Term Paper on Investment Management

Presented By: Quazi Mortuza Ali ID: 09364040 Nilon Talukder ID: 09164055 Md. Moshiur Rahman ID: 10364020 Adnan Rahman ID: 09364013 BRAC University.

OBJECTIVE OF THE STUDY

The Primary Objective was to study the stock price and behavior of stocks towards various incentives and company performances. To know about stock pricing. To find out the effect of dividend, bonus & right. Major attributes, which a investor should look for investing in a stock. Factors that influence stock purchase. Portfolio performance analysis.

Study Design
The study is conducted on simple random sampling and we conducted the study within four stocks of Dhaka Stock Exchange.
The City Bank Limited BRAC Bank Limited Square Pharmaceuticals Beximco Pharmaceuticals

Individual stock analysis Portfolio Analysis

BRAC Bank Limited

BRAC Bank Started Business in 2001 with aiming to serve the missing middles (i.e. SME segments) Shareholding 50% by Institutions

EPS
EPS
70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2005 2006 2007 2008 2009 2010 38.54 29.39 42.30 62.30 60.98 60.39

ROE
ROE 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2005 2006 2007 2008 2009 2010 28.06% 23.05% 23.83% 22.88% 19.19% 18.95%

Operating Profit Growth

Growth in Operating Profit 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2005 2006 2007 2008 2009 2010 17.14% 33.64% 63.14% 80.88% 81.03% 85.24%

Other Financial Figures

Year 2005 2006 2007 2008 2009 2010 ROA 1.41 % 1.42 % 1.62 % 1.64 % 1.56 % 9.69% 11.64 % 12.61 % 12.30 % 9.00% ROI NAV 156.5 9 196.7 2 214.3 4 311.7 1 371.5 5 8.40 29.3 3 17.5 2 13.8 8 P/E Growth Ass et 65.51% 77.83% 54.55% 56.18% 31.31% 25.25% Capital A R 9.39% 13.53% 12.24% 12.76% 12.45% 12.07% Shareholders' Equity (Million) 783 2,117 3,058 5,438 8,151 9,412 20% 10% 20 30% 30% 20% 10% % 50 0 Stock Cash Rig rat

1.55 %

332.9 1

15.0 7

Recommendation
Rate of return of last five years annualized return 22.41% with standard deviation 59.61% Dividend & Bonus combined above 20% every year This stock is a Investment worthy if considers return around 20%.

Mission of CBL: Offer wide array of products and services that differentiate and excite all customer segments. Be the Employer of choice by offering an environment where people excel and leaders are created.

Vision of CBL:
The Financial Supermarket With A Winning Culture Offering Enjoyable Experiences Values: Result-Driven Engaged & Inspired Accountable & Transparent Courageous & Respectful Customer Delight

City Bank is one of the oldest private Commercial Banks and started its journey on 27th March 1983 through opening its first branch at B. B. Avenue Branch in the capital, Dhaka city.

The sponsor directors commenced the journey with only Taka 3.4 crore worth of Capital, which now is a respectable Taka 330.77 crore as capital & reserve.

The bank manages its business and operation vertically from the head office through 4 distinct business divisions namely - Corporate & Investment Banking; - Retail Banking (including Cards); - SME Banking; & - Treasury & Market Risks.

The bank currently has 89 online branches and 14 SME service centers and 10 SME Agro center

It currently has 99 ATMs of its own; and ATM sharing arrangement with a partner bank that has more than 550 ATMs in place; SMS Banking; Interest Banking and so on.

It already started its Customer Call Center operation (24/7)

Very personalized and friendly customer service.

It has in place a customized service excellence model called CRP that focuses on ensuring happy customers through setting benchmarks for the bank's employees' attitude, behavior, readiness level, accuracy and timelines of service quality.

City Bank has launched American Express Credit Card and American Express Gold Credit card in November 2009.

