Company Update - EBL Securities

Analysis on MJL Bangladesh Limited (MJLBD)
Basic Information
Current Price (25/11/2014)
Market Cap(BDT mn)
3 Months Return%
1 Year Return%
3 Months Volume Avg. (mn)
No. of Shares Outstanding (mn)
Dividend (2013)
Current P/E
52 week price range(BDT)
Sector P/E
Income Data BDT mn
Net Sales
COGS
Gross Profit
Operating Profit
PAT
Operating Activities mn
Inventories
Account Receivables
Account Payables
Working Capital
Balance sheet BDT mn
Asset
Liabilities
Equity
Paid up
Margins
Gross Margin
Operating Margin
Net profit Margin
Return
ROE
ROA
Growth
Revenue Growth
Operating Profit Growth
Net Profit Growth
Per Share BDT
EPS
NAV
NOCF
Debt & Cash BDT mn
Total Debt
Long Term Debt
Cash & FDR
Interest Coverage
Debt/Equity
Date: Nov 26, 2014
124.8
29880
4.09%
66.4%
2.21
238.5
25%C
24.33x
68.4 -163.9
12.42
2012
6994
5668
1327
1179
651
2012
1734
250
318
2583
2012
11312
4099
7212
2385
2012
19%
17%
9%
2012
9%
6%
2012
16%
-10%
2%
2012
2.73
30.24
1.28
2012
2539
904
1747
4.19
0.35
2013
7188
5705
1497
1221
721
2013
1495
324
229
1261
2013
12106
4768
7338
2385
2013
21%
17%
10%
2013
10%
6%
2013
3%
4%
11%
2013
3.03
30.77
3.63
2013
3021
489
1565
5.29
0.41
2014A
8437
6219
2219
1939
1223
2014
1270
558
241
454
2014
16202
7753
8374
2385
2014A
26%
23%
15%
2014A
15%
8%
2014A
17%
58%
70%
2014A
5.13
35.43
6.21
2014
5598
1694
2566
10.26
0.66
P/E Based Valuation
NPAT
No of Shares
EPS
Sector PE Multiplier
Value
Price @P/E 25
Price @P/E 30
Price @P/E 35
BDT mn
Mn
BDT
BDT
BDT
BDT
BDT
1223
238.5
5.13
12.42
63.70
128.25
153.90
179.55
NAV Based Valuation
NAV (Q3 2014)
Avg. P/NAV Multiplier (Similar Cos.)
Value
BDT
BDT
35.43
3.52
124.71
Company Profile:
Joint venture Company between state owned Jamuna Oil
Company and EC Securities Limited
Incorporation: 1998
Commercial Operation: May 20, 1999
Listing: DSE & CSE- June 22, 2011
Management: Dr. Md Mozammel Haque Khan (Chairman),
Azam J. Chowdhury (Managing Director).
Subsidiaries: Omera Petroleum Limited, Omera Cylinders
Limited and MJL & AKT Petroleum Ltd.
Shareholding Structure:
EC Securities
Jamuna Oil
Sponsors/Directors
Others
Total
No. of Shares (mn)
139.0
46.4
0.2
52.9
238.5
% holding
58.4%
19.5%
0.01%
22.2%
100.0%
Business Profile:
Nature of Business: (1) owns Oil blending plant and (2)
sells lubricants in both local and international market
Revenue Generation: 13.5% from Oil Tanker, 41.6% from
Manufacturing & 44.9% from Trading (2014 Q3)
Product Line: More than Twenty (20) types. Major Brands:
Mobil, Omera & Others.
Customers: Private Vehicles, Commercial Vehicles,
Industrial, Manufacturing, Processing & Energy sector.
Capacity Utilization: 51% (2013)
Distribution: (1) Indirectly through 16 depots, 431 filling
stations, 852 agents & 181 packed point dealers
(2) Directly through 82 wholesalers
Omera Fuels Ltd. (OFL) is a Group Company, not a
subsidiary/ associate of MJLBD.
Subsidiary Profile:
Nature of
Business
Paid up
capital
Share
Money
Deposit
MJL’s
ownership
Commercial
Operation
OPL
Installing a LPG
terminal with
import,
storage,
bottling &
marketing
facilities.
OCL
Setting up
a Cylinder
Manufactu
ring Plant.
MJL & AKT
Incorporated
in Myanmar
Plant capacity
of 100
K.TON/Annum
60 mn
Plant
capacity of
500,000550, 0000
cylinders
per annum.
20 mn
To carry out
business as
authorized
importer,
dealer and
distributer of
Exxon Mobil
engine Oil.
973 mn
1525 mn
533 mn
-
75%
99.99%
(25% Jamuna Oil Ltd.)
51%
(49% Myanmar)
Jan 2015*
Jan 2015*
(Expected)
(Expected)
July 2013
*Source: Company Official, over telephone (9899636)
Global Lubricant Market Outlook:
World lubricant demand: 42.3 mn MT (2014E) & 41.35 mn
MT (2013)
2.3% annual growth expected
Key players: ExxonMobil, Royal Dutch Shell, British
Petroleum, Castrol, Chevron, Total and Fuchs.
Asia is the growth market for this industry.
