Analyst:

Shuva Saha
shuva@abaci-investments.com
Md. Khalid Hossain
khalid@abaci-investments.com
Recommendation: Buy
Market Price: BDT 53.70
Fair Value: BDT 62.41
Projected Convergence Period: 2 Months

ORION INFUSION LIMITED

DSE, CSE ticker: Orioninfu
Key Stock Statistics
Current Pri ce
Sha res Outs ta ndi ng (BDT MN)
Ma rket Ca p (BDT MN)
52 Week Ra nge (BDT) (H/L)
Beta
Free Fl oa t (%)
3 Months Return
Avg Da i l y Vol umes (90 da ys )
Sector P/E

Company Overview:
54
20
1053
34.3-77.0
0.07
59.39%
33.00%
404,622
19.07

Financials (BDT MN)

EPS
NAVPS
Revenue
Gros s Profi t
Opera ting Profi t
Net Profi t a fter Ta x
Tota l Equi ty
Tota l As s ets

2012
1.73
8.72
601
227
37
35
177
619

2013
1.27
7.00
611
232
38
25
142
703

2014 2015Q3
3.64
1.30
8.15
9.14
656
492
251
200
93
36
74
26
166
186
716
708

Growth
Revenue
Gros s Profi t
Opera ting Profi t
Net Profi t a fter Ta x

2012
1%
5%
16%
9%

2013
2%
2%
3%
-29%

2014 2015Q3
7%
0.15%
8%
6%
145%
-48%
196%
-53%

2012
37.77%
6.16%
5.82%

2013
37.97%
6.22%
4.09%

2014 2015Q3
38.26% 40.65%
14.18%
7.32%
11.28%
5.28%

Return Indicators
Di vi dend
Return on Equi ty (ROE)
Return on As s et (ROA)

2012
16%
20%
6%

2013
12%
18%
4%

2014 2015Q3
15%
N/A
45%
14%
10%
4%

Valuation Multiples
P/E Ra tio
P/B Ra tio

2012
Ni l l
Ni l l

2013
37.92
6.90

2014 2015Q3
12.47
30.45
5.57
5.93

Profitability Ratios
Gros s Profi t Ma rgi n
Opera ting Profi t Ma rgi n
Net Profi t Ma rgi n

Performance vis--vis
ORIONINFU
DSE-X

3-M
33.00%
0.07%

Return
6-M
24.00%
0.11%

12-M
20.00%
-0.13%

Producing Large Volume Parenteral (LVP) & other lifesaving injectable

product
Incorporation: May 05, 1983
Management: Mohammad Obaidul Karim (Chairman) (3.24%), Mr. Salman
Obaidul Karim (Managing Director) (21.76% representing Orion Pharma
Ltd)
Employees: 761
Capacity (2013): Intravenous Fluids and Injections: 12.00 mn, Utilization:
76.58%
Market Share: According to IMS Health 2015Q1 report, Orions market
share is 0.2%.
Industry Overview:

Total Pharmaceutical Market: BDT 117 bn, Employing around 115000

workers. Only 2% of the drugs are imported, the remaining 98% come
from local companies. With a current Growth rate of 11.37% & CAGR
(6yrs) of 21%, this sector has a lot more to offer in the future.
Market Players: Before 1985, in the Intravenous (I.V.) Fluid market, there
used to be a shortage as Bangladesh could not manufacture enough to
fulfill the local demand. Therefore, the major portion had to be imported
from abroad. In 1985, Libra Infusion Ltd entered the market. Besides the
Institute of Public Health, the five companies which produce saline are
Beximco Pharmaceuticals Limited, Orion Infusion Limited, Opsonin,
Popular Pharmaceuticals Limited and Libra Pharmaceuticals Limited.
Government Regulation: This sector has been considered as a thrust
sector in the export policy since 2006.
A comparison between some listed companies in the Pharmaceutical
Sector are shown below:

