Analyst: Parvez M Chowdhury

parvez@bracepl.com

Beximco Pharmaceuticals
DSE: BXPHARMA Bloomberg: BXPHAR:BD
Company Summary 52-week Price Range (BDT) Current Price (Dec 18, 2011) (BDT) Dec 12 Fair Price (BDT) Cash Dividend (BDT) Total Return Number of Shares (MM) Market Capitalization (MM BDT) Free Float LTM Avg daily volume (MM BDT) Headlines Revenue (MM BDT) Gross Profit (MM BDT) Operating Income (MM BDT) Net Income (MM BDT) Margins Gross Margin Operating Margin Net Margin Growth Revenue Growth Net Income Growth Per Share (BDT) EPS BVPS CFPS Dividend Valuation P/E P/B EV/EBITDA Other Debt/equity Debt/assets ROA ROE 72.2 - 151.9 93.9 130.0 1.5 40% 252 23,641 87% 74 2010A 2011E 2012E 6,491 3,173 1,430 1,052 8,127 10,273 3,951 2,185 1,434 5,008 2,817 1,929

Rating: Outperform Dec-2012 Fair Value Estimate: BDT 130 per share December 19, 2011

Gearing up for exports

Event

Beximco Pharmaceuticals Limited (BPL) had a strong first nine months in 2011 with respectable growth. BPL appears to have recovered strongly from the slowdown they endured in 2008 and 2009. The company has made noticeable progress with its ambition of entering into exports with greater intensity. BPL is in the process of attaining approvals from several regulators in developed and other markets.

2010A 2011E 2012E 49% 25% 16% 49% 27% 18% 49% 27% 19%

Action and Recommendation

BPL is one of our top picks. We believe the company is poised to witness strong and highly visible earnings growth in the domestic market over the next few years. An even stronger growth in exports will sustain growth in the longer term. Rating: Unchanged. We maintain our previous OUTPERFORM rating for BPL. 12-month (December 2012) fair value: BDT 130, based on DCF valuation. Our previous price target of BDT 160 before 20% stock dividend. Our fair value denotes a total return of 40%. Catalyst: In the last 12 months and in the course of the pronounced market correction, BPLs stock price dropped substantially and has not recovered fully. We believe the market is largely unaware of the growth potential signaling a very good opportunity to buy and accumulate.

2010A 2011E 2012E 33% 68% 25% 36% 26% 35%

2010A 2011E 2012E 4.18 63.45 6.45 0.00 5.70 67.64 6.82 1.50 7.66 73.30 7.66 2.00

2010A 2011E 2012E 22.5x 1.5x 10.7x 16.5x 1.4x 9.1x 12.3x 1.3x 7.3x

2010A 2011E 2012E 25% 18% 5% 8% 25% 19% 6% 9% 25% 18% 8% 11%

Source: Company Data, BRAC EPL Research, December 2011

Source: Company Data, BRAC EPL Research, December 2011

Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)

9M11 Performance
YoY revenue growth 21%; net profit growth 15%

BPLs performance in the first nine months of 2011 has been reasonably healthy. The company certainly looks to have overcome the hurdles it faced during 2008 and 2009 due to capacity constraint. BPL maintained consistent performance during the first three quarters of 2011. Overall, the company has been able to achieve a revenue of BDT 5,789 million for the first nine months of 2011 compared to BDT 4,781 million for the same period in 2010 with a growth of 21% (YoY). Profit after tax for the first nine months of 2011 amounted to BDT 968 million while it was BDT 840 million during the same period in 2010, denoting a growth of 15%.
Table 1: Comparative performance of 2011 and 2010 (MM BDT) Net Sales Revenue Cost of Goods Sold Gross Profit Administrative Expenses Selling & Distribution Expenses Profit from Operations Other Income Finance Cost Profit Before Contribution to WPPF Contribution to WPPF Profit Before Tax Income Tax (Current & Deferred) Profit After Tax 3Q11 2,147 1,079 1,067 83 378 606 79 146 539 26 514 117 397 2Q11 1,971 1,012 959 61 358 540 79 135 484 23 461 143 319 1Q11 1,672 909 763 51 333 379 71 132 318 15 303 51 253 9M11 5,789 3,000 2,789 195 1,069 1,524 230 412 1,342 64 1,278 310 968 9M10 %

4,781 21% 2,364 27% 2,416 15% 164 19% 951 12% 1,302 17% 402 -43% 511 -19% 1,194 12% 57 12% 1,137 12% 297 5% 840 15%

