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Justification of Issuing Price of
RAK Ceramics (Bangladesh) Limited
Prepared forMr. Manirul Ahsan
Foreign Private Equity & Debt Specialist
Course Instructor, Financial Inor!ation Analysis
Prepared byApon Das "#oll$ %'
Mushtahir A(i( #ah!an "#oll$ )*'
Mahbubur #ah!an "#oll$ )'
M+. i(bul Si-+er "#oll$ '
M+. Mohiu++in /ahangir "#oll$ 01'2anvir asan Cho3+hury "#oll$
04'
M5A 06D, I5A "D7'
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#A8 at a glance#A8 Cera!ics 5angla+esh 9i!ite+
Subsi+iary o #A8 Cera!ics PSC, 7AE
:perational since ;ove!ber *, )44< in5angla+esh
Asset 0,111,%
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S>:2 AnalysisStrength
Strong bran+ na!e "S7PE#5#A;D, M#M business A3ar+, 5ran+ Finance
Mi++leEast A3ar+ etc'
In 5angla+esh, every 0th sanitary 3are i?e+ is non #A8 cera!ics
an+ every 0th
tile is #A8 cera!ics
Strong supply chain "1%% global suppliers, 4< +ealer'
>ea-ness
Susceptibility to e?change rate an+ political ris-
2hreats
Stagnating real estate gro3th rate in 5angla+esh "7rban gro3th
rate is currently.6@'
:pportunity
overn!ent policy "Acco!!o+ation or all by %), 01@ +uty on
i!porte+ tiles,targete+ DP gro3th rate o )%@ by %)6'
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PorterBs Five Forces Mo+elSuppliersB bargaining po3er$ 9o3 "1%%
suppliers'
5uyersB bargaining po3er$ Mo+erate
Co!petition$ 9o3 ")) co!petitors #A8 has 1@tiles an+ *6@
sanitary 3are !ar-et share'
Substitute pro+ucts$ Fe3
2hreat o ne3 entrant$ Mo+erate "high capitalrequire!ent, several
co!panies 3ere in pipeline'
Scale$ .01.%
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PES2E AnalysisPolitical$ :5Bs +iscourage!ent or i!porte+ goo+s
in
iscal bu+get=%%4, Political stability
Econo!ic$ #eal DP gro3th rate o 1.60@ in %%4 an+*.%6@ in %)%,
Frontier FiveB econo!y "/P Morgan' an+;e?t ))B "ol+!an Sachs',
Social$ ro3ing !i++le class, Acceptability o oreignco!pany
pro+ucts a!ong consu!ers
2echnological$ ;o history o non operation, superiorquality ra3
!aterials, international +esign quality,access to appropriate ne3
technology
Environ!ental$ 9arge scale E2P installation on March,%%4
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#is- PerspectiveInterest rate ris-$ lo3 "cash richness, lo3 +ebt
to equity ratio'
E?change rate ris-$ igh
In+ustry an+ !ar-et ris-$ Mo+erate
Slo3 !oving inventory ris-$ Mo+erate
;ature o the in+ustry
)1 +ays sales in inventory
:ther ris-s$ 9o3 supply chain, technology relate+ ris-s,
operational ris-s, !anage!ent an+ labour relate+ ris-s
Cre+it rating$ AA long ter!, S2=) short ter! by C#IS9
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Techniques Price V
NAV/NTAV
P/E Multiple DDM P/BV
Value 12.56 32.31 38.6 .8!
"ei#ht$Equal%
!.25 !.25 !.25 !.25 32.!6
"ei#ht$Base& 'n()p'rtance%
!.3! !.3! !.2! !.2! 3!.1
stimated !air "alue
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2he Fair Galue o #A8 Stoc- beco!es 0.1*3hich 3as sho3n .)
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2han- Hou
