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Bangladesh: Free float of 3 companies to rise as BSEC aims to increase liquidity

  • Regulator asks sponsors of Berger, Walton, and ICB to sell their stakes to ensure 10% free float shares within a year

  • Berger, Walton and ICB need to sell 2.3mn, 27.4mn, and 54.9mn shares respectively to comply with BSEC’s direction.

  • Maximum 1% of the total outstanding share can be sold in the market per month.

IDLC Securities
14 September 2021
Published byIDLC Securities

According to the reports, Bangladesh Security and Exchange Commission (BSEC) asked the sponsors of the three companies - Berger Paints Bangladesh Limited, Walton Hi-Tech Industries Limited, Investment Corporation of Bangladesh (ICB) - to sell their stakes to ensure 10% free float shares within a year. One major purpose of this directive is to conform to the public issue rules, which the regulator amended earlier to make it mandatory for companies to offload at least 10% shares. The goal of the amendment was to increase the liquidity of low free-float stocks.

The free-float shares of Berger, Walton and ICB stands at 5.0%, 1.0%, 3.2% of total outstanding shares respectively. It suggests that the sponsors of Berger, Walton and ICB need to sell 2.3mn, 27.4mn, and 54.9mn shares respectively in the next 12 months. The sponsors of these companies can sell a maximum of 1% of the total outstanding share in the market per month and they have to update the regulator at the end of each month until they completely comply with the directive.

A brief on these companies is given below.

Berger Paints Bangladesh Limited

  • Leading paint and coating manufacturing and distribution company in Bangladesh with a 48% market share.

  • 95% of the shares are held by Berger India through J & N Investments (Asia) Limited.

  • Revenue USD198.6mn, NPAT USD31.7mn, MCAP USD983.8mn, NAV USD127.0mn

  • FY15-21 revenue CAGR 7.3%, NPAT CAGR 14.6%, LTM P/E 24.4x, dividend yield 1.6%.

Walton Hi-Tech Industries Limited

  • Leading manufacturer of consumer durables, home appliances and electronic appliances in Bangladesh. It has a 70%+ market share in the refrigerator, 24% market share in TV, 20% in residential AC, 4% market share in home appliances, 5% market share in electronic appliances.

  • A family business where 99% of the stocks belong to Alam brothers (the founders) and their children.  

  • Revenue USD823.9mn, NPAT USD192.9mn, MCAP USD4,803.7mn, NAV USD1,110.5mn.

  • FY16-21 revenue CAGR 21.4%, NPAT CAGR 21.4%, LTM P/E 24.9x, dividend yield 1.5%.

Investment Corporation of Bangladesh (ICB)

  • The primary activity of ICB is to invest in the capital market of Bangladesh.

  • ICB is owned by the Government of Bangladesh and other government entities such as Bangladesh Development Bank, 6 government commercial banks, and Sadharan Bima Corporation (govt. owned general insurance company).

  • Revenue USD70.5mn, NPAT USD24.1mn, MCAP USD1,229.6mn, NAV USD520.0mn.

  • LTM P/E 51.0x, P/B 2.4x, dividend yield 0.4%.