RAK Ceramics (Bangladesh) Limited - DSE

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Determination of Indicative Fair Price:The offer price of RAK is derived under different applicable valuation methods.Finally, the fair value of RAK share is derived by calculating the weightedaverage price of the fair values derived under different valuation techniques.Since, RAK has appeared to be a capital-intensive company, highest weight isassigned to the price derived through Primary Valuation Method and equalweights are assigned to the prices derived through other valuation technique.ParticularsValues(Tk.)Assignedwt.WeightedValue(Tk.)Price Based on Average P/BV Multiple of Similar Stocks 48.02 0.650 31.21Price Based on Average P/E Multiple of Similar Stocks 22.88 0.175 4.00Price Based on DDM 38.6 0.175 6.76Price (Fair Value) 41.97Additional Justifications to the Indicative Price1) During the last five years, RAK has experienced significant growth inrevenue and earnings. The half yearly revenue of this year was 25.90%higher than that of the previous year. The company is expected to have aprofitable business in this year due to the positive impact of the recentlydeclared Budget 2009-10 and the declining price of raw materials in theInternational Market.2) Considering all the internal and external factors, a conservative approachhas been taken during the future projection of RAK earnings. Theindustry and business outlook of the company reveal that the companywill continue to maintain above industry-average growth during the nextseveral years as a market leader.3) The NAV per share of RAK grew at a steady rate since inception. The NAVper share of the company grew by 95.55% in last five years. Theincreasing trend of NAV represents that the company always focused inmaintaining a strong asset base, which increased their investmentopportunities to support their expansion plan.4) RAK is the market leader in the ceramic industry with strong brandequity. The company is maintaining a strong equity base and enjoys awide diversification of products currently. All these factors contribute tothe company’s strength of generating substantial revenue.
Consent of the Eligible institutional Investors regarding indicative price7 (Seven) Institutional Investors have consented to the proposed indicative priceof Tk. 40 each, including a premium of Tk. 30 per share. The following tableillustrates the list of Eligible Institutional Investors (EIIs) consenting to theindicative price:NameCategoryPrime Bank LimitedBank & Merchant BankerSoutheast Bank LimitedBank & Merchant BankerIFIC Bank LimitedBankPrime Finance & Investment Limited FI & Merchant BankerLankaBangla Finance Limited FI & Merchant BankerMercantile Insurance Limited Insurance CompanyRoyal Green Securities Limited Stock Dealer
Page 1 and 2: RAK Ceramics (Bangladesh) Limited(I
Page 3 and 4: Executive SummaryDate of Incorporat
Page 5 and 6: Directors’ involvement in other o
Page 7 and 8: Performance at a Glance:Tk. in mill
Page 9 and 10: Net Tangible Asset per Shareas on 3
Page 11 and 12: IPO process under Book Building Met
Page 13: (ii)Valuation based on Dividend Dis
Page 17 and 18: Company. If exchange rate is increa
Page 19 and 20: and, in tandem with the real estate
Page 21 and 22: Management perceptionThe Company pl

RAK Ceramics (Bangladesh) Limited - DSE

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