Equity research report

[COMPANY RESEARCH ON] FU-WANG FOODS LIMITED
http://www.fuwanggroup.com 1 |
FU-WANG FOODS LIMITED
;LF;DLGKL;

ANALYST NAME- IMRUN MALLIK
EMAIL - imrun111@gmail.com
PHONE NUMBER- 01920168547

September 2012
Equity Research Report
ANALYST OPINION: NEUTRAL
As an analyst I have a lot of confidence on Fu-Wang Foods that, it is properly
valued. Fu-Wang Foods is popular Food processing company, which has
demonstrated solid advance, driven by an antagonistic attainment-ambitious
approach. It is a big company with a robust brand name and huge consumer base.
On the other hand, the company has been trusting on attainments for its growth
and faces very strong rivalry, characterized by such industry giants as PRAN Foods,
APEX Foods and FAHIM. The concluding is a flag bearer in much food processing
company and is developing its own set of strategy tools, and capacity heavily
directed by Fu-Wang Foods. However, unlike Fu-Wang Foods, PRAN has testified
strong plant growth and is in no place to give up its market share. At this time, Fu-
Wang Foods has built a strong portfolio of companies, but it will need to merge
them efficiently, improving the limitations that agonized in the past few years. It
will also have to make an effort at aggressive organic growth to proportions
equivalent with PRAN‟s to retain and increase price of share.
FU WANG FOOD LIMITED
Summary

Company Size
FU-WANG Foods & Beverage Ltd. now makes a great
position in the present study is limited to one
industrial enterprise of the food industry in Bangladesh.
FU-WANG FOOD LTD, the largest producer of food
products in the country, was taken as the sample of
study. In this connection it may be relevant to examine
how far the sample enterprise is important in the context
of the industry as a whole. At year 2005-06 their net
Production was 292,625,507 taka which was quite
significant food production for our country demand. There
fore capacity utilization of this enterprise would affect
cost of products and hence the prize and availability of
food products in our country.
Types of Products
The Fu-Wang produces various kinds of food products,
i.e. Lemon cake, Crown biscuit, Fu-Wang chips, Family
cake, ABC biscuit, popular toast, Queen Cake, Bread,
Wafer, Toast, Noodles etc. The management of the
company budgets its annual production in accordance
with the corporations directives. In fixing its budgeting
production the management takes into account the
targets fixed by the Corporation, past trends and the
existing facilities available with the unit.
INVESTMENT HIGHLIGHTS
Year 2005-06 is the year in
which Fu-Wang food ltd has
performed better than the last
year. Turnover for the year is
Tk. 37.54 crore at against Tk.
34.12 core of 2004-05.There is
thus an increase in turnover by
10.02% over the last financial
year.
The present trend of sales if
continued will ensure better
financial result during fiscal
year 2006-2007. The directors
are striving hard to maintain
this trend for brighter
operational result in the years
to come.
The management of the
company budgets its annual
production in accordance with
the corporations directives. In
fixing its budgeting production
the management takes into
account the targets fixed by the
Corporation, past trends and
the existing facilities available

Productive Capacity
Productive capacity is a term used to define
maximum possible output of an economy. The
productive resources, entrepreneurial capabilities
and production linkages which together determine
the capacity of a country to produce goods and
services." The term „productive capacity‟ is also
used in economics to mean income-generating
capacity be it of a factory, land, patent or the labor
skills of an individual.
Company Overview
FU-WANG FOODS AND BEVERAGE LTD was
established 17 February, 1997 with authorized
capital Tk. 500 million and paid up capital Tk. 184
million; as a food production industry. In the
starting period its number of employee was 762,
and started production commercially on August
1997. FU-WANG FOOD LTD has got ISO certificate
on 04 November 1998. It has been listed in Dhaka
and Chittagong stock exchange on July 2000.
Fu-Wang is a renowned bakery food organization.
Its lifetime is not so long, but because of it well
organized manufacturing process it foods become
fresh, healthy and testy for consumer. Its market
segment is not so large but it has already gained
The achievement of production target
in the food industry is not only the
function of machines. The materials
have also a great role to play in food
production. Food of Fu-Wang are
mainly produced from the Raw
Chinese-Bread Family- Bread Mini-
Bread Tiffin-Bread Fu-Wang Diasalt
Biscuit Vanilla pie Fu-Wang Milk Marie
Biscuit Fu-Wang Orange Biscuit
materials, those are Milk, Wheat,
various fruits and vegetables, oil,
butter, Ghee etc. They collect those
materials from various foreign and
home sources.
Company name: FU-WANG FOODS
LIMITED.
Date of incorporation: 27 February 1997
Listed in DSE: July 2000
Listed in CSE: July 2000
Commercial production: August 1997
ISO certification: ISO-9002 Certificate on
04 November 1998
Business lines: Food processing Industry
Authorized capital: Tk. 1000 million
Paid-up capital: Tk. 445.28 million
Number of employees: 895

Huge popularity. Therefore its current financial
situation is also satisfying .So why its thinks to
expense its market segments. As it is a profitable
organization, so we think that it will be able to
capture market and may it more profitable.
IndustryOverview
Fu Wang foods limited belongs to food processing
industry. Fu Wang is one of the most promising food
companies among the various food companies. Among
the food processing companies the Fu Wang food is the
best in terms of quality, price, packaging, marketing,
availability and so on.
There are many food companies in Bangladesh like PRAN
foods, FAHIM foods, apex foods and AFTAB foods. But the
leaders are Fu Wang. After Fu Wang there are two
markets dominating such as apex and PRAN.
By the all evidence it is clear that the market growth, total
net profit and fixed asset is indicates the vital role for the
company. Here the net profit and total fixed asset of Fu
Wang foods is more higher than the all other peer group.
So it is said that in a food processing industry the Fu
Wang is a very good position.
The factory is equipped with gas converted boiler, water
treatment plant and Research and development center.
Therefore its current financial situation
is also satisfying .So why its thinks to
expense its market segments. As it is a
profitable organization, so we think
that it will be able to capture market
and may it more profitable.
Fu Wang is one of the most promising
food companies among the various
food companies. Among the food
processing companies the Fu Wang
food is the best in terms of quality,
price, packaging, marketing,
availability and so on.
The factory is equipped with gas
converted boiler, water treatment
plant and Research and development
center.
The company has further scope of
improvement in its
production operation field as well as in
the field of cost control in line with
more modern and sophisticated
plants.

