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Singer BD

Published on: 29th September, 2016


Close Price
Market Cap (BDT in bn)

183.8
14.5

Outstanding Shares (in mn)

76.69

Sponsor holding (%)


Category
Year End

73%
A
Dec

Key Comps
Annualized
EPS

EPS' 16(Q2)

EPS' 16(Q1)

Audited
EPS'15

6.9

2.7

0.8

4.8

Company vs
Industry

Audited
Income
Y-o-Y

Annualized
Vs Audited
Growth

Current
Quarter
Y-o-Y

SINGERBD

1.7%
29.9%

43.5%
49.0%

154.8%
127.9%

Engineering

Growth intrinsic with the new plant


offing which focuses on enhanced capacity and economic production
Singer Bangladesh Ltd a subsidiary of Singer Bhold
BV (The Netherlands) engages in manufacturing color
televisions, air conditioners, furniture. It also carries
out distributions of refrigerators, televisions, furniture,
sewing machines and other consumer electronics
and household appliances. The manufacturing
plant of the Company is situated at Rajfulbaria,
Jhamur, Savar, Dhaka 1340. The registered office of
the company is located at 39 Dilkusha Commercial
Area, Dhaka 1000, Bangladesh.
Singer invested 73.85% (40% in 2014 and 33.85% in
2013) in the equity of International Appliances
Limited (IAL) and treated this investment as investment in associate. The other shareholders of IAL are,
Sunman (6.1%), Sonlu (20.0%). Singer has a call option arrangement with Sunman to acquire 33.85%
from Singer; effective and enforceable up to 1
March 2023, with 60 days written notice. The exercise
price for the call option will be equal to face value of
the 33.85% shares plus 12% compounded annually
less any dividend or distribution received in respect to
the shares. IAL is a joint venture refrigeration manufacturing company which will be manufacturing freezers under the brand name of Singer.

EPS' 15 (Q3) EPS'15 (Q2)


3.3

1.04

Quarter Q-o- Profit Growth


Q
(5 Yr CAGR)

231.3%
9.0%

Key Financials (mn BDT)


Revenue from Refrigerator
Revenue from A.C
Revenue from Television
Revenue from Sweing machine
Revenue from furniture
Revenue from other
Total Revenue
Gross Profit
EBITDA
Operating Profit
Net Income
Total Asset
Total Debt
Total Equity
Profitability
Gross Profit Margin
EBIT margin
ROE

-2.0%
2.6%

Market Cap Free Float M.


(BDT in bn)
Cap (bn)

Year end

Q No.

14.89

4.05

Dec

Audited
P/E

LTM P/E

Annualized
P/E

P/B

38.5x
22.7x

25.4x
18.0x

26.9x
15.2x

10.0x
2.0x

2011

2012

2013

2014

2015

2,975.8
377.5
998.6
225.0

3,723.6
472.1
1,270.7
274.5

3,854.3
580.3
1,226.2
289.0

884.3
5,461.2
1,401.2
549.6
503.0
399.6
3,680.3
27.2
2,198.7

962.5
6,703.4
1,809.5
811.4
762.2
490.4
4,493.2
494.2
2,539.6

655.3
6,605.1
1,785.5
658.3
586.4
382.1
4,236.2
25.5
2,632.8

4,274.6
765.3
1,558.2
360.6
26.6
276.3
7,261.8
1,839.7
665.4
600.4
362.3
3,821.2
218.4
1,527.2

4,071.0
792.0
1,421.8
353.7
74.8
197.4
6,910.7
1,843.0
690.4
622.4
368.6
3,652.9
18.8
1,417.3

