Relative valuation Model Summary 2022

Relative valuation Model
Relative valuation model serves the investors as a tool to determine a target company’s value
and to compare with that of the competitors and justify whether it is undervalued or
overvalued. It provides a certain standard to take an investment decision or evaluate a
company. Here, AMCL is our main concern and it belongs to Food and Allied industry and
we have taken Olympic Industries Ltd, FU-Wang Foods Ltd, Apex Food Ltd and Rangpur
Dairy & Food product limited; as these companies are the main peers and we have conducted
this valuation by using P/E ratio, Normalized P/E ratio, P/BV ratio, PEG ratio and P/Sales
ratio.
Scenario of AMCL
Based on previous years’ data; from 2011 to 2019, AMCL’s revenue had a soaring trend
which started with 1,316,345,576, had a growth of more than double and lastly ended with
2,821,830,393.
2011 2012 2013 2014 2015 2016 2017 2018 2019
-
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
Net Sales movement trend
This graph is presenting a continuous
rise in net sales in the last 9
years.Moreover, EBIT, EBT and Net
profit also had a rising tendency but
the portion of net profit is far less
than the turnover due to incremental
expenses year after year.
Till 2015, it had a smooth net profit
but from the next year, the company
faced little hurdles to continue the
previous standard, again the condition started to change, appeared with a satisfactory trend.
2011 2012 2013 2014 2015 2016 2017 2018 2019
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
Net Profit Movement trend

Trailing P/E ratio provides a proper insight to investors that how much they are willing to pay
and it is solely based on past earnings of the company. On the mirror side, to visualize the
future value of the stock, inventors are tend to use Leading P/E ratio that supports projected
earnings which seems to biased sometimes as the future is uncertain and more to exposed to
unforeseen contingencies.
Currently, the trending
share price is TK 241.50
and EPS of 2019 was
7.30. So the Trailing P/E
ratio and forward P/E
ratio is respectively 33.07
and 31.27.This means
investors will pay TK
33.07 for every one TK
increase in earnings per
share and the share is
trading at 33.07 times
earnings. Again, forward P/E ratio is calculated to ensure the future growth. Here, we have
got the ratio of 31.27 in 2019, which is lower than the current ratio depicts that the investors
are expecting higher earnings in future. Besides, we have got the justified P/E ratio, which is
lower than the forward P/E ratio implies that the stock is overvalued. Normalized P/E ratio
considers cyclical changes in the company’s operation and the impact of it on the operational
performance whilst PEG ratio takes into account the earnings growth rate and here the ratio is
149.42.
Current Price
0
50
100
150
200
250
300
0
P/Bv ratio is 3.04x
The company’s P/BV ratio is 3.04, ROE of 2019 is 9.43% and cost of equity is 9.00%. P/BV
ratio serves the most realistic view of the company’s value. A high P/B and Low ROE is not
acceptable. Actually, discrepancies between ROE and P/BV gives a negative sign to investors
as an overvalued stock. Here, both ROE and Payout ratio had a declining view, the adjusted
1
-
50.00
100.00
150.00
200.00
250.00
300.00
241.50
7.30
Trailing P/E ratio 33.07x

average ROE is 10.82%, adjusted average Payout ratio is 46.37% and adjusted average
growth rate is 5.76%.
Current Price
0
50
100
150
200
250
300
350
400
0
P/Sales ratio 0.68x
However, in 30th June, 2019; Current Sales per share is 352.73, so the P/Sales ratio is 0.68
investors are paying less than one, every increase in sales. Low P/S ratio can be result of
undervaluation or also indicates low level sales.
Scenario of Olympic Industries Ltd
2011 2012 2013 2014 2015 2016 2017 2018 2019
-
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
14,000,000,000
16,000,000,000
Sales movement trend
The graph is portraying an uptick trend in the sales of Olympic where in 2016; there was a
peak in sales, though next year it dropped a bit, afterwards the situation changed.

2011 2012 2013 2014 2015 2016 2017 2018 2019
-
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
1,600,000,000
1,800,000,000
2,000,000,000
Net Profit Movement Trend
Over the span of time, net profit also increased coping with revenue. In 2011, it was
256,212,992, during the peak, it was 1,625,663,229 and at last the amount was
1,871,821,560. This company gives dividend both in stock and in cash and the number of
outstanding shares is volatile. In 2019, the number of outstanding share is 199,938,886.
The market price of the stock is 236.30
and Trailing P/E Ratio is 25.24 means
Investors paid TK 25.24 per
earnings;whilst the Leading P/E ratio is
20.77 which is lower than the trailing
P/E ratiomeans they are expecting
higher earnings from the company in
future. Again, Normalized P/E Ratio is
15.97 and the PEG Ratio is74.14. PEG
ratio considers earnings growth rate and
provides a proper guidance.
During these 9 years, the company
experienced a severe volatility in ROE and it reduced significantly. The highest ROE was
75.37% which was in 2015. In 2019, Olympics’ ROE was 27.69% while the average ROE
was 45.60%, Dividend payout ratio 51.27%, Growth Rate was 13.49% and adjusted average
growth rate was 21.54%.
P/BV ratio compares the market
value to book value. Here, market
share price represents the market
value. High P/BV means the stock
is overvalued.
1
-
50.00
100.00
150.00
200.00
250.00 236.30
99.36
Trailing P/E ratio is 25.24x
Current Price EPS
Current Price
0
50
100
150
200
250
0
P/Bv RAtio is 6.55x

