BKASH LIMITED JUNE 2020

PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

Introduction

bKash has been successfully providing Mobile Financial Services (MFS) in the Bangladeshi market
since 2011 and has received endorsement from renowned global investors, which has been an integral
part of its business development and expansion. Since bKash is currently focusing on expanding and
retaining market share rather than optimizing their bottom line, their costs have jumped up
considerably and have consequently incurred operating loss. While transaction volume has
plummeted by 30% amid the pandemic, their reach has expanded significantly. We believe this impact
is expected to be temporary. In the long run, we expect that they will most likely be able to reap the
benefits of their current strategies and bounce back stronger given the high growth potential of the
MFS industry itself as well as the first mover advantage of bKash. Moreover, digital transactions have
globally been replacing physical transactions as brick-and-mortar businesses have moved to the
sidelines in recent times amid the pandemic. Similar to how after SARS China become more
digitalized, we can expect a similar transition (though a slower one in comparison to China) in
Bangladesh going forward.

Outlook

● Subscriber Growth: bKash’s subscriber base currently stands at approximately 41 million users,
which has allowed the company to capture 70% market share in terms of transaction volume. Over
the last five years, their subscriber base grew at a CAGR of 17.9% while the industry grew at a
CAGR of 25.9% in the corresponding period. Going forward, growth will be driven by an overall
progression towards a cash-lite society and bKash’s persistent focus on customer acquisition. We
expect that bKash will reach around 53.2 mn subscribers by the end of 2024, implying a 64%
market share and 5-year CAGR of 8.2%.

● Transaction Volume and Revenue Growth: The total transaction volume of the MFS industry
stands at around BDT 4,345 bn as of 2019 with a historic 5-year CAGR of 33.3% while bKash’s
transaction volume, that currently stands at BDT 3,041 bn as of 2019, has grown at 28.7% during
the same period. Bangladesh’s MFS-favorable population demographics (where 27.6 years is the
median age) implies that there is more room for attracting tech-savvy customers. Also, 52% of the
population that is still unbanked will find bKash easier to use as against the banking system.
Therefore, over the next few years, we expect the transaction volume of MFS industry to grow at
a 5-year CAGR of 16.0% while the same for bKash may grow at 13.9%. Overall, Bangladesh’s
advancement towards a digital economy, which will be accelerated by the pandemic, will play a
significant role in boosting bKash’s business.
The table below shows historical and forecast growth of MFS industry services along with the
outlook of their growth drivers.

5-Year 5-Year
MFS Services Historical Forecast Outlook
CAGR CAGR
The interconnectivity between MFS accounts and bank
Cash-In accounts has been a blessing for people in the pandemic-
29.7% 13.7%
transaction stricken country. Cash-in transactions are expected to have a
healthy growth ahead.
Given that the income of a large number of bKash users may be
affected due to the pandemic and the overall economic
Cash-Out slowdown, cash-out transaction volume (which accounts for
31.9% 11.2%
Transaction 35.5% of the total MFS industry transactions) may experience a
decline in the short term but it is expected to revive strongly
afterwards in tandem with economic recovery.
All analysis has been conducted by LR Global Research based on publicly available information. 1
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

5-Year 5-Year
MFS Services Historical Forecast Outlook
CAGR CAGR
The government has recently increased P2P ceiling from BDT
75,000 to BDT 200,000 per month, paving the way for more
P2P transaction 33.7% 20.9% transactions to take place during COVID. With this, bKash has
added a BDT 5 fixed charge on P2P transactions, which could
previously be done for free.
As a large number of migrant workers’ income are being
affected amid the pandemic, remittance volume may fall
Inward
52.7% -0.4% drastically but may be offset by some degree as more users
Remittance
might turn to bKash to send money home instead of physically
visiting banks.
The salary of garment workers are being sent through bKash in
recent times. Out of the 1.9 mn MFS accounts that have been
opened for RMG workers’ salary disbursements, bKash has
Salary
been able to grab ~50% of the subscribers. Although the
Disbursement 77.1% 30.8%
transaction charges for this salary disbursement has been
(B2P)
reduced, in the long term, bKash will be able to benefit from
these new subscribers as they learn to use bKash more as part
of their daily lives.
Utility Bill Utility bill payments are rapidly being digitalized with the help of
34.5% 23.9%
Payment (P2B) MFS agents and personal MFS mobile apps.
Merchant payment via bKash will receive a huge boost not only
*Merchant
172.4% 47.4% because of the pandemic but also due to the fast growing e-
Payment
commerce industry.
Government to person (G2P) payments will likely receive a
boost in the next few years as social security, stipends, and
other aid disbursements will become more digitalized. Only
*Government
33.2% 15.0% 1.3% of the 32 mn people receive social security payment from
Payment
the government (~14% of budget) through digital platforms as
per pre-COVID estimates. This implies that there is significant
headroom for further digitalization.
Mobile data usage has jumped by around 15-20% recently. MFS
users have become heavily reliant on bKash to top up their
Others 58.0% 18.0% phones. As per bKash data, ~45 mn people used bKash to
recharge their phones in April, as against 32 mn in January. This
implies a 40% jump in usage.
*Historic 2-year CAGRs provided due to non-availability of data.