Source: Company Data and BRAC EPL Research, December 2011

Growth
Improved production capacity helped maintain consistent growth

BPL has been able to improve their top line with improved production capacity. They have invested heavily in the past few years, which seems to have started paying off. In all three quarters in 2011, revenue witnessed solid growth. However, because of the newly installed equipment and plants, depreciation expenses have been slightly higher than usual and this has affected the growth in gross profit. Even then, the gross profit growth has never dipped below double digits (YoY) in any quarter and the 9-month growth (YoY) has been 15%. Operating profit growth also remained healthy during the three quarters. In 2Q11, net profit growth dropped to only 3%. This was mainly due to a one-off gain on sale of assets in 2Q10. Otherwise, net profit growth in all three quarters has been rather impressive gaining 15% (YoY) for the first nine months.
Table 2: Comparative performance of 2011 and 2010 3Q11 Revenue Growth Gross Profit Growth Operating Profit Growth Net Profit Growth
Source: BRAC EPL Research, December 2011

2Q11 20% 12% 21% 3%

1Q11 26% 21% 13% 16%

9M11 21% 15% 17% 15%

18% 15% 17% 27%

Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)

Margins
Despite minor setbacks margins are improving gradually

With increased capacity coming online, BPL managed to improve their margins noticeably. This was done partly through increased efficiency from new machinery and partly through focusing more on high margin products. In the 4Q10 gross margin stood at 44.3%, which has improved a substantially to 49.7% in 3Q11. BPL also improved selling and distributing expenses to 17.6% in 3Q11 from 20.6% in 4Q10. This has led to significant improvement in operating margin; from 19.5% in 4Q10 to 28.2% in 3Q11. Net margin, however, improved in a slightly tamer pace; from 12.4% in 4Q10 to 18.5% in 3Q11. This was mainly due to a mixture of net tax effect on newly installed machinery, lower other income and higher finance cost. However, the 9-month margins of 2011 is still a little bit lower than that of the same period in 2010 as they had to gradually eliminate the problem areas in 2011.
Table 2: Margins are improving gradually 3Q11 Gross Margin Operating Margin Net Margin
Source: BRAC EPL Research, December 2011

2Q11

1Q11

4Q10

9M11

9M10

49.7% 48.6% 45.6% 44.3% 48.2% 50.5% 28.2% 27.4% 22.6% 19.5% 26.3% 27.2% 18.5% 16.2% 15.1% 12.4% 16.7% 17.6%

Table 3: Expenses as % of sales also improving 3Q11 COGS as % of Sales Administrative Expense as % of Sales S&D Expense as % of Sales
Source: BRAC EPL Research, December 2011

2Q11

1Q11

4Q10

9M11

9M10

50.3% 51.4% 54.4% 55.7% 51.8% 53.7% 3.9% 3.1% 3.1% 4.1% 3.4% 3.4% 17.6% 18.2% 19.9% 20.6% 18.5% 19.5%

Domestic markets limitations

The domestic pharmaceutical market, which is estimated to be close to BDT 1 billion, has been growing at a double digit rate for the last few years.
Rapidly growing domestic market helping local manufacturers

Growth drivers for the domestic market have been:

Increased government health expenditure Growing income base of the population Emergence of private healthcare service Popularization of wellness drugs

The local manufacturers including BPL benefitted from the growth, which is expected to continue for years to come. However, there are also some limitations in the domestic market. In Bangladesh, the pharmaceutical companies have no power on setting prices for the essential drugs, a list of lifesaving drugs decided by the government. Only the Directorate of Drug Administration (DDA) has the power to decide price of these drugs and the revision of price is few and far between. Therefore, the pharmaceutical companies make only marginal
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Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)
profits, if any, from these drugs. Then again, the large manufacturers do not focus much on these drugs anyways . However, the pharmaceutical companies are free to set prices on products outside of this list. So, the companies make the bulk of their profit from these non-essential drugs. Even then, the companies cannot set prices too high as the DDA usually does not allow such prices consider the limited purchasing power of the population. On top of that, any kind of advertising for any drug is prohibited.

