Equity Valuation Report on

Olympic Industries Limited

December, 2019 Update

(This document has been prepared by the Research Team of EBL Securities Limited for information only for its clients.
No part of this report should be copied or used in any other report or publication or anything of that sort without
any prior permission taken from the authorized publisher of this report)
Olympic Industries Limited
DSE: OLYMPIC BLOOMBERG: OLYMPI:BD Analyst:
Target Price: BDT 188.90, Current Price: BDT 157.30 Asaduzzaman Ashik
Valuation date: 18th December, 2019 research@eblsecurities.com

Company Fundamentals  Olympic Industries is the market leader in biscuit, cookies

Sector Food & allied and confectionary market in Bangladesh having market
Market Cap (BDT million) 31,510.4 share of 39% of the total branded market for biscuits and
Equity Market weight 1.1% confectionary items. The company is capturing the market
Paid-up Capital (BDT million) 1,999.4 share by launching new products and strategic pricing.
No. of Share Outstanding (in million) 199.9  The current size of branded biscuit market is around BDT
Free-float Shares (Inst.+For.+Public in mn) 144.4 30.79 bn which is expected to grow at 10 to 15% over next 10
3 Months Avg. Daily Turnover (BDT million) 8.5 years. We assume Olympic may sustain its market share
3 Months Avg. Daily Volume 46,933 around 40% in next 5 years with regular expansions and
3 Months Return -22.6% product diversification.
52-week price range (BDT) 154.0-281.0  Investment in expansion projects for Olympic Industries is
2017-18 2018-19 2019-20 2020-21 remarkable. They invested BDT 651 mn in FY 2016-17 and
Act. Act. Exp. Exp. BDT 1,108 mn in FY 2017-18. Following the trend, they have
invested BDT 1,058 mn in PPE in FY 2018-19. We assume that
Financial Information (BDT million):
Olympic Industries will continue the historical trend of
Net Sales 12,929 13,734 15,147 16,495 investment in expansion projects in coming years.
Gross Profit 4,221 4,548 5,029 5,457  Olympic has 9 biscuits production lines and is going to set up
EBITDA 2,686 3,057 3,354 3,615 a Wafer manufacturing line and a Toffee manufacturing line.
Operating Profit 2,395 2,509 2,819 3,047 Besides, Olympic has acquired 465 decimals of land worth
Profit After Tax 1,791 1,872 2,080 2,260 BDT 210 mn in 2019 which may be used for further
Total Assets 9,788 10,957 11,497 12,360 expansion activities.
Total Debts 2,108 2,067 2,050 2,025  Forecasted CAGR in total revenue of Olympic is 9.09% while
Total Equity 6,304 7,216 7,619 8,379 9.31% CAGR in net profit has been projected over the period
Retained Earnings 4,305 5,217 5,619 6,380 2018-19 to 2023-24. Olympic’s maximum production
461 608 893 873 efficiencies along with the economies of scale over the higher
Cash
sales volume may reasonably uplift the net profit.
Dividend (C/B)% 48%C/- 50%C/- 75%C/- 85%C/-  The key raw materials used by the Olympic Industries are
Margin: wheat, egg, palm oil, soya bean oil, sugar etc. According to
World Bank, there will be no significant changes in the price
Gross Profit 32.6% 33.1% 33.2% 33.1%
of the raw materials over next 3 to 4 years.
EBITDA 20.8% 22.3% 22.1% 21.9%
 Olympic declared & disbursed 50% cash dividend in FY 19 &
Operating Profit 18.5% 18.3% 18.6% 18.5%
48% cash dividend in FY 18. We expect Olympic may declare
Pretax Profit 18.6% 18.6% 18.7% 18.6% 60 to 75% cash dividend in next fiscal year.
Net Profit 13.9% 13.6% 13.7% 13.7%  The Biscuit market is fiercely competitive and the threat of
Growth (YoY): new entrants is very high. A huge variety of quality products
Sales 14.5% 6.2% 10.3% 8.9% is available to the consumers. On the other hand, production
Gross Profit 12.0% 7.8% 10.6% 8.5% and distribution of duplicate or fake products of Olympic by
Operating Profit 11.2% 4.8% 12.4% 8.1% local producers is another concern for the Company.
Net Profit 9.0% 4.5% 11.1% 8.7%
Profitability: Price-Volume Movement of OLYMPIC
ROA 18.0% 18.0% 18.5% 18.9% Price-Volume Movement of OLYMPIC
300.00 VOLUME CLOSE PRICE 1,500,000
ROE 30.6% 27.7% 28.0% 28.3%
1,250,000
Payout Ratio 53.6% 64.1% 72.1% 75.2% 250.00
PEG ratio 2.8 5.6 2.0 2.4 1,000,000

Leverage: 200.00 750,000

Debt Ratio 21.5% 18.9% 17.8% 16.4% 500,000

150.00
250,000
Debt-Equity 33.4% 28.6% 26.9% 24.2%
100.00 0
Altman Z-Score 10.9 10.7 10.6 10.4
17-01-19

17-08-19
17-12-18

17-02-19

17-03-19

17-04-19

17-05-19

17-06-19

17-07-19

17-09-19

17-10-19

17-11-19

17-12-19

Valuation:
EPS (BDT) 9.0 9.4 10.4 11.3
NAVPS (BDT) 31.5 36.1 38.1 41.9 We conducted a valuation on Olympic Industries Ltd based on DCF,
P/NAV (x) 7.1 6.5 6.2 5.6 Exit multiple method and Relative Valuation models while assuming
EV/EBITDA 17.3 15.9 14.4 13.4 next 5-Years’ CAGR to be 9.09%. Currently, OLYMPIC is traded at BDT
EV/Sales 3.6 3.5 3.2 2.9 157.30 (as on 18th December, 2019). In our valuation, the target
price for Olympic based on DCF and other Valuation methods is
P/E Ratio 25.1 25.2 22.7 20.9
determined at BDT 188.90 per share.
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90

