Analyst: Khandakar Safwan Saad

safwan@bracepl.com

Nafees Mohammed Badruddin

nafees.badruddin@bracepl.com

DSE Performance in First Half of 2012

July 3, 2012

In the first half of 2012, Dhaka Stock Exchange (DSE) continued to witness decline in market price of most companies. There were very few gainers while the turnover value also declined sharply in the period. This report highlights the performance of DSE during the six month period - January to June 2012. Index Movement and Turnover Value The general index of Dhaka Stock Exchange (DGEN) lost 13% in the first half of 2012. DGEN was down by 31% (YTD) as on February 6, 2012 as it fell to 3,616.24 points; from its peak value in December 2010 - it was down by 59% on that day. Turnover value also declined significantly in the period - average daily turnover value was BDT 4.2 billion in the first half of 2012, down by 38% from 2011s daily average turnover value of BDT 6.6 billion. On 21st June 2012 the turnover value was BDT 1.2 billion which was the lowest value in more than three and a half years. Chart 1 below shows the index change and the turnover value for the last six months. Table 1 and 2 shows the movement in index and turnover value while table 3 shows month-wise change in the two indicators.
Chart 1: Index movement
6,000 13,500

DGEN lost 13.0% YTD while daily average turnover value (YTD) is down by 38% compared to 2011 numbers

5,500

11,250

4,500

6,750

4,000

4,500

3,500

2,250

3,000

DGEN

Turnover

Source: BRAC EPL Research, 2012 Table 1: Index movement Index DGEN DSI DSE-20 28-Jun-2012 4,572.88 3,877.64 3,529.30 29-Dec-2011 5,257.61 4,383.94 3,910.33 (Pts) (684.73) (506.30) (381.03) % YTD -13.0% -11.6% -9.7% January February March Maximum 12,018.5 19,579.3 32,495.8 12,451.8 5,905.1 Minimum 1,185.5 1,819.4 5,064.1 2,120.1 744.0 April May June Table 3: Monthly indicator Month DGEN Return -21.0% 13.0% 6.3% 2.2% -7.2% -3.4% Average Turnover Value 4,035.0 3,012.8 4,206.2 8,027.4 3,186.6 1,968.2

Table 2: Turnover Value Year 2012 (YTD) 2011 2010 2009 2008 Daily Average 4,137.3 6,642.2 16,433.9 6,046.3 2,818.4

Source: DSE, 2012; BRAC EPL Research, 2012 * All turnover values and market capitalization values are given in BDT million while prices are given in BDT

Turnover BDT m

5,000

9,000

DGEN

DSE Performance in First Half of 2012

July 3,2012

Table 4: Most appreciated stocks Company Name Lafarge Surma Cement Meghna Petroleum Jamuna Oil National Tea Pioneer Insurance Delta Life Insurance Uttara Finance ACI Formulations Grameenphone Ltd. Stylecraft Limited MCAP June 28, 2012 46,338.8 13,369.4 17,451.7 4,792.3 3,106.7 14,568.8 11,104.3 3,415.5 281,942.6 423.5 MCAP Dec 29, 2011 30,892.5 9,115.0 12,579.8 3,498.0 2,357.2 11,070.4 8,441.7 2,670.0 220,774.1 334.8 Price June 28, 2012 39.90 212.00 248.60 726.10 87.90 4046.90 107.30 75.90 208.80 770.00 Daily Average Turnover Value 81.6 89.8 110.6 1.8 5.6 2.9 22.6 7.3 188.6 0.1 YTD 50.0% 46.7% 38.7% 37.0% 31.8% 31.6% 31.5% 27.9% 27.7% 26.5%

Source: DSE, 2012; BRAC EPL Research, 2012

Top Gainers and Losers

Only 14% of the stocks gained in the first half of 2012

There were few gainers - out of all the issues that have been trading from the beginning of the year, only thirty eight stocks gained; the remaining 231 issues declined. A total of twenty two companies posted double digit growth in the period. Lafarge Surma Cement was the highest gainer with 50% return. Table 5 shows the least appreciated stocks. Fine Foods Ltd lost 57% in 2012. Four stocks lost more than 50% in the first half of 2012.
Table 5: Least appreciated stocks MCAP June 28, 2012 270.8 2,200.9 136.2 216.0 918.9 220.8 116.9 266.8 1,687.5 8,795.8 MCAP Dec 29, 2011 632.2 4,587.9 281.2 438.0 1,775.9 422.4 220.4 501.2 1,505.0 11,047.8 Price June 28, 2012 23.30 266.00 80.10 10.80 19.30 13.80 34.70 28.90 22.50 26.90 Daily Average Turnover Value 2.9 18.7 .7 3.5 7.4 .9 .7 1.4 13.4 76.2

Company Name Fine Foods Ltd Bangladesh Shipping Corp Jute Spinners Prime Finance First MF Metro Spinning Meghna Condensed Milk Desh Garments Al-Haj Textile Saiham Textile R.N. Spinning Mills Limited

