DSE: AFTABAUTO

AFTAB AUTOMOBILES LIMITED BLOOMBERG: AFTABA:BD

Company Overview sole distributor of Ashok Leyland, Runner Motors Ltd. is the
Aftab Automobiles Limited (The Company) was incorporated in sole distributor of Eicher Mini Truck, Energypac Power
1967. The Company is mainly a vehicle assembler and bus-body Generation Ltd. is the sole distributor of JAC, Uttara Motors
fabricator. It has been assembling TOYOTA & HINO vehicles for Limited is the sole distributor of Isuzu, Swaraj, Mazda, Suzuki,
Bangladesh market since 1982. The Company is the authorized FAW, Rangs Motors Limited is the sole distributor of Eicher
sole distributor of Indian "Mahindra" brand motor-cycles in Heavy Truck, Mitsubishi FusoTruck.
Bangladesh and started selling of the brand from 2013-14. The
principal activity of the company is assembling of Toyota Land Company Fundamentals
Cruiser soft top/Pick-up, Land Cruiser Prado, Hino Bus, Hino Market Cap (BDT mn) 6,299.3
Mini Bus/Truck Chassis. The Company has a production capacity Market Weight 0.2%
of 2,400 units of vehicles in 3 shifts in Assembling Unit, 336 Free-float (Public +Inst.) 71.6%
units Hino Buses in Body Building Unit and 10,000 units in No. of Shares Outstanding 95.73
Motor Cycle Unit. Navana Batteries Limited (NBL), a fully owned
Paid-up Capital (BDT mn) 957.3
subsidiary company of Aftab Automobiles Limited (AAL) holding
3 Months Average Turnover (BDT mn) 67.9
99.95% share, is manufacturing automotive, industrial and solar
3 Months Return 13.9%
batteries in the plant located at Fouzdarhat, Chittagong. The
Current Price (BDT) 65.5
Company is also holding insignificant portion of shares in
Navana CNG Limited and Navana Real Estate Limited. 52-Week Price Range (BDT) 46.5 - 72.5
Sector Forward P/E 22.7
Revenue breakdown:
2013-14 2014-15 2015-16 2016-17
Capacity (Jul-Dec
Growth Contribution (Sep-Aug) (Sep-Aug) (Sep-Jun)(10m)
Utilization Ann.)
2014- 2015- 2014- 2015- 2014- 2015- Financial Information (BDT mn):
15 16 15 16* 15 16
Sales 2,710 3,459 3,052 3,628
Assembling
unit 14% 18% 30% 13% 53% 59% Gross Profit 706 841 763 869
Body building Operating Profit 552 649 587 650
unit 49% 53% 70% 26% 8% 10% Profit After Tax 384 292 268 271
Assets 7,746 9,259 9,791 9,893
Motor cycle 28% 24% 137% -1% 9% 9%
Navana LT Debt 485 1,369 1,446 1,432
battery n/a n/a 2% -21% 29% 22% Equity 5,039 5,157 5,369 5,404
Div. % (C/B) 17/- 16/- 15/- -/-
The company became enlisted with the DSE and CSE in 1987 Margin:
and 1996 respectively. As on January 2017, around 28.42% of
Gross Profit 26.0% 24.3% 25.0% 24.0%
the shares of the company are held by its sponsors/ directors,
Operating 20.4% 18.8% 19.2% 17.9%
37.90% by the general and rest 33.68% by the institutional
Profit Profit
Pretax 18.2% 11.7% 12.2% 10.3%
investors.
Net Profit 14.2% 8.4% 8.8% 7.5%
Industry Overview Growth:
Sales -18.7% 27.6% 2.9%* --
Commercial vehicle sales are spurred on by economic growth Gross Profit -5.3% 19.1% 5.8%* --
going in hand with the rising demand for the transport of Operating 5.0% 17.4% 7.0%* --
goods. Commercial vehicles are segmented into various classes Profit
Net Profit 13.6% -23.9% 7.2%* --
on the basis of gross vehicles weight and use. Heavy
Profitability:
Commercial Vehicle (HCV) usually contains more than 15,500
ROA 5.0% 3.4% 2.8% 2.8%
Kg of heavy goods. Containers, Tanker Coal, Timber, Edible Oil,
ROE 7.8% 5.7% 5.1% 5.0%
Bitumen, Material Sand, Brick, Stone, Auto Parts, Fertilizers,
Cement Bulk and Bags, Food grains and Woods etc. are carried Leverage:
with HCVs. Medium Commercial Vehicles (MCV) usually Debt Ratio 24.0 33.2% 33.8% 34.0%
contains 7,500 kg to 15,500 kg goods and generally carries Debt-Equity Ratio %
36.9 59.7% 61.7% 62.2%
construction materials- Sand, Brick, Stone etc., Garment Goods, Interest Coverage %
3.6 2.8 2.9 2.3
Fabrics, Cotton, Industrial Raw-Materials, Packaging Products, Ratio
Valuation:
Vegetables and Seeds. Light Commercial Vehicles (LCV) contains Price/Earnings 16.3 21.5 23.4 23.1
3,500 kg- 7,500 kg of light goods and generally carries Price/BV 1.2 1.2 1.2 1.2
Agricultural Goods, Poultry Products, Light Industrial and EPS (BDT) 4.0 3.0 2.8 2.8
Construction Goods, Plastic and Packaging Products etc. NAVPS (BDT) 52.6 53.9 56.1 56.5
Vehicles containing less than 3,500 Kg of goods are classified as * The Company has changed its reporting year from September-August to July-
Small Commercial Vehicles (SCV). June as per provision of Section 9 of the Finance Act, 2015. The growth for 2015-
Among the major vehicle importers in Bangladesh- Nitol Motors 16 is calculated for 10 months over the same period of 2014-15.
Limited is the sole distributor of TATA, IFAD Autos Limited is the

