BEXIMCO LIMITED : A MID-TERM INVESTMENT SCOPE

BEXIMCO GROUP OF COMPANIES: CONTROVERSIAL OWNERS , STILL SAFE INVESTMENT OPPORTUNITY

LISTED COMPANIES:

1. BEXIMCO LIMITED.

2. BEXIMCO PHARMACEUTICALS.

3. BEXTEX.

4. BEXIMCO SYNTHETICS.

5. SHINEPUKUR CERAMICS.

6. SONALIASH.

SPONSORS: Salman F Rahman and Sohel F Rahman are the present owners and corner stones of Beximco group, the largest business conglomerate of our country. Salman F Rahman is a very suspicious character in our business culture. He is one of the prime suspects of 1996 share scam and was in jail during last caretaker government. He is the most criticised business character also. In spite of these facts, there are some real opportunities to invest in beximco group companies.

AT THIS MOMENT, OUT OF THEIR SIX LISTED COMPANIES, BEXIMCO LIMITED, BXPHARMA, SHINEPUKUR AND BEXTEX ARE REALY GOOD COMPANIES. IN THIS ARTICLE, I WILL TRY TO DISCUSS PROS AND CONS OF BEXIMCO LIMTED.

BEXIMCO LIMITED: FOR INVESTMENT , NOT FOR TRADING

FUNDAMENTALS:

Paid-up capital: 165.5 crore , Tradeable portion=67%=110 crore

Lot is 100/10, Available lot= 11 lakh

DENOMINATOR	NAV (Restated)	EPS	YEAR END PE	DIVIDEND	NPAT,crore
2010	81	Q2=21.25X2=42.5	PRESENT 7.5		351x2=702
2009	101 (63)	35	14	60%B	325
2008	72 (43)	19	14	50%B+10%C	104
2007	32 (23)	1.5	24	15%B	5.5

EPS is growing continuously over last 4 years in spite of increasing capital, reflecting potential growth of business. Even this year, Q1 is just 6, Q2 is 21.5……………Q4 may be 50 plus, at least it will be 40……….just EPS justifies its price should be 400 with PE 10……………..AT PRESENT THIS IS AN UNDERVALUED SHARE.

NAV is also increasing…………….present NAV is 81…………year end NAV may be 100 plus…….same as last year……..this is basically 60% increase of NAV as they have given 60%B last year………..

Present PE is 7.45………….for any developing country this is an undervalued state for a share. Moreover, company is exponentially growing…………….still expanding its business in Aviation, Hotel and Ceramic sector.

Dividend amount is also very encouraging……..always bonus…………increasing.

NET PROFIT AFTER TAX (NPAT) is also promising. Last year, NPAT was 325 crore, this year half year NPAT is 351 crore…………….ALMOST 100% growth……

FUTURE NEWS PREDICTABLE:

1.  GMG airlines is scheduled to be listed shortly……..BEXIMCO has more than 50% shares in GMG…..They have invested 35 crore for share and another 70 crore for development. If GMG's 10 tk share price goes to 200tk after listing………..BEXIMCO will be gainer of at least 600 crore……their NAV will increase by 40 tk……..

2. Westin hotel: Beximco bought Westin's 1 crore share of 10 tk with 160 crore tk with a premium of 150 tk. Now, Westin's indicative price is 211 tk……..in IPO it will be at least 225………when trading starts it will be at least 300 plus…………..again with a 160 crore investment, they will be gainer of 160 crore…………….increasing BEXIMCO's NAV another 10 tk………….SEC few days back returned Westin's IPo proposal as they wished to float 30 crore tk, but SEC's requirement was 40 crore……….now SEC relaxed its rule…………hopefully Westin IPo approval will be within short time.

3. Dhaka Shanghai ceramic, newly acquired by Beximco………….in exchange of approx.1 crore beximco limited share(10 crore tk )………….later they invested 25 crore tk more for its growth………….BEXIMCO group is planning to merge it with Shinepukur ceramic…………..they will transfer it to shinepukur with equivalent share of shinepukur……………..if they get 1 crore shinepukur share…………with present price of 75 tk …………..1 crore share will be of 75 crore tk…………..beximco will be gainer of 65 crore tk.

4. They are also planning to enter into oil, gas and energy sector.

5. Awami league in power………..Salman F Rahman is a close fellow of Prime minister……..so he will not face any problem………..when he really deserves……..I dont want to mix business with politics............but this is a reality

TECHNICAL ANALYSIS:

1. You can see from graph, over last 8 months its price is moving around 310-320………….with a spike 345………..probably no other company has PE less than 10 (except banks)………….rest all companies are getting over-valued……………people will look to invest in a company with low PE…………..Beximco LTd will be the choice…………

2. Additionally, you can see and assume from graph, all have bought share with 310 plus………no chance to fall its price below 300………even if market crashes, its price will not be effected much, as present PE is only 7.45………….no space remains to fall price…………..

3. All share's price has already been doubled over last 6 months…………..Beximco limited remais same…………..but earning is good…………just waiting for a spark

DRAWBACKS:

1. Realatively large paid-up capital and 67% public holding.

2. Lack of integrity of Salman F Rahman.

INFERENCE:

1. I do not think that price of BEXIMCO LTD will increase to sky within a short time………But I believe it will start its upward journey from November………………..will follow slow and steady growth upto next April 2011………………hopefully 4-10% increase per month………………ultimately will achieve a 40-60% growth over next 6 months…………….

2. BEXIMCO LTD deserves a minimum price of 21.25 x 2 x 10 = 425 tk. (to do justice with its fundamental)

Expected price is 21.25 x 2 x 12 = 510 tk

RECOMMENDATION: Those who are interested for investment for 6 months and will be satisfied with a 40-60% profit in 6 months ( equivalent to 100% in a year), BEXIMCO LIMITED could be a choice for them…………..

Even in the worst situation, if its price does not increase satisfactorily, after next dividend's record date you will get the stock free because a stock with EPS of more than 40, will not remain at 300 tk for long time………………..

IN ANY CASE AT LEAST 40-60% profit will come over 6 months.

Posted in: Analysis