Considering these factors, bKash’s revenue will likely grow at a CAGR of 13.9% over the next 5
years as against 30% in the last 5 years.

● Recognized by International Investors and High-end Technology Support: bKash's strategic

partnership with international investors has been key in reinforcing the company’s continuous
efforts to provide sophisticated services to its customers. bKash has gained access to top-notch
technology, which in turn has acted as a multiplier effect for the company. The company has
investors such as Ant Financial, Bill & Melinda Gates Foundation, and IFC under its belt. As part
of bKash's deal with Ant Financial, the company has been able to polish its cybersecurity features.
Also, Ant Financial's cutting-edge facial recognition technology has allowed bKash to match
applicants' photos and NIDs with that of the government's database within seconds. Self -
registration via the app itself has become a seamless process and potential customers no longer
have to go through the hassle of visiting agents. Bank to bKash transfer and vice versa have also
been made possible. City Bank and BRAC Bank have joined hands with bKash to allow subscribers
to withdraw money from their ATMs. Additionally, with its partnership with Ripple, bKash has also
been able to bring Blockchain technology on board for its remittance services. Such enhancements
All analysis has been conducted by LR Global Research based on publicly available information. 2
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

in bKash’s services are expected to continue in the future and will act as a major weapon in beating
competitors.

● Strong Network and Brand Value: bKash’s strong growth can be attributed to its first-mover
advantage, user friendly interface, and high marketing and promotional expenditures. In addition,
they currently have more than 230,000 cash-out agents operating across the country. bKash’s
brand positioning has been so successful that MFS and bKash have become synonymous in
Bangladesh. bKash’s brand value has been and will continue to be play an important role in
attracting customers.

● Robust Growth in Other Income: Interest from fixed deposits has grown to become a strong
source of 'other income' for bKash, as it almost doubled in 2019, reaching BDT 832.24 mn. Other
income stands at BDT 824.82 (equivalent to 3.9% of revenue), with an 81% increase in 2019 alone.
We expect ‘other income’ to be equivalent to 6-7% of revenue in the near future backed by the
strong growth in fixed deposit.

Challenges

 Increasing Competition Pushing Costs Higher: As new competitors such as Nagad, iPay, and
Dmoney have entered the market, bKash has been heavily engaged in trying to stay ahead of
competitors. However, despite its strong efforts, bKash has been losing market share. Hence,
rather than trying to maximize profits, bKash has continued to remain focused on attempts to
acquire and retain subscribers. As such, the company’s marketing expenditures increased by
25.5%, 78.8%, and 16.2% in 2017, 2018, and 2019 respectively, taking their marketing expenses
as high as BDT 2.16 bn at the end of 2019. Moreover, the company was also dragged down to a
net loss (BDT 625.15 mn) in 2019 for the first time since 2013. Given that agents and distributors'
commission account for a substantial portion of cost (87.6% as of 2019), in order to ensure these
agents and distributors do not switch to competitors, bKash will not be able to bring these cost
components down any time soon. Hence, we expect such expenditures to continue to remain high
for at least another 2 to 3 years.

 Economic Slowdown: The coronavirus pandemic has caused a slowdown in almost all sectors
of the economy in Bangladesh, which in turn have hurt the income of both individuals and
businesses. The World Bank has forecast that GDP will grow by a mere 1.6% in FY 2020 and 1%
in FY 2021, which is a stark decline from its all-time high 8.15% growth in FY 2019. This indicates
that the effects of the virus may remain in the Bangladeshi economy in the next fiscal year as well.
Such impacts have also reflected in bKash’s transaction volume as it declined from ~ BDT 9 - 10
bn to BDT 7 bn during the crisis. Moreover, given that the curve is yet to flatten in the country,
there is high uncertainty regarding when we can expect transaction volume to bounce back.

 High User Cost Differences: Most MFS users are price sensitive. Thus, trying to match charge
with competitors and offering the best services at the same time will be a daunting task for bKash.
In addition, bKash’s comparatively higher charges than other domestic and international players
has placed bKash in a fire of criticism.

All analysis has been conducted by LR Global Research based on publicly available information. 3
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

Type of transaction bKash Nagad Rocket

Send Money USSD BDT 5/Txn BDT 4/Txn Free
Free up to BDT 500 BDT 5/Txn
Send Money App Free Free
for any amount >500
Cash-out from Agent 1.85% 1.45% 1.80%
Cash-out from ATM 1.50% NA 0.90%
Cash-out branch NA NA 0.90%
Cash out from agent with app 1.75% 1.45% 0.90%
Transfer money (bKash to bank) 2.00% NA Free
Transfer money (bank to bKash) Free NA 1.80%
Merchant payment Free Free Free
Balance inquiry Free Free Free
Statement request Free Free BDT 3
International remittance receipt Free NA NA
*Txn = transaction

 Agent Banking Proliferation: Another challenge is the rise of agent banking services all over the
country. The number of agent banking accounts increased by 114% times in the last one year, as
it grew from 2.46 mn in 2018 to to 5.26 mn at the end of 2019. Hence, the increased availability of
agent banking services may snatch MFS customers as well.