2011

2012

2013

2014

2015

25.7%
9.2%
36.3%

27.0%
11.4%
20.7%

27.0%
8.9%
14.8%

25.3%
8.3%
17.4%

26.7%
9.0%
25.0%

ROE Decomposition

2011

2012

2013

2014

2015

Net Profit Margin


Asset Turnover
Financial Leverage
Growth

7.3%
3.0
1.7
2011

7.3%
3.0
1.7
2012

5.8%
3.1
1.7
2013

5.0%
3.8
1.9
2014

5.3%
3.8
2.5
2015

25.1%
29.1%
51.5%
22.7%

3.5%
-1.3%
-23.1%
-22.1%

10.9%
3.0%
2.4%
-5.2%

-4.8%
0.2%
3.7%
1.7%

Sales Growth
Gross Profit Growth
Operating Profit Growth
Net Profit Growth

Stock DSEX
%
Last
-7.2% 0.5%
Week
Last
3.6% 2.5%
Month
Last
11.2% -3.3%
Local consumer market gaining pace with grow- Year
ing national income
Velocity 49.84% 26.05%
According to BCG (Boston Consultancy Group), (6 Months)
Bangladesh has a growing consumer market and
Risk
termed as one of the fastest growing in consumer
Debt to Capital
goods sector.
Bangladeshs affluent class people expanding rap- Interest Coverage
idly (average 10.5% annually) and expected to
grow 65% more in next five years.
Valuation Metrics
The average household consumption expenditure P/OCF
grew by 8.4% (CAGR) over the last 15 years. PEG
Countrys per capita income stands at USD 1190 Price/Sales
in FY 2015, which is projected to grow USD 1466
Dividend Yield
in FY 2016. Per capita GNI now stands at USD
EV/EBITDA
1190 registering a growth of 9.1% (10 year
CAGR).
Singer generates a significant proportions of its revenue from refrigerator (59%). The sales from consumer
electronics derives 19.6%, A.C (11.5%), Sewing machine (4.9%) and furniture (1%) in 2015.

2011
0.0
10.7

2011

2012
0.2
(11.8)

2012

2013
0.0
(14.6)

2014

2015

0.1
(8.5)

0.01
(9.69)

2013

2014

2015

71.8x

-2.5x

3.0x

10.4x

17.8x

0.0x
0.7x

-193.2x
0.3x

-2.9x
0.7x

-0.7x
1.4x

-4.2x
2.0x

0%

26%

11%

12%

4%

6.1x

2.8x

6.7x

15.5x

21.2x

Per capita electricity consumption of the country stands at 293


KWH, registering a CAGR of 7.4% in last 5 year period. Countrys population under electricity coverage is 76.0% in 2016, while
it is envisioned to reach 90.0% within 2019 and 100.0% in 2021.

Local Refrigeration industry grew at 6 year CAGR of


17.7%

The local refrigeration market had an annual production capacity


of 2.3 mn units in 2015 while there was a demand of 1.8 mn
units up from 713 thousand unit in 2009.
77.0% of the total refrigeration demand is met by local manufacturers while 23.0% is met by imports. The country used to import
73.0% of the total refrigeration demands in 2011.
Approximately 60.0% of the total refrigerator sales take place in
Eid-Ul-Adha session. According to a report published by Daily
Prothom Alo in 2016, Singer targeted a record sale of 90,000 unit
refrigerator on ahead of Eid-Ul-Adha session, while Walton targeted 450,000 units sale.
Walton, the market leader holds 60.0% market share (annual
capacity 1.4 mn unit), others; i.e Singer, LG, My one follows
next with 11.0%, 9.0% and 3.4% market share respectively.
In FY 17, the Custom Duty (CD) for both refrigerator and accessories import is 25.0% while the Supplementary Duty (SD) is
30.0% for Refrigerator unit import and zero SD for accessories
import. However, the Regulatory Duty (RD) in FY 17 is 4.0% for
both segment while it was 5.0% in FY 16.

Local manufacturers dominating the A.C & Television


market

The demand for Air Conditioner (AC) in Bangladesh is 160 thousand unit per annum. Walton leads the market with 300 thousand capacity. The capacity for Singer is 10,000 unit which is fully
utilized now and the capacity enhancement is in process now.
In FY 16-17, Import duty for A.C machines are 100.0% while for
parts/accessories import the duty is 60.0% (which was 20% in FY
15-16).
Countrys annual demand for television is approximately 1.5 mn
units while 1.2 to 1.3 mn units are assembled or manufactured
locally, 200 thousand is imported per annum. Singer produces 64
thousand television per annum, while Walton the market leader
alone produces 1 mn television sets.
Duty Structure of different electronics product (FY 16-17)
HS Code

Description

CD (%) SD (%) VAT (%) AIT (%) RD (%) ATV (%)

TTI (%)

84189910

Household refrigerators
For Refrigerator Parts Import

25
25

30
0

15
15

5
5

4
4

4
4

85287200

Television Import

25

20

15

89.8

85299040

Television parts import by Vat registered manufacturer

25

15

58.82

84151090

Window or wall air conditioning machines

25

100

15

213.71

84159091

Parts of A.C Imp by VAT registered manuf. industry

25

60

15

151.7

84182900

105.29
58.82

Singer holds the second largest market share


in the industry

Singer has a revenue growth of 6.0% CAGR over the last five
years.