YTD -57.2% -52.0% -51.6% -50.7% -48.3% -47.7% -46.9% -46.8% -45.8% -45.6%

Source: DSE, 2012; BRAC EPL Research, 2012 Table 6: Most traded stocks (in value) Company Name Grameenphone Ltd. Beximco Limited Jamuna Oil Titas Gas Lankabangla Finance National Bank Meghna Petroleum United Airways (BD) Ltd. Lafarge Surma Cement M.I. Cement Factory Limited MCAP June 28, 2012 281,942.6 31,884.8 17,451.7 67,267.1 15,550.4 41,026.5 13,369.4 6,835.5 46,338.8 14,661.0 MCAP Dec 29, 2011 220,774.1 40,171.8 12,579.8 63,687.0 14,016.2 57,472.4 9,115.0 10,539.9 30,892.5 14,917.5 Price June 28, 2012 208.80 87.70 248.60 71.40 82.10 28.90 212.00 15.50 39.90 108.60 Daily Average Turnover Value 188.6 153.1 110.6 96.9 93.9 90.0 89.8 88.1 81.6 79.0 YTD 27.7% -22.6% 38.7% 5.6% 3.0% -28.6% 46.7% -35.1% 50.0% -1.7%

Source: DSE, 2012; BRAC EPL Research, 2012

DSE Performance in First Half of 2012

July 3,2012

Turnover Leaders
The top ten most traded stocks accounted for 26% of the total market turnover value

The turnover leaders (shown in table 6 on page 2) are dominated by large market capitalized (MCAP) stocks. The top 10 companies combined accounts for 26% of the total market turnover value in the first half of 2012 with GP leading the way. Performance of Large Capitalized Stocks The top ten market capitalized stocks significantly outperformed the market. The ten companies accounts for 32% of the total market capitalization and gained 10% while DGEN lost 13% in the same period. Grameenphone, the largest capitalized stock, gained 28%. Lafarge Surma Cement had the best performance with 50% gain while National Bank lost the most - down by 29%.
Table 7: Performance of Large Companies Company Name Grameenphone Ltd. Square Pharmaceuticals Titas Gas ICB Islami Bank Lafarge Surma Cement National Bank BATBC Beximco Limited Prime Bank MCAP June 28, 2012 281,942.6 69,784.0 67,267.1 67,204.7 52,915.8 46,338.8 41,026.5 36,024.0 31,884.8 29,289.6 MCAP Dec 29, 2011 220,774.1 62,792.3 63,687.0 54,793.1 54,542.0 30,892.5 57,472.4 37,578.0 40,171.8 34,701.5 Price June 28, 2012 208.80 263.50 71.40 1,991.25 42.30 39.90 28.90 600.40 87.70 31.30 Daily Average Turnover Value 188.6 69.6 96.9 4.8 40.9 81.6 90.0 5.1 153.1 25.8 YTD 27.7% 11.1% 5.6% 22.7% -3.0% 50.0% -28.6% -4.1% -22.6% -15.6%

Large market capitalized stocks performed better than the broader market

Source: DSE, 2012; BRAC EPL Research, 2012

* YTD return adjusted for fresh equity issue

Listing of New Issues Ten issues commenced trading in the first half of 2012, including four mutual funds. Apart from the mutual funds, the other new issues performed better, with Padma Islami Life Insurance having a price return of 909% over its IPO price of BDT 10 per share. Bangladesh Submarine Cable Company, which got listed recently on 14th June, also saw an impressive gain of 76% over its offer price. Two more companies Unique Hotels & Resorts Limited and Amra Networks - carried out subscription in the first half of the year; the stock will commence trading in July 2012.
Table 8: Performance of new issues Company Name AB Bank 1st Mutual Fund NLI First Mutual Fund First Bangladesh Fixed Income Fund GSP Finance Company Padma Islami Life Insurance GPH Ispat Limited NCCBL Mutual Fund - 1 GBB Power Limited Bangladesh Submarine Cable Company Limited Saiham Cotton Mills Limited Start of Trading 29-Jan 27-Feb 19-Mar 9-Apr 18-Apr 19-Apr 24-May 13-Jun 14-Jun 24-Jun MCAP at start of trading 1,500.0 457.6 5,000.0 1,191.2 300.0 2,700.0 1,000.0 2,040.0 4,147.8 2,705.0 Price June 29, 2012 10.00 9.20 9.40 41.50 100.90 73.20 10.30 38.60 61.60 20.50 Daily Average Turnover Value 0.1 0.1 0.1 26.7 41.3 71.2 0.1 35.3 210.9 108.4 Return since start of trading 0.0% -8.0% -6.0% 82.6% 909.0% 144.0% 3.0% -3.5% 76.0% 2.5%

Ten issues commenced trading in the six-month period, including four mutual funds