The company has further scope of improvement in its
production operation field as well as in the field of cost
control in line with more modern and sophisticated plants.
Product Feature
A product can be offered with varying features. A
stripped-down model, one without any extras, is
the starting point. The company can create higher-
level models by adding more features. Features are
competitive tools for differentiating the company‟s
products from competitors‟ product.
Product Design
Good design contributes to products usefulness as
well as to its look. On the basis of kids mind we
decorated our design in various way. Colorful
pictures and funny cartoons are shown in our
design.
Product Style
Style simply describes the appearances of product.
Style will be eye-catching or yawn producing. Our
packaging shows such sort of style that innovate
something funny and enjoy for kids.
Fu Wang has the best product feature
among the food processing company.
Fu wings’ packaging and marketing is
very competitive and attractive.
The company can create higher-level
models by adding more features.
Features are competitive tools for
differentiating the company’s products
from competitors’ product.
Righteous plan contributes to products
usefulness as well as to its look. On the
basis of kids mind we decorated our
design in various way. Colorful pictures
and funny cartoons are shown in our
design.
Smartness simply describes the
appearances of product. Style will be
eye-catching or yawn producing. Our
packaging shows such sort of style that
innovate something funny and enjoy
for kids.
Situation analysis

Market analysis
The Fu Wang analysis markets in
terms of geographic, demographic,
psychographic and behavioral
segments.
In geographic segments they
consider region, area size, density,
and climate.
In demographic segments they
consider age, gender, income,
occupation, education, race, home
and ownership.
In psychographic segments they
consider personality, perception
and lifestyle.
In behavioral segments the Fu
Wang consider benefits, usage
updates, user status and loyalty
status.

Market Trends
The current trends include a shift away from junk
foods and carbonated drinks, a growing interest for
healthier / beneficial products for the “mind and
body” the trend towards the availability of on-the-
go products for those with an active lifestyle, as
well as the trend for personalization through
customization (or for beverages, through variety -
seeking in a wide introduction of flavors).
Market Growth
Statistical reports anticipate a segment growth of
55.26 % over the next 9 years (2015)
Distribution Network Analysis
Place includes company activities that make the
product available to target consumers. We can also
say that distribution is a process by which a firm
makes profit by delivering a certain product or
service to target consumers. Without an effective
distribution line no company can earn estimated
profit. Place strategies include:
1. Channel
We will set two types of channel. One includes
suppliers, retailers and consumers. Another one
includes no channel. Product will be sold directly to
the consumers.
The present movements include a shift
away from junk foods and effervescent
drinks, a growing interest for healthier
/ favorable products for the “mind and
body” the trend towards the
availability of on-the-go products for
those with an active lifestyle, as well as
the trend for personalization through
customization.
We can also say that distribution is a
process by which a firm makes profit
by delivering a certain product or
service to target consumers. Without
an effective distribution line no
company can earn estimated profit.
The marketing channel plays a vital
role for the new investor. A good
channel can boost up the price of the
share. We will set two types of
channel. One includes suppliers,
retailers and consumers. Another one
includes no channel. Product will be
sold directly to the consumers.

2. Location:
Fu-Wang Tiffin packs will be sold in schools, retail
store, varsity, college areas and local community.
3. Transportation:
Strong transportation system will be ensured. The
good transportation is available for Fu Wang foods
limited. That‟s why the product of Fu Wang is
available anywhere. A strong distribution system
already exists with Fu-Wang, since partnerships
and channels are already in place. This will
facilitate the product‟s reach into its target market.
The product of Fu Wang foods limited is
available because it has the excellent
product channel. Through this channel the
product can easily hand over the customer.
It will be clear if we see the channel.
That’s why the product of Fu Wang is
available anywhere. A strong distribution
system already exists with Fu-Wang, since
partnerships and channels are already in
place. This will facilitate the product’s
reach into its target market.
A strong distribution system already exists
with Fu-Wang, since partnerships and
channels are already in place. This will
facilitate the product’s reach into its target
market.

Competitive Analysis
The current market for Fu-Wang Tiffin Pack is
fragmented, since the distributions restricted to
Fu-Wang local outlets and nearby schools and
small shops in scattered locations. However, direct
competition from these local players is not
anticipated, but soon other competitors may follow
us. A strong distribution system already exists
with Fu-Wang, since partnerships and channels
are already in place. This will facilitate the
product‟s reach into its target market.
Current Financial Position
Fu-Wang is a renowned bakery food organization.
Its lifetime is not so long, but because of it well
organized manufacturing process it foods become
fresh, healthy and testy for consumer. Its market
segment is not so large but it has already gained
much popularity. Therefore its current financial
situation is also satisfying .So why its thinks to
expense its market segments. As it is a profitable
organization, so we think that it will be able to
capture market and may it more profitable.
The existing market for Fu-Wang Tiffin Pack
is split, since the distributions restricted to
Fu-Wang local openings and nearby
schools and small shops in scattered
locations. However, direct competition
from these local players is not anticipated,
but soon other competitors may follow us.
A durable distribution system already exists
with Fu-Wang, since partnerships and
channels are already in place. This will
smooth the product’s reach into its target
market.
Because of it well organized manufacturing
process it foods become fresh, healthy and
testy for consumer. Its market segment is
not so large but it has already gained much
popularity. Therefore its current financial
situation is also satisfying .So why its thinks
to expense its market segments. As it is a
profitable organization, so we think that it
will be able to capture market and may it
more profitable.

