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Company Overview Company Fundamentals

Market Cap (BDT mn) 6,652.2
Active Fine Chemicals Limited (AFCL) was incorporated
Market weight 0.2%
on December 1, 2004 and started its commercial
No. of Share Outstanding (in mn) 159.9
operations on October 5, 2009. The core business of the
Free-float Shares 87.9%
firm is to produce Active Pharmaceutical Ingredients
Paid-up Capital (BDT mn) 1,599.6
(API)/ Bulk Drugs and different Laboratory Reagents. To
3-month Average Turnover (BDT mn) 98.2
carry out the business, the firm has a multi-purpose bulk
3-month Return -2.9%
drugs and fine chemicals manufacturing facility at
Current Price (BDT) 51.5
Munshigonj on 3.60 acre land.
52-week price range (BDT) 37.7 - 53.7
At present, the firm is producing around 25 APIs and Sector Forward P/E 19.6
around 100 Reagents. Almost 100% revenue came from 2014 2015 2016* 2016-17
local sales though the company is exporting some (Jan-Dec) (Jan-Dec) (Jan-Jun) (9M Ann)**

products to Vietnam, South Africa and other countries to Financial Information (BDT mn):
some extent. Sales 1,395.0 1,728.5 940.9 2,060.0
Gross Profit 611.0 756.1 403.3 970.1
The company’s main raw materials are products of the 543.5 677.3 345.9 845.8
Operating Profit
Biotechnology Industry which are mainly imported from Profit After Tax 359.2 455.7 222.5 543.6
China and India. Materials consumed accounted for Assets 3,159.0 4,143.9 4,766.8 5,303.2
around 75% of total costs of goods sold. However, AFCL Long Term Debt 38.8 24.2 26.6 4.3
has established an associate company – AFC Agro Short Term Debt 58.7 362.8 575.4 803.9
Biotech Ltd. (AFCABL) (holding 12% stake) for facilitating Equity 2,758.6 3,299.2 3,509.2 3,764.6
uninterrupted supply of some particular raw materials. Margin:
AFCABL has got listed in the capital market in 2014. Gross Profit 43.8% 43.7% 42.9% 47.1%
AFCL has other associate companies – AFC Solvents Ltd. Operating Profit 39.0% 39.2% 36.8% 41.1%
(12.50% ownership) engaged in chemical trading Pretax Profit 34.8% 35.3% 31.5% 35.1%
activities, AFC Capital Ltd. (47.69% ownership) engaged Net Profit 25.7% 26.4% 23.6% 26.4%
in merchant banking activities, AFC Health Ltd. (17.68% Growth:
ownership), AFC Agro Biotech Ltd. (12.01% ownership) Sales 13.7% 23.9% 21.3% 19.2%
engaged in chemical industry and AFC Agro Biology Ltd. Gross Profit 15.6% 23.7% 25.4% 28.3%
(16.67% ownership) engaged in chemical industry. Operating Profit 20.3% 24.6% 20.1% 24.9%
Net Profit 7.3% 26.9% 12.7% 19.3%
The Firm has been enlisted in DSE and CSE on November
22, 2010. Historical shareholding status is shown in the
ROA 14.7% 12.5% 10.0% 10.8%
following table:
ROE 17.7% 15.0% 13.1% 14.9%
As on Sponsor Govt. Instt. Foreign Public Leverage:
30-Apr-17 12.02% 0.00% 35.67% 3.00% 49.31% Debt Ratio 3.1% 9.3% 12.6% 15.2%
31-Dec-16 12.02% 0.00% 23.14% 3.00% 61.84% Debt-Equity 3.5% 11.7% 17.2% 21.5%
30-Jun-16 12.02% 0.00% 23.14% 3.00% 61.84% Interest Coverage 14.0 14.1 9.0 9.1
31-Dec-15 12.02% 0.00% 21.50% 2.60% 63.88% Dividend History:
Dividend % (C/B) 6/20 -- 5/30+ -/-
In August 2014, the company raised its capital through
issuance of 20 million ordinary shares to the Investment Dividend Yield 0.9% -- 1.0% --
Corporation of Bangladesh (ICB) and/or different Dividend Payout 27% -- 36% --
institutional investors upon permission of Bangladesh Valuation:
Securities and Exchange Commission for expansion of Price/Earnings 22.3 17.6 17.6 14.7
business which were locked-in for three years. The lock- Price/BV 2.9 2.4 2.3 2.1
in free up date of the said shares is November 30, 2017. EPS (BDT) 2.2 2.8 1.4 3.4
NAVPS (BDT) 17.2 20.6 21.9 23.5
N.B: The Company has changed the accounting year to July-June from January-
December in compliance of Finance Act 2015. *Growth is calculated for 6
months over same period last year. **Growth is calculated on annualized data
over full year of 2015. +Dividend yield was calculated on the closing price on
record date for the respective dividend entitlement. The Company has
recommended 5% cash & 30% stock dividend for the 18 months period from
January 2015 to June 2016.