Companies

Paid up Cap
(mn)
CENTRALPHL 820
ORININFU
204
JMISMDL
110
LIBRAINFU
13

Rev (mn)
701
657
1379
262

NPAT
(mn)
162
354
54
4

EPS

NAV

1.97
1.54
4.90
2.83

18.44
9.14
51.26
15.73

Investment Positives:
OIL has private placements in IPO of C & A Textiles Ltd & Olympic
Accessories. The locks in period of these two placements are going to
expire in October 30, 2015 & March 19, 2016 respectively. Once the lock in
expires, OIL can sell those shares and can earn a substantial amount of
profit (one time). Thus profitability is expected to increase in those
quarters.
Dividend for 2014-15 is pending. Historically, Orion Infusion paid Cash
Dividends of about 10%-15% in the last few years.
COGS decreased by 3% as a proportion to sales in 2014-15. This has
increased the Gross & Operating Margin by 3% and 2% respectively.
Investment in PPE was BDT 20 mn in 2013-14 compared to 21 mn in 201213.

ORION INFUSION LIMITED

DSE, CSE ticker: Orioninfu
Investment Negatives :

The NPAT of OIL is mostly dependent on capital gain from

Marketable Securities. The NPAT for 2014-15 is expected to be
lower due to lower Capital Gain from Marketable Securities
and higher Financial Expenses compared to other years.
OIL is a high risk company as it has a high debt equity ratio
(2.06). Times interest earned decreased from 4 times to 2
times in 2014-15.
OILs market share is low and gradually declining. Therefore, it
has less control over the market and price fixing.

Valuation:
Case 01: We have used Free Cash Flow to Equity (FCFE) valuation
method to derive the intrinsic value of ORIONINFU. We have
taken 4 years forecasted Income Statement and Proforma Balance
Sheet whereas terminal value is assumed 2%. Cost of equity was
considered as 15%.
Our derived fair price of ORIONINFU is BDT 62.41 which implies a
total return of 14% within expected convergence period of 2
months.
Particulars
Unlevered Income
Add: De pri ci a ti on
Le s s : Cha nge s i n Worki ng Ca pi ta l
Le s s : Ca pi ta l Expe ndi ture s

2014
97,792,349
18,520,884
(233,268,872)
20,000,000

2015A
60,785,665
18,594,840

:
(180,955,084)

2016E

2017E

49,698,422

2018E

51,034,778

18,665,098

52,425,614

18,731,843

(199,405,159)

18,795,251

(186,247,676)

(168,116,621)

20,000,000

20,000,000

20,000,000

20,000,000

Net CF before Debt

240,335,589

247,768,679

236,014,297

219,337,486

PV of Adjus te d Ca s h Fl ows

208,987,468

187,348,718

155,183,231

Te rmi na l Va l ue

125,406,919
1,720,955,656

PV of TV
Enterprise Value
Pl us : Ca s h
Le s s : I nte re s t Be a ri ng De bt
Equity Value
No of Outs ta ndi ng Sha re
Price

983,961,982
1,660,888,318
10,891,124
401,199,019
1,270,580,423
20,359,760
62.41

Case 02:
NAV Based Valuation
NAV (2015Q3)
Avg. P/NAV Mul ti pl i er

BDT
9.14
5.68

Val ue

51.92

Earning Based Valuation

EPS(2015)
Value @26 P/E

BDT
1.78
46.28

In NAV and EPS Based Valuation, we consider 2015Q3 Value and

prevailing market price. As per Valuation we found that the fair
price is near to current market price.

Remarks
According to the valuation, OIL seems to be properly priced in the current
earnings context with P/E of 30.45x. However, price return is expected in
the coming year once they realize the gains from IPO shares.
When the lock in period of Olympic Accessories Ltd & C & A Textile
Limiteds IPO share (held by Orion Infusion) will expire in the October 2015
& March 2016, Orion Infusion might have an additional profit of BDT 242
mn at current market price and an additional EPS of BDT 11.83 in the next
FY (2015-16).

Companies

Share

Cost Market Price

Profit (mn)

Additional EPS

OAL

40,00,000

10

57.9

191.60

9.39

CNA TEX

55,50,000

10

19

49.95

2.44

Total

95,50,000

241.55

11.83