Business Strategies
Marketing Strategy
Segment means dividing the market into distinct
groups of buyer with different needs and wants,
characteristics or behavior that might require
separate attributes. A set of buyers who share
common needs or characteristics that the company
decides to serve is target market. For target
marketing we follow undifferentiated (mass)
marketing. As we are launching new product, we
are selecting this strategy.
Positioning Strategy
It is the only Tiffin pack available which saves time
for the parents to prepare. Eye-catching package,
reasonable-price, cool, new and unusual, unique
experience, aspects of play (oversized colored
straw), variety of flavors, sweet, refreshing,
healthier alternative to other healthy foods.
Product Strategies:
Fu-Wang Tiffin Pack is pre-packed, ready-to-eat
format.
The actual product
Dividing the market into distinct groups of
buyer with different needs and wants,
characteristics or behavior that might
require separate attributes. A set of buyers
who share common needs or
characteristics that the company decides to
serve is target market. For target
marketing we follow undifferentiated
(mass) marketing. As we are launching new
product, we are selecting this strategy.
Fu Wang food has the various products in
market. The positioning should be same for
the different product. It is the only Tiffin
pack available which saves time for the
parents to prepare. Eye-catching package,
reasonable-price, cool, new and unusual,
unique experience, aspects of play
(oversized colored straw), variety of
flavors, sweet, refreshing, healthier
alternative to other healthy foods.

Branding
Colorful, aspect of play, square shaped, prominent Fu-
Wang logo written in modern font, catchphrases such
as “Full Power pack of Fun and Energy”
Trade name
Fu-Wang Tiffin Pack™, a Fu-Wang product
Brand personality
Energy, cool, functional, original and healthy.
Brand equity
Fu-Wang provides a quality, consistent, innovative and
accessible reputation.
Augmented product
Nutritional information, ingredients, items inside the
package, Features promoting the website, Health
benefits.
New product
The price strategy, trade name, brand
personality, brand equity, augmented
product are the most crucial features
of the any reputed brand.
Colorful, aspect of play, square
shaped, prominent Fu-Wang logo
written in modern font, catchphrases
such as “Full Power pack of Fun and
Energy.
Nutritional information, ingredients,
items inside the package, Features
promoting the website, Health
benefits

Advertisement in different sectors
Price Strategy
The price strategy that will be undertaken should
consider the following aspects:
1. Customer demand
Customer demand is a crucial factor, which is driven by
tastes, income and availability of others similar
products at a different price(mentioned later in the
potential substitutes section).For a lot of consumers,
value and price are highly related: „‟the higher the
price, the higher the value‟‟. Consequently, Fu-Wang‟s
intention to position Fu-Wang Tiffin pack as a unique,
innovative and attractive Pure bundling product which
gives it a certain control over price. To be able to
implement higher pricing though, the minimization of
the non-monetary costs to customers should also be
include along with awareness of the product (notably by
advertising) and value (benefits)
For a lot of consumers, value and
price are highly related: ‘’the higher
the price, the higher the value’’.
Consequently, Fu-Wang’s intention
to position Fu-Wang Tiffin pack as a
unique, innovative and attractive
Pure bundling product which gives it
a certain control over price. To be
able to implement higher pricing
though, the minimization of the non-
monetary costs to customers should
also be including along with
awareness of the product.
The product life cycle plays a vital
role for the company. The company
should take advantage also to the
fact that the newer the product and
the earlier in its lifecycle the higher
the price can usually be. It ensures
high profit margin as the early
adopters buy the product and the
firm seeks to recoup development
costs quickly and it also brings a
certain prestige to the product.

2. The product lifecycle
The company should take advantage also to the
fact that the newer the product and the earlier in
its lifecycle the higher the price can usually be. It
ensures high profit margin as the early adopters
buy the product and the firm seeks to recoup
development costs quickly and it also brings a
3. Potential substitutes
Fu-Wang is constrained by the monopolistic market
in which it competes. The main characteristic
however is product differentiation.
It ensures high profit margin as the
early adopters buy the product and
the firm seeks to recoup development
costs quickly and it also brings a
The potential substitutes always a
threat for the company the company
should try to face it smoothly.
Otherwise it can be the more harmful
for the company. If new entrants is
exists then price and branding could
be changed. Fu-Wang is constrained by
the monopolistic market in which it
competes. The main characteristic
however is product differentiation.

Financial Performance
0
100
200
300
400
500
600
700
800 Financial Highlights
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
(taka in million)
1.34 1.24
0.99 0.99
1.92
0.00
0.50
1.00
1.50
2.00
2.50
2007 2008 2009 2010 2011
Current Ratio
0
10000000
20000000
30000000
40000000
50000000
2007 2008 2009 2010 2011
Cash dividend
year
cash dividend
Here, 1.34 indicates in 2007 taka
1.34 current asset is available to
meet the 1 taka of current
liabilities. In addition it also
indicates the margin of safety
present to cover to any possible
reduction of current asset.
Furthermore, we can see that there
is a difference in ratio in 2008 and
2007 is -1.34-1.24=0.1.on the other
because of increasing liabilities and
asset in 2008 leads to decrease the
ratio. As noted earlier, the
increasing of CA and CL leads to
decrease the current ratio in 2008.
So it can be said that for which
components it was occur. IN 2008
inventory, AR, loans, advances and
deposit were increased in
compared to 2007. So in this
components adhered to lots of
money. So it can be the proper
reason to decrease the current ratio
in 2008.
On the other hand current liabilities
are increased as well in compared
to 2007. So it is the reason to fall
current ratio in 2008.
So if we see why it was happened
then we can notice that accrued
expense, AP, and provision for
income tax were high in compared
to 2007.
Form this situation we can assume
that this the main reason to
decrease current ratio in 2008 in
compared to 207.
In terms of cash dividend it is
increasing day by day. As we see
that in 2008 has a better position
than 2007. In 2009 the cash
dividend paid a little bit. But in 2010
and 2011 the cash dividend has
been paid in huge amount.