Lastly, the Current Sales per share was 68.69 and P/Sales Ratio was 3.44 in 2019. The higher
the p/sales ratio the more overvalued it is.
The graph is presenting that the investors paid 3.44
times the sales per share. Lower P/Sales ratio is more
attractive to the investors as they are expecting to
provide higher return in future.
Scenario of FU-Wang Foods Ltd
2011 2012 2013 2014 2015 2016 2017 2018 2019
0
200000000
400000000
600000000
800000000
1000000000
1200000000
Sales Movement Trend
FU-Wang Foods Ltd earned smooth revenue till 2016, but after it faced a rough time and in
2019, it earned TK 981,860,152 revenue more than 2011which was 709,168,568.
Current Price
0
50
100
150
200
250
0
P/Sales ratio is 3.44x

2011 2012 2013 2014 2015 2016 2017 2018 2019
0
20000000
40000000
60000000
80000000
100000000
120000000
Net Profit Movement Trend
This company experienced contraction till 2014, in 2015, the net profit reached to 110,054,185
from 59,693,789, but exactly the next year it again dropped to 87,583,465 and in 2019, situation
started to change as the net profit was 88,176,809.
In 2019, No of outstanding shares was 110839284, EPS was 0.80 and ROE was 7.04%.
1
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
15.70
1.05
P/E ratio is 19.74x
Current Price EPS
Currently, this company’s share is trading at 15.70. Trailing P/E Ratio was19.74 means the
investors paid TK19.74 for every increase in earnings. But, Leading P/E ratio is 19.85 which
lower than trailing one, which means investors are expecting decrease in earnings.
Moreover,Normalized P/E Ratio is 0.95,Justified Trailing P/E ratio is 10.89 and Justified
Leading P/E ratio is 10.95, as the justified P/E ratio is less than forward P/E ratio, we can say
that the stock is overvalued.

Current Price
0
2
4
6
8
10
12
14
16
18
0
p/bv ratio is 1.34x
In 2019, equity was 1,297,524,256, growth rate was negative and the payout ratio was more
than hundred and Current BV of equity is 11.71. PEG ratio in 2019 was -162.42, which
means the earnings growth had a decreasing tendency. Moreover, a lower p/B ratio indicates
towards undervaluation or operationally inefficient. P/Bv ratio is 1.34 and Justified P/Bv ratio
is 0.91, as the justified one lower than the actual, the company is overvalued.
Current Price
0
2
4
6
8
10
12
14
16
18
0
P/Sales ratio is 1.77x
Current Sales per share is 8.86 and P/Sales Ratio is 1.77 means investors paid TK 1.77 for
every increase in sales per share.

Scenario of Apex Food Limited
2011 2012 2013 2014 2015 2016 2017 2018 2019
0
500000000
1000000000
1500000000
2000000000
2500000000
3000000000
3500000000
4000000000
4500000000
Sales Movement Trend
From 2011, a swift peak raised the revenue to 3,933,346,104 in 2012, then it dropped to
3,305,717,280; next year, it rose to 3,844,681,256 and from then it had a sharp decline which
made the turnover to 1,712,669,526.
2011 2012 2013 2014 2015 2016 2017 2018 2019
-20000000
0
20000000
40000000
60000000
80000000
100000000
Net Profit Movement Trend
In addition, the net income is presenting that the company was not performing good in its
operation. Compared to sales, there was severe volatility in net income. In 2015, it was
84,842,534 which rose from 17,040,575, but then declined to -13,228,582. After 2016, it
successfully managed the net profit of 11,811,047 in 2019.