 Regulatory Risk: Bangladesh Bank's ETF transaction limits can also be a barrier in terms of the
number and amount of transactions that can take place through MFS on a daily and monthly basis
(BB’s daily ETF transaction volume limit is 10 mn while bKash’s daily transaction volume is 7 mn).
Furthermore, the entrance of government-backed Nagad has not only created scope for uneven
competition but also hurt bKash as the former has been the recipient of preferential treatment from
the government as it had been empowered with higher transaction limits. However, as the
pandemic began, bKash has been enjoying the same transaction limits as Nagad. Given that the
MFS industry is relatively new in Bangladesh, frequent changes in rules and regulations is a big
risk for bKash. Going forward, similar to how BTRC is currently mulling on imposing SMP
(Significant Market Power) conditions on Grameenphone, bKash also stands at risk of facing such
curbs due to its dominant market share.

 Financial Literacy of the Users: Although the literacy rate in Bangladesh stands at 73.9% (as of
2018) the country still lags behind in terms of financial literacy and non-availability of NIDs among
the worker-class. This stands as a hindrance in their financial inclusion in the country’s economy.
Hence, while bKash is adding more and more new services/functions to its app, the lack of financial
literacy among majority of its subscriber base may act as an obstacle to them adapting as the
services continue to become more and more complex. This poses a challenge for bKash to ensure
simplicity while introducing any new service.

All analysis has been conducted by LR Global Research based on publicly available information. 4
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

Valuation

The valuation for bKash, given our assumptions and outlook, range between USD 775 - 900 mn, with
an expected case of USD 815 mn. We have estimated our expected case, as shown in the table below:

Valuation method bKash Valuation (in USD mn)

Expected Case Best Case Worst Case
Discounted Cash Flow 228.9 336.6 166.3
Price/Active subscribers (M-Pesa Deal) 1,096.3 1,167.3 1,057.5
Price/Avg. revenue per user (M-Pesa Deal) 638.5 667.0 632.0
Price/Revenue (M-Pesa Deal) 466.6 519.0 445.6
Price/Revenue (Using US comparables) 1,643.0 1,827.5 1,568.9
Average 814.7 903.5 774.1

A stress test has also been conducted by stressing key variables such as MFS industry transaction
growth, bKash’s market share, subscriber growth, active ratio, transaction to revenue ratio, and cost
structure to forecast expected, best and worst-case scenarios.

We have carried out bKash’s valuation using a combination of several methods (discounted cash flow
model, and subscriber and usage-based multiples). In the DCF valuation model, FCFF is expected to
reach a positive value in 2022 and after the 2024, FCFF is expected to growth at a CAGR of 22.9% in
the subsequent five years. Terminal growth rate of free cash flow has been assumed to be ~10%.
Initially, we had taken fundraising deals of M-Pesa (Africa), Easypaisa (Pakistan) and Paytm (India)
into consideration for relative valuation. However, M-Pesa seems to be the most comparable to bKash
in terms of their business model, demography, and company growth stage. Moreover, the deal took
place very recently in April 2020 compared to Easypaisa (March, 2018) and Paytm (November 2019).
Hence, we have used M-Pesa’s multiples to arrive at bKash’s valuation.

Supporting Details
Valuation of bKash using multiple of recent deals: Expected Best Worst
Price to active subscriber multiple
Estimated number of active Subscribers of bKash (Dec’20) (mn) 41.6 43.0 40.9
Active Ratio of bKash (Dec’20) 65.0% 67.0% 63.8%
Estimated number of active Subscribers of bKash (Dec’20) (mn) 27.0 28.8 26.1
Price to active subscriber multiple assigned 40.5 40.5 40.5
Fair value of bKash (USD mn) 1,096.3 1,167.3 1,057.5
Price to revenue per user multiple
Estimated revenue (USD) (Dec’20) 261.3 290.7 249.5
Revenue per active user (RPAU) (USD) 9.7 10.1 9.6
Price to RPAU multiple assigned 66.1 66.1 66.1
Fair value of bKash (USD mn) 638.5 667.0 632.0

Price to revenue multiple

Estimated Revenue of bKash (Dec’20) (mn) 261.3 290.7 249.5
Price to revenue multiple assigned 1.8 1.8 1.8
Fair value of bKash (USD mn) 466.6 519.0 445.6
Price to earnings multiple
Discounted estimated EPS of 2024 at Dec'2020 5.7 8.1 4.0
Price to earnings multiple assigned 20.0 20.0 20.0
Fair value of bKash (USD mn) 115.0 161.2 80.6

All analysis has been conducted by LR Global Research based on publicly available information. 5
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

Valuation of bKash using price to revenue multiple of US comparables:

Price to Revenue multiple Expected Best Worst
Estimated Revenue of bKash (Dec’20) (USD mn) 261.3 290.7 249.5
Price to revenue multiple assigned 6.3 6.3 6.3
Fair value of bKash (USD mn) 1,643.0 1,827.5 1,568.9

Valuation of bKash
Historical deal-multiple of bKash, Bangladesh with Ant Financial (Apr'2018)
Number of active Subscribers (Apr’18) (mn) 19
Market share of bKash (Apr’18) (in terms of transaction value) 71.3%
Valuation by Ant Financials (USD mn) 640
Implied Price to active subscriber multiple 33.7

Deal-multiple of M-Pesa, Africa with Vodacom & Safaricom (Apr'2020)