0
500
1000
1500
2000
2500
2007 2008 2009 2010 2011
EPS
0.00
0.20
0.40
0.60
0.80
1.00
1.20
2007 2008 2009 2010 2011
Fixed asset to net worth
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
2007 208 2009 2010 2011
Total liability to net worth
The Earning per share can play
a crucial role for the company.
Interestingly the EPS payment
was same over the year. I hope
it will increase in future.
Here the ratio of fixed asset to
net worth in 2010 and 2011
was accordingly 1.01 and .58. In
addition in purpose of
interpretation it indicates that
the Reflects the portion of net
worth that consists of fixed
assets. Generally a smaller ratio
is desired. So in my selected
company it can be seen that in
2011 was the better
performance than the 2010.
The reason is that in 2011 the
fixed asset and the net worth
are much higher than the 2010.
On Other hand in 2010 the
fixed asset and inventory both
are higher than in compared to
2011. In other words it can be
said that the fixed asset
actually depends on
accumulated depreciation. If
accumulated depreciation is
high then fixed assed will be
lower on the other hand if
accumulated depreciation is
low then fixed asset will be
lower.
Here the ratio of total liabilities
to net worth in 2007 and 2008
accordingly 1 and 1. In other
words it easily understands
that, the lower ratio will be the
best position for the company.
On the other hand the higher
ratio indicates the worst
position for the company.
In2007 1 and interestingly in

0.00
2.00
4.00
6.00
8.00
10.00
2007 2008 2009 2010 2011
Inventory turnover
0.00
0.20
0.40
0.60
0.80
1.00
2007 2008 2009 2010 2011
Asset to sales
-450.00
-400.00
-350.00
-300.00
-250.00
-200.00
-150.00
-100.00
-50.00
0.00
50.00
2007 2008 2009 2010 2011
Sales to net working capital
Here the ratio of Inventory turns
over of 2009 and 2010
accordingly 8.63 and 8.43 which
determines the rate at which
merchandise is being moved and
the effect on the flow of funds
into a business. So in this ratio
one thing is clear that more
inventory turnover determines
the better position on the
contrary the lower inventory
turnover determines the worst
condition of the firm. Now the
question comes why in happens.
IN 2009 the inventory turnover
is higher than 2010 because in
2009 the sales are more in
compare to the total turn over.
That means the ratio of sales
and turnover is higher than the
2010. In addition in 2010 the
sales and inventory has
increased but not increasing the
ratio between sales and
inventory turnover in compared
to 2009. So it is the signal for the
manager that if sales are higher
than the turnover then the turn
over ratio will be higher and
otherwise it will be fall. So
manager should try to make
rapid sales in terms of
accumulated inventory.
Asset to sales growing year to
tear.it is green signal for the
company.in 2011 it looks very
good in compare to previous
year.
Sales to net working capital in
2007 and 2008 were same. It fall
in 2009 but in 2010 and 2011 it
shows the great performance.

0.00
0.02
0.04
0.06
0.08
0.10
0.12
2007 2008 2009 2010 2011
Return on sales
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
2007 2008 2009 2010 2011
Return on assets
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
2007 2008 2009 2010 2011
Return on equity
The return on sales from 2007
to 2009 was more or less same
but in 2010 and 2011 has
increased in huge blow .its
shows how much return can be
earned from sales. So it indicates
the great signal for the company.
Return on asset has a great impact
on the company. It shows the how
much return can be earned from
the existing asset. The graph shows
that the position of graph
increasing day bye day.
Return of equity shoes how much
return can be generate for the
equity. The ratio of return on
equity analyzes the ability of the
firm's management to realize an
adequate return on the capital
invested by the owners of the firm.
So its indicates how much return
Wii generate in using of total
capital invested by the owners of
the firm. So it is sensitive for the
firm & crucial ratio for the firm. It
indicates how much net profit I can
generate to use the total worth. So
it will be indicate the higher the
ratio the better the company
position. On the other hand the
lower the ratio indicates the worst
the firm position. In 2008 and 2009
the ROE were accordingly .06 snd
.08. That indicates that in 2008 the
company was able to convert its
6% worth to net income. On the
other hand in 2008 the convertible
rate was 8% of total capital. The
questions comes why 2009 ROE
beter than 2008 the reason may be
in compare to 2008 the total worth
& net profit after-tax both were
increased in slightly

The financial performance
show that from 2006—
2012 what will be the
performance of Fu wang
foods limited based on the
share market price, basic
EPS, basic EPS(restated),
including extra-ordinary
income, net asset value per
share, net profit after tax,
dividend per percentage
and dividend yield
performance.
On the other hand the
crucial share market
information leads the
financial performance. It is
a category market. Its share
face value 10. It paid up
capital 534 million and so
on.

Strong Competitors
The Fu-Wang Foods has the strong competitors like Pran
foods, apex foods, Aftab foods, Rahima foods and fine-
foods.
Fu-wang Foods
Pran foods
Apex foods
Aftab foods
Fahim foods
Investment risk
The Fu-Wang Foods has the strong
competitors like Pran foods, apex
foods, Aftab foods, Rahima foods
and fine- foods.
As I said earlier that, the fu wang
has to face strong competition
among the rivals.
There are many food companies in
Bangladesh like pran foods, Fahim
foods, apex foods and Aftab foods.
But the leaders are Fu Wang. After
Fu Wang there are two markets
dominating such as apex and Pran.
By the all evidence it is clear that
the market growth, total net profit
and fixed asset is indicates the vital
role for the company. Here the net
profit and total fixed asset of Fu
Wang foods is more higher than the
all other peer group. So it is said
that in a food processing industry
the Fu Wang is a very good position.

