Present at a Ion

8/9/2019 Present at a Ion

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Welcome to OurWelcome to Our

PresentationPresentationPerformance analysis and Selection ofPerformance analysis and Selection ofSecurities in Cement IndustrySecurities in Cement Industry

Group - G

CEMENT INDUSTRY

1. Lafarge Surma Cement Ltd

2. Confidence Cement3. Heidelberg Cement Bd

4. Niloy Cement and

5. Padma Cement


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Country EconomicCountry Economicanalysisanalysis


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BANGLADESH

Bangladesh is an agricultural country. Withsome three-fifths of the populationengaged in farming. Jute and tea areprincipal sources of foreign exchange.

Major impediments to growth includefrequent cyclones and floods, inefficientstate-owned enterprises, inadequate portfacilities, a rapidly growing labor force that

cannot be absorbed by agriculture, delaysin exploiting energy resources (naturalgas), insufficient power supplies, and slowimplementation of economic reforms.Economic reform is stalled in manyinstances by political infighting and


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For higher GDP growth, investmentsin both public and private sectors will

need to be accelerated. Theprevailing political and economicstability has greatly encouragedinvestment in the private sector. The

trend of foreign direct investment isvery encouraging.

GDP growth


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The economy has grown 5-6% per year since1996 despite political instability, poorinfrastructure, corruption, insufficientpower supplies, and slow implementationof economic reforms. Bangladesh remains apoor, overpopulated, and inefficiently-governednation. Although more than half of GDP isgenerated through the service sector, nearlytwo-thirds ofBangladeshis are employed in theagriculture sector, with rice as the single-most-important product. Bangladesh's growth wasresilient during the 2008-09 global financialcrisis and recession. Garment exports, totaling$12.3 billion in Fiscal Year 09 and remittancesfrom overseas Bangladeshis totaling $9.7 billionin Fiscal Year 09 accounted for almost 25% of


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Budget : 10th June 2010

Revenues: $12 billion (app) in tk 97,565 core

expenditures: $17 billion (2010 est.) in tk132170 core

Public debt 38.2% of GDP (2009 est.) 39% ofGDP (2010 est.)

GDP Growth Rate : 6% (2010) and real 5.7%(2009)

Inflation Rate : 6.5% est(2010) and 5.1%(2009)

Industries

Cotton textiles, jute, garments, tea processing,paper newsprint, cement, chemical fertilizer,

light engineering, and sugar


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In ustr a pro uct on growt rateIn ustr a pro uct on growt rate

YearIndustrial

production

growth rate

RankPercent

Change

Date of

Information

2006 6.70 % 55 3.08 % 2005 est.

2007 7.20 % 46 7.46 % 2006 est.

2008 8.40 % 35 16.67 % 2007 est.

2009 6.90 % 31 -17.86 % 2008 est.

2010 5.90 % 17 -14.49 % 2009 est.

Notes: This entry gives the annual percentage increase in

industrial production (includes manufacturing, mining, and

construction).


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Inflation RateInflation Rate

YearInflation rate(consumer

prices)Rank

PercentChange

Date ofInformation

2006 7.00 % 160 16.67 % 2005 est.

2007 7.20 % 163 2.86 % 2006 est.

2008 9.10 % 184 26.39 % 2007 est.

2009 8.90 % 137 -2.20 % 2008 est.

2010 5.10 % 142 -42.70 % 2009 est.


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INDUSTRY ANALYSISINDUSTRY ANALYSIS


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Industry analysisIndustry analysis

Definition

A basic category of business activity.The term industry is sometimes used todescribe a very precise business activity(e.g. semiconductors) or a more genericbusiness activity (e.g. consumerdurables). If a company participates inmultiple business activities, it is usuallyconsidered to be in the industry in whichmost of its revenues are derived.


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Industry analysiscontdIndustry analysiscontd

