MALEK SPINNING MILLS LIMITED

/MALEK SPINNING MILLS LIMITED MALEK SPINNING MILLS LIMITED _

ii) Earning Based Value per share (iv) Projected Book Value Based Price Per Share Section The company's operational performance and financial results reflect its growth, financial strength, earning and Accounting year end date Projected Book per Price X ofValue Offering prospects that help investors in makingDetermination informed investment decision. The operational and financial results are share summarized as follows:

(in Taka) The issue price at Tk 25.00 (including premium of Tk 15.00 each) is justified as per the guidelines of the Securities and 301" June 2010 (9 months' period) 30.14 Exchange Commission as detailed below: Financial Years Turnover Net Profit Paid-up EPS (Tk) 1 30 " - June 2011 29.84 (mn Tk) AfterTax Capital Tk 10 1 (Position on 30Asset " - June 2012per Share 30.02 Net Value 30th June) (mn Tk) (mn Tk) basis 1 30 - June 2013 stock of Malek Spinning Mills 30.64 The offering of"the common Ltd has been determined by assessing the Net Asset Value (NAV). The 1 financial calculations below are from the audited accounts of 30 " September 2009. Average presented NAV 30.16

(i)
(v) Si No

2004-05 904.09 Average market price of similar stocks Particulars

29.45

Company Name Rahim Textile Apex Spinning Current Assets 2005-06 1,869.35 65.22 Cash and Bank balances 2006-07 1,996.43 Same 75.59 Basis of selecting company Same management product line 'A' Category Turnover 260.977 close to Advances and Deposits company MSML 0 2 Receivables 700.620 2007-08 2,349.81 113.80100.00 70 1.6 Face value (a) 100.00 100.00 10.00 Raw materials and Finished goods Inventories, Stores and A 673.609 0 3 Closing Prices spares etc 2008-09 2,369.93 183.99 70 2.6 Investments Jun '09 NetJuly' Fixed Assets Ave ra ge 5 Yea rs (2004 09of Aug '09 Sep '09 05 To 2008-09) 1231.00 1350.00 1,897.92 1287.75 593.25

30 0.9 Amount in million 0 8 Taka Prime Textile Square Textile 30 2.1 95.853 0 7 30 2.5

93.61625.50 955.00

0

322.25 1.9 Total 360.50 Assets 9

231.50 3

380.017 95.90 1,736.462 92.30 3,847.538 91.20

1749.75 1206.75 422.25 96.90 Current Liabilities Oct 109 1536.25 993.25 418.00 111.40 776.146 Short Term Bank loan Nov '09 1874.25 1132.00 418.75 108.50 The weighted average net profit after tax for the last 5 (five) years 2004-05 To 2008-09 stands at Tk 93.611 million Income tax payable 48.109 Average and theclosing weighted price average (b) EPS stands at Tk. 1.99. 1505.83 The Price Earning 917.62 Multiple (PE) at issue 362.21 price of Tk. 25.00 99.37 each B Workersof Profit Participation Fund 43.485 (including a multiplier premium Tk. 15.00 per share) stands at PE 12.56 as against the overall DSE PE of 25.00 in November Market value (a/b) 15.06 9.18 3.62 9.94 2009. Accounts and expenses payable 508.034 Average Market value 9.45 If we consider the share price on the basis of DSE overall price earning multiple of 25.00, the earning based41.813 value Long Term Bank Loan multiplier of shares of the Company at average EPS of 1.99 stands at Tk. 49.75, a price much higher than the price offered. Total Liabilities 1,417.587 From the above it is clear that market price of prospective similar companies of textile sector are on average 9.45 times higher iii) Projected Earning Based Value Per Share than that of its face value. Based on this, we may assume that share prices of Malek Spinning Mills Ltd. would be Tk 94.50. C Net Assets (A-8) 2,429.951 D No. of Shares 70,000,000 Period Projected Earnings per share From the foregoing as summed up below the determination of the offer price Tk.25.00 each is quite justified. (in Taka) E Net Asset Value per Share (C/D) 34.71 Justification of offering price under different methods 2009-10 (9 months) 1.27 Amount (Taka)

2010-11 0.98 We have examined the above calculation of Net Asset Value (NAV) of Malek Spinning Mills Limited which appears to be correct 01 Net asset Value (NAV) per share 34.71 2011-12 1.92 02 Earning Based Value per Share 51.04 2012-13 2.62 03 Projected Earning Based Value Per Share 46.42 Dhaka EPS of 3 yrs and 9 months 1.81 04 Projected Average Book Value Per Share 30.16

05 Average Market Price of Similar Shares 94.50 29"' 2010 (M.A. Malek Siddique Wali & Co) Chartered TheMarch weighted average EPS of the Company for next 3 (three) years and 9 (nine) months, 2009-10 (Oct '09 to Jun '10) Accountants to Average 51.36 2012-13 stands at Tk. 1.81. If we consider the share price of the Company on the basis of DSE overall price earning multiple of 25.65 (DSE Monthly Review, December 2009), the earning based value per share of the Company stands Sd/
at Tk. 46.42, a price much higher than the price

offered. From the above analysis, it appears that the ordinary share of Tk.10.00 being offered at Tk.25.00 each (including a premium of Tk. 15.00 per share) by the Company is quite justified. (Md. Waliullah, FCA)

Prospectus

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