Industry Structure and Profitability
DEGREE OF ACTUAL POTENTIAL COMPETITION
INDUSTRY PROFITABILITY
Rivalry Among
Existing Firms
Industry growth
Concentration
Switching costs
Scale/learning
economics
Fixed variable costs
Excess capacity
Excess barriers
Threat of New Entrants
Scale of economics
First mover advantages
Distribution access
Relationships
Legal barriers
Threat of substitute’s
products
Relative price and
performance
Buyers’ willingness to
switch
Bargaining power of buyers
Switching costs
Differentiation
Importance of product for
cost and quality
Number of buyers
Volume per buyer
Bargaining power of
suppliers
Switching cost
Differentiation
Importance of product for
cost and quality
Number of suppliers
Volume per suppliers
BARGAINING POWER IN INPUT AND OUTPUT MARKETS
Industry growth can be the
vital role for the company.
Industry growth will tell how
much competitive I am. On
the other hand higher
switching cost leads the
better competition among
the rival. But Fu Wang has
the highly exit barrier so it
has a chance to fight.
It has a threat of substitute
product among the existing
firms. E.g. the bread of Fu
Wang food can be taken
place for new pran breads.
There is strong chance of
threat of substitute. Because
of new technology can
imitate the product.
There is slight chance to
bargaining power of buyer.
But in some times like
different economic
condition the bargaining
power of supplier’s might be
increased. Then raw
materials will be costly.

Rivalry among Existing Firms
Switching cost is not so much tats why the rivalry among
existing firms not so high at all. But there is a restricted
exit barrier so in this sense competition is so high.
Threat of New Entrants
As I said earlier that there is huge chance to face new
entrants. Because in food processing industry there are
many big companies like Fu Wang foods limited. Fu Wang
food might face the threat of new entrants some of the
products. So it should be faced cleverly.
Threat of Substitute’s Products
Threat of substitute can damage the profit of the
company. The substitute‟s product may bring the other
peer group or other any company existing the industry. So
if it is true then it should be faced in good way. Here the
price or some features might be changed.
Bargaining Power of Buyers
Fu Wang is facing the bargaining power of buyers. But it is
tolerance. If bargaining power is so high then it might be
the key problem for the company.
Bargaining Power of Suppliers
It‟s the bargaining power of suppliers. But it is tolerance.
If bargaining power is so high then it might be the key
problem for the company. The suppliers are still under
control. If suppliers are out of control then suppliers will
Substituting price is not so much
tats why the rivalry among
existing firms not so high at all.
But there is a restricted exit
barrier so in this sense rivalry is
so high.
There is huge chance to face new
entrants. Because in food
processing industry there are
many big companies like Fu Wang
foods limited. Fu Wang food
might face the threat of new
entrants some of the products. So
it should be faced cunningly.
Risk of substitute can damage the
profit of the company. The
surrogate’s product may bring the
other peer group or other any
company existing the industry. So
if it is true then it should be faced
in good way. Here the price or
some features might be change.
It’s the brokering power of
suppliers. But it is tolerance. If
bargaining power is so high then
it might be the key problem for
the company. The suppliers are
still under control. If suppliers are
out of control then suppliers will
Control the company’s price
setting. Then company will be
bound to agree the suppliers
demand.

control the company‟s price setting. Then company will
be bound to agree the suppliers demand.
Comparing Among Peer Groups
TK-
TK200,000,000
TK400,000,000
TK600,000,000
TK800,000,000
TK1,000,000,000
TK1,200,000,000
2007 2008 2009 2010 2011
Fixed asset
apex pran fu wang
-20000000
0
20000000
40000000
60000000
80000000
100000000
120000000
140000000
160000000
2007 2008 2009 2010 2011
net profit
apex pran fu wang
The graph shows clearly that
among the peer group the
amount of fixed asset of Fu Wang
foods much higher. It shows the
physical strength of the company.
If fixed asset is grater than other
company then its shows the more
dominating power in the same
industry. So investor can trust
this company. On the other hand
the fixed asset indicates the
chance of further improvement
of company. In future the
infrastructure can be more
improved through the fixed asset.
By the net profit we can
understand the company
strength. It net profit is better
than any other company then we
assume that this company has
the more profit than the other
firm. And we assume in future it
will generate more profit. And it
will give dividend if it gains profit.

Production and the Degree of
Capacity Utilization
It is seen from the above table that FU-WANG has
operated as an average on installed capacities and
on budgeted capacities is 95.24% and 87.50%
during 2007-2008 it has been changed at 93.22%
and 88.00% during 2007-2008 respectively. It is
specially seen that capacity utilization has been
improving year by year and these 8 year‟s actual
production occurred nearly with budgeted
production.
If the production exceed the target a
further bonus equal to three days’ pay is
paid for production exceeding the target by
1%- 10%. This incentive bonus system
creates a great enthusiasm among the
company staff and officers to reach and
even to exceed the targets.
It is to be seen from the above table that
the degree of capacity utilization on
budgeted production has exceeded the
target in recent years. It is interesting to
note that in 2005-06 the installed capacity
utilization on actual capacity was 93.22%
and budgeted capacity utilization on actual
capacity was 88.00%. All this were due, as
gathered, to the application and
acceptance of incentive bonus system for
achievement of production target.
FU-WANG has operated as an average on
installed capacities and on budgeted
capacities is 95.24% and 87.50% during
2007-2008 it has been changed at 93.22%
and 88.00% during 2007-2008 respectively.