Source: DSE, 2012; BRAC EPL Research, 2012

DSE Performance in First Half of 2012

July 3,2012

Table 9: Rights Issue Company Name Saiham Textile Mills Ltd R. N. Spinning Mills Ltd. LankaBangla Finance Ltd. Trust Bank Central Inrurance Keya Cosmetics Tallu Spinning Rights Ratio 2R:1 1R:1 1R:1 1R:5 1R:2 1R:1 2R:1 Rights Issue Size (BDT million) 1,250.0 2,782.8 823.5 1,064.5 168.5 1,479.9 428.0 Subscription Period Feb 5, 2012- Feb 19, 2012 Feb 17, 2012- Mar 13, 2012 Mar 18, 2012 - Apr 15, 2012 Apr 22, 2012 - May 17, 2012 Apr 25, 2012 - May 23, 2012 Apr 29, 2012 - May 28, 2012 Jun 10, 2012 - Jul 9, 2012

Source: DSE, 2012; BRAC EPL Research, 2012

Rights Issue Seven companies carried out subscription of rights issue during the first half of 2012 (shown in table 9 above), raising BDT 8.0 billion in total. R.N. Spinning Mills Ltd raised the highest amount of money, worth BDT 2.8 billion. Other Equity Issues There were three other equity issues during the period:

ACI Limited issued 0.96 million ordinary shares for conversion of the second phase of ACI Zero Coupon Bond. Mithun Knitting issued 6.67 million ordinary shares to acquire 100% of Toyo Composite Knitwear Garments Limited and Pure Cotton Mills Limited Beximco Limited issued 8.06 million ordinary shares to acquire International Knitwear & Apparels Ltd, Beximco Fashions Limited, Crescent Fashions & Design Limited and Freshtex Bangladesh.

Table 10: Performance by Sector Company Name Banks NBFIs Mutual Funds General Insurance Life Insurance Telecommunication Pharmaceuticals Fuel & Power Cement Services & Real Estate Engineering Food & Allied IT Textiles Paper & Printing Tannery Jute Ceramics Miscellaneous Index Jun 28 1,403.02 2,416.47 673.96 2,016.63 2,151.74 2,909.08 1,138.89 1,286.58 1,627.98 1,360.03 2,198.11 3,173.00 1,042.28 1,261.37 1,417.36 1,386.85 2,280.46 530.08 1,137.65 Index Year open 1804.64 2415.55 796.62 2370.45 2105.63 2276.87 1183.98 1298.98 1356.49 1736.51 2771.07 3489.72 1384.98 1728.17 2244.61 1611.21 3628.16 577.96 1432.09 % YTD -22.26% 0.04% -15.40% -14.93% 2.19% 27.77% -3.81% -0.95% 20.01% -21.68% -20.68% -9.08% -24.74% -27.01% -36.86% -13.93% -37.15% -8.28% -20.56% % of total Equity MCAP 26.81% 9.16% 1.86% 2.76% 2.92% 14.96% 8.52% 12.78% 4.34% 1.64% 4.46% 2.65% 0.16% 2.42% 0.03% 0.62% 0.03% 1.32% 2.57% % of total Market Turnover 18.39% 10.56% 1.10% 4.45% 4.67% 13.74% 6.87% 16.47% 5.29% 1.67% 7.33% 1.65% 0.25% 3.84% 0.00% 0.23% 0.02% 0.95% 2.52%

Source: BRAC EPL Research, 2012

DSE Performance in First Half of 2012

July 3,2012

Sectoral Performance Table 10 in the previous page (page 4) shows the sector-wise performance of the market. All the Financial sectors, apart from Life Insurance and NBFIs, underperformed the broader market. The largest sector, Banks, accounting for 27% of the total market capitalization, lost 22% in the first half of 2012.
Telecommunications and Cement sector both saw gains of above 20%

Telecommunications the second largest sector, gained the most 28%, in the first half of 2012 - owing to the gains of Grameenphone. Cement sector also outperformed the market with 20% gain thanks to Lafarge Surma Cement. NBFIs closed flat while Fuel and Power (-1%) and Pharmaceutical (-4%) also outperformed the market. Regional Comparison Chart 2 below shows comparison of DGEN with India, Sri Lanka and Japan. Table 11 shows further comparison with other indices. DGEN has under-performed compared to most of the indices shown in the table.
Chart 2: Regional Index movement

Source: http://www.bloomberg.com/apps/quote?ticker=DHAKA:IND Table 11: Comparison with other indices Country (Index) Bangladesh (DSE GEN) India (BSE SENSEX 30 INDEX) Pakistan (KSE-100) Sri Lanka (CSEALL INDEX) Japan (Nikkei 225) UK (FTSE 100) USA (DJIA) Source: DSE, 2012; Bloomberg, 2012 Year Open 5,257.61 15,454.92 11,347.66 6,074.42 8,455.35 5,572.28 12,217.56 June Close 4,572.88 17,429.98 13,801.42 4,965.77 9,006.78 5,571.15 12,880.09 % YTD -13.0% 12.8% 21.6% -18.3% 6.5% 0.0% 5.4%

DSE Performance in First Half of 2012

July 3,2012

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.

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Khandakar Safwan Saad Farjad Siddiqui Kallol Biswas Nafees Mohammed Badruddin Research Analyst Research Analyst Research Associate Research Associate safwan@bracepl.com farjad.siddiqui@bracepl.com kallol.biswas@bracepl.com 01730 357 779 01730 727 924 01730 727 930

nafees.badruddin@bracepl.com 01730 727 931

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