Source: Research Department, Prime Bank Investment Limited (PBIL). Email: [email protected]
IPO Profile of ADN Telecom Limited
Key Particulars of the IPO
Ticker ADNTEL Face Value (Tk.) 10
Cut Off Price (Tk.) 30 Offer Price per share (Tk.) 27 No. of Share (IPO) (30.6%) 19,791,666 No. of Pre-IPO Share (69.4%) 44,860,000 No. of Post-IPO Share 64,651,666 Issue Size (Offer Price) (Tk) 570,000,000 Pre-IPO Paid-up Capital (TK) 448,600,000 Post-IPO Paid Up(Tk) 646,516,660 Authorized Capital (Tk) 2,000,000,000
No. of Free Float Shares on Debut 13,854,166 Post-IPO EPS (3m, Sep 30, 2019) 0.44 Annualized EPS (12m, 2019-20) 1.76
NAVPs (as on Sep, 2019) 23.85 PE at Tk 27 (Post-IPO) 15.34
Company Overview
ADN Telecom Limited is in the IT and telecommunication
service business providing data, internet packages, IP Te-
lephony services, inter office network systems and video
conferencing system solution to both local and foreign
companies. In addition they also provide including IPVPN,
MPLS, IPLC. ADN Telecom Limited was incorporated in
September 22, 2003 and started their commercial opera-
tion in the same year. The company has range of customers
list extending from local organizations to international
business and government agencies. Some of the renowned
clients of the company includes: Unilever Bangladesh,
Equant Networks Limited , SingTel, Chevron, British Ameri-
can Tobacco, British High Commission in Dhaka, Janata
Bank Ltd, Agrani Bank Ltd etc. Being an IT service provider
most of the company’s raw materials are sourced locally,
their main suppliers include Grameen Phone Ltd, BD Link
Communications Ltd and Summit Communications Lim-
ited. The company also maintains strategic partnerships
with some of the global leaders of telecommunication in-
dustry like Singapore Telecommunications Ltd. (SingTel),
Tata Communications Ltd. Bharti Airtel and Orange Tele-
communications.
The chairman of the company Mr. Asif Mahmood, has over
26 years of experience in the IT and ICT industry of Bang-
ladesh. Along with his various ventures in the IT industry
he is also the chairman of bdnews24 publishing limited
(magazine published by bdnews24.com in partnership
with The New York Times News Service). The managing
director, Henry Hilton, (holds 0.19% Post-IPO share) has
over 21 years of experience in the IT sector, he has previ-
ously worked with companies like Cosmos Group, Heidel-
berg Cement Bangladesh Limited and Agni Systems Limited.
Major Products of the Company
Name of Sponsors and Directors and Key Personnel
Top Private Placement Shareholders
Name Position Post IPO
%
Asif Mahmood Chairman 19.18%
Md. Moinul Islam Director 10.07%
Md. Mahfuz Ali Sohel Director 10.07%
Niaz Ahmed (Savoy Ice
Cream Factory Limited) Director 2.08%
Waqar Ahmad Choudhury
(Vanguard AML ) Director 2.06%
Md. Abu Yousof Zakaria Sponsor 2.64%
Mohammad Ali Sarker Sponsor 2.64%
Mamonoor Rashid Sponsor 2.64%
Henry Hiltion Managing Director 0.19%
Total 51.57%
Internet Service, Data Service, IP (Internet Protocol)
telephony service, telehouse & hosting, equipment Sales,
bulk sms service for digital business.
Name No. of Shares Lock In
City Bank Capital Resources Ltd. 1,933,334 3Yr
SEAF Bangladesh Ventures
LLC.
1,285,832 3Yr
SEAF Bangladesh Ventures
Ltd.
1,286,666 3Yr
GSP Finance Company Ltd. 700,000 3Yr
Digicon Technologies Ltd. 600,000 3Yr
Year 2017-18 2018-19 2019-20
Internet Bandwidth 78% 80% 78%
Network Capacity 76% 78% 78%
Capacity Utilization (Yearly)
Source: Research Department, Prime Bank Investment Limited (PBIL). Email: [email protected]
IPO Profile of ADN Telecom Limited
Operating Profit Margin & Net Profit Margin
Ratio 2018 2017 2016 2015 2014
ROA 8.3% 9.2% 9.0% 6.9% 8.2%
ROE 14.2% 14.6% 15.0% 12.7% 13.5%
Debt-Equity 0.15 0.21 0.23 0.10 0.19
Gross Profit Margin
44.0% 41.9% 39.3% 39.2% 44.1%
Operating Profit Margin
21.9% 21.3% 19.0% 17.5% 25.1%
Net Profit Margin
12.9% 12.8% 12.0% 10.5% 11.7%
Financial Indicators
Revenue During Last Five Financial Years
Implication Schedule of IPO Proceeds
Particulars Amount %
BMRE for infrastructure development 326,660,018 57.31%
Data center setup 93,236,609 16.36%
Loan repayment 120,603,373 21.16%
Estimated IPO expenses 29,500,000 5.17%
Total 570,000,000 100%
Particulars Approximate period of project completion & commercial oper-ation
BMRE for infrastruc-ture Development
The project is expected to be com-
pleted within 12 months of receiv-
ing the IPO fund. Data center setup The data center is planned to
begin operation 12 months after
receiving the IPO fund. Loan repayment The loan amount will be cleared
off within 30 days of subscription.
