1. Share Information
Scrip Code CONFIDCEM
Sector Cement
Market category A
Current price (as of January 9, 2017) BDT 135.5
52-week price range BDT 70.2-136.9
Cash Dividend (FY15-16) 37.5%
Dividend yield (FY15-16) 2.8%
Payout ratio (FY15-16) 25.3%
Market Cap, Mn BDT 5,745.7
Number of shares, Mn 44.99
Free float 74.5%
Financial year-end 30-Jun
P/E (Annualized) 26.1
P/B 1.8
ROE (Based on June 30, 2016) 20.1%
ROA (Based on June 30, 2016) 11.8%
Income Statement, (BDT mn) 1Q16-17 1Q15-16
Jan15-
Jun16
Jul13-
Dec14
Revenue 607.1 648.7 5,530.1 5,123.3
Less: COGS 535.4 562.5 4,633.1 4,304.9
Gross Profit 71.6 86.2 897.1 818.3
Operating expense (net) 40.2 40.9 237.0 191.5
Operating profit 31.4 45.3 660.1 626.8
Interest income 2.9 12.1 35.3 45.2
Interest expense 16.1 19.6 119.8 114.0
WPPF 0.9 1.9 28.8 27.9
Non-operating income 2.3 3.3 -29.5 14.8
Profit from associates 47.3 35.2 252.4 -58.3
PBT 67.0 74.3 769.6 486.6
Tax 8.4 12.5 103.6 202.3
PAT 58.6 61.8 666.0 284.4
Restated EPS (BDT) 1.30 1.37 14.80 6.32
Balance sheet Performance 1Q16-17 Jan15-Jun16
Property, plant & equipment 1,821.70 1,853.31
Long term loan 3.30 3.15
Capital and reserves (Equity) 3,380.85 3,318.62
Current ratio 0.98 1.10
Debt-equity ratio 0.00 0.00
BVPS 75.14 73.76
Key Ratios (%) 1Q16-17 Jan15-Jun16
Revenue growth -6.4% 7.9%
Gross margin 11.8% 16.2%
Operating margin 5.2% 11.9%
Net Margin 9.6% 12.0%
Share holding information (%) Sponsor/Director Institute Public
Share holding (as on Dec 31, 2014) 23.47% 29.10% 47.43%
Share holding (as on Oct 31, 2016) 23.47% 39.18% 37.35%
Share holding (as on Nov 30, 2016) 23.47% 39.49% 37.04%
Confidence Cement Limited
Equity Note - January 10, 2017
Nature of Business
Confidence Cement Limited (CCL) manufactures and deals cement and allied
materials of all kind and varieties. CCL also has three associates including 1)
Energypac Confidence Power Venture Ltd (50% stake) with a capacity of 11 MW at
Hobigonj, 2) Confidence Power Ltd (25% stake), manufactures and sales of spun
prestressed concrete (SPC), prestressed concreate (PC) and prefabricated
construction material (poles and piles) to REB, BPDB and PDB, and 3) Confidence
Electric Ltd (49% stake) manufactures and assembles of electronic and electrical
goods in association with CCL.
Major developments
The Bangladesh Power Development Board (BPDB) has accepted the technical
reports submitted by CCL among others for 10 proposed fuel-based power plants,
which can produce 1,000 MW each and start production by 2018. Confidence
Cement has bid and obtained recommendation from BPDB for the Bagura plant
and the Rangpur plant. If CCL successfully complete their financial bid of power
plant, it will accelerate their topline revenue. Meanwhile, CCL’s project to expand
capacity from the existing 2,000 tons per day to 4,500 tons per day is near
complete. The new project is scheduled for completion in April 2017.
Financial Performance
In 1Q16-17, CCL’s revenue shrunk slightly by 6.4% (YoY) due to capacity
bottleneck. Gross profit margin also dropped to 11.8% compared to 16.2% for the
18 months ended June 30, 2016. However, thanks to BDT 47.3 mn profit from
associates helped CCL finish with EPS of BDT 1.30 in 1Q16-17 compared to BDT
1.37 in 1Q15-16. CCL currently has very small amount of long term debt helping
them curb on interest expenses.
Technical Analysis
In technical analysis, CCL is just moving up with volume after more than a year
(Mar14 to May15) of downtrend and one year of remaining at the same price level
just before breakout from Nov16 at price BDT 88-95. Considering the highest price
in 2010 (at 250), CCL’s higher price since 2012 was at 159 and it is the strongest
resistance for CCL along with at 138. In long term scenario of pricing (high, low
and middle), CCL has created a very strong “W” pattern to move up the price and
hit the previous highest level which can be confirmed after crossing the middle
resistance at 159 and at 215. In day chart it looks like slight overbought but
considering the resistance at 159 and new higher high CCL is likely to move up
gradually and may be hit the target price within this year. All other indicators are
moving up and down constantly supporting the price level with volume. The
support area of pricing are at 113 and 102 and lowest bottom at 67.
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