Retail Deposit Retail Loan Debit Card Credit Card ATMs NRB

Structured Finance Syndication Equity Investment Foreign Trade

Retail

Corporate

Global market & Transaction

Money Market Foreign Exchange Spot Forward & Options

SME
SME Deposit SME Loan

Taka in mullion

2010 Tk. 1,849

2006 Tk. 240

Taka in mullion

2010 Tk. 11,519

2006 Tk. 2,531

Taka in mullion

2010 Tk. 59.4

2006 Tk. 20.2

Year
ROE

2006
9.48%

2007
11.93%

2008
9.44%

2009
13.96%

2010
16.05%

30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2006 2007 2008 2009 2010 16.05% 13.96% 9.44%

9.48%

11.93%

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment.

Year ROA

2006 0.51%

2007 0.70%

2008 0.70%

2009 1.07%

2010 2.03%

2.00%

2.03%

1.50%
1.00% 0.50% 0.00% 2006 2007 2008 2009 2010 1.07% 0.70% 0.70%

0.51%

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. Year ROI 2006 3.75% 2007 4.54% 2008 4.39% 2009 7.73% 2010 14.82%

30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2006 2007 2008 2009 2010 7.73% 4.54% 14.82%

3.75%

4.39%

A liquidity ratio that measures a company's ability to pay short-term obligations.

Year ROI

2006 74.60%

2007 65.35%

2008 75.50%

2009 68.62%

2010 85.90%

90.00% 85.90%

74.60%
65.00% 2006 65.35% 2007

75.50%

68.62%
2008 2009 2010

The company was founded in 1958 by Samson H. Chowdhury along with three of his friends as a private firm. It went public in 1991 and is currently listed on the Dhaka Stock Exchange. Square Pharmaceuticals Ltd. is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and it has been continuously in the 1st position among all national and multinational companies since 1985.

* 1958: Debut of Square Pharma as a Partnership Firm. * 1964: Converted into a Private Limited Company * 1982: Licensing Agreement signed with F. Hoffmann-La Roche Ltd., Switzerland. * 1985: Achieved first position in the Pharmaceutical Market of Bangladesh among all national and multinational companies. * 1991: Converted in to a Public Limited Company. * 1994: Initial Public Offering of Square Pharmaceutical Shares. * 2004: Signing of agreement with ROVIPHARM, Vietnam to manufacture and market Square products under

EPS

ROE

ROA

ROI

net asset value

P/E Ratio

Growth in Total Shareholder Stock Assets s' Equity Div

Cash Div

Offe net profit after Righ r tax(fugure in t Rate thousand

Total assets(figure in thousand)

6,402,014,7 2006 77.26 0.018% 12.54% 12.54% 424.00 29.46 22.94% 72 7,333,257,6 2007 86.36 0.018% 12.43% 12.43% 486.00 28.33 9.81% 12 8,417,040,7 2008 91.57 0.016% 10.88% 10.88% 558.00 44.88 18.93% 05 10,044,685, 2009 125.25 0.019% 14.26% 14.26% 659.00 23.43 16.72% 134 11,554,379, 2010 138.36 0.018% 13.89% 13.89% 766.00 25.88 17.53% 825

1165865

9298987

50%

50

1303243

10486940

35%

40

1381863

12703127

25%

40

1890053

13251243

30%

35

2087872

15029500

Figure in thousand : BDT

2007-08

2006-07

2005-06

2004-05

2003-04

CORPORATE OPERATIONAL RESULT

Turnover (Gross) Value Added Tax Turnover (Net) Gross Profit Net Profit before Tax Net Profit after Tax Shareholders Equity Total Assets

9,565,716 1,307,872 8,257,844 3,401,782 1,868,634 1,381,863 8,417,041 12,703,127

8,711,035 1,210,223 7,500,811 3,232,364 1,722,906 1,303,243 7,333,258 10,486,940

7,085,553 995,648 6,089,905 2,564,503 1,533,043 1,165,865 6,402,015 9,298,987

6,199,135 867,088 5,332,047 2,172,593 1,513,019 1,255,848 5,568,790 7,907,933

5,482,088 760,536 4,721,552 1,906,592 1,151,636 970,044 4,590,142 6,021,497

No. of Share Outstanding Dividend per Share(Cash) Dividend per Share(Stock) Shareholders' Equity per Share EPS at original capital at IPO Earning per Share (SPL) Earning per Share (Consolidated) Quoted Price per Share - DSE Quoted Price per Share - CSE Price Earning Ratio - DSE (Time) Number of Shareholders Human Resources :