Steady growth in topline, unwavering cost of raw material’s price along with
lower administrative expenses continued the earnings growth of Olympic in first
Quarter of FY ‘20
Olympic Industries Ltd has generated BDT 3,963 mn revenue in Q1 of FY ‘20 having 12.6% YoY growth. The cost
of sales were 0.96% lower in Q1 of FY ‘20 compared to the first Quarter of last fiscal year. The gross profit grew
14.9% YoY and recorded BDT 1,318 mn in Q1 of FY ‘20 compared to BDT 1,148 mn in Q1 of FY ‘19. The gross
profit improved noticeably as total sales volume has increased to some extend while the price of key raw
materials was comparatively lower in this 3M period of FY 20.
Olympic focused on its selling and distribution activities in a more aggressive way and spend BDT 502 mn in Q1
of FY ‘20 having 22.9% growth from Q1 of FY ‘19. On the other hand, administrative expenditure recorded 10.8%
negative growth in Q1 of FY ‘20 compared to Q1 of FY ‘19 which accelerated the operating profit growth rate
by 13.3%.
Interest expense has recorded 10.8% de-growth in Q1 of FY 20 which was another stimulus for supporting the
bottom line growth of Olympic along with the lower cost of sales. In the bottom line, Olympic Industries Ltd has
recorded 17.3% YoY growth and generated BDT 558 mn net profit after tax in Q1 of FY ‘20 compared to BDT 475
mn in Q1 of FY ‘19.
% Change Q1 ‘19 Q1 ‘20
Particulars (Figures in BDT mn) Q1 ‘19 Q1 ‘20
(YOY) % of Sales % of Sales
Net Turnover 3,518.8 3,963.3 12.6% 100.0% 100.0%
Cost of Goods Sold 2,371.1 2,644.9 11.5% 67.4% 66.7%
Gross Profit 1,147.7 1,318.4 14.9% 32.6% 33.3%
Total Operating Income 1,147.7 1,318.4 14.9% 32.6% 33.3%
Operating Expenses: 497.0 581.0 16.9% 14.1% 14.7%
Selling and Distribution Expenses 408.4 502.0 22.9% 11.6% 12.7%
Administrative Expenses 88.6 79.1 -10.8% 2.5% 2.0%
Profit From Operations 650.7 737.4 13.3% 18.5% 18.6%
Financial Expenses 47.7 42.6 -10.6% 1.4% 1.1%
Other Non-operating Income 74.1 92.0 24.2% 2.1% 2.3%
Provision for loss in Investments (0.7) (0.9) 35.5% 0.0% 0.0%
Profit Before WPPF 676.4 785.9 16.2% 19.2% 19.8%
Allocation for WPPF 32.2 37.4 16.2% 0.9% 0.9%
Profit Before Tax 644.2 748.4 16.2% 18.3% 18.9%
Provision for Income Tax 167.0 193.6 16.0% 4.7% 4.9%
Provision for Deferred Income Tax 2.1 2.8 36.0% 0.1% 0.1%
Profit After Tax For The Year 475.1 557.6 17.3% 13.5% 14.1%
EPS 2.38 2.79 17.3% 0.1% 0.1%

Performance Analysis of FY 2018-19

Olympic Industries Ltd has recorded BDT 13,734 mn revenue in FY ‘19 having only 6.2% YoY growth. The cost of
sales were 0.74% lower in FY ‘19 compared to the last fiscal year. The gross profit grew 7.8% YoY and recorded
BDT 4,548 mn in FY ‘19 compared to BDT 4,221 mn in FY ‘18. Growth in gross profit seems slow as total sales
volume has not increased remarkably though the price of key raw materials was comparatively lower in this
fiscal year.
Olympic focused on its selling and distribution activities and spend BDT 1,716 mn in FY ‘19 having 14.6% growth
from last fiscal year. On the other hand, administrative expenditure recorded 1.6% negative growth in FY ‘19
compared to FY ‘18 which resulted the operating profit growth rate up by 4.8%.
Interest expense has recorded 25.0% growth in FY ‘19 which was another stimulus for slowing down the growth
of bottom line. In the bottom line, Olympic Industries Ltd has logged 4.5% YoY growth and generated BDT 1,872
mn net profit after tax in FY ‘19 compared to BDT 1,791 mn in FY ‘18.
2
Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90
% Change FY ‘18 FY ‘19
Particulars (Figures in BDT mn) FY ‘18 FY ‘19
(YOY) % of Sales % of Sales
Net Turnover 12,928.5 13,733.7 6.2% 100.0% 100.0%
Cost of Goods Sold 8,707.7 9,185.3 5.5% 67.4% 66.9%
Gross Profit 4,220.8 4,548.4 7.8% 32.6% 33.1%
Total Operating Income 4,220.8 4,548.4 7.8% 32.6% 33.1%
Operating Expenses: 1,825.8 2,039.4 11.7% 14.1% 14.8%
Selling and Distribution Expenses 1,497.2 1,716.0 14.6% 11.6% 12.5%
Administrative Expenses 328.6 323.4 -1.6% 2.5% 2.4%
Profit From Operations 2,395.0 2,509.0 4.8% 18.5% 18.3%
Financial Expenses 155.5 194.3 25.0% 1.2% 1.4%
Other Non-operating Income 285.9 366.6 28.2% 2.2% 2.7%
Provision for loss in Investments (5.8) (2.1) -63.9% 0.0% 0.0%
Profit Before WPPF 2,519.6 2,679.1 6.3% 19.5% 19.5%
Allocation for WPPF 120.0 127.6 6.3% 0.9% 0.9%
Profit Before Tax 2,399.6 2,551.6 6.3% 18.6% 18.6%
Provision for Income Tax 592.8 659.2 11.2% 4.6% 4.8%
Provision for Deferred Income Tax 15.7 20.5 30.6% 0.1% 0.1%
Profit After Tax For The Year 1,791.1 1,871.8 4.5% 13.9% 13.6%
EPS 8.96 9.36 4.5% 0.1% 0.1%