Number of active subscriber of M-Pesa (mn) Dec'2019 37
Recent Valuation (USD mn) 1,500
Implied Price to active subscriber multiple 40.5
Revenue (USD) (2019) 840
Revenue per active user (RPAU) (USD) 22.7
Price to RPAU 66.1
Price to Revenue 1.8
Price to Earnings 20.0

Deal-multiple of Paytm, India with Ant Financial (Nov'2019)

Number of active subscriber of Paytm (mn) 140
Recent Valuation (USD mn) 15,000
Implied Price to active subscriber multiple 107.1
Revenue (USD mn) 500.0
Revenue per active user (RPAU) (USD) 3.6
Price to RPAU 4,200
Price to Revenue 30

Deal-multiple of Easypaisa, Pakistan with Ant Financial (Mar'2018)

Number of active subscriber of TMB (EasyPaisa) (mn) 20
Recent Valuation (USD mn) 410
Implied Price to active subscriber multiple 20.5
Revenue (USD) 55.0
Revenue per active user (RPAU) (USD) 2.8
Price to RPAU 149.1
Price to Revenue 7.5

Revenue Revenue (2020 P/S (using P/S (using

Price to Revenue MCap
(LTM) estimated) LTM rev) 2020 est.)
Discover Financial Services 14,552 11,584 10,981 1.26 1.33
Global Payments Inc 53,686 5,932 6,711 9.05 8.00
PayPal Holdings Inc 182,007 18,262 20,124 9.97 9.04
Square Inc 35,623 5,135 5,253 6.94 6.78
Average Multiple 6.80 6.29
Median Multiple 7.99 7.39
all values in USD mn except multiples

All analysis has been conducted by LR Global Research based on publicly available information. 6
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)
5-Yr 5-Yr
MFS Industry & bKash Statistics
2015A 2016A 2017A 2018A 2019A 2020E 2021E 2022E 2023E 2024E Hist. Frcst.
(Expected Case)
CAGR CAGR
MFS Industry Total Transaction (BDT bn) 1,577.7 2,346.9 3,146.6 3,788.9 4,344.9 4,728.3 5,515.8 6,516.8 7,758.6 9,110.2 33.3% 16.0%
bKash Total Transaction (BDT bn) 1,299.1 1,805.5 2,173.5 2,703.1 3,041.4 3,215.2 3,695.6 4,301.1 5,043.1 5,830.5 28.7% 13.9%
Market share of bKash 82.3% 76.9% 69.1% 71.3% 70.0% 68.0% 67.0% 66.0% 65.0% 64.0%
Subscriber of MFS Industry (in mn) 31.8 41.1 58.8 67.5 79.5 91.4 102.4 112.6 120.5 126.6 25.9% 9.7%
Subscriber of bKash (in mn) 20.7 26.2 28.8 31.0 35.8 41.6 47.1 50.7 51.8 53.2 17.9% 8.2%
% share of bKash 65.1% 63.7% 48.9% 45.8% 45.0% 45.5% 46.0% 45.0% 43.0% 42.0%
Industry Subscriber Growth 26.7% 29.2% 43.1% 14.8% 17.8% 15% 12% 10% 7.0% 5.0%
bKash Subscriber Growth 31.8% 26.4% 9.9% 7.6% 15.6% 16.3% 13.2% 7.6% 2.2% 2.6%
MFS industry active users (in mn) 13.2 15.9 21.0 37.3 34.6 41.1 47.1 52.9 58.5 63.3 23.3% 12.8%
Active bKash users (in mn) 9.1 11.3 14.4 18.7 23.3 27.0 30.6 33.5 34.2 35.6 29.0% 8.9%
Industry active ratio 41.6% 38.6% 35.7% 55.3% 43.6% 45.0% 46.0% 47.0% 48.5% 50.0%
bKash active ratio 44.0% 43.1% 50.1% 60.4% 65.0% 65.0% 65.0% 66.0% 66.0% 67.0%
MFS industry active users growth 8.8% 20.1% 32.3% 77.7% -7.2% 18.8% 14.5% 12.4% 10.4% 8.2%
Active bKash user growth 39.6% 24.0% 27.8% 29.6% 24.4% 25.0% 20.0% 15.0% 15.0% 15.0%
Revenue per User (RPU) BDT 414.8 461.9 495.8 622.7 594.8 533.3 541.3 585.5 680.8 767.5 10.3% 5.2%
Revenue per Active User (RPAU) BDT 943.6 1,071.7 988.8 1,031.1 915.1 820.4 832.8 887.1 1,031.6 1,145.5 0.8% 4.6%
RPU Growth 13.6% 11.4% 7.3% 25.6% -4.5% -10.3% 1.5% 8.2% 16.3% 12.7%
RPAU Growth 7.3% 13.6% -7.7% 4.3% -11.3% -10.3% 1.5% 6.5% 16.3% 11.0%

Key Financials 5-Yr Hist. 5-Yr Frcst.