Annual production target is broken down into
monthly production target. If the target is not
reached in any month for any reason, attempt is
made to fulfill the short fall in the following month
or months. There is a relation between the
achievements of targets and the payment of
incentives bonus to the employee of the company.
The present rate of incentive bonus is one month‟s
pay for the achievement of target or budget
production. If the production exceed the target a
further bonus equal to three days‟ pay is paid for
production exceeding the target by 1%- 10%. This
incentive bonus system creates a great enthusiasm
among the company staff and officers to reach and
even to exceed the targets. The linking of incentive
bonus to production has contributed much to the
improvement of capacity utilization in recent years.
It is to be seen from the above table that the
degree of capacity utilization on budgeted
production has exceeded the target in recent years.
There is a relation between the
achievements of targets and the payment
of incentives bonus to the employee of the
company. The present rate of incentive
bonus is one month’s pay for the
achievement of target or budget
production. If the production exceed the
target a further bonus equal to three days’
pay is paid for production exceeding the
target by 1%- 10%.
The linking of incentive bonus to
production has contributed much to the
improvement of capacity utilization in
recent years. It is to be seen from the
above table that the degree of capacity
utilization on budgeted production has
exceeded the target in recent years

Director
12%
Government
0%
Institute
4%
Foreign
0%
Public
84%
Share Holding Pattern
Share holding pattern
The good looking pie chart
shows that the maximum share
holders are public. So it
indicates that the investors have
the huge expectation on Fu
Wang foods limited.
The second share holders are
directors. They have the
minority power on share. But
controlling power is huge in
terms of managing the firms.
The third share holders are
institute. This has also more
expectation on the company.

In Chittagong stock
exchange ltd the
condition of this
company lays down. In
graphs it shows in March
15, 2012
Open price: 41.8
High price: 43.3
Low price: 42.7
Close price: 42.9
Volume: 21000
In Chittagong stock
exchange ltd the
condition of this
graphs it shows in April
22, 2012
Open price: 41.1
High price: 43.1
Low price: 41.1
Close price: 41.5
Volume: 17740
Valuation

In Dhaka stock exchange ltd the
condition of this company lays
down. In graphs it shows in
September 06, 2011
Open price: as per as graph
High price: as per as graph
Low price: as per as graph
Close price: -45.69
Volume: 799200
In Dhaka stock exchange ltd the
condition of this company lays
down. In graphs it shows in
September 06, 2011
Low price: 42.7
Close price: -45.69
Volume: 799200

In Dhaka stock exchange
ltd the close price of this
graphs it shows in October
to September
Close price: as per as graph
Highest Volume: 63.6
Lowest volume: 26.8
In February the stock price
was fallen drastically.
In Dhaka stock exchange
ltd the trade information
of this company lays down.
In graphs it shows in
October to September
Close price: as per as graph
Highest Volume: 4504
Lowest volume: 0
In Jun and July the stock
price was fallen
drastically.

(Tkinthousands) 2012E 2013E 2014E 2015E 2016E
Total Revenue Tk.878,782,220 Tk.1,048,395,872 Tk.1,218,009,524 Tk.1,387,623,176 Tk.1,557,236,828
GrowthRate 0.19 0.16 0.14 0.12 0.11
COGS 710,786,888 847,975,781 985,164,674 1,122,353,567 1,259,542,460
Gross Margin 167,995,332 200,420,091 232,844,850 265,269,609 297,694,368
%of Sales 19% 19% 19% 19% 19%
Operating Expenses 95,774,487 114,259,910 132,745,332 151,230,755 169,716,177
%of Sales
Royalty, training andconsultancy - - - - -
%of Sales
General andAdministrative - - - - -
Total Operating Expenses 95,774,487 114,259,910 132,745,332 151,230,755 169,716,177
EBIT 72,220,844 86,160,181 100,099,518 114,038,854 127,978,191
Key forecast
Here the operating expenses
increases as the day passes. On
the other hand the operating
income increases as well.
Cogs of goods sold are most
impressible.
Gross margin is so positive. The
good gross margin can be the
more attractive for the Investor.
Earning before income and taxes
are so impressive.

(Tk in thousands) 2012E 2013E 2014E 2015E 2016E
Total Revenue Tk.878,782,220 Tk.1,048,395,872 Tk.1,218,009,524 Tk.1,387,623,176 Tk.1,557,236,828
Growth Rate 0.19 0.16 0.14 0.12 0.11
COGS 710,786,888 847,975,781 985,164,674 1,122,353,567 1,259,542,460
Gross Margin 167,995,332 200,420,091 232,844,850 265,269,609 297,694,368
% of Sales 19% 19% 19% 19% 19%
Operating Expenses 95,774,487 114,259,910 132,745,332 151,230,755 169,716,177
% of Sales
Royalty, training and consultancy - - - - -
% of Sales
General and Administrative - - - - -
Total Operating Expenses 95,774,487 114,259,910 132,745,332 151,230,755 169,716,177
EBIT 72,220,844 86,160,181 100,099,518 114,038,854 127,978,191
% of Sales 8% 8% 8% 8% 8%
Depreciation/Amortization 25,031 28,535 32,530 37,084 42,276
EBITDA 72,245,875 86,188,716 100,132,047 114,075,938 128,020,467
% of Sales 8% 8% 8% 8% 8%
Income Taxes 7,568,744.49 9,029,586.96 10,490,429.44 11,951,272 13,412,114
Unlevered Net Income 64,652,100 77,130,594 89,609,088 102,087,582 114,566,076
Add: Depreciation/Amortization 25,031 28,535 32,530 37,084 42,276
Less: Changes in Working Capital 43,354 49,424 56,343 64,231 73,224
Less: Capital Expenditures 9,975,573 11,482,551 13,217,183 15,213,861 17,512,170
Net Cash Flow Before Debt 54,658,203 65,627,154 76,368,091 86,846,574 97,022,958
Present Value of Adjusted Cash Flows 3,803,633 317,812 25,736 2,037 158
In 2012 to 2016 the
expected analysis has
been shown in this
statement.
Here we can see that,
total revenue is so good
for the company. The
growth rate can be
calculate as follows
(R1-R0)/ (R0)
On the other hand the
EBIT is the most crucial
one. So many things
depend on EBIT.
As same as EBIT the most
crucial one is EBITDA it
has the more crucial
impact on the valuation of
any company.

