Equity Report on ACI
Equity Report on ACI
ACI Limited is one of the largest business conglomerates in Bangladesh tracking a 5Y revenue CAGR of 16.3%; the company has 63.92% of free float market capitalization up to May 2024. The consolidated revenue of ACI for the year ended 2023 was BDT 115 billion which was 19.45% higher than the previous year of 2022. Majority of the revenue comes from the Pharmaceutical segment. In the last year that contributed 47.4% of total revenue in 2023. With slight change of production cost base, the consolidated gross profit margin reckoned to 22.43% in the reported year compared to 24.70% YoY. In the last year, the consolidated operating profit was BDT 6.1billion. The earnings growth of the company is deemed volatile that is clearly observable in the charts below. In 2023, the company has significant earnings growth by 104% YoY.
The company has 15 subsidiaries and associates with 3 joint venture. ACI launching contemporary products in various segments like Health Care, FMCG (First Moving Consumer Goods), Agriculture, Retail chain, Transport etc.
ACI Motor has the highest revenue growth in the last five years stated at 27%(CAGR), whereas net profit CAGR (5Y) stated at 18.4% though in the last year profit growth decline due to adverse macro-economic situation in the country.
ACI Foods achieved a healthy growth rate of 26% over the year with its innovative marketing initiatives, timely procurement proactive strategies.
ACI Premiaflex Plastics has grown by 20.2% over the five years (CAGR) and holds 87.3% share in the company. In the last year, the company revenue has grown up by 13.8%.
ACI Agrolonk Ltd. Achieved 20.2% revenue growth in the last five years and holds 90% share in the company. This company provides raw, blanched and cooked shrimp The business has shown 9% growth over the previous year despite international market downfall, high freight cost due to port congestion, raw and packaging materials price hike.
ACI Healthcare Ltd has a significant revenue growth by 68.1% over the previous year and five years CAGR shows 1.9%.
The average revenue growth of ACI Limited sustained 16.3% despite macro-economic affecting consumer sentiment. Last year in FY’23 the revenue increased by19.5% as against the previous year in FY’22. Gross profit margin came under pressure and decreased slightly by 2.3% from the previous year due to increased COGS. Net profit margin have shown negative as company’s interest expense and tax expense eroded it’s bottom line.
Total assets of this company also increased due to expanding various backward integration initiatives and various management strategies to increase revenue. The company has high degree of debt which may increase it’s financial risk.
ACI Limited made its stock market debut in Pharmaceutical & Chemical sector in Bangladesh. The Company is listed with Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited (CSE). Its paid up capital is BDT762.06mn. The company has 48.7mn free float share in DSE. In the case of shareholding composition 36.07% holding held with sponsor and director, while general investors have only 22.68% as of March,2024 and increased by 0.02%. Institute holding decreased by 0.09%. ACI occupied 11th position (BDT10,554mn) in the pharmaceutical market capital.
ACI’s dividend payout ratio has been steadily declining over the years. The company through its good corporate governance attain the investors’ confidence which demonstrates in it’s stock performance over long horizon. The current market price per share of ACI Limited is BDT138.5 (7th July’24) which implies the share is undervalued compared to it’s intrinsic value of BDT288. If the company sustains it’s growth and the industries are likely to expand more which will trigger more business potential for the company. So, it can be presuming that the investors may get a return of 108% from the investing this share at the current price level.