Singer achieved a hefty sales growth in 2016. The Q22016


registered a revenue growth of 43.2% (YoY). In Q12016 the
growth was 29.3% (YoY).

Singer reported a gross profit margin of 28.0% in Q22016


against 25.0% in Q22015. Its net profit margin was 9.0% in
Q22016 against 7.0% in Q22015.

The companys debt to equity ratio in FY 2015 was 0.0x while


it marked up to 0.9x in the second quarter of 2016.

Singer started assembling A.C in its own factory from 2014


while it used to import it previously. It also started its furniture manufacturing from December, 2013.

Singer imports 0.2 mn refrigerator (approx.) per year.

Singer is running on full capacity in its Furniture (103.0%)


and Air Conditioning (101.0%) segment, while capacity utilization for television plant is 75.0%.

Singer has started production from its newly established refrigeration plant in Savar. The commercial operation of the
plant reportedly started at 27th July, 2016. The annual capacity of the plant is 132,000. The production from this plant
aims at targeting lower end refrigeration customers.

Singer had a major managerial changes in September, 2016.


Mr. Mohamed Haniffa Mohamed Fairoz joined as MD &
CEO replacing A.M. Hamim Rahmatullah. Mr. Fairoz previously served in the management committee.

Singer has total 76.69 mn outstanding share, out from which


sponsor/directors hold 73%, institutions hold 6% and general public holds other 21%.

According to news published in DSE, Retail Holdings Bhold


B.V has expressed its intention to sale 383,472 shares of
Singer within October 31, 16. Retail Holdings Bhold holds
40.47 mn shares of Singer.

Singer is now trading at a LTM P/E of 18x against the engineering sector LTM P/E of 25.4x.

Income statement Growth


(YoY)
Sales
Earned Carrying Charges
Turnover
Cost of sales
Gross Profit
Operating expenses
Other income/(loss)
Contribution to Workers' Profit Participation Fund (WPPF)
Operating Profit
Finance income
Finance cost
Net finance costs
Share of loss of equity-accounted investees, net of tax
Profit before income tax
Provision for tax
Profit after tax for the year

2015
Q1
-2.2%
40.5%
-1.1%
0.9%
-6.4%
10.0%
653.8%

Q2
-14.3%
76.6%
-13.2%
-12.2%
-16.2%
-5.4%
1374.4%

Q3
21.9%
17.4%
21.9%
17.5%
35.4%
6.5%
151.3%

Q4
-37.7%
-12.3%
-37.1%
-41.2%
-24.8%
6.4%
-2092.8%

Q1
29.3%
-12.9%
27.7%
19.5%
51.8%
19.9%
-68.1%

Q2
43.2%
5.1%
42.3%
36.8%
58.9%
28.6%
-18.5%

-63.7%

-44.4%
-32.2%

110.6%
85.8%

-6.2%
-47.4%

413.5%

151.9%
125.6%

100.5%

522.7%

-5.4%

-131.2%

-32.7%

-19.4%

-101.7%
-76.1%
-125.8%

-44.0%
-39.5%
-45.6%

110.6%
138.8%
102.3%

-51.4%
-9.3%
-35.2%

-11656.3%
429.9%
-1097.7%

150.0%
142.0%
153.3%

Income Statement (% of
sales)

2015
Q1

Cost of sales
Gross Profit
Operating expenses
Other income/(loss)

Contribution to Workers' Profit Participation Fund (WPPF)


Operating Profit
Finance income
Finance cost
Net finance costs
Share of loss of equity-accounted investees, net of tax
Profit before income tax
Provision for tax
Profit after tax for the year