2015A 2016A 2017A 2018A 2019A 2020E 2021E 2022E 2023E 2024E
(Expected Case) CAGR CAGR
Revenue 8,586.5 12,088.7 14,258.3 19,272.1 21,281.3 22,185.2 25,499.6 29,677.7 35,287.0 40,797.0 30.0% 13.9%
Gross Profit 1,575.9 2,322.8 2,959.1 5,229.7 4,669.0 4,880.7 5,673.7 6,751.7 8,204.2 9,995.3 37.3% 16.4%
Total Operating Income 2,591.6 3,502.1 4,401.0 5,685.5 5,493.8 6,045.5 7,203.6 8,532.3 10,674.3 12,851.1 27.6% 18.5%
Total Operating Expenses 2,088.8 2,636.2 3,308.3 4,752.8 5,419.4 6,045.5 6,821.1 7,493.6 8,733.5 10,097.3 35.2% 13.3%
EBITDA 502.8 865.9 1,092.7 932.7 74.4 - 382.5 1,038.7 1,940.8 2,753.8 -29.3% 105.9%
Profit before Tax 380.0 621.1 790.8 558.5 (633.7) (886.5) (659.6) (66.7) 631.2 1,255.2
Profit after Tax 237.6 386.5 487.8 204.5 (625.1) (886.5) (659.6) (46.7) 441.8 853.5
Non-current Assets 739.9 979.1 1,231.2 1,840.5 2,698.1 2,977.5 3,465.4 3,988.7 4,476.7 5,084.0 47.2% 13.5%
Current Assets 13,759.9 21,028.9 26,654.6 41,055.6 46,607.0 51,159.2 59,541.3 68,533.5 76,917.6 83,333.3 38.5% 12.3%

All analysis has been conducted by LR Global Research based on publicly available information. 7
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

Total Assets 14,499.8 22,008.0 27,885.8 42,896.1 49,305.1 54,136.7 63,006.6 72,522.2 81,394.2 88,417.3 38.9% 12.4%
Total Equities 2,256.8 2,592.0 3,079.8 10,708.8 10,083.6 9,197.1 8,537.5 8,490.8 8,932.6 9,786.1 37.9% -0.6%
Non-current Liabilities 66.4 144.1 83.9 42.0 232.9 125.7 121.1 130.4 152.5 132.5 100.7% -10.7%
Current Liabilities 12,176.6 19,271.9 24,722.1 32,145.3 38,988.6 44,813.8 54,348.0 63,901.0 72,309.1 78,498.7 39.0% 15.0%
Total Liabilities 12,243.0 19,416.1 24,806.0 32,187.3 39,221.5 44,939.6 54,469.2 64,031.4 72,461.6 78,631.2 39.1% 14.9%
Total Equities & Liabilities 14,499.8 22,008.0 27,885.8 42,896.1 49,305.1 54,136.7 63,006.6 72,522.2 81,394.2 88,417.3 38.9% 12.4%
Profitability Ratios
Gross Profit Margin 18.4% 19.2% 20.8% 27.1% 21.9% 22.0% 22.3% 22.8% 23.3% 24.5%
EBITDA Margin 5.9% 7.2% 7.7% 4.8% 0.3% 0.0% 1.5% 3.5% 5.5% 6.8%
PBT Margin 4.4% 5.1% 5.5% 2.9% -3.0% -4.0% -2.6% -0.2% 1.8% 3.1%
Profit after Tax Margin 2.8% 3.2% 3.4% 1.1% -2.9% -4.0% -2.6% -0.2% 1.3% 2.1%
ROCE 16.4% 22.7% 25.0% 5.2% -6.1% -9.5% -7.6% -0.8% 6.9% 12.7%
Earnings Volatility
Gross Profit Growth 64.4% 47.4% 27.4% 76.7% -10.7% 4.5% 16.2% 19.0% 21.5% 21.8%
Operating Profit Growth 59.9% 35.1% 25.7% 29.2% NA NA NA NA 25.1% 20.4%
Profit after Tax Growth 26.0% 62.7% 26.2% -58.1% NA NA NA NA 1,046.5% 93.2%
Other Ratios (as % of Revenue)
Cost of Services 81.6% 80.8% 79.2% 72.9% 78.1% 78.0% 77.8% 77.3% 76.8% 75.5%
Operating and Admin. Expense 13.0% 14.5% 15.5% 15.0% 15.3% 16.0% 15.5% 14.8% 14.8% 14.8%
Marketing and Prom. Expense 9.9% 6.9% 7.3% 9.7% 10.2% 11.3% 11.3% 10.5% 10.0% 10.0%

Revenue components (As % of total revenue) 2017 2018 2019

Cash out and others 88.4% 85.7% 85.5%
Merchant settlement 0.7% 1.4% 0.0%
Airtime commission 2.8% 2.5% 2.2%
Return on trust cum settlements 8.1% 10.4% 12.3%
As % of total cost of services As % of revenue
Cost of services: 2017 2018 2019 2017 2018 2019
Agents & distributors commission 91.4% 89.5% 87.6% 72.5% 65.2% 68.4%
MNO service charges 8.6% 9.4% 11.0% 6.8% 6.8% 8.6%
Interest and Others 0.0% 1.1% 1.4% 0.0% 0.8% 1.1%
Remittance service cost 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total 100% 100% 100% 79.2% 72.9% 78.1%