Graphical Presentation of Quarter wise Operating Performances

Sales (BDT mn)

3,963.3
3,552.0
3,518.8

3,449.3
3,270.1

3,224.1

4,00 0.0
3,217.5

3,216.7

3,213.6
3,80 0.0

3,60 0.0
2,796.4

3,40 0.0

3,20 0.0

3,00 0.0

2,80 0.0

2,60 0.0

2,40 0.0

2,20 0.0

2,00 0.0

Q4 FY '17 Q1 FY '18 Q2 FY '18 Q3 FY '18 Q4 FY '18 Q1 FY '19 Q2 FY '19 Q3 FY '19 Q4 FY '19 Q1 FY '20

Net Profit after Tax (BDT mn)

557.6

600 .0
481.9
475.1

550 .0
474.0
464.0

449.6
448.8

440.8
428.7

500 .0

450 .0
355.1

400 .0

350 .0

300 .0

Q4 FY '17 Q1 FY '18 Q2 FY '18 Q3 FY '18 Q4 FY '18 Q1 FY '19 Q2 FY '19 Q3 FY '19 Q4 FY '19 Q1 FY '20

3
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90

Sales & NPAT Growth-% (YoY)

26.6%
18.3%

17.3%
11.5%
13.1%

10.4%
30. 0%

25. 0%

7.6%

7.2%

7.2%
20. 0%
3.7%

15. 0%

10. 0%

12.6%
15.3%
8.3%

5.0 %

5.9%
-17.8%

2.8%
0.0 %

2.8%
1.5%

2.2%

-0.3%
-5.0%

-10.0%

-15.0%

-20.0%

-25.0%

Q4 FY '17 Q1 FY '18 Q2 FY '18 Q3 FY '18 Q4 FY '18 Q1 FY '19 Q2 FY '19 Q3 FY '19 Q4 FY '19 Q1 FY '20
Sales Growth NPAT Growth

Gross Profit Margin

36.9%
37. 0%
33.6%
36. 0%

33.3%
32.6%

32.6%
32.6%

32.5%

35. 0%

32.3%
31.9%

34. 0%

31.0%
33. 0%

32. 0%

31. 0%

30. 0%

29. 0%

28. 0%

27. 0%

Q4 FY '17 Q1 FY '18 Q2 FY '18 Q3 FY '18 Q4 FY '18 Q1 FY '19 Q2 FY '19 Q3 FY '19 Q4 FY '19 Q1 FY '20

Net Profit Margin

15.0%
14.4%

14.1%
15. 0%
13.9%
13.7%

13.5%

14. 5%
13.3%
13.3%

14. 0%
12.8%
12.7%

13. 5%

13. 0%

12. 5%

12. 0%

11. 5%

Q4 FY '17 Q1 FY '18 Q2 FY '18 Q3 FY '18 Q4 FY '18 Q1 FY '19 Q2 FY '19 Q3 FY '19 Q4 FY '19 Q1 FY '20

Restated EPS (BDT)