Use of the Proceeds of IPO
Financing of IPO fund
Particulars % No. of Ordi-
nary Shares
Issue
price
Issue Amount
(Taka)
Eligible
investor
(EI)
EI 50% 9,895,833
10
98,958,330
Mutual
Funds
and CIS
10% 1,979,167 19,791,670
General
public
(GP)
GP 30 % 5,937,500 59,375,000
NRB 10 % 1,979,166 19,791,660
Total 19,791,666 197,916,660
Return on Assets & Return on Equity NPAT & NPAT Growth
10169208297576170
200
400
600
800
1000
1200
20192018201720162015
Revenue (mn)
8.4%
8.3%
9.2%
9.0%6.9%
13.5%14.2%
14.6%15.0%
12.7%
6.5%
7.5%
8.5%
9.5%
10. 5%
11. 5%
12. 5%
13. 5%
14. 5%
15. 5%
20192018201720162015
ROA ROE
17.3%
21.9%
21.3%19.0%
17.5%
12.5%
12.9%
12.8%
12.0%10.5%10. 0%
12. 0%
14. 0%
16. 0%
18. 0%
20. 0%
22. 0%
24. 0%
20192018201720162015
Operating Profit Margin Net Profit Margin
65 88 106 120 1270
20
40
60
80
100
120
140
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
2015 2016 2017 2018 2019
NPAT (mn) YoY NPAT Growth
Source: Research Department, Prime Bank Investment Limited (PBIL). Email: [email protected]
IPO Profile of ADN Telecom Limited
Key Observations
Post IPO total shareholding percentage of the compa-ny’s sponsors and directors would stand at 51.57% .
Between the years 2015 to 2019, ADN Telecom Lim-ited has a CAGR of 13.28% for Revenue and for Net Profit Margin 18.23%
The company has been able to maintain a debt-equity ratio of less 0.25 consistently during the last five fi-nancial year.
Around 40% of the company’s revenue is generated in foreign denominated currency, therefore the company is exposed to a significant exchange rate fluctuation risk.
Although, operating profit margin dipped by around 4% during the last financial year, 2018-19, the compa-ny has been able to maintain able to maintain its NPAT margin steady in comparison to the previous years.
At present there are big players in the IT industry like Agni System Limited, Aamra Technologies Limited etc. providing similar services to ADN Telecom Ltd. with Bangladesh government focusing heavily on the IT sector more competition is expected to come in the future.
The IT industry in Bangladesh is still in it’s early stag-es but as businesses look to increase efficiency and decrease operational expenditure the industry is ex-pected to grow further in the coming years.
ADN Telecom Limited does not have any Holding or Subsidiary Company.
Issue Date of Prospectus: October 03, 2019
Year End: June
Issue Manager: ICB Capital Management Ltd.
Registrar to the Issue: Roots Investment Ltd .
Dividends Declaration
Disclaimer
Market PE 11.74
Sector (IT) PE 18.42
PE – AAMRATECH 10.28
PE – GENEXIL 16.61
Price relative to different prices
Other IPO Details
Period On Debut 6-months 9-months
Portion Initial 50% Next 25% Last 25%
Date 06.01.2020 06.06.2020 06.09.2020
No. of Shares 5,937,500 2,968,750 2,968,750
Lock-in Free Period for EI: (from first day of trade)
This Document/Report has been prepared and issued by Prime
Bank Investment Limited on the basis of the public infor-
mation available in the market, internally developed data and
other sources believed to be reliable. Whilst all reasonable
care has been taken to ensure that the facts and information
stated in the Documents are accurate as on the date men-
tioned herein. . If any person takes any action relying on this
Document, shall be responsible solely by himself/herself/
themselves for the consequences thereof any claim or de-
mand for such consequences shall be rejected outright by PBIL
or by any court of law.
Price 27 30 33 36 39 42
PE 15.3 17.0 18.8 20.5 22.1 23.9
PE relative to other companies
Email: [email protected]
Contact: +8802-48810315-6
CORPORATE OFFICE
Tajwar Center (5th Floor)
House: 34, Road: 19/A, Block: E Banani, Dhaka-1213
Contact Us
Prepared by
Rahat-Ul-Amin Head of Research
Shakawat Hossain Research Analyst
Syed Reazul Haque Research Analyst
Year 2019 2017 2016 2018 2015
Cash (%) 0% Nil Nil 6% Nil
Stock (%) 0% Nil Nil 0% Nil