All analysis has been conducted by LR Global Research based on publicly available information. 8
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)
5-Yr 5-Yr
MFS Industry & bKash Statistics
2015A 2016A 2017A 2018A 2019A 2020E 2021E 2022E 2023E 2024E Hist. Frcst.
(Best Case)
CAGR CAGR
MFS Industry Total Transaction (BDT bn) 1,577.7 2,346.9 3,146.6 3,788.9 4,344.9 5,038.0 6,058.1 7,314.6 8,832.5 10,532.0 33.3% 19.4%
bKash Total Transaction (BDT bn) 1,299.1 1,805.5 2,173.5 2,703.1 3,041.4 3,526.6 4,119.5 4,900.8 5,829.4 6,845.8 28.7% 17.6%
Market share of bKash 82.3% 76.9% 69.1% 71.3% 70.0% 70.0% 68.0% 67.0% 66.0% 65.0%
Subscriber of MFS Industry (in mn) 31.8 41.1 58.8 67.5 79.5 91.4 102.4 112.6 121.1 130.2 25.9% 10.4%
Subscriber of bKash (in mn) 20.7 26.2 28.8 31.0 35.8 43.0 47.1 50.7 53.3 56.0 17.9% 9.4%
% share of bKash 65.1% 63.7% 48.9% 45.8% 45.0% 47.0% 46.0% 45.0% 44.0% 43.0%
Industry Subscriber Growth 26.7% 29.2% 43.1% 14.8% 17.8% 15% 12% 10% 7.5% 7.5%
bKash Subscriber Growth 31.8% 26.4% 9.9% 7.6% 15.6% 20.1% 9.6% 7.6% 5.1% 5.1%
MFS industry active users (in mn) 13.2 15.9 21.0 37.3 34.6 41.1 47.1 52.9 58.7 65.1 23.3% 13.4%
Active bKash users (in mn) 9.1 11.3 14.4 18.7 23.3 28.8 31.6 34.5 36.2 38.6 29.0% 10.7%
Industry active ratio 41.6% 38.6% 35.7% 55.3% 43.6% 45.0% 46.0% 47.0% 48.5% 50.0%
bKash active ratio 44.0% 43.1% 50.1% 60.4% 65.0% 67.0% 67.0% 68.0% 68.0% 69.0%
MFS industry active users growth 8.8% 20.1% 32.3% 77.7% -7.2% 18.8% 14.5% 12.4% 10.9% 10.8%
Active bKash user growth 39.6% 24.0% 27.8% 29.6% 24.4% 25.0% 20.0% 15.0% 15.0% 15.0%
Revenue per User (RPU) BDT 414.8 461.9 495.8 622.7 594.8 574.2 611.9 676.5 765.5 855.7 10.3% 7.5%
Revenue per Active User (RPAU) BDT 943.6 1,071.7 988.8 1,031.1 915.1 857.0 913.3 994.8 1,125.8 1,240.2 0.8% 6.3%
RPU Growth 13.6% 11.4% 7.3% 25.6% -4.5% -3.5% 6.6% 10.6% 13.2% 11.8%
RPAU Growth 7.3% 13.6% -7.7% 4.3% -11.3% -6.3% 6.6% 8.9% 13.2% 10.2%

Key Financials 5-Yr Hist. 5-Yr Frcst.

2015A 2016A 2017A 2018A 2019A 2020E 2021E 2022E 2023E 2024E
(Best Case) CAGR CAGR
Revenue 8,586.5 12,088.7 14,258.3 19,272.1 21,281.3 24,676.3 28,824.8 34,291.3 40,789.3 47,901.1 30.0% 17.6%
Gross Profit 1,575.9 2,322.8 2,959.1 5,229.7 4,669.0 5,428.8 6,413.5 7,887.0 9,585.5 11,735.8 37.3% 20.2%
Total Operating Income 2,591.6 3,502.1 4,401.0 5,685.5 5,493.8 6,724.3 8,143.0 9,944.5 12,440.7 15,088.8 27.6% 22.4%
Total Operating Expenses 2,088.8 2,636.2 3,308.3 4,752.8 5,419.4 6,662.6 7,638.6 8,487.1 9,891.4 11,616.0 35.2% 16.5%
EBITDA 502.8 865.9 1,092.7 932.7 74.4 61.7 504.4 1,457.4 2,549.3 3,472.8 -29.3% 115.7%
Profit before Tax 380.0 621.1 790.8 558.5 (633.7) (824.8) (590.0) 240.9 1,070.8 1,760.5
Profit after Tax 237.6 386.5 487.8 204.5 (625.1) (824.8) (590.0) 168.6 749.6 1,197.1
Non-current Assets 739.9 979.1 1,231.2 1,840.5 2,698.1 3,127.0 3,762.0 4,444.2 5,061.5 5,836.9 47.2% 16.7%
Current Assets 13,759.9 21,028.9 26,654.6 41,055.6 46,607.0 53,727.3 64,638.5 76,359.4 86,966.1 95,674.2 38.5% 15.5%

All analysis has been conducted by LR Global Research based on publicly available information. 9
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