1 May 25, 2017

Industry Overview plant. After completion of the project, it is
expected to increase turnover of the company by
Country's pharmaceutical sector has witnessed
BDT 720.0 mn to BDT 960.0 mn (approx.) per
phenomenal growth in recent years in terms of capacity
annum. The estimated cost of the project will be
building, local consumption and feeding the
BDT 900.0 million (approx.). The cost of plant will
international market. Pharmaceutical Industry of
be arranged from the company’s own sources and
Bangladesh, currently valued at BDT 160 billion up from
bank loan. The company has started production on
an estimated total of BDT 30 billion some 12 years ago,
test basis of both the units and will start
primarily produces generics drugs of around 8,000
commercial operation soon.
different brands which can furnish up to 98% of the
 As per 2015-16 annual report, the company’s
domestic demand. The country is now exporting to more
associate AFC Health Ltd. (17.68% ownership) has
than 127 countries after meeting 98% of the local
signed an agreement with American Oncology
demand. The market grew at an average rate of over
Institute to build three world class cancer hospitals
in Bangladesh. The company has also invested in
According to Directorate General of Drug Administration chain cardiac hospital with collaboration of Fortis
(DGDA), there are over 250 registered small, medium Escorts. Already 2 hospitals are running and 5 more
and large enterprises are engaged in the industry where are in the pipelines that are expected to be
the top 10 pharmaceutical companies are jointly holding operational in the next five years. For this purpose,
around 70% share of the drug market. the company has made investment of BDT 1.8
billion in purchase of fixed assets during January
However, supply side of this industry mostly depends on
2015 to March 2017.
import. Around 80% of required raw materials are
imported from China and India whereas some local Investment Negatives
companies – Beximco Pharmaceuticals Ltd., Square
Pharmaceuticals Ltd., Opsonin Chemicals Ltd. Drug  The company is exposed to foreign exchange risk,
International Ltd., Globe Pharmaceuticals Ltd., as the company’s 95% raw materials are imported.
Gonoshashtaya Pharmaceuticals Ltd, Sunipun
Pharmaceuticals Ltd. etc. – produce certain APIs on Profit After Tax (BDT mn)
smaller scale for mainly in-house use. The local 544
companies usually run the relatively easier final chemical 456
synthesis stage with API intermediaries, instead of the 335
223 222
complete chemical synthesis.
Meanwhile, construction of 200-acre API Park is in
progress. A total of 42 industries would be set up under 2012 2013 2014 2015 2016 2016-17
the project; expected total cost is BDT 4.39 billion. Upon (Jan-Jun) (Jul-Mar
operational of the plant, the raw material imports are
expected to come down to 30% and the costs of APIs are
estimated to decrease by around 20%. The API industrial Historical Price (BDT) & Volume ('000) Movement
park promises to propel Bangladesh to the next level as 120
Closing Price (BDT) Volume ('000)
a drug exporter since it is expected to help the local
Closing Price (BDT)

pharma companies gain more export orders with a
Volume ('000)

competitive edge and maintain stable prices in the 80
domestic market. 60
Investment Positives
20 0
 The company maintains a steady growth in its May-13 May-14 May-15 May-16 May-17
turnover and profit after tax. 5 year CAGR
(Compound Annual Growth Rate) of turnover and Movement of DSEX & ACTIVEFINE Index (Rebased)
profit after tax of the company are 35% and 30% 250
respectively. 200
 As per DSE news published on January 2016, the
company has decided to produce Cephalosporin 150

Antibiotics and other related chemicals. It is 100

expected that the turnover of the company will
increase approximately by BDT 720 mn – BDT 960 May-13 May-14 May-15 May-16 May-17
mn per annum from this unit. The Board has also
decided to set up an Anti-Cancer Formulations
2 May 25, 2017
Pricing Based on Relative Valuation: Concluding Remark
Multiple Value (BDT)
The company runs monopoly business in API market. In
Sector Forward P/E 19.6 66.6 its latest 9 months (Jul 2016 to Mar 2017) performance
Sector Trailing P/E 17.1 48.7 declarations, the company reported net profit of BDT
Market Forward P/E 15.7 53.3 407.67 million registering 9% growth over the same
Market Trailing P/E 15.0 42.8 period last year. The company’s profitability is expected
Sector P/B 2.9 67.7 to increase upon initiation of operation of its
Cephalosporin Antibiotics and Anti-Cancer Formulations
Source: Annual Report, the Financial Express, the Daily Star, ILSL Research,
Company’s website, DSE website & CSE website.

ILSL Research Team:

Disclaimer: This document has been prepared by International Leasing Securities
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Rezwana Nasreen Head of Research 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
Towhidul Islam Sr. Research Analyst contained herein and should not be construed as an offer or solicitation to buy or
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3 May 25, 2017