2.79
2.41

2.80
2.40

2.37
2.32

2.25
2.24

2.20

2.60
2.14

2.40

2.20
1.78

2.00

1.80

1.60

1.40

1.20

1.00

Q4 FY '17 Q1 FY '18 Q2 FY '18 Q3 FY '18 Q4 FY '18 Q1 FY '19 Q2 FY '19 Q3 FY '19 Q4 FY '19 Q1 FY '20

4
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90
Key Ratios: Olympic Industries Limited
Particulars Q4 ‘17 Q1 ‘18 Q2 ‘18 Q3 ‘18 Q4 ‘18 Q1 ‘19 Q2 ‘19 Q3 ‘19 Q4 ‘19 Q1 ‘20
Liquidity Ratios
Current Ratio 2.0 2.0 1.8 1.9 2.2 2.0 1.7 1.9 2.2 2.5
Quick Ratio 1.7 1.8 1.5 1.6 1.8 1.7 1.4 1.6 1.8 2.1
Cash Ratio 0.1 0.2 0.2 0.1 0.2 0.1 0.1 0.1 0.2 0.3
Operating Efficiency*
Inventory Turnover 3.6 3.5 3.2 2.8 2.5 2.7 2.5 2.5 2.4 3.2
Receivable Turnover 16.5 20.5 22.8 20.9 17.9 18.2 16.3 15.3 13.9 18.1
Avg. Collection Period 21.9 17.5 15.8 17.2 20.1 19.8 22.1 23.5 25.8 19.8
Inventory Conv. Period 101.3 102.3 113.6 130.2 143.6 132.1 143.4 144.3 147.3 113.3
Operating Cycle 123.2 119.8 129.4 147.4 163.7 151.9 165.4 167.8 173.1 133.1
A/C Payable T/O 3.3 4.2 4.5 4.6 4.6 5.4 5.5 5.4 4.5 5.3
Payables Pmt. Period 107.5 84.8 79.9 77.5 77.9 66.2 65.2 66.1 79.8 67.4
Cash Conversion Cycle 15.7 35.0 49.4 70.0 85.8 85.7 100.2 101.7 93.3 65.7
Total Asset Turnover 31.3% 34.3% 32.2% 31.8% 32.3% 33.6% 30.0% 30.5% 28.6% 35.8%
Fixed Asset Turnover 154.5% 173.1% 170.9% 161.8% 149.1% 155.1% 152.2% 158.2% 128.4% 145.3%
Operating Profitability Margins
Gross Profit 32.6% 32.6% 31.9% 32.5% 33.6% 32.6% 31.0% 32.3% 36.9% 33.3%
Operating Profit 16.0% 19.0% 18.2% 18.5% 18.5% 18.5% 16.2% 18.2% 20.3% 18.6%
Pre Tax Profit 16.6% 18.7% 18.0% 19.4% 18.2% 18.3% 17.1% 18.5% 20.6% 18.9%
Net Profit 12.7% 13.7% 13.3% 14.4% 13.9% 13.5% 12.8% 13.3% 15.0% 14.1%
Valuations Ratio
P/B Ratio 10.3 9.3 10.7 9.4 7.1 6.0 6.9 6.9 6.5 5.3
NAVPS 27.1 29.3 27.0 29.3 31.5 33.9 31.3 33.7 36.1 38.9
EPS 1.8 2.2 2.1 2.3 2.2 2.4 2.2 2.4 2.4 2.8
P/E Ratio 33.9 30.3 32.8 30.7 25.1 21.4 23.5 25.0 25.2 18.3
EV/Sales 126.4 88.8 100.0 95.3 78.1 64.8 79.3 74.4 74.6 56.3
Price/Sales 20.2 16.8 18.2 17.6 14.4 12.0 12.9 13.5 15.2 10.5
Tobin’s Q 19.9 16.6 17.9 17.1 13.9 11.6 12.5 13.1 14.7 10.3
Sales/ Share 10.3 9.3 10.7 9.4 7.1 6.0 6.9 6.9 6.5 5.3
Growth Rates (QoQ)
EPS -21.3% 26.4% -4.5% 8.3% -3.1% 6.6% -8.0% 7.5% 1.7% 15.7%
Sales Growth -3.1% 16.9% -1.6% 0.0% 0.2% 9.1% -2.0% 3.0% -9.5% 23.3%
Gross Profit -5.3% 17.0% -3.8% 1.7% 3.7% 6.0% -7.0% 7.4% 3.5% 11.1%
EBIT Growth -23.5% 38.4% -5.7% 1.7% 0.2% 9.2% -14.1% 15.6% 1.0% 13.0%
Net Income -21.3% 26.4% -4.5% 8.3% -3.1% 5.7% -7.2% 7.5% 1.7% 15.7%
Total Asset 4.3% 8.9% 1.0% 1.5% -3.9% 14.2% 5.4% -2.5% -4.6% 1.8%
DUPONT Analysis
NPAT/Sales 12.7% 13.7% 13.3% 14.4% 13.9% 13.5% 12.8% 13.3% 15.0% 14.1%
Sales/Total Assets 30.7% 32.9% 32.1% 31.6% 32.9% 31.5% 29.3% 30.9% 29.3% 35.5%
ROA 3.9% 4.5% 4.3% 4.6% 4.6% 4.3% 3.7% 4.1% 4.4% 5.0%
NPAT/Total Assets 3.9% 4.5% 4.3% 4.6% 4.6% 4.3% 3.7% 4.1% 4.4% 5.0%
Total Assets/ Equity 168.5% 169.5% 186.2% 173.9% 155.3% 164.8% 188.1% 170.5% 151.8% 143.5%
ROE 6.6% 7.7% 8.0% 7.9% 7.1% 7.0% 7.0% 7.0% 6.7% 7.2%
Extended DUPONT Analysis
NPAT/PBT 76.3% 73.2% 74.1% 74.5% 76.8% 73.8% 74.6% 72.3% 72.9% 74.5%
PBT/EBIT 104.0% 98.9% 98.9% 104.8% 98.2% 99.0% 105.7% 101.5% 101.2% 101.5%
EBIT/Sales 16.0% 19.0% 18.2% 18.5% 18.5% 18.5% 16.2% 18.2% 20.3% 18.6%
Sales/Assets 30.7% 32.9% 32.1% 31.6% 32.9% 31.5% 29.3% 30.9% 29.3% 35.5%
Assets/Equity 168.5% 169.5% 186.2% 173.9% 155.3% 164.8% 188.1% 170.5% 151.8% 143.5%
ROE 6.6% 7.7% 8.0% 7.9% 7.1% 7.0% 7.0% 7.0% 6.7% 7.2%

5
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90

INVESTMENT THESIS
Key Assumptions Underlying the Valuation
Revenue:
Changes in Revenue Projection

20,024
19,502
22,0 00

18,398
17,925
16,924
20,0 00

16,495
15,537
15,147
18,0 00

14,297
13,734
13,130
12,929

16,0 00

14,0 00

12,0 00

10,0 00

2017-18 A 2018-19 A 2019-20 E 2020-21 E 2021-22 E 2022-23 E

Revised/Actual Earlier
***The Green color chart refers to the revised data of forecasted periods and actual data of FY 18 and 19 while the yellow color chart refers to the previous forecasted data.

The average top line growth of Olympic Industries Limited has been assumed at 9.09% per annum from FY 20
to FY 24 while our previous projection of sales growth was 10.05% up to FY 23. The historical average top line
growth from FY 14 to FY 19 was 11.83%. Considering the extreme competition in the market, topline growth
has been assumed. The biscuit market is now well diversified and the customers have different options. So with
the current product portfolio it will be very difficult for Olympic Industries to retain its market share in the biscuit
& cookies industry. Though Olympic is trying to diversify its business from biscuits to noodles, wafer, toffee and
candy, it is high time to diversify its core revenue sources that is biscuits.