8,942,400 5,961,600 4,968,000 4,320,000 3600,000 40 35% 941 690.93 154.53 170.28 4,110 4,107 26.60 31,688 2007-08 50 50% 1,230 651.62 218.61 244.60 2,447 2,462 11.19 13,009 2006-07 75 20% 1,289 582.93 234.67 272.65 2,276 2,289 9.70 13,206 2005-06 77 15% 1,289 627.92 290.91 303.55 3,768 3,766 12.95 10,486 2004-05 70 20% 1,063 485.02 224.55 233.29 2,272 2,316 10.12 9,270 2003-04

Executive
Staff

1,525
1,110

1,242
913

1,143
796

949
740

895
686

. Beximco Pharmaceuticals Ltd (BPL) is a leading manufacturer of pharmaceutical formulations in Bangladesh.

. The company is the largest exporter of pharmaceuticals in the country

. State-of-the-art manufacturing facilities are certified by global regulatory . The company is consistently building upon its portfolio and currently producing more than 400 products in different dosage forms . contract manufacturing experience with global MNCs, . Skilled manpower and proven formulation capabilities . Building a visible and growing presence across the continents offering high quality at the most affordable cost.

Establishment Key Company Information Country Status

:: 1976 :: Bangladesh :: Public Limited Company

Commercial Production :: 1980 Business Lines :: Manufacturing and marketing of pharmaceutical Finished Formulation Products Authorized Capital (Taka) :: 9,100 million

Paid-up Capital (Taka)

Number of Employees

:: 2517.6 million
:: 2,507

Number of Shareholders :: Around 93,000

Allergic Disorders Analgesics & Antipyretic Product Range: Anti-Infectives Cough & Cold Endocrine & Diabetes

Gastrointestinal
Intravenous fluids Musculoskeletal

Product Range:

Strength

Diversification:
- lies in its diversified products and dosage forms. - producing solid products like tablets and capsules liquid products like syrup, suspension and solution, as well as semisolid products like cream and ointment. Achievement of national export trophy: Achievement of National Export Trophy (Gold) as the first pharmaceutical company of the country.

R&D
- continuously searching for the next treatment advancements. - portfolio features a range of high-quality, effective products.

- This product portfolio, combined with the steady stream of promising new products
in development, is one of the many reasons BPL is among the nations leading pharmaceutical companies.

Technology
- Keeping pace with the advanced world Technology carries the promise of tomorrow. - Ensure highest-possible quality at every stage of manufacturing and quality control.

Portfolio
Portfolio can be defined as the combination of related items to meet some goals or objectives. Therefore, portfolio of securities refers to combination of securities to minimize risk. However, some portfolios are formed to maximize returns given a level of risk. For our analysis we make a portfolio with equal weight of the above four stocks (BRAC Bank Ltd, The City Bank Ltd., Square

Annual Return
BRAC Bank City Bank Annual Return 22.47% 54.55% Square Pharma 50.48% Beximco Pharma 64.15%

Variance Standard Deviation

0.029610268 0.036659468 0.035049735 0.340983103

59.61%

66.33%

60.85%

63.66%

Average Return
Geometric mean of the portfolio return is 114.41% where Three months treasury bill return around 9% and Fixed Deposit standard rate of interest is 12% Standard deviation from 59.61% TO 639.66% SO the market is very volatile.

Correlation
Correlation BRAC Bank BRAC Bank City Bank Square Pharma 1.00 (0.25) 0.33 1.00 0.04 1.00 City Bank Square Pharma Beximco Pharma

Beximco Pharma

0.48

(0.04)

0.38

1.00

Conclusion
The market is volatile. Rate of returns are high with high standard deviation. The portfolio will help to reduce risks.