1
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
174.60
2.07
Trailing p/e ratio is 84.30x
Current Price EPS
However, No. of Shares Outstanding is 5702400 and EPS was2.07 in 2019. The market price
of the stock is 174.60, Trailing P/E Ratio and Leading P/E ratio was respectively 84.30 and
83.10. As the leading P/E ratio was less than trailing P/E ratio, it points that the investors are
expecting higher earnings in future. Moreover, Justified Trailing P/E ratio was 7.82 and
Justified Leading P/E ratio was 7.71 and Normalized P/E Ratio Low justified P/E ratio than
forward P/E ratio indicates overvaluation.
Moreover, The Growth Rate was 0.05% and the adjusted average growth rate was 1.44% so
PEG Ratio was 276.58. Higher ratio indicates overvaluation.
Current Price
0
20
40
60
80
100
120
140
160
180
200
0
p/bv ratio is 1.40x
Current BV of equity was 124.30, ROE was 1.58%, RR was 3.44%, and Payout Ratio was
96.56% in 2019. So the P/Bv ratio was 1.40 and Justified P/Bv ratio was 0.23. The company
is overvalued as the justified P/BV ratio is lower than the actual one.

Current Price
0
50
100
150
200
250
300
350
0
P/Sales ratio is 0.58x
Current Sales per share was 300.34 and P/Sales Ratio was 0.58 means the investors paid less
than one for every increase in sales per share.
Scenario of Rangpur Dairy & Food product limited
2013 2014 2015 2016 2017 2018 2019
0
100000000
200000000
300000000
400000000
500000000
600000000
700000000
800000000
Sales Movement Trend
Rangpur dairy had an upward trend in sales after 2014, in 2015 it reached to 693,232,596 and
then it started to decrease again and ended to 607,572,995 in 2019.

2013 2014 2015 2016 2017 2018 2019
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
Net Profit Movement Trend
Net profit rose from 41,047,314 in 2014 to 61,708,051 in 2015, after the rising to the tip, it
faced a smooth decline till 2018 which was 25,687,228 and at the end, it managed to earn
31,725,993 in 2019.
However, No. of Shares Outstanding is 68871264, paid dividend in stock, EPS was 0.46and
payout ratio was more than hundred.
1
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00 14.60
0.46
Trailing P/E ratio is 31.69x
Current Price EPS
Current share price is 14.60; Trailing P/E Ratio was 31.69 and Leading P/E ratio was 31.40.
Hence, leading ratio is less than trailing one, it depicts that the investors have high earnings
expectations in future. Moreover, Justified Trailing P/E ratio was 12.73, Justified Leading
P/E ratio was 12.61 and Normalized P/E Ratio was 0.64. The stock is overvalued as the
forward P/E ratio is higher than the justified.Again, the PEG Ratio is 67.78 and the growth
rate was -0.10% in 2019. Higher PEG ratio is also indicating toward overvaluation.

1
14.45
14.50
14.55
14.60
14.65
14.70
14.75
14.80
14.85
14.90
14.95
P/Bv ratio is 0.98x
ROE was 3.10%, Current BV of equity was 14.90, P/Bv ratio was 0.98; means market price
is 0.98 times the book value and Justified P/Bv ratio was 0.42. As the justified P/BV was less
than actual, that means the company is overvalued.
Current Price
0
2
4
6
8
10
12
14
16
0
p/sales ratio is 1.65x
Current Sales per share was 8.82 and P/Sales Ratio was 1.65 means investors paid 1.65 for
every increase in sales. The lower is the ratio, the higher is the undervaluation.

Relative valuation
Particulars P/E ratio
Normalized P/E
ratio P/Bv ratio PEG ratio P/Sales ratio
AMCL 33.07 8.60 3.04 149.42 0.68
Olympic 25.24 15.97 6.55 74.14 3.44
FU Wang 19.74 0.95 1.34 1.77
Appex Food 84.30 3.98 1.40 276.58 0.58
RD Food 31.69 0.64 0.98 67.78 1.65
Total 194.04 30.14 13.31 567.91 8.13
Average 38.81 6.03 2.66 141.98 1.63
Standard Deviation 25.98 6.41 2.31 97.09 1.15
Acceptable minimum
value 12.82 0.000 0.35 44.89 0.48
Acceptable maximum
value 64.79 12.44 4.97 239.07 2.78
Comment Undervalued Overvalued
Overvalue
d
Fairly
Valued Undervalued
Overall Undervalued
Accepability Acceptable Acceptable Acceptable Acceptable Acceptable
Overall Acceptable
This is the overall summary of the ratios. According to P/E ratio and P/Sales ratio, the stock
of AMCL is undervalued as both the P/E ratio and P/Sales ratio are less than the average
38.81 and 1.63. Again, According to Normalized P/E ratio and P/BV ratio, the company is
overvalued as both of these are greater than the average respectively 6.03 and 2.66 while
actually it values are 8.60 and 3.04. Lastly, according to PEG ratio the company’s stock is
fairly valued as the value is within the range of 100%-110% of average.
So, based on this valuation, the conclusion we should accept AMCL as it currently
undervalued and there is a possibility that the price will rise in near future and now we should
buy the stock to get a profitable return in future.