Cost of Goods Sold:

In FY 19, the cost of sales was 66.9% of Sales compared to 67.4% in FY 18. The fluctuating trend of raw material
prices is the stimulus for slight changes in the cost of sales. As the raw material prices have increased to some
extend for last few years, we expect that the cost of direct materials will be around or higher than that of FY 19
within the forecasted periods. The average COGS as percentage of sales has been considered as 66.9% for FY 20
to FY 24 whereas it was 67.53% in our previous projection.

Revised COGS (as % of Sales)

67.6%

67.6%

67.6%

67.6%

67.6%
67.4%

67.2%

68. 0%
67.0%
66.9%

66.9%
66.9%

66.8%

67. 5%

67. 0%

66. 5%

66. 0%

65. 5%

65. 0%

2017-18 A 2018-19 A 2019-20 E 2020-21 E 2021-22 E 2022-23 E

Revised/Actual Earlier

***The Light Blue color chart refers to the revised data of forecasted periods and actual data of FY 18 and 19 while the yellow color chart refers to the previous forecasted data.

6
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90
Selling, Distribution & Administration Expenses:
The selling and distribution expense was 12.5% of total sales in FY 19 compared to 11.6% in FY 18. Last 5 years
average selling and distribution expense as percentage of sales is 11.65%. Average selling and distribution
expenses as percentage of total sales has been assumed at 12.07% for FY 20 to FY 24 while it was 11.1% in our
last valuation.
On the other hand, Olympic’s 5 years average administration expense as percentage of sales was 2.6%. In
coming 5 years, the expenses are expected to remain same as percentage of sales at 2.6%.
Selling & Distribution Expense (as % of Sales) Administrative Expenses (as % of sales)
12.5%

12.2%

12.1%
12.0%
12.0%

2.6%

2.6%
2.6%

2.6%
2.6%

2.6%
2.6%

2.6%
2.6%
2.4%
11.1%

11.1%

11.1%

11.1%

11.1%
3.0 %

12. 0%

2.5 %

11. 0%
2.0 %

10. 0%
1.5 %

9.0 %
1.0 %

8.0 % 0.5 %

7.0 % 0.0 %

2018-19 A 2019-20 E 2020-21 E 2021-22 E 2022-23 E 2018-19 A 2019-20 E 2020-21 E 2021-22 E 2022-23 E

Revised/Actual Earlier Revised/Actual Earlier

***The Green color chart refers to the revised data of forecasted periods ***The Purple color chart refers to the revised data of forecasted periods
and actual data of FY 19 while the yellow color chart refers to the previous and actual data of FY 19 while the Light Blue color chart refers to the
forecasted data. previous forecasted data.

Cash & Investment in FDR:

In the end of FY 2018-19, Cash and cash equivalents stood at BDT 608 million (excluding FDR) where it was BDT
461 mn in the end of FY 18. Moreover, Olympic has shown BDT 4,015 mn Fixed deposit at the end of FY ’19
compared to BDT 3,970 mn in the end of FY 18. Cash has been considered as the pluck variable in the forecasted
years.

Updates on Vertical Expansion Projects:

Currently Olympic has 9 biscuits line along with a Noodles manufacturing unit and a Chocolate manufacturing
unit. The Noodles unit started commercial operation since May 2018 and Chocolate unit started commercial
operation since June 2018. Besides these units, Olympic has decided to set up a Wafer manufacturing line which
will be imported from Franz Haas Waffelmaschinen Gmbh, Austria, at an estimated cost of BDT 125.5 mn to be
funded by the company's own sources and bank financing. The line will be installed at the company's Lolati
factory premises and will have an estimated annual capacity of 1,800 metric tons.
On the other hand, Olympic has also decided to set up a Toffee manufacturing line which will be imported from
India, at an estimated cost of BDT 11.4 mn to be funded by the company's own sources and bank financing. The
line will be installed at the company's Madanpur factory premises and will have an estimated annual capacity
of 1,800 metric tons as well. (Source: Dhaka Stock Exchange)

Recent Land Acquisitions as per the Board of Directors

Date Total Cost (BDT) Total Area Location
23/05/2019 4,298,000 12.83 Decimals Sonargaon, Narayanganj
01/04/2019 193,349,334 414.32 Decimals Sonargaon, Narayanganj
13/02/2019 12,730,000 37.94 Decimals Sonargaon, Narayanganj
Source: DSE

7
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90
Reasonable Valuation on both DCF and Relative Valuation matrices
Discounted Cash Flow Valuation: Our updated DCF analysis with a discount rate of 10.6% & terminal growth
rate of 3.0% gives us Net Present Value (PV) of Free Cash Flow to Firm (FCFF) of BDT 34.86 billion as of June,
2020. The fair value using DCF method stands at BDT 187.10 per share for the company, which implies an upside
of 19.0% from the current market price. The details of the valuation are as follows:
(Figures in BDT million) 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Terminal
Profit for the Year 1,871.8 2,079.8 2,260.2 2,437.7 2,680.8 2,921.4
Add: After Tax Interest Expenses 142.2 164.1 171.2 173.2 187.5 203.5
Add: Depreciation & Amortization 548.1 535.0 568.5 592.2 631.7 686.1
Less: Investment (Divestment) in NWC -302.5 -13.2 -22.1 23.5 8.9 -8.0
Less: CAPEX 535.1 606.2 864.5 806.4 916.1 1,041.4
Free Cash Flow to the Firm 2,329.5 2,185.9 2,157.5 2,373.2 2,575.0 2,777.6 37,487.1
Present Value Adjusted Free Cash flow to
- 2,185.9 1,950.2 1,939.0 1,901.7 1,854.2 25,024.3
the Firm
Enterprise Value 34,855.2
Plus: Cash & cash equivalent 4,623.0
Less: Interest Debt 2,067.2
Equity Value 37,411.0
No. of Share Outstanding 199.9
Value per Share (In BDT) 187.10