INCOMESTATEMENT 2007 2008 2009 2010 2011
TURNOVER Tk.346,245,351 Tk.384,463,424 Tk.522,439,574 Tk.539,554,916 Tk.709,168,568
Less:COSTOFGOODSSOLD 282070942 316992595 434969289 444958348 530277616
GROSSPROFIT Tk.64,174,409 Tk.67,470,829 Tk.87,470,285 Tk.94,596,568 Tk.178,890,952
OPERATINGEXPENSES:
Less:Administritive, Financial and selling Expenses 41514817 42772318 57211549 56932628 70029772
OPERATINGPROFIT Tk.22,659,592 Tk.24,698,511 Tk.30,258,736 Tk.37,663,940 Tk.108,861,180
NonoperatingIncome 0 0 1000000 1200000 1200000
TOTALOPERATINGPROFIT Tk.22,659,592 Tk.24,698,511 Tk.31,258,736 Tk.38,863,940 Tk.110,061,180
contribution to W.P and walefare fund 1079028 1176120 1488511 1850664 5241009
NETPORFITBEFORETAX Tk.21,580,564 Tk.23,522,391 Tk.29,770,225 Tk.37,013,276 Tk.104,820,171
Less:ProvisionForIncomeTax 8632226 9408956 8186812 10178651 25942992
NETPORFITAFTERTAX Tk.12,948,338 Tk.14,113,435 Tk.21,583,413 Tk.26,834,625 Tk.78,877,179
ProfitBroughtForward Tk.17,165,600 Tk.24,532,413 Tk.31,948,018 Tk.53,531,431 Tk.61,966,056
Tk.30,113,938 Tk.38,645,848 Tk.53,531,431 Tk.80,366,056 Tk.140,843,235
ProposedCashDividends 5581525 6697830 0 18400000 40480000
ProfitCarriedForward Tk.24,532,413 Tk.31,948,018 Tk.53,531,431 Tk.61,966,056 Tk.100,363,235
Weightedaverageofnumberofordinary
sharesounstandingduringtheyear 18400000 18400000 18400000 20240000 41104833
EarningPerShare(EPS)-Basic 0.703714022 0.767034511 1.173011576 1.325821393 1.918927125
BALANCE SHEET 2007 2008 2009 2010 2011
NETASSETS:
Tangible Fixed Asset, Net of Accumulated
Depriciation Tk.177,001,040 Tk.191,307,221 Tk.257,095,135 Tk.284,277,230 Tk.387,913,056
TradeMarks Tk.7,000 Tk.7,000 Tk.7,000 Tk.7,000 Tk.7,000
Non-CurrentAssets Tk.177,008,040 Tk.191,314,221 Tk.257,102,135 Tk.284,284,230 Tk.387,920,056
Investment Tk.50,000,000
Current Assets:
Inventories Tk.60,445,455 Tk.79,285,401 Tk.60,510,390 Tk.63,978,805 Tk.100,367,939
SundaryDebtors Tk.41,630,756 Tk.58,476,200 Tk.57,794,689 Tk.59,343,138 Tk.100,067,414
Loans,AdvancesandDeposits Tk.64,443,553 Tk.73,496,882 Tk.83,972,706 Tk.109,357,268 Tk.173,848,641
CashandEquivalents Tk.29,964,861 Tk.11,621,739 Tk.20,557,713 Tk.25,913,841 Tk.97,530,734
TotalCurrentAssets Tk.196,484,625 Tk.222,880,222 Tk.222,835,498 Tk.258,593,052 Tk.471,814,728
Current Liabilitiesand Provisions:
Credit short termbank loans-secured Tk.69,542,261 Tk.58,167,755 Tk.109,491,742 Tk.72,204,786 Tk.63,004,233
AccruedExpenses Tk.3,988,270 Tk.6,173,446 Tk.2,757,315 Tk.3,208,715 Tk.6,028,902
SundryCredititors Tk.14,282,730 Tk.46,232,972 Tk.40,995,911 Tk.103,757,840 Tk.69,060,537
ProposedDevidend Tk.5,581,525 Tk.6,697,830 Tk.0 Tk.0 Tk.0
ProvisionorIncomeTax Tk.53,319,996 Tk.62,728,952 Tk.70,915,764 Tk.81,094,415 Tk.107,037,407
TotalCurrentLaiabilitiesandProvisions Tk.146,714,782 Tk.180,000,955 Tk.224,160,732 Tk.260,265,756 Tk.245,131,079
NetCurrentAssets Tk.49,769,843 Tk.42,879,267 (Tk.1,325,234) (Tk.1,672,704) Tk.226,683,649
TOTAL ASSETS Tk.226,777,883 Tk.234,193,488 Tk.255,776,901 Tk.282,611,526 Tk.614,603,705
FINANCEDBY:
ShareholdersCapital Tk.184,000,000 Tk.184,000,000 Tk.184,000,000 Tk.202,400,000 Tk.445,280,000
Retained Earnings-as Per Profit and Loss
Account Tk.18,245,470 Tk.18,245,470 18245470 18245470 Tk.18,245,470
TaxHolidayReserve Tk.24,532,413 Tk.31,948,018 Tk.53,531,431 Tk.61,966,056 Tk.105,398,985
CapitalReserve Tk.0 Tk.0 Tk.0 Tk.0 Tk.95,679,250
ShareholdersEquity Tk.226,777,883 Tk.234,193,488 Tk.255,776,901 Tk.282,611,526 Tk.664,603,705
TOTAL LIABILITIES Tk.226,777,883 Tk.234,193,488 Tk.255,776,901 Tk.282,611,526 Tk.664,603,705
RATIOANALYSIS
InternalLiquidity(Solvency)
CurrentRatio(X) 1.34 1.24 0.99 0.99 1.92
QuickRatio(X) 0.49 0.39 0.35 0.33 0.81
CurrentLiabilitiestonetworth 0.65 0.77 0.88 0.92 0.37
Currentliabilitiestoinventory 2.43 2.27 3.70 4.07 2.44
Totalliabilitiestonetworth 1.00 1.00 1.00 1.00 1.00
Fixedassettonetworth 0.78 0.82 1.01 1.01 0.58
Inventoryturnover 5.73 4.85 8.63 8.43 7.07
Assettosales 0.65 0.61 0.49 0.52 0.94
Salestonetworkingcapital 6.96 8.97 -394.22 -322.56 3.13
Accountspayabletosales 15.06 43.89 28.64 70.19 35.54
ProfitabilityRatio(Profit)
Returnonsales 0.04 0.04 0.04 0.05 0.11
Returnonassets 0.06 0.06 0.08 0.09 0.12
Returnonequity 0.06 0.06 0.08 0.09 0.12
EfficiencyRatio
Collectionperiod 43.89 55.52 40.38 40.14 51.50
CASH FLOW STATEMENT 2007 2008 2009 2010 2011
Cash Flows From Operating Activities:
Collection From Turnover and Others Tk.349,578,266 Tk.367,617,980 Tk.524,121,085 Tk.539,206,467 Tk.669,644,292
Payment for Cost and Expenses Tk.267,393,881 Tk.329,129,157 Tk.463,397,371 Tk.429,702,797 Tk.639,775,355
Interest Paid on Short Term Borroeing Tk.12,709,462 Tk.10,736,840 Tk.11,529,037 Tk.8,476,882 Tk.8,666,372
Income Tax Paid and Deduct at Source Tk.31,493,660 Tk.8,517,596 Tk.5,143,982 Tk.15,905,244 Tk.7,500,000
Total Cash flows from operating activities Tk.37,981,263 Tk.19,234,387 Tk.44,050,695 Tk.85,121,544 Tk.13,702,565
Tangible Fixed Asset Dissposal Tk.50,000,000 Tk.0 Tk.0 Tk.0 Tk.0
less:Tangible Fixed Asset Accquired Tk.36,099,765 Tk.20,621,478 Tk.79,758,878 Tk.42,478,460 Tk.24,285,119
Less:Investment in Subsidary Tk.0 Tk.0 Tk.0 Tk.0 Tk.50,000,000
Less:Advancement in Subsidary Tk.0 Tk.0 Tk.0 Tk.0 Tk.61,000,000
Cash flows from Investing Activities Tk.13,900,235 (Tk.20,621,478) (Tk.79,758,878) (Tk.42,478,460) (Tk.135,285,119)
Cash Flows from Financing Activities:
Cash credit and other short term loan
received dividend paid (Tk.14,410,170) (Tk.11,374,506) Tk.51,323,987 (Tk.37,286,956) (Tk.9,200,553)
Pividend Paid (Tk.18,400,000) (Tk.5,581,525) (Tk.6,697,830) Tk.0 Tk.202,400,000
Total Cash Flows from Financing Fctivities (Tk.32,810,170) (Tk.16,956,031) Tk.44,626,157 (Tk.37,286,956) Tk.193,199,447
Cash and Cash Equivalents at Closing:
Increase/(decrease) in cash and cash
equivalents at opening Tk.19,071,328 (Tk.18,343,122) Tk.8,935,974 Tk.5,356,128 Tk.71,616,893
Cash and Cash Equivalents at Opening Tk.10,893,533 Tk.29,964,861 Tk.11,621,739 Tk.20,557,713 Tk.25,913,841
Total Cash and Cash Equivalents at Closing Tk.29,964,861 Tk.11,621,739 Tk.20,557,713 Tk.25,913,841 Tk.97,530,734
Financials

