/E Multiple 27.1x 15.6x
Fair Value Per Share (Tk.) 55.2 31.8
** Lower value has been considered for calculating the weighted average.

Calculation of Nine Month Average P/E Multiple (Source: DSE Monthly Publication)
Month IT Sector P/E Market P/E
January' 2018 26.6 17.2
February' 2018 26.0 16.5
March' 2018 25.4 15.7
April' 2018 26.1 15.4
May'2018 25.3 14.5
June'2018 26.0 15.0
July'2018 30.9 15.2
August'2018 30.4 15.7
September'2018 27.4 15.2
Average 27.1 15.6

Method 3: P/B based value per share

(Source: DSE)
Close price
Company name NAV per share (BDT) P/B
31-Oct-2018
AAMRATECH 23.24 27 1.2
AGNISYSL 14.88 19.2 1.3
BDCOM 15.55 25.4 1.6
DEFODILCOM 13.58 32.1 2.4
ITC 16.16 42.6 2.6
Average 1.8

Particulars NAV per share (BDT) Average P/B Value per share (BDT)
Without revaluation reserve 16.1 1.8 29.3
***The company did not do any revaluation from its inception.
Method 4: MVIC TO EBITDA Based Value Per Share

This is another multiple based method. First, we calculated the multiple. Our multiple in this method is
MVIC/EBITDA. Market Value of Invested Capital (MVIC) of each stock consisted Market Value of its debt
and equity. The EBITDA is the Earnings Before Interest Tax Depreciation and Amortization. A publicly
listed comparable company may be able to acquire more capital given its operating income. That is why
we took a 20% discount in calculating the multiple of the subject company. We found our MVIC/EBITDA
to be 17. The multiple was multiplied with subject company EBITDA to find the MVIC. We subtracted the
debt from MVIC to determine the equity value. The equity value was divided by the number of shares,
increased in exact percentage of the company capital, to find the price per share.

MKT CAP (mn) DEBT (mn) EBITDA (mn) Pricing

Company MVIC (mn)
31/10/2018 30/06/2017 30/06/2017 Multiple
AAMRATECH 1500.551 130.10 1,630.65 90.45 18.03
AGNISYSL 1347.472 74.97 1,422.44 77.46 18.36
BDCOM 1186.314 10.94 1,197.25 69.60 17.20
DAFODILCOM 1637.122 27.46 1,664.58 116.63 14.27
ITC 4338.968 102.94 4,441.91 117.63 37.76
Comparative company Pricing multiplier 21.13
ADNTEL 225.71 177.23

Criteria
Initial MVIC to EBITDA 21.13
Relative growth and risk adjustment -20%
Multiple before control adjustment 16.90
Control adjustment 0%
Multiplier after control adjustment 16.9
Rounded to 17

Guideline Public Commpany Method

EBITDA 177.23
Pricing Multiple 17
Initial Value of Invested Capital 3012.93
Debt Capital 177.23
Value of Equity 2835.70
Number of shares 80.2
Value Per Share 35.4
 Valuation Summary of ADN TELECOM LIMITED

Value per Weighted average

Valuation Methods Weight
share (BDT) value per share (BDT)
Method 1: NAV per share based valuation 16.1 40%
Method 2: Weighted Earning Based Value Per Share 31.8 30%
25.4
Method 3: P/B based value per share 29.3 20%
Method 4: MVIC to EBITDA Based Value Per Share 35.4 10%
100%

** Lower value has been considered from each of the 4 methods for calculating the weighted average.

Decisions Considering 4 valuation methods, the fair value of ADNTEL will be BDT 25.4