CFA Institute Research Challenge
CFA Institute Research Challenge Hosted by CFA Society Bangladesh Bangladesh Institute of Business Administration Bangladesh Institute of Business Administration Telecommunication sector, Mobile telecommunication services industry Dhaka Stock Exchange Grameenphone Date: November 14, 2016 Current Price: BDT 279.90 Recommendation: BUY (17.2% of total return) Ticker – DSE: GP Market Capitalization: 376,543.886 (mn) Target Price: BDT 325 Highlights Valuation Summary Weight We initiate coverage on Grameenphone Ltd. (“GP” or “the company”) – the largest mobile telecommunication service provider in Bangladesh – with a Buy Fair Value from FCFF Method 334 0.50 167 Fair Value from Relative recommendation based on a 12-month target price of BDT 325, offering 17.2% Valuation 316 0.50 158 upside from its closing price of BDT 279.90 on November 14, 2016. Our recommendation is driven by the following catalysts and critical risk factors. Intrinsic Value 325 Investment catalysts Effective corporate governance inspires confidence: GP is one of the most Key Financial Information transparent company of Bangladesh that has committed considerable resources In BDT Million 2,013 2,014 2,015 2016E 2017E 2018E to implement internationally accepted corporte standards to maintain effective Revenue 96,624 102,663 104,754 113,555 123,907 139,143 corporate governance. Revenue Growth 5% 6% 2% 8% 9% 12% Healthy free cash flow ensures value for the capital providers: GP’s dividend Net Profit 14,702 19,803 19,707 23,780 27,945 32,858 policy is to payout minimum 50% of net profit and the company has consistently EBITDA 48,538 54,553 55,971 61,774 69,016 78,198 paid dividend well above the minimum level since its enlistment into DSE.
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