2016

Q2

2016
Q3

Q4

Q1

Q2

74.4%

75.0%

72.7%

70.5%

69.6%

72.1%

25.6%

25.0%

27.3%

29.5%

30.4%

27.9%

24.1%
0.3%

17.4%
0.1%

13.7%
0.0%

29.5%
6.1%

22.6%
0.1%

15.7%
0.1%

0.5%

0.9%

0.1%

0.5%

1.1%

7.4%

12.9%

5.6%

7.6%
0.2%

11.7%
0.1%

-1.2%

-0.9%

1.9%

2.0%

1.4%

1.4%

0.4%

1.0%

0.8%

0.0%

0.0%

0.0%

-1.4%

-0.2%

-0.4%

3.8%
0.5%

8.8%
1.7%

14.3%
3.0%

4.6%
2.4%

8.5%
2.0%

12.0%
3.0%

3.4%

7.0%

11.4%

4.4%

6.4%

9.1%

Quarterly Balance Sheet

2015
Q1

Q2

2016
Q3

Q4

Q1

Q2

ASSETS
Property Plant and Equipment

894,112,684

889,391,843

877,407,649

Intangible assets
Investments

828,954,308

815,647,247

830,902,585

45,041,154

42,789,096

40,537,039

93,199,050

92,687,350

147,804,450

183,882,558

183,684,683

172,362,593

6,801,482

10,821,168

12,588,172

29,056,261

28,549,767

32,932,067

182,373,130

175,882,874

201,806,757

994,113,216

992,900,361

1,037,800,271

1,269,307,411

1,246,553,667

1,278,541,041

1,527,205,221

1,711,253,873

1,112,270,351

1,127,463,294

1,803,804,701

1,991,706,587

Trade Receivables

769,584,138

1,074,517,606

1,805,771,288

1,042,142,492

1,152,623,079

1,944,898,854

Advances, deposits and prepayments

444,611,594

337,666,476

227,181,231

107,900,404

231,041,435

210,349,502

2,210,492

22,915,234

Deferred tax assets


Advances, deposits and prepayments
Total non-current assets
Current assets
Inventories

Current tax assets

23,141,535

Cash and cash equivalents

75,311,871

Advance payment for Corporate tax, net

18,584,929

86,884,076

230,653,008

103,885,107

68,234,310

144,517,340

Current assets

2,835,297,753

3,233,463,566

3,375,875,878

2,383,601,789

3,278,618,759

4,291,472,283

Total Assets

3,829,410,969

4,226,363,927

4,413,676,149

3,652,909,200

4,525,172,426

5,570,013,324

Share capital

613,555,930

766,944,910

766,944,910

766,944,910

766,944,910

766,944,910

Reserves

392,542,132

388,526,225

385,706,103

421,897,695

419,594,290

417,290,886

Retained earnings

515,827,976

232,782,343

487,856,652

228,490,099

292,947,320

307,239,393

1,521,926,038

1,388,253,478

1,640,507,665

1,417,332,704

1,479,486,520

1,491,475,189

125,199,151

129,761,724

134,970,696

129,507,000

129,088,818

132,452,989

1,070,327,774

1,123,271,296

1,134,171,915

1,283,006,853

1,283,683,562

1,325,524,192

1,195,526,925

1,253,033,020

1,269,142,611

1,412,513,853

1,412,772,380

1,457,977,181

Trade and other payables

771,818,630

900,368,046

1,051,842,104

804,293,657

724,254,169

1,202,913,850

Short-term borrowings - secured

340,139,376

684,709,383

434,219,637

18,768,986

908,659,357

1,410,682,888

EQUITY AND LIABILITIES


Equity

Total equity
Liabilities
Retirement benefit obligations (gratuity)
Other liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities

Current tax liabilities

17,964,132

6,964,216

Current liabilities

1,111,958,006

1,585,077,429

1,504,025,873

823,062,643

1,632,913,526

2,620,560,954

Total liabilities

2,307,484,931

2,838,110,449

2,773,168,484

2,235,576,496

3,045,685,906

4,078,538,135

Total Equity and Liabilities

3,829,410,969

4,226,363,927

4,413,676,149

3,652,909,200

4,525,172,426

5,570,013,324

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Research & Investment Team

N.M. Al- Hossain


Head of Research
Phone: +8801777764942
Email: hossain@sheltechbrokerage.com

Md. Aslam Hossain

Md. Mostafa Noman

Research Executive

Research Executive

Phone: +8801777764949

Phone: +8801777764900

Email: aslam@sheltechbrokerage.com

Email: noman@sheltechbrokerage.com

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