Total Assets 14,499.8 22,008.0 27,885.8 42,896.1 49,305.1 56,854.3 68,400.5 80,803.6 92,027.7 101,511.1 38.9% 15.5%
Total Equities 2,256.8 2,592.0 3,079.8 10,708.8 10,083.6 9,258.8 8,668.8 8,837.4 9,587.0 10,784.1 37.9% 1.4%
Non-current Liabilities 66.4 144.1 83.9 42.0 232.9 125.7 121.1 130.4 152.5 132.5 100.7% -10.7%
Current Liabilities 12,176.6 19,271.9 24,722.1 32,145.3 38,988.6 47,469.8 59,610.6 71,835.8 82,288.1 90,594.5 39.0% 18.4%
Total Liabilities 12,243.0 19,416.1 24,806.0 32,187.3 39,221.5 47,595.5 59,731.8 71,966.3 82,440.7 90,727.0 39.1% 18.3%
Total Equities & Liabilities 14,499.8 22,008.0 27,885.8 42,896.1 49,305.1 56,854.3 68,400.5 80,803.6 92,027.7 101,511.1 38.9% 15.5%
Profitability Ratios
Gross Profit Margin 18.4% 19.2% 20.8% 27.1% 21.9% 22.0% 22.3% 23.0% 23.5% 24.5%
EBITDA Margin 5.9% 7.2% 7.7% 4.8% 0.3% 0.3% 1.8% 4.2% 6.3% 7.2%
PBT Margin 4.4% 5.1% 5.5% 2.9% -3.0% -3.3% -2.0% 0.7% 2.6% 3.7%
Profit after Tax Margin 2.8% 3.2% 3.4% 1.1% -2.9% -3.3% -2.0% 0.5% 1.8% 2.5%
ROCE 16.4% 22.7% 25.0% 5.2% -6.1% -8.8% -6.7% 2.7% 11.0% 16.1%
Earnings Volatility
Gross Profit Growth 64.4% 47.4% 27.4% 76.7% -10.7% 16.3% 18.1% 23.0% 21.5% 22.4%
Operating Profit Growth 59.9% 35.1% 25.7% 29.2% NA NA NA NA 25.1% 21.3%
Profit after Tax Growth 26.0% 62.7% 26.2% -58.1% NA NA NA NA 344.6% 59.7%
Other Ratios (as % of Revenue)
Cost of Services 81.6% 80.8% 79.2% 72.9% 78.1% 78.0% 77.8% 77.0% 76.5% 75.5%
Operating and Admin. Expense 13.0% 14.5% 15.5% 15.0% 15.3% 16.0% 15.5% 14.8% 14.3% 14.3%
Marketing and Prom. Expense 9.9% 6.9% 7.3% 9.7% 10.2% 11.0% 11.0% 10.0% 10.0% 10.0%

5-Yr 5-Yr
MFS Industry & bKash Statistics
2015A 2016A 2017A 2018A 2019A 2020E 2021E 2022E 2023E 2024E Hist. Frcst.
(Worst Case)
CAGR CAGR
MFS Industry Total Transaction (BDT bn) 1,577.7 2,346.9 3,146.6 3,788.9 4,344.9 4,663.6 5,312.4 6,227.9 7,402.3 8,618.8 33.3% 14.7%
bKash Total Transaction (BDT bn) 1,299.1 1,805.5 2,173.5 2,703.1 3,041.4 3,124.6 3,453.0 3,923.6 4,515.4 5,171.3 28.7% 11.2%
Market share of bKash 82.3% 76.9% 69.1% 71.3% 70.0% 67.0% 65.0% 63.0% 61.0% 60.0%
Subscriber of MFS Industry (in mn) 31.8 41.1 58.8 67.5 79.5 91.4 100.6 108.6 116.2 122.0 25.9% 8.9%
Subscriber of bKash (in mn) 20.7 26.2 28.8 31.0 35.8 40.9 45.3 47.8 48.8 50.0 17.9% 6.9%
% share of bKash 65.1% 63.7% 48.9% 45.8% 45.0% 44.8% 45.0% 44.0% 42.0% 41.0%
Industry Subscriber Growth 26.7% 29.2% 43.1% 14.8% 17.8% 15% 10% 8% 7.0% 5.0%
bKash Subscriber Growth 31.8% 26.4% 9.9% 7.6% 15.6% 14.4% 10.6% 5.6% 2.1% 2.5%
MFS industry active users (in mn) 13.2 15.9 21.0 37.3 34.6 41.1 46.3 51.1 56.4 61.0 23.3% 12.0%

All analysis has been conducted by LR Global Research based on publicly available information. 10
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

Active bKash users (in mn) 9.1 11.3 14.4 18.7 23.3 26.1 28.9 30.5 31.2 32.0 29.0% 6.6%
Industry active ratio 41.6% 38.6% 35.7% 55.3% 43.6% 45.0% 46.0% 47.0% 48.5% 50.0%
bKash active ratio 44.0% 43.1% 50.1% 60.4% 65.0% 63.8% 63.8% 63.8% 64.0% 64.0%
MFS industry active users growth 8.8% 20.1% 32.3% 77.7% -7.2% 18.8% 12.4% 10.3% 10.4% 8.2%
Active bKash user growth 39.6% 24.0% 27.8% 29.6% 24.4% 25.0% 20.0% 15.0% 15.0% 15.0%
Revenue per User (RPU) BDT 414.8 461.9 495.8 622.7 594.8 517.8 518.8 558.2 633.6 713.1 10.3% 3.7%
Revenue per Active User (RPAU) BDT 943.6 1,071.7 988.8 1,031.1 915.1 812.2 813.8 875.7 990.0 1,114.3 0.8% 4.0%
RPU Growth 13.6% 11.4% 7.3% 25.6% -4.5% -13.0% 0.2% 7.6% 13.5% 12.5%
RPAU Growth 7.3% 13.6% -7.7% 4.3% -11.3% -11.2% 0.2% 7.6% 13.1% 12.5%

Key Financials 5 Yr Hist. 5 Yr Frcst.

