SINGER BANGLADESH LIMITED DSE: SINGERBD BLOOMBERG: SINGER:BD Company Overview Company Fundamentals Singer Bangladesh Limited (The Company) is operating in this Market Cap (BDT mn) 15,085.8 region (now Bangladesh) since 1905. In 1983, the Firm had Market weight 0.4% established itself as public limited Company. It has been a No. of Shares Outstanding (mn) 76.7 direct subsidiary of the Singer Bhold BV, the Netherlands since Free-float Shares 41.7% 2003. Up to 1985, the Company produced only sewing Paid-up Capital (BDT mn) 766.9 39.8 machine. Over the years, SINGER has transformed into a 3 Months Average Turnover (BDT mn) 3 Months Return 4.9% marketing powerhouse with a wide range of product brands Current Price (BDT) 196.7 including manufacturing of household consumer durable 52-week price range (BDT) 175.5 - 228.9 products i.e. televisions, air conditioners, sewing machines, Sector Forward P/E 21.5 furniture and some other consumer electronics and household 2017 appliances. Beside these, it is also carrying out marketing of 2014 2015 2016 (9M Ann.) consumer electronics, home appliance, refrigerator & freezer, computer and instant power supply and other allied products. Financial Information (BDT mn): Singer Bangladesh has over 374 retail outlets (Singer Mega & Sales 7,262 6,911 9,007 12,428 Singer Plus & singer Pro outlets), 425 dealers and widespread Gross Profit 1,840 1,843 2,594 3,492 service networks in the country. The manufacturing plant of the Operating Profit 600 557 934 1,414 Company is situated at Savar, Dhaka. Profit After Tax 362 369 546 911 Assets 3,821 3,653 5,700 7,217 Revenue Composition: Long Term Debt - - - - Contribution Growth Short Term Debt 218 19 1,131 1,750 2014 2015 2016 2015 2016 Equity 1,527 1,417 1,947 2,095 Home Appliances 69% 70% 69% -4% 28% Margin: Consumer Electronics 21% 21% 23% -9% 45% Gross Profit 25.3% 26.7% 28.8% 28.1% Sewing 5% 5% 5% -2% 21% Operating Profit 8.3% 8.1% 10.4% 11.4% Furniture 0% 1% 2% 181% 112% Pretax Profit 6.9% 7.5% 8.7% 9.9% Others 4% 3% 2% -29% -29% Net Profit 5.0% 5.3% 6.1% 7.3% Turnover includes television under consumer electronics and air Growth: conditioner under home appliances. Sales 9.9% -4.8% 30.3% 38.0% Major festivals i.e., Eid-ul-Fitar, Eid-ul-Azha, Durga Puja etc. Gross Profit 3.0% 0.2% 40.7% 34.6% stimulates the products demand. Therefore, the firm enjoys Operating Profit 2.4% -7.3% 67.7% 51.4% higher earnings in the quarter of festival time. Net Profit -5.2% 1.7% 48.2% 66.8% Utilization of Installed Capacity: Profitability: ROA 9.0% 9.9% 11.7% 14.1% Installed Utilized ROE 17.4% 25.0% 32.5% 45.1% 2015 2016 2015 2016 Operating Efficiency Ratio: Panel Television (number) 50,000 80,000 71% 112% CRT Television (number) 35,000 20,000 81% 89% Inventory Turnover 5.2 5.2 5.5 5.6 Air-conditioner (sets) 10,000 20,000 101% 99% ReceivableRatio Turnover 8.0 7.2 7.0 5.6 Furniture (sets) 5,300 5,300 104% 94% A/CRatio Payable 6.9 6.0 6.5 6.2 TotalTurnover Asset Ratio Turnover 1.8 1.8 1.9 1.9 The Company has increased its production capacity of Fixed Asset Turnover 8.1 7.9 9.7 12.0 Television by 18% in 2016 and Air-condition & Furniture unit by Leverage: 67% & 342% respectively in 2015. Debt Ratio 5.7% 0.5% 19.8% 24.3% Raw Materials Consumption: Debt-Equity 14.3% 1.3% 58.1% 83.5% Particulars 2012 2013 2014 2015 2016 Int. Coverage 5.4 8.4 9.6 9.1 Imported 98.6% 98.0% 98.9% 97.0% 95.9% Dividend History Dividend (C/B)% 125/25 65/- 70/- -/- Locally Procured 1.4% 2.0% 1.1% 3.0% 4.1% Dividend Yield 8.9% 3.6% 3.6% -/- Shareholding Structure: Dividend Payout 412.7% 135.3% 98.3% -/- The Company became enlisted with the Dhaka Stock Exchange Valuation: in 1983 and Chittagong Stock Exchange in 2001. Historical Price/Earnings 39.1 38.5 25.9 16.6 shareholding status: Price/BV 9.3 10.0 7.3 7.2 EPS (BDT) 4.7 4.8 7.1 11.9 As on Sponsor Govt. Instt. Foreign Public NAVPS (BDT) 19.9 18.5 25.4 27.3 30-Nov-17 57.00% 0.00% 14.56% 8.61% 19.83% 31-Dec-16 70.10% 0.00% 7.73% 3.08% 19.09% 30-Jun-16 72.77% 0.00% 6.25% 0.00% 20.98% 31-Dec-15 72.77% 0.00% 4.84% 0.00% 22.39% 1 December 21, 2017 Industry Overview position in the refrigerator market and improve yields further. Bangladesh is the best placed in the region for electrical, . The Company showed a considerable growth in both the electronic home appliances industry due to cheap labor and topline and bottom line in the recent years. In 2016, favorable trade status with the EU. Thus the potential for turnover of the Company has grown by 30.4% over last backward and forward linkage industry is growing very