M. Shahryar Faiz, EBL Securities Ltd. 5/28/2014 CONFIDENCE CEMENT LTD. Scrip: CONFIDCEM Sector: Cement Day's Hi-Lo 128.9 - 134.7 1 wk Hi-Lo 124.1 - 134.7 1 mo. Hi-Lo 119.7 - 134.7 No. of Shares Paid-Up Cap. 44,993,520 450 mn Price/ Volume Graph CLP Volume 132.40 317,400 119.7 - 160 Shareholding 117.9 - 160 % 95.3 - 160 No. of Shares MCap. (BDT mn) Reserve 1445.10 mn 5,957.14 Adj. Price Graph 3 mo. Hi-Lo 6 mo. Hi-Lo 1 yr. Hi-Lo Auth. Capital 1000 mn (1-year) 2,500,000 EPS (Ann.) 8.52 Public 50.03 22,510,258 Market Lot 20 P/E 15.54 Sponsor 23.47 10,559,979 Face Value 10 (2009-2014) NAV 65.11 Instt. 26.5 11,923,283 Credit Rating A+/ ST3 (CRISL) P/NAV 2.03 Foreign Year-End 201312 165 158.1 155 2,000,000 145 145 1,500,000 137.7 135 131.8 125 1,000,000 121 115 500,000 105 0 5/28/2013 7/28/2013 9/28/2013 11/28/2013 1/28/2014 3/28/2014 EPS Trend (BDT) 95 5/28/2014 (6-year) EPS- Quarterly (BDT) 9.00 8.52 8.50 8.09 2.50 8.00 7.50 7.00 2.10 2.00 7.39 2.13 1.86 1.84 1.42 1.37 0.92 1.00 6.23 2.51 2.30 1.50 6.86 6.50 0.50 6.00 5.29 5.50 0.00 Q1 5.00 2009 2010 2011 NPAT (BDT mn) 2012 2013 Q2 2014A (6-year) Q3 383 75.00 280 Q2 Q3 2013 Q4 Q1 2014 (6-year) 74.57 69.43 70.00 65.11 67.24 65.00 241 230 Q1 80.00 330 280 Q4 2012 NAV (BDT) 364 380 180 (9 Quarters) 3.00 198 60.00 55.90 56.74 55.00 143 130 50.00 2009 2010 Year Dividend Investment Prospects 2011 2013 27.5%C 2012 2013 2012 20%C 2014A 2009 2011 P/E 20%C, 20%B Price @ P/E Investment Concerns 2010 15 127.8 2011 2012 17 144.8 2013 2014A 20 170.4 22 187.4 Expansion project to Double capacity (from 2000 MT to 4000 MT, per day) in existing factory premises located at Madambibirhat, Bhatiary, Chittagong. Project cost: BDT 2,000.00 mn @80:20 ratio by borrowing from Banks. Expected commercial production: 2016. Construction of Padma Bridge is expected to increase sales & profitability of the Company. Confidence Cement was used in large projects like Jamuna Bridge, Shah Amanat intl. Airport, Dhk- Ctg 4-lane Highway, Ctg Port Flyover, Cox's Bazar Ocean Paradise Hotel & Hotel The Cox today etc. Significant scope to incraese capacity utilization will boost revenue as demand incraeses. Current capacity utilization is around 67%. Capacity was incraesed to 750,000 MT from 600,000 MT/ year in 2013. Utilization was 500,399 MT in 2013. CCL has to import the main raw materials (Clinker & Gypsum) from foreign sources which is around 67-70% of their total cost. Any adverse movement in international prices will advesely affect the COGS & profitability of the Company. Energypac Confidence Power Venture Ltd. (ECPVL) is a 49% owned associate company of Confidence Cement Ltd. (CCL). ECPVL has got 2 power projects: 11MW in Hobiganj (running since 2009) and 108MW project in Patega, Chittagong (under process). Investment: around BDT 420.00 mn. Dividend/ other comprehensive income from these investments will add benefits for the Company. CCL has around BDT 243.00 mn (@MV) investment in marketable securities. The difference between cost & market price was around BDT 124.00 mn . Cost price was BDT 367.00 mn. Profiatbility of the investments in Confidence Power Ltd., Confidence Electric Ltd., Asia Paint (BD) Ltd., CBC-Confidence Cement Convention Centre etc. may generate additional income for CCL. The Company has started its Readymix Plant in 2013. Moreover it has investment in Confidence Power Ltd., Confidence Electric Ltd., Asia Paint (BD) Ltd., CBC-Confidence Cement Convention Centre etc. the prospects of which are not clearly known yet. Borrowing BDT 1,600 mn from banks for the expansion project will incraese the debtequity ratio & financial expences of the Company. D-E ratio may incraese to 88% from existing 33%! Term loan interest of CCL is around 15.50%. Any adverse exchange rate fluctuation will have ngative impact on profitability of the Company. Disclaimer: This document is for information purpose only and does not solicit any action based on material contained herein. EBLSL will not take any responsibility for decisions made by investors based on the information herein.
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