Exportthe next growth driver

Exports could emerge as a growth driver thanks to greater purchasing power in developed markets

We believe that one of the biggest growth drivers for BPL down the line, besides the apparent removal of bottlenecks, is that the company is putting more attention to the international market. Because of the enhanced purchasing power of the consumers of the developed markets, the sales volume has the potential to grow significantly over the years, if BPL can successfully penetrate those markets.
Table 4: Exports still not a major contributor 2006 Local Sales % of Total Exports % of Total 97% 3% 2007 97% 3% 2008 96% 4% 2009 94% 6% 2010 95% 5%

Source: Company Data and BRAC EPL Research, December 2011

In 2010, exports contributed to 5% of the total revenue for BPL. The company is aiming to elevate it to 25% by 2015. Although it may sound a little bit optimistic, it looks to be achievable. On the other hand, because of the strict quality control and regulations of the developed market such as Europe and USA, BPL will need to continuously maintain and renovate their manufacturing plants. This means they are expected to have a large outflow in capital expenditure in regular intervals. Since most of the state of the art plants are already in place and waiting for certification, the expenditure should not spiral out of control in the short term. However, we foresee more than BDT 1 billion in capex on average annually for the next few years.

Regulatory approvals
BPl is seeking regulatory approvals from multiple market regulators in preparation for large scale exports

BPL wants to become a world-class manufacturer of pharmaceutical products operating in domestic and international markets, including Least Developed Countries (LDCs, owing to TRIPS Agreement), developing and developed countries. Currently, product registration in several countries is in the pipeline. In line with the goal to enter high margin markets and developed markets, few regulatory audits have already been taken place. GMP accreditation audit by an EMA regulatory authority was completed for the OSD and Ophthalmology units, and inspections and approvals from UK MHRA and US FDA are anticipated to take place shortly. Very recently, the company has received regulatory approvals including:

GMP clearance from Therapeutic Goods Administration (TGA) Australia for OSD, MDI and Spray. GMP certification from Gulf Central Committee for Drug Registration,
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Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)
Executive Board of the Health Ministers Council of GCC states.

GMP certification from ANVISA, Brazil (Agncia Nacional de Vigilncia Sanitria) GMP certification from INVIMA, Colombia (Instituto Nacional de Vigilancia de Medicamentos y Alimentos) GMP certification from AGES, Austria (Austrian Agency for Health and Food Safety) Qualified by UNICEF (MDI & OSD) Qualified by Asthma Drug Facility (ADF), France (MDI)

BPL expects to commence full scale exports to these countries and regions very soon.

Minor successes overseas

The company expects that higher margin will be achieved in all these international markets. Along with developed markets, additional 25 countries are also targeted (distributor agreement signed and product registration under process). These markets/continents include Latin and Central America, South Africa, Africa, Caribbean Island, Pacific Island countries, South Asia and South East Asian countries.
Already some success in GCC especially Saudi Arabia

Among these, GCC market looks to be the most lucrative for BPL given only four countries (Egypt, Algeria, Morocco and Bangladesh) are allowed to export there. No other companies from Bangladesh have any plans for GCC as of now. Starting from 2012, as many as 15 products are expected to be exported to GCC. Initially, BPL has started with a small packaging facilities in Saudi Arabia with an aim to become local eventually. Saudi authority provides 30% discount to local firms for tender. Export to Saudi Arabia could potentially reach USD 10-15 million in 2013-14.

Rights for 8 products acquired so far from US

BPL has recently acquired rights of 8 niche products from US manufacturers. These products are currently manufactured in plants in India. BPL plans to apply to the US FDA for a site change to BPLs own factory in Bangladesh. This is expected expedite the US FDA approval process significantly, making their entry into the US market a little bit smoother.

Contract Manufacturing Opportunity

Cost of medication is becoming a major concern even in the developed countries. This particular issue coupled with severe price competition from the generic manufacturers has prompted a number of giant multinational companies to shift or outsource their production from developed to developing and less developed countries, because of huge cost advantage. It is believed that the world pharmaceutical market will continue to see more consolidation than ever across the entire value chain of the pharmaceutical business. Big companies will continue to look for suitable partners in their supply chain management in order to reduce their cost of production.

Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)
BPL has already established partnership with a number of leading global pharmaceutical companies. These partnerships have given the company expertise and know-how to contract manufacture products for reputed MNCs for the developed markets like Europe, USA, and Australia etc. which will commence soon. Along with own brand marketing, contract manufacturing opportunities are also expected from the developed countries. For example, after receiving TGAs GMP Clearance, the company has already started receiving strong queries for contract manufacturing from Australia and other developed European markets (including Austria, Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, UK etc.) where TGAs GMP certification is accepted as a quality standard (under Mutual Recognition Arrangement). Since only a few companies in the world are operating with their CFC free MDI (Metered Dose Inhalers) formulations and BPL has a certified MDI setup, there will be huge opportunities for contract manufacturing for reputed MNCs in the coming years. Moreover, opportunities for operating in developed markets with proprietary formulations are also opening up. BPL has established a few successful business partnerships with MNCs regarding contract manufacturing which could lead to further exploration of revenue sharing custom manufacturing arrangements for developed and strategically important international markets such as Latin America, Africa and Middle East and South East Asia.
Already in contract manufacturing and outsourcing arrangements with GlaxoSmithKline and Sanofi Aventis

BPL started its journey back in the 80s partnering with Bayer AG of Germany and Upjohn Inc. of USA. The company has also partnered with Roche of Switzerland and Pharma Italia Carlo Erba of Italy. Currently, the company contract manufactures worlds number one reliever inhaler brand Ventolin for GlaxoSmithKline, and will soon commence to contract manufacture liquid, cream, ointment and suppository products for Novartis. On the other hand, the company has outsourced two of its cephalosporin injectable products from Sanofi Aventis.

Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)
Valuation
DCF Valuation gives fair value of BDT 130

The DCF valuation for Beximco Pharmaceuticals gave us a fairly attractive value for the company. We believe even though the real value addition will come after 2012 when the full potential of the ambitious expansion program is realized, the company is slightly undervalued. With a discount rate of 16.0% and terminal growth rate of 4.0%, our DCF valuation provides a fair value of BDT 130 per share (for December 2012). BPL has witnessed a fair bit of dilution over the last one year because of conversion of preferred stock into ordinary stocks, which ended up increasing share premium in the shareholders equity. The dilution makes the stock appear richly valued with 22.9x earnings multiple (based on 2010 earnings), slightly higher than its peers 21.0x. However, BPL has an EV/EBITDA ratio of 10.9x, which is much better than the peer average of 13.8x. Our forecast model indicates a forward EV/EBITDA ratio of 9.3x with a P/E ratio of 16.8x for 2011. Given the growth potential of the company, the stock is really not as expensive as it looks. Based on both of our valuations, we arrive at a fair value of BDT 130. With an estimated dividend yield of 2%, our fair price would provide a 12-month total return of 40%.

Recent dilution making the stock appear more expensive than it is; EV/EBITDA ratio much lower than peer average

Total return of 40% including dividend yield of 2%

Table 5: DCF Valuation Discounted FCF (MM BDT) Operating Cash Capital Expenditure Change in Debt Net Terminal Value Terminal Value Terminal Debt FCFE Discount Rate Terminal Growth Rate NPV (MM BDT) 2011 NPV/Share (Dec 2011) (BDT) NPV/Share (Dec 2012) (BDT) Beximco Pharmaceuticals 2012 Estimates (BDT) Multiples Value/Share (BDT) Fair Value Average (BDT) Current Price (BDT) Dividend Yield Total Return 437 843 16.0% 4.0% 23,723 113 131 EPS 7.66 17.0x 130 130 94 2% 40% 1,034 2,489 799 2,234 3,454 4,413 5,320 2011 1,432 -1,361 367 437 2012 1,607 -1,120 356 843 2013 2,180 -997 -149 1,034 2014 2,820 -854 524 2,489 2015 3,284 -2,608 123 799 2016 4,057 -1,944 120 2,234 2017 5,047 -1,661 68 3,454 2018 5,952 -1,523 -15 4,413 2019 6,812 -1,355 -137 5,320 2020 7,670 -1,161 -292 6,217 49,022 53,879 4,857 55,239

Table 6: Comparative Valuation* Other Pharmaceuticals Square Pharmaceuticals Renata Limited ACI Limited GlaxoSmithKline Average Beximco Pharmaceuticals 93.90 Price (BDT) 231.60 1214.20 203.90 625.10 P/E EV/EBITDA 18.8x 27.9x 18.6x 18.4x 20.9x 22.5x 11.4x 18.4x 8.5x 16.7x 13.7x 10.7x

* All EPS and BVPS figures are from audited reports of latest fiscal year of the respective

Source: Company Data, BRAC EPL Research, December 2011

Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)
Table 7: Income Statement Income Statement (MM BDT) Net Sales Cost of Goods Sold Gross Profit Administrative Expenses Selling & Distribution Expenses Operating Profit Other Income Financial Cost Profit Before WPPF Contribution to Workers' Profit Participation/Welfare Funds Profit Before Tax Tax Profit After Tax Diluted EPS (BDT)
Source: Company Data, BRAC EPL Research, December 2011