fast. year due to the higher sales in the products categories of Presently, about 50%-60% of this demand is met by import refrigerator, panel television, air conditioner, washing from countries like China, India, Hong Kong, Thailand, Korea, machine, micro-ovens and furniture. Turnover growth in Indonesia etc. This offers a tremendous opportunity for further retail channel was 31.3% and the wholesale channel investment. posted 27.5% over last year. This was because of the Among the major products of consumer electronics and home increased production capacity and its utilization in the appliances produced and supplied by Singer Bangladesh. consumer electronics and home appliances. Refrigerator and Television generate most of the revenue in the . Gross margin percentage of the Company was impacted consumer durable goods. Currently, the annual demand of favorably by a greater mix of higher margin product lines refrigerators in Bangladesh is around 1.1 million units but the coupled with higher ECC (Earned Carrying Charges). production capacity of all companies is around 2.3 million units. In March 2017, Singer Bangladesh has introduced energy Here Bangladesh is self-sufficient in producing refrigerators. efficient and environment friendly refrigerators with The television market of Bangladesh is now stands at about 1 R600a gas. This type of refrigerators can reduce electricity million units a year. Of the sum, branded products account for consumption by up to 50%. 40 percent. In 2016, the Company has introduced low-voltage air conditioners, chest freezer, mattress & dining table sets, According to Bangladesh Refrigerator Manufacturers locally manufactured refrigerators, pressure cookers and Association (BRMA), in FY 2013-14 a total of 10 lakh 77 cookery items etc. which will improve both the top line thousand refrigerators were sold, which is 32.9% higher than and bottom line figures in the coming years. the previous fiscal year. Among them, the percentage of . Singer offers some of the world renowned branded home domestic made refrigerators was 77.73 (8.37 lakh) while the appliances i.e. Samsung Television, Godrej, Haier, Huawei, sales of imported refrigerators was only 22.27 %( 2.8 lakh). LG, Skyworth, Videocon and Whirlpool etc through its The prominent local brands which are manufacturing retail chains across the country. In March 2015, the Refrigerator are Walton, Marcel, Eco Plus, Jamuna, RFL, MyOne Company added two European home appliances and and Minister. Among them, the annual production capacity of electronics brands - Beko and Grundig. Beko products Walton Hi-Tech Industries is 14 lakh units, Jamuna Electronics 3 include refrigerators, washing machines, dishwashers and lakh, Butterfly Manufacturing Company Ltd (Eco Plus) 2 lakh, microwave ovens, while Grundig brought in LED TV, sound RFL Electronics 3 lakh while MyOne and Minister’s capacity are systems and some other small household appliances. 1 lakh. Singer is the market leader in the country’s household appliances. According to the Daily Star news published in The demand of consumer electronics and home appliances June 2017, Singer controls around 25 percent market mainly depends on income level and purchasing power of share in consumer durables in Bangladesh. consumer which shows increasing trend in our country. Recently, South Korean technology giant Samsung has invested Investment Negatives $100 million in Bangladesh to established two manufacturing . The Company is exposed to foreign currency risks as units. The company will produce televisions, refrigerators, around 96% of its total raw materials consumed are microwave oven and air conditioners for the local market and it imported. Therefore, adverse foreign exchange movement has the plan to export in future. It has started manufacturing will hamper the earnings. television on a test basis from May 2017. Samsung’s other . Intense competition from large number of local factory which is located at Narsingdi will officially open from manufacturers and low priced Chinese product is the main May 2018. The company is aiming to grab 30 to 40 percent of threat for the Company to sustain its position in the the market share within next three to four years. market. Meanwhile, the Company is going to face a high threat from new entrants i.e. Samsung which is investing Investment Positives in the consumer electronics and home appliances business in the country that may affect the turnover and . The Company has increased its equity participation to profitability of the Company.