Key success factors

Technology

Organization cultureQuality control

Cost focus

Proper distribution channel

Effective marketing


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Porters five forces model



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SWOT analysis Lafarge Surma

Cement Ltd

Confidence

Cement

Heidelberg

Cement Bd

Niloy

Cement and

Padma Cement

Strengths 1. Large Capital

2. Supporting

Environment

3. Profit

increasing

1.Healthyshared

governance

2. Country

DevelopmentSupport

1. Year of

Experience

2. Increased

Capacity

1. Aggressive

enrollment

Management

2. Commitment

to access incompetitive

market

1. Long term

Planning

2. Skillful

Employee

weakness 1. Competing

Demands2. Loss for 2

years closed

production

1. Lack Of

Raw Materials2.Limited

Resource

1. Small

number ofEmployee

2.Limited

Resource

1. Fiscal

Uncertainty2.Limited

Resource

1. High rate of

Bank Interest2. Carrying cost

of Raw

Materials

Opportunities 1. Potential

Growth

2. Proactive

Partnerships

with other

Company

1. Good

Market Share

2. Customer

Needs

1. New

technology

2. Growth Rate

1. Potential

Growth

2. Changing

Demand and

Delivery

1.Amalgamation

2. Market

Demand

Threat 1.Increased

Price of RawMaterials

2. Legislative

Involvement

1.Increased


2. Competition

1.Increased


2.Development

of Other

cement

Company

1.Increased


2. Rapidly

Advancing

Technologies

1.Increased


2. Rate of

Interest on loan


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Life cycle analysis


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1. Lafarge SurmaCement

Ltd Co. no- 21643

2. ConfidenceCement

Company No: 21621

3. Heidelberg CementBd

Company No: 21614

4. Niloy Cement andCompany No: 21630

5. Padma CementCom an No: 21642

Open Price563.0

Yesterday Close569.75

Open Price 2049.0

Yesterday Close 2024.25

Open Price 3548.0

Yesterday Close3524.5

Open Price 253.0


Open Price 18.5


Face Value 100.0

Market Lot 50

Face Value 100.0

Market Lot 20

Face Value 100.0

Market Lot 5

Face Value 100.0

Market Lot 50

Face Value 10.0

Market Lot 500


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Management AnalysisManagement Analysis


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Each and every companyEach and every companyhas corporate directory. Allhas corporate directory. All

are different from eachare different from eachother.other.


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Usually the corporate directoryUsually the corporate directory(board of directors ) of many(board of directors ) of many

companies are like this:companies are like this:


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Board of directors:Board of directors:

ChairmanChairmanManaging DirectorManaging Director

DirectorDirector

Company SecretaryCompany SecretaryBoards Audit CommitteeBoards Audit Committee

Management committeeManagement committee


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Product AnalysisProduct Analysis


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According to annual reportAccording to annual reportof 2009 following cementof 2009 following cementcompanies has producedcompanies has produced

the following brands ofthe following brands ofcement:cement:


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Name of

the company Year Brand

Total

Production(in m.t.)

Total

sale

HeidelbergCementBangladeshLTD.

2009 Heidelberg

Cement

11,63,767 11,52,187

Confidence

Cement LTD.

2oo9 Confidence

Cement

2,23,139

m.t. Not found

Padmacement LTD.

2009 DolphinBrand

6,090 Not found

Niloy cementindustriesLTD.

2009 Not found Not found Not found

Meghnacement millsLTD.

2008 Not found Not found Not found


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Mission and Vision of theMission and Vision of thecompanies mentioned abovecompanies mentioned above

are not so specific.are not so specific.


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Ratio AnalysisRatio Analysis


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Source of CapitalSource of Capital

All five companies are listed withDhaka Stock Exchange.

The capital of these companies arethe initial public offering, Initialassets and in some cases foreigninvestment.

For example Heidelberg Cement.


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Intrinsic value of aIntrinsic value of a

companycompanyDetermination of IntrinsicDetermination of Intrinsicvalue of a company is thevalue of a company is the

most important task tomost important task to

make investment decisionmake investment decisionin any security.in any security.

There are three widelyThere are three widely

used methods to do this.used methods to do this.


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Intrinsic value of a companyIntrinsic value of a company

They are-

1. Dividend Discounting Model

(Constant Growth).2. Earnings Multiplier Model

(Relative Valuation Technique)

3. The Corporate value model.


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Constant Growth model is helpful,when:-

The dividend grows at a constantrate.

The constant growth rate willcontinue for indefinite period.

The required rate of return (k)must be greater than theconstant growth rate (g).


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The equation that exhibit the relationis

Ks = (D/P0) + g

Where, D represents currentyears Dividend

P0 represents current marketprice

g represents growth rate


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For Earning Multiplier method:

Earning multiplier (P/E Ratio) =

{(D/E) /K

s gs} Here,

D represents the dividend (per

share) E represents earrings (per

share)

(D/

E

)

represents dividend


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Any method of above based onavailable information; intrinsic valueis calculated. In the case of cementindustry we use the third method tocalculate the intrinsic value.

Due to lack of sufficient information we

can not use the Constant Growth orEarning Multiplier Method.


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Name NAV (, 000Tk.) No. of Shares Value of Share(Tk.) Market value(Tk.)

Lafarge cement 17246396 58068675 297 573

Padma cement 125842 27600000 4.559 17

Heidelburg cement 6030450 5650358 1067.26 3515

Niloy 305600 1600000 191 243

Confidence cement 1870550 2090000 895 1957

Our Value per share Found:


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RecommendationRecommendation

Current Market Price < Intrinsic Value= Undervalued

Current Market Price > Intrinsic Value

= OvervaluedThe another measure is the return rate. Some one

must not invest until the true return is higherthan the risk free rate.

In each every industry we selected the share priceis overvalued.

i.e. If there is any market correction the share priceimmediately go down & the net return is

negative.


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RecommendationRecommendation

So any Potential investor must notinvest in those five cement industry.


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