2015A 2016A 2017A 2018A 2019A 2020E 2021E 2022E 2023E 2024E
(Worst Case) CAGR CAGR
Revenue 8,586.5 12,088.7 14,258.3 19,272.1 21,281.3 21,184.7 23,480.7 26,680.2 30,930.5 35,681.7 30.0% 10.9%
Gross Profit 1,575.9 2,322.8 2,959.1 5,229.7 4,669.0 4,660.6 5,224.5 5,936.3 7,191.3 8,563.6 37.3% 12.9%
Total Operating Income 2,591.6 3,502.1 4,401.0 5,685.5 5,493.8 5,772.8 6,633.3 7,537.2 9,356.5 11,061.3 27.6% 15.0%
Total Operating Expenses 2,088.8 2,636.2 3,308.3 4,752.8 5,419.4 5,825.8 6,222.4 6,603.3 7,655.3 8,831.2 35.2% 10.3%
EBITDA 502.8 865.9 1,092.7 932.7 74.4 (53.0) 410.9 933.8 1,701.2 2,230.1 -29.3% 97.4%
Profit before Tax 380.0 621.1 790.8 558.5 (633.7) (939.5) (610.2) (117.7) 486.8 880.5
Profit after Tax 237.6 386.5 487.8 204.5 (625.1) (939.5) (610.2) (82.4) 340.7 598.7
Non-current Assets 739.9 979.1 1,231.2 1,840.5 2,698.1 2,917.5 3,305.2 3,715.0 4,072.7 4,553.5 47.2% 11.0%
Current Assets 13,759.9 21,028.9 26,654.6 41,055.6 46,607.0 50,127.8 56,789.5 63,829.6 69,976.3 74,638.1 38.5% 9.9%
Total Assets 14,499.8 22,008.0 27,885.8 42,896.1 49,305.1 53,045.3 60,094.7 67,544.6 74,049.0 79,191.6 38.9% 9.9%
Total Equities 2,256.8 2,592.0 3,079.8 10,708.8 10,083.6 9,144.1 8,533.9 8,451.6 8,792.3 9,391.1 37.9% -1.4%
Non-current Liabilities 66.4 144.1 83.9 42.0 232.9 125.7 121.1 130.4 152.5 132.5 100.7% -10.7%
Current Liabilities 12,176.6 19,271.9 24,722.1 32,145.3 38,988.6 43,775.4 51,439.7 58,962.6 65,104.1 69,668.1 39.0% 12.3%
Total Liabilities 12,243.0 19,416.1 24,806.0 32,187.3 39,221.5 43,901.1 51,560.8 59,093.0 65,256.7 69,800.6 39.1% 12.2%
Total Equities & Liabilities 14,499.8 22,008.0 27,885.8 42,896.1 49,305.1 53,045.3 60,094.7 67,544.6 74,049.0 79,191.6 38.9% 9.9%
Profitability Ratios
Gross Profit Margin 18.4% 19.2% 20.8% 27.1% 21.9% 22.0% 22.3% 22.3% 23.3% 24.0%
EBITDA Margin 5.9% 7.2% 7.7% 4.8% 0.3% -0.3% 1.8% 3.5% 5.5% 6.3%
PBT Margin 4.4% 5.1% 5.5% 2.9% -3.0% -4.4% -2.6% -0.4% 1.6% 2.5%
Profit after Tax Margin 2.8% 3.2% 3.4% 1.1% -2.9% -4.4% -2.6% -0.3% 1.1% 1.7%

All analysis has been conducted by LR Global Research based on publicly available information. 11
BKASH LIMITED JUNE 2020
PERFORMANCE ANALYSIS & VALUATION (CONFIDENTIAL)

ROCE 16.4% 22.7% 25.0% 5.2% -6.1% -10.1% -7.1% -1.4% 5.4% 9.2%
Earnings Volatility
Gross Profit Growth 64.4% 47.4% 27.4% 76.7% -10.7% -0.2% 12.1% 13.6% 21.1% 19.1%
Operating Profit Growth 59.9% 35.1% 25.7% 29.2% NA NA NA NA 24.1% 18.2%
Profit after Tax Growth 26.0% 62.7% 26.2% -58.1% NA NA NA NA -513.7% 75.7%
Other Ratios (as % of Revenue)
Cost of Services 81.6% 80.8% 79.2% 72.9% 78.1% 78.0% 77.8% 77.8% 76.8% 76.0%
Operating and Admin. Expense 13.0% 14.5% 15.5% 15.0% 15.3% 16.0% 15.5% 14.8% 14.8% 14.8%
Marketing and Prom. Expense 9.9% 6.9% 7.3% 9.7% 10.2% 11.5% 11.0% 10.0% 10.0% 10.0%

All analysis has been conducted by LR Global Research based on publicly available information. 12