2008 4,010 2,003 2,007 153 855 999 1 250 750 36 714 169 545 2.17

2009 4,868 2,566 2,302 215 1,086 1,001 199 289 911 43 867 243 625 2.48

2010 6,491 3,318 3,173 233 1,304 1,636 456 662 1,430 68 1,362 310 1,052 4.18

2011E 2012E 2013E 8,127 10,273 12,633 4,176 5,265 6,443 3,951 5,008 6,190 285 318 392 1,481 1,873 2,299 2,185 2,817 3,499 328 423 525 564 617 669 1,948 2,622 3,355 92 125 160 1,856 2,497 3,196 423 568 727 1,434 1,929 2,468 5.70 7.66 9.80

Table 8: Cash Flow Statement Cash Flow Statement (MM BDT) Net Profit After Tax Change in Working Capital Non-Cash Charges Other Changes Cash Flow from Operating Activities Capital Expenditure Cash Flow from Investing Activities Change in Debt Dividends Paid Cash flow from Financing Activities Net Cash Flow Opening Cash Closing Cash Diluted CF Per Share (BDT)
Source: Company Data, BRAC EPL Research, December 2011

2008

2009

2010

881

521

1,352

2011E 1,434 -559 483 74 1,432 -1,361 -1,438 367 -378 -11 -17 1,471 1,454 6.82

2012E 1,929 -881 511 48 1,607 -1,120 -1,120 356 -504 -147 340 1,454 1,794 7.66

2013E 2,468 -923 530 105 2,180 -997 -997 -149 -629 -779 405 1,794 2,199 10.39

-1,180

-3,453

-991

288 -12 86 74 4.20

3,917 985 74 1,058 2.48

52 413 1,058 1,471 6.45

Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)
Table 9: Balance Sheet Balance Sheet (MM BDT) Inventories Spares & Supplies Accounts Receivable Loans, Advances & Deposits Short Term Investment Cash & Cash Equivalent Total Current Assets Property, Plant & Equipment - Net Intangible Assets Investment in Shares Total Non-Current Assets Total Assets Short Term Borrowings Long Term Borrowings - Current Maturity Creditors & Other Payables Accrued Expenses Dividend Payable Income Tax Payable Total Current Liabilities Long Term Borrowings - Net of Current Maturity (Secured) Fully Covertible, 5% Dividend, Preference Share Liability for Gratuity & WPPF Deferred Tax Liability Total Non-Current Liabilities Issued Share Capital Share Premium Excess of Issue Price over Face Value of GDRs Capital Reserve on Merger Revaluation Surplus Retained Earnings Total Shareholders' Equity Total Liablities and Shareholders' Equity Diluted BVPS (BDT)
Source: Company Data, BRAC EPL Research, December 2011

2008 1,470 182 500 686 86 2,924

2009 1,505 235 504 545 0 74 2,862

2010 1,723 242 694 699 2,500 1,058 6,917

2011E 2,198 348 1,028 981 859 1,454 6,869

2012E 2,632 439 1,300 1,236 859 1,794 8,261

2013E 3,068 537 1,599 1,513 859 2,199 9,775

8,993 11,921 12,967 16,002 16,611 17,078 0 6 128 128 128 37 37 3 6 6 6 9,030 11,958 12,975 16,136 16,746 17,212 11,953 14,820 19,892 23,005 25,006 26,987 908 344 272 60 3 42 1,628 1,776 247 51 2,075 1,462 648 263 82 3 144 2,602 1,447 0 274 46 1,767 1,451 309 410 79 2 71 2,321 1,925 307 352 6,685 1,784 345 544 114 2 0 2,788 2,129 410 647 3,186 1,921 386 686 144 2 0 3,138 2,307 458 647 3,412 1,814 418 840 176 2 0 3,249 2,232 564 647 3,443

1,145 1,260 1,511 2,518 2,518 2,518 1,490 1,490 1,490 5,269 5,269 5,269 1,690 1,690 1,690 1,690 1,690 1,690 295 295 295 295 295 295 0 1,711 1,617 1,535 1,535 1,535 3,632 4,005 4,283 5,724 7,149 8,988 8,251 10,450 10,886 17,030 18,456 20,295 11,953 14,820 19,892 23,005 25,006 26,987 32.77 41.51 43.24 67.64 73.30 80.61

Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)
Table 10: Indicators and Ratios 2008 Sales growth Earnings growth EBITDA (MM BDT) EBITDA growth Dividend growth Dividend yield Cost of sales/Sales Gross profit (MM BDT) Gross profit margin Operating Profit (MM BDT) Operating margin Net Profit (MM BDT) Net margin Return on equity Return on assets EBITDA margin Diluted Book value per share (BDT) Diluted Earnings per share (BDT) Diluted Cash Flow per share (BDT) Debt/equity Debt/assets Equity growth rate P/E P/B EV (MM BDT) EV/EBITDA 11% 54% 1,111 37% 120% 0% 50% 2,007 50% 999 25% 545 14% 6% 4% 28% 41.51 2.17 2.48 34% 24% 27% 43.4x 2.3x 27,124 24.4x 2009 21% 15% 1,443 30% NM 0% 53% 2,302 47% 1,001 21% 625 13% 6% 4% 30% 43.24 2.48 6.45 34% 19% 4% 37.8x 2.2x 26,268 18.2x 2010 33% 68% 2,438 69% NM 0% 51% 3,173 49% 1,636 25% 1,052 16% 8% 5% 38% 63.45 4.18 6.82 25% 18% 47% 22.5x 1.5x 26,061 10.7x 2011E 25% 36% 2,903 19% NM 2% 51% 3,951 49% 2,185 27% 1,434 18% 9% 6% 36% 67.64 5.70 6.82 25% 19% 7% 16.5x 1.4x 26,445 9.1x 2012E 26% 35% 3,625 25% 33% 2% 51% 5,008 49% 2,817 27% 1,929 19% 11% 8% 35% 73.30 7.66 7.66 25% 18% 8% 12.3x 1.3x 26,461 7.3x 2013E 23% 28% 4,395 21% 25% 3% 51% 6,190 49% 3,499 28% 2,468 20% 13% 9% 35% 80.61 9.80 10.39 22% 17% 10% 9.6x 1.2x 25,907 5.9x

Source: Company Data, BRAC EPL Research, December 2011

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Beximco Pharmaceuticals
(DSE: BXPHARMA; Bloomberg: BXPHAR:BD)

IMPORTANT DISCLOSURES
Analyst Certification: Each research analyst and research associate who authored this document and whose name appears herein certifies that the recommendations and opinions expressed in the research report accurately reflect their personal views about any and all of the securities or issuers discussed therein that are within the coverage universe. Disclaimer: Estimates and projections herein are our own and are based on assumptions that we believe to be reasonable. Information presented herein, while obtained from sources we believe to be reliable, is not guaranteed either as to accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any security. As it acts for public companies from time to time, BRAC-EPL may have a relationship with the above mentioned company(s). This report is intended for distribution in only those jurisdictions in which BRAC-EPL is registered and any distribution outside those jurisdictions is strictly prohibited. Compensation of Analysts: The compensation of research analysts is intended to reflect the value of the services they provide to the clients of BRAC-EPL. As with most other employees, the compensation of research analysts is impacted by the overall profitability of the firm, which may include revenues from corporate finance activities of the firm's Corporate Finance department. However, Research analysts' compensation is not directly related to specific corporate finance transaction. General Risk Factors: BRAC-EPL will conduct a comprehensive risk assessment for each company under coverage at the time of initiating research coverage and also revisit this assessment when subsequent update reports are published or material company events occur. Following are some general risks that can impact future operational and financial performance: (1) Industry fundamentals with respect to customer demand or product / service pricing could change expected revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes; (3) Unforeseen developments with respect to the management, financial condition or accounting policies alter the prospective valuation; or (4) Interest rates, currency or major segments of the economy could alter investor confidence and investment prospects.

BRAC EPL Stock Brokerage Capital Markets Group

Sajid Huq Amit Parvez Morshed Chowdhury Ali Imam Khandakar Safwan Saad Aasim Tajwaar Matin M M Shahnewaz Kabir Shawon Farjad Siddiqui Senior Research Analyst Research Analyst Investment Analyst Research Associate Research Associate Research Associate Research Associate sajid.huq@bracepl.com parvez@bracepl.com imam@bracepl.com safwan@bracepl.com tajwaar.matin@bracepl.com shahnewaz@bracepl.com farjad.siddiqui@bracepl.com 01755 541 254 01730 357 154 01730 357 153 01730 357 779 01730 727 913 01730 727 918 01730 727 924

Institutional Sales and Trading

Delwar Hussain (Del) Head of Institutional Sales and Trading del.hussain@bracepl.com 01755 541 252

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