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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)



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



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