Sensitivity Analysis:
We have also checked the sensitivity analysis of DCF value per share (in BDT) on discount rate and terminal
growth rate.
Discount Rates
7.0% 8.0% 9.0% 10.6% 11.0% 12.0% 13.0% 14.0%
1.0% 243.7 211.7 187.6 159.2 154.1 141.9 131.7 123.1
Terminal Growth

2.0% 281.5 237.9 206.8 171.5 165.4 150.9 139.0 129.1

3.0% 338.2 274.7 232.3 187.1 179.5 161.8 147.8 136.3
3.5% 378.7 299.2 248.6 196.5 187.9 168.3 152.8 140.3
4.0% 432.7 329.8 268.1 207.4 197.6 175.6 158.5 144.8
5.0% 621.7 421.7 321.7 234.8 221.8 193.2 171.8 155.2
6.0% 1188.7 605.5 411.1 274.2 255.6 216.8 189.0 168.2

DCF Valuation Based on Exit Multiple Method:

Our restructured DCF analysis based on EV/EBITDA exit multiple method gives us total enterprise value of BDT
35.96 billion as of June, 2020. EV/EBITDA multiple has been used 8.5 and EBITDA has been forecasted at BDT
4,606 mn at the end of projected year for calculating the terminal value of BDT 39,148 mn at the end of FY 2023-
24. The fair value using DCF method stands at BDT 192.7 per share for the Company, which implies an upside of
22.5% from the current market price. The details of the valuation are as follows:
(Figures in BDT mn) 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Terminal
Terminal Value with Assumed EV/EBITDA 39,147.5
Free Cash Flow to the Firm 2,329.5 2,185.9 2,157.5 2,373.2 2,575.0 2,777.6
Present Value Adjusted Free Cash flow to the Firm 2,185.9 1,950.2 1,939.0 1,901.7 1,854.2
Present Value of Terminal Value 26,132.7
Total Enterprise Value 35,963.6
Plus: Cash & cash equivalent 4,623.0
Less: Interest Debt 2,067.2
Equity Value 38,519.4
No. of Shares Outstanding 199.9
Value per Share (in BDT) 192.7

8
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90

Sensitivity Analysis:
We have also checked the sensitivity analysis of DCF (exit multiple) value per share (in BDT) on discount rate
and EV/EBITDA ratio.
Discount Rates
7.0% 8.0% 9.0% 10.6% 11.0% 12.0% 13.0% 14.0%
5.0 153.1 149.0 145.0 138.8 137.5 134.0 130.6 127.4
6.0 170.7 165.9 161.3 154.2 152.7 148.6 144.8 141.1
EV/EBITDA

7.0 188.3 182.8 177.6 169.6 167.9 163.3 158.9 154.7

8.5 214.7 208.2 202.1 192.7 190.6 185.2 180.1 175.2
9.0 223.4 216.7 210.3 200.3 198.2 192.6 187.2 182.0
10.0 241.0 233.6 226.6 215.7 213.4 207.2 201.3 195.6
11.0 258.6 250.6 242.9 231.1 228.6 221.8 215.4 209.3

Relative Valuation Method: Favorable Valuation is derived based on relative valuation methodologies
calculated over 2019-20 EPS estimates and industry multiples.
Relative Valuation
Particulars Multiples EPS & NAVPS Valuation
Consumer Goods Forward PE 17.64 (1) 10.40 183.5
Sector PE 20.40 (2) 10.40 212.2
P/NAVPS (Sector) 5.20 (3) 38.11 198.1
Weighted Avg. price per Share 187.5

Multiples (1, 2 and 3)

Golden Harvest Agro Industries Limited, Agricultural Marketing Company Limited (PRAN), Rangpur Dairy & Food
Products Limited, Fu Wang Food Limited, British American Tobacco Bangladesh Company Limited and Marico
Bangladesh Limited- these listed firms have been considered as the consumer goods manufacturing firms.
Average consumer goods average PE was 17.64x. On the other hand, Sector PE was 20.40x and P/NAVPS was
5.20x as on the valuation date.
FMCG Companies Forward P/E
GHAIL 8.20
AMCL(PRAN) 22.40
RDFOOD 17.00
FUWANGFOOD 13.10
BATBC 22.40
MARICO 17.80
Consumer Goods Forward PE (1) 17.64
Sector PE (2) 20.40
P/NAVPS-Sector (3) 5.20

9
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90

Determination of Target Price

We recommend 40.0% weight on the value that we derived from DCF valuation, 30.0% on DCF Exit Multiple
Method and 30.0% on Relative valuation models. Based on the weighted average of the DCF, Exit Multiple and
Relative Valuation, we get a June 2020 target price of BDT 188.90 for the Company.

Valuation Methods Estimated Value Weight

Discounted Cash Flow (FCFF)- Fair value 187.1 40.0%
DCF Exit Multiple Method 192.7 30.0%
Relative Valuation Models 187.5 30.0%
Weighted Average Price Per Share 188.9 100.0%
Current Price 157.3
Target Price 188.9
Rating Validity June, 2020
Expected Capital Gain 20.1%
Expected Dividend Yield 4.8%
Total Expected Return 24.9%

STOCK RATING

Overweight: Overweight indicates that the stock is expected to outperform the broader market averages. It
usually derives the rating from comparing the expected return from the stock in a specified time period with
weighted average cost of capital. Overweight concludes that expected return from the stock is greater than
the weighted average cost of capital.