As an analyst I have a lot of confidence on Fu-Wang Foods that, it is properly
valued. Fu-Wang Foods is popular Food processing company, which has
demonstrated solid advance, driven by an antagonistic attainment-ambitious
approach. As an analyst I have tried so much to highlight this company for the
investors. I think this report can contribute for those investors who want to invest
for this company. On the other hand it can be said that this report might have
mistake. If mistake is found then it will be unintentional.
To fore cast this company I tries so much in terms of logic, data, information, share
price, valuation, market analysis, situational analysis, price analysis, competitive
analysis, peer group analysis, estimated value analysis, condition of past and future
analysis, industry analysis, share holding parent analysis, porters five forces model
analysis and last of all fairly valuation analysis.
Summary

REFERENCES
1. Fu-Wang Foods And Beverage Limited Annual Report 2005-2006,2007-
2008,2009-2010,2010-2011
2. Gupta S P and Gupta N P, Business Statistics, 8th
Edition, Prentice Hall of
India Private Limited.
3. Besly Scott and Brigham F. Eugene, Essentials of Managerial Finance, 13th
Edition, Thomson South Western.
4. Corporate Finance Ross, Westerfield, and Jaffe 9th edition
5. Personal factory visit.
6. www.bocigroup.com
7. www.raymondjames.com
8. www.rbs.org
9. www.valuenotes.com
10.www.dowjones.com
11.www.spindices.com

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