Grameenphone Limited

Market Profile Valuation Date: 21/8/2017 Recommendation: BUY Stock Exchange: DSE
Market Category A
Current Price: BDT 391.90 Target Price: BDT 422.53 Industry:
Closing Price BDT 391.90 Telecommunication
52 week's BDT 260 - Ticker: GP Upside: 7.82%
moving range 394.80
Market Cap BDT GP: Go beyond
(mn) 528642.459
Shares 1,350,300,022 We issue a BUY recommendation on Grameenphone Limited (GP)
Outstanding with a one-year target price of BDT 422.53 using the Discounted
Beta 0.93033987
Enterprise Value 699,885.96 Free Cash Flow to Firm Method and relative valuation methods.
(mn) This offers a 7.82% upside from its closing price of BDT 391.90 on
Source: DSE website & Group Analysis
August 21, 2017. The intrinsic price based on FCF method is BDT
Valuation Snapshot:
Methodology Weight Price ( TK) 502.28 per share. We have used South Asian mobile operator
FCF 0.5 502.28 companies as the proxy of the peer group in relative valuation, as
EV/EBITDA 0.25 301.93
P/E 0.25 383.63 only two companies is listed in telecommunication industry in
Target Price 422.53
Bangladesh.
Source: DSE website & Group Analysis

Revenue Drivers:
The basic two revenue driver for GP are Voice calls; data and other value
added service. Average revenue per user (ARPU) growth is fundamental
factor here.
Key Risks:
The key risks to our target include: upcoming 4G Auction, increased
platform competition, potential legal and regulatory restrictions, and
uncertain management succession plans.

Key Financials and Ratios 2016 A 2017 2018 2019 2020 2021
Total Revenue 114862160 121481998 128679568 136198921 145453843 154299878
YoY Revenue Growth 9.65% 5.76% 5.92% 5.84% 6.80% 6.08%
Current ratio 0.16 0.28 0.30 0.33 0.40 0.44
Quick ratio 0.15 0.27 0.29 0.32 0.39 0.43
Operating profit margin 36.19% 35.68% 35.49% 35.72% 35.67% 35.75%
Pretax margin 33.24% 36.02% 35.93% 35.94% 35.87% 35.98%
Net profit margin 19.61% 19.81% 19.55% 20.25% 20.17% 20.22%
ROA 17.26% 16.61% 16.79% 17.90% 17.88% 18.06%
ROE 67.10% 75.24% 81.24% 88.40% 93.38% 98.50%
EPS 16.68 17.82 18.63 20.42 21.73 23.10