Market weight: Market weight indicates that the stock is expected to equal performance of broader market
averages. It usually derives the rating from comparing the expected return from the stock in a specified time
period with weighted average cost of capital. Market weight concludes that expected return from the stock is
equal to weighted average cost of capital.

Underweight: Underweight indicates that the stock is expected to underperform broader market averages. It
usually derives the rating from comparing the expected return from the stock in a specified time period with
weighted average cost of capital. Underweight concludes that expected return from the stock is less than the
weighted average cost of capital.

Not-Rated: “Not-Rated” implies that currently the analyst does not have adequate conviction about the stock's
total return relative to the broader market average.

10
 Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90

STATEMENT OF COMPREHENSIVE INCOME

(IN BDT MN)

Particulars 2016-17 A 2017-18 A 2018-19 A 2019-20 E 2020-21 E 2021-22 E

Net Turnover 11,290.6 12,928.5 14,026.9 15,147.5 16,494.9 17,925.0
Cost of Goods Sold 7,523.1 8,707.7 9,185.3 10,118.8 11,037.9 12,007.6
GROSS PROFIT 3,767.4 4,220.8 4,548.4 5,028.7 5,457.0 5,917.3
Total Operating Income 3,767.4 4,220.8 4,548.4 5,028.7 5,457.0 5,917.3
Operating Expenses: 1,614.3 1,825.8 2,039.4 2,209.6 2,410.3 2,645.8
Selling & Distribution Exp. 1,322.2 1,497.2 1,716.0 1,817.7 1,983.6 2,182.1
Administrative Exp. 292.1 328.6 323.4 391.9 426.7 463.7
Operating Profit 2,153.1 2,395.0 2,509.0 2,819.1 3,046.7 3,271.5
Financial Expenses 118.2 155.5 194.3 224.2 234.0 236.7
Non-Operating Income 299.2 285.9 366.6 377.3 410.9 446.5
Changes in Fair Value (Investment) 0.2 -5.8 -2.1 -4.0 -3.1 -3.5
PROFIT BEFORE WPPF 2,333.9 2,525.4 2,681.2 2,972.3 3,223.7 3,481.3
Allocation for WPPF 111.1 120.0 127.6 141.5 153.5 165.8
PROFIT BEFORE TAX 2,222.8 2,405.4 2,553.6 2,830.7 3,070.1 3,315.6
Provision for Income Tax 565.6 592.8 659.2 732.6 790.1 856.5
Deferred Income Tax 13.9 15.7 20.5 18.4 19.8 21.4
PROFIT AFTER TAX 1,643.3 1,796.8 1,873.9 2,079.8 2,260.2 2,437.7
Restated EPS (in BDT) 8.22 8.99 9.37 10.40 11.30 12.19
Outstanding Share 199.9 199.9 199.9 199.9 199.9 199.9

** A refers to Actual data whereas E refers to Expected data over the periods.

11
Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90

STATEMENT OF FINANCIAL POSITION

(IN BDT MN)

Particulars 2016-17 A 2017-18 A 2018-19 A 2019-20 E 2020-21 E 2021-22 E

ASSETS
Non-Current Assets: 2,363.8 3,174.2 3,899.1 3,663.8 4,103.1 4,353.8
PPE-Carrying Value 1,907.1 2,243.6 2,754.8 2,872.5 3,168.5 3,382.8
Capital Work-in-Progress 450.3 930.6 1,144.2 791.3 934.6 971.0
Current Assets: 6,756.5 6,614.0 7,058.1 7,833.1 8,257.3 8,936.8
Inventories 889.7 1,306.9 1,253.1 1,363.3 1,451.6 1,577.4
Trade Debtors 163.4 178.5 211.1 265.1 288.7 313.7
Advan. Depo & Prepayments 1,360.6 696.7 971.0 1,089.0 1,217.6 1,357.3
Investment in FDR 4,095.5 3,970.7 4,015.0 4,222.9 4,426.4 4,670.1
Cash & Cash Equivalents 247.3 461.3 608.0 892.8 873.1 1,018.3
TOTAL ASSETS 9,120.3 9,788.2 10,957.2 11,496.9 12,360.4 13,290.6
Shareholders' Equity: 5,412.9 6,304.2 7,216.3 7,618.7 8,379.4 9,117.6
Share Capital 1,999.4 1,999.4 1,999.4 1,999.4 1,999.4 1,999.4
Retained Earnings 3,413.5 4,304.8 5,216.9 5,619.3 6,380.0 7,118.2
Non-Current Liabilities: 298.8 490.0 559.2 470.4 448.2 462.7
Long term loans 176.1 361.9 415.3 349.2 332.7 355.2
Deferred Tax Liability 107.7 123.4 144.0 121.2 115.5 107.5
Current Liabilities: 3,408.6 2,994.0 3,181.6 3,407.8 3,532.9 3,710.2
Short Term Bank Loans 846.4 1,571.4 1,411.8 1,363.3 1,319.6 1,344.4
Current portion of LT loan 144.8 174.2 240.2 337.5 372.2 397.4
Trade Creditors 529.2 456.4 463.2 469.6 494.8 519.8
Other creditors 15.8 12.6 2.9 16.6 18.1 19.7
Current Tax Liabilities 1,138.1 121.0 175.1 205.4 221.9 293.6
Provision for Accruals 58.9 104.8 129.8 111.8 115.8 129.1
Interest Payable 0.4 0.1 0.4 0.4 0.3 0.4
Advance against Sales 131.6 88.0 246.6 268.5 286.7 257.0
Liabilities for other finance 53.8 94.9 74.5 91.4 106.6 110.6
Provision for WPPF 352.5 200.7 226.6 236.6 256.6 277.1
Unclaimed Dividend 111.6 160.8 205.7 304.7 338.7 359.7
Finance Lease Current portion 25.4 9.2 4.9 2.0 1.5 1.5
TOTAL SHAREHOLDERS'
9,120.3 9,788.2 10,957.2 11,496.9 12,360.4 13,290.6
EQUITY AND LIABILITIES
NAVPS (in BDT) 27.07 31.53 36.09 38.11 41.91 45.60