1 March 12, 2017

Investment Positives
5 Years Price Movement (BDT)
180
 The Company is expecting to assemble and fabricate the
following number of units in the next FY 2016-17. 130
Actual Units Expected Units
80
2015-16 2016-17
(10 Months) (12 Months) 30
Assembling Unit 436 550 Feb/12 Feb/13 Feb/14 Feb/15 Feb/16 Feb/17

Body Building Unit 164 200 Source: DSE & ILSL Research

Motor Cycle Unit 2,350 2,500 Profit After Tax (BDT mn)
 Considering the market demand and orders from the
384
customers, the Company is expecting to sell 50 units of 338
292 268 271
Hino new model RN8J completely built up (CBU) luxury air-
conditioned bus in the current financial year.
Investment Negatives
2012-13 2013-14 2014-15 2015-16 2016-17
 Net profit margin of the Company dropped to 7.5% in (Sep-Aug) (Sep-Aug) (Sep-Aug) (Sep-Jun) (Jul-Dec Annu)
2016-17 from 14.2% in 2013-14. This was because of Source: Annual Reports & ILSL Research
increasing finance expenses and decreasing non-operating
income. Debt ratio of the company has increased to 34% Pricing Based on Relative Valuation:
up to December 2016 from 24% in August 2014. Multiple Value (BDT)
 The contribution from the subsidiary is in declining trend Sector Forward P/E 22.7 64.3
because the company could not go up to the expected Peer* Forward P/E 21.9 62.1
level due to discontinuation of NG Rickshaw Batteries Value per Share (average) 63.1
because of government restrictions. However, the *IFADAUTO has been considered as Peer Company as both are operating in the relevant
Company has introduced ‘motorcycle batteries’ in 2014-15 business segment.

that are expected to contribute more in the consolidated Concluding Remark

revenue.
 The Company has significant exposure to country specific
risk as it is engaged in transport business. Any political
turmoil may hamper the turnover as well as profitability of
the Company.
 The business of the Company is completely dependent on
Toyota Motor Corporation for its products/raw materials
for buses and Mahindra & Mahindra Limited for motor
cycles. Termination of the contract between the
companies will cease the operations of the company.
Aftab Automobiles Limited is assembling automobiles in the
private sector of Bangladesh. In its latest half yearly financial
results, the company recorded 18.33% YoY growth in sales and
2.7% YoY negative growth in net profit of the Company
compared to the same period of the previous year. This was
because of increase in operating and finance expense and
decrease in share of profit from associate companies.
Source: Annual Reports, DSE news, Company website, newspaper reports, ILSL Research

ILSL Research Team:

Name Designation Disclaimer: This document has been prepared by International Leasing Securities Limited
(ILSL) for information only of its clients on the basis of the publicly available information in
Rezwana Nasreen Head of Research the market and own research. This document has been prepared for information purpose
only and does not solicit any action based on the material contained herein and should
Towhidul Islam Sr. Research Analyst not be construed as an offer or solicitation to buy or sell or subscribe to any security.
Kawsar Ahmed Research Analyst Neither ILSL nor any of its directors, shareholders, member of the management or
employee represents or warrants expressly or impliedly that the information or data of
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2 March 12, 2017