Disclaimer: This document has been prepared by EBL Securities Ltd. (EBLSL) for information only of its clients on the basis of the publicly available information in the market and own research. This
document has been prepared for information purpose only and does not solicit any action based on the material contained herein and should not be construed as an offer or solicitation to buy or sell or
subscribe to any security. Neither EBLSL nor any of its directors, shareholders, member of the management or employee represents or warrants expressly or impliedly that the information or data of the
sources used in the documents are genuine, accurate, complete, authentic and correct. However all reasonable care has been taken to ensure the accuracy of the contents of this document. EBLSL will
not take any responsibility for any decisions made by investors based on the information herein.
Analysis on MJL Bangladesh Limited (MJLBD)
Date: Nov 26, 2014
Financial Review: (FY-2013):
Despite the turbulence in 2013, MJL had a 2.77% increase
in revenue and a 10.85% increase in NPAT.
Total debt increased though long term debt decreased.
Tax & VAT paid: BDT 181 (mn) & BDT 939 (mn)
respectively.
Lubricant Demand by region in 2013:
Bangladesh Lubricant Market Outlook:
Estimated to be worth more than BDT 2,400 crore, which
was BDT 1,200 crore five years back.
Annual domestic consumption: 100,000 tons
Total Lubricant Consumption in 2013: Private Vehicle: 29%,
Commercial Vehicle- 46%, Industrial- 25%
Market Growth: 2.5% a year
Market Share: (1) 54% supplied by renowned local and
foreign manufacturers (Mobil/ MJLBD-30%, BP/ Meghna11%, Total/ Padma- 5%, Omera/ MJLBD, Shell, Caltex &
Castrol- 2% each) & (2) 46% by small brands (2013)
A comparison of listed companies:
Company
MJLBD
Jamuna Oil
Mpetroleum
Padma Oil
CVO
Paid
up
2385
1004
984
982
198
NPAT
EPS
P/E
NAV
1223
2844
2537
1847
104
5.13
25.76
23.4
18.8
5.24
24.33
9.71
10.89
14.36
116.4
35.43
69.81
63.81
78.92
10.61
Investment Positive:
OPL & OCL, the two subsidiaries of MJL is expected to
begin its operation soon. The earnings of these
subsidiaries will have positive impact on MJL’s
profitability.
MJL has an unutilized capacity of 49% which means it has
scope for more production if demand increases in the
future.
Import Duty on LPG cylinders has been increased from 5%
to 25% in order to protect the local manufacturers hence
OCL may get the benefit.
MJLBL has also signed an agreement with Balmer Lawrie &
Co (India), to manufacture high quality steel barrels for
storage of lubricating oil.
MJL leads the lubricant market with the highest market
share (30%) and so it may have some scope to set price
standards.
Within a short span of time Omera, a brand of MJL, has
captured 2% of the market share.
MJL pays consistent dividend (25% in last 4 yrs.)
Impressive 5 year CAGR: Sales: 21.3%, NPAT: 24.6%
Investment Concern:
An increase in price in the international market may
adversely affect the profitability of MJL as Base Oil and
some finished products are imported from ExxonMobil.
Shortage of Gas & Power Supply unfavorably affects the
Industrial production resulting in lower demand for
Industrial Lubricant consumption.
Export sales of lubricants have been decreased compared
to local sales of imported lubricants.
Debt and D/E ratio are increasing over the years.
Financial Review: (FY-2014A):
NPAT is expected to increase to BDT 1223 mn by the end
of the year due a decrease in COGS, Selling &
Administration expenses and financial charges of MJL.
EPS is expected to be BDT 5.13 at the end of the year.
ROE, ROA and all margins are expected to increase.
Debt Increase: Long Term by BDT 1205 mn.
Concluding Remarks:
•
OPL, OCL will boost earnings when comes to operation
(Expected: January 2015). As per our assumptions, the
NPAT might grow by BDT 250.00 mn and EPS might grow
upto BDT 6.15.
•
As MJL is the market leader, demand is expected to be
stable & growing in future.
•
Overall, MJL is a large cap company with strong financials
& growth prospects.
•
Price has declined to BDT 124.80, almost 25% from the
recent high of BDT 163.90.
Price-Volume graph (2014):
NPAT (BDT mn) Trend last 6 years:
EPS (BDT mn) Trend last 6 years:
EBL Securities Ltd. Research Team:
M. Shahryar Faiz
Farah Tasneem
Shahriar Azad Shashi
Head of Research
Research Associate
Research Associate
[email protected]
[email protected]
[email protected]
Disclaimer: This document has been prepared by EBL Securities Ltd. (EBLSL) for information only of its clients on the basis of the publicly available information in the market and own research. This
document has been prepared for information purpose only and does not solicit any action based on the material contained herein and should not be construed as an offer or solicitation to buy or sell or
subscribe to any security. Neither EBLSL nor any of its directors, shareholders, member of the management or employee represents or warrants expressly or impliedly that the information or data of the
sources used in the documents are genuine, accurate, complete, authentic and correct. However all reasonable care has been taken to ensure the accuracy of the contents of this document. EBLSL will
not take any responsibility for any decisions made by investors based on the information herein.

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