12
Equity Valuation on Olympic Industries Ltd. December, 2019 Update Date: 18th December, 2019
Current Price (BDT): 157.30 Target Price (BDT): 188.90

RATIO ANALYSIS
Particulars 2016-17 A 2017-18 A 2018-19 A 2019-20 E 2020-21 E 2021-22 E
Liquidity Ratios
Current Ratio 1.98 2.21 2.22 2.30 2.34 2.41
Quick Ratio 1.72 1.77 1.82 1.90 1.93 1.98
Cash Ratio 1.27 1.48 1.45 1.50 1.50 1.53
Operating Efficiency Ratios
Inventory Turnover Ratio 15.35 11.77 10.73 11.58 11.72 11.84
Receivable Turnover Ratio 67.67 75.64 70.51 63.62 59.58 59.52
Avg. Collection Period (Days) 5.32 4.76 5.11 5.66 6.04 6.05
Inventory Conv. Period (Days) 23.45 30.58 33.55 31.09 30.72 30.42
Operating Cycle (Days) 28.77 35.34 38.66 36.75 36.76 36.46
A/C Payable Turn. Ratio 13.58 17.67 19.98 21.70 22.89 23.67
Payables Pmt. Period (Days) 26.51 20.37 18.02 16.59 15.73 15.21
Cash Conversion Cycle (Days) 2.26 14.97 20.64 20.16 21.03 21.25
Total Asset Turnover 134.72% 136.75% 132.40% 134.92% 138.28% 139.76%
Fixed Assets Turnover 631.02% 622.96% 549.52% 538.35% 546.10% 547.22%
Operating Profitability Ratios
Gross Profit Margin (GPM) 33.37% 32.65% 33.12% 33.20% 33.08% 33.01%
Operating Profit Margin (OPM) 19.07% 18.52% 18.27% 18.61% 18.47% 18.25%
Pre Tax Profit Margin 19.69% 18.56% 18.58% 18.69% 18.61% 18.50%
Net Profit Margin (NPM) 14.55% 13.85% 13.63% 13.73% 13.70% 13.60%
Valuation Ratios
P/B (price to book) Ratio 10.55 7.12 6.55 6.20 5.64 5.18
Dividend Payout Ratio 54.75% 53.58% 64.09% 72.10% 75.19% 86.12%
Retention Rate 45.25% 46.42% 35.91% 27.90% 24.81% 13.88%
P/E Ratio 34.76 25.05 25.24 22.72 20.90 19.38
EV/EBITDA 24.22 17.32 15.93 14.43 13.39 12.51
EV/Sales 5.14 3.60 3.55 3.20 2.93 2.70
Price/Sales 5.06 3.47 3.44 3.12 2.86 2.64
Tobin’s Q 10.55 7.12 6.55 6.20 5.64 5.18
Sales/ Share 56.47 64.66 68.69 75.76 82.50 89.65
Growth Rates
EPS Growth Rate 1.20% 9.00% 4.51% 11.11% 8.68% 7.85%
Dividend Growth Rate 12.50% 6.67% 25.00% 25.00% 13.33% 23.53%
Sales Growth Rate 2.97% 14.51% 6.23% 10.29% 8.90% 8.67%
Gross Profit Growth 2.08% 12.03% 7.76% 10.56% 8.52% 8.44%
EBIT Growth Rate 1.73% 11.23% 4.76% 12.36% 8.07% 7.38%
Net Income Growth 1.20% 9.00% 4.51% 11.11% 8.68% 7.85%
Total Asset Growth Rate 19.36% -2.14% 19.61% 12.50% 4.28% 14.54%
DUPONT ANALYSIS
Net Profit AT/Sales 14.55% 13.85% 13.63% 13.73% 13.70% 13.60%
Sales/Total Assets 134.72% 136.75% 132.40% 134.92% 138.28% 139.76%
ROA 19.61% 18.94% 18.05% 18.52% 18.95% 19.01%
Net Profit AT/Total Assets 19.61% 18.94% 18.05% 18.52% 18.95% 19.01%
Total Assets/ Equity 1.69 1.61 1.53 1.51 1.49 1.47
ROE 33.05% 30.57% 27.69% 28.04% 28.26% 27.86%
Extended DUPONT ANALYSIS
Net Profit/Pretax Profit 73.93% 74.64% 73.36% 73.47% 73.62% 73.52%
Pretax Profit/EBIT 103.24% 100.19% 101.70% 100.41% 100.77% 101.35%
EBIT/Sales 19.07% 18.52% 18.27% 18.61% 18.47% 18.25%
Sales/Assets 134.72% 136.75% 132.40% 134.92% 138.28% 139.76%
Assets/Equity 1.69 1.61 1.53 1.51 1.49 1.47
ROE 33.05% 30.57% 27.69% 28.04% 28.26% 27.86%

13
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