Current Price (BDT): 55.50

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1 Company Fundamentals Ticker SHASHADNIM Market Cap (BDT mn) 6, Market weight 0.16% Paid-up Capital 1,195.6 No. of Share Outstanding (in mn) Free-float Shares (Inst.+For.+Public) 53.5% 3 Months Avg. Daily Turnover (BDT mn) Months Avg. Daily Volume 232,019 3 Months Return -11.4% 52-week price range (BDT) Sector P/E 17.4 Financial Information (BDT mn): (Q2,An) Net Sales 5,635 6,257 7,070 Gross Profit 1,095 1,208 1,268 EBITDA 1,200 1,257 1,281 Operating Profit 940 1,016 1,044 Profit After Tax Total Assets 9,701 10,108 12,041 Total Debt 3,497 3,898 5,429 Total Equity 5,257 5,375 5,694 Retained Earnings 1,808 1,924 2,166 Cash 1, Dividend (C/B)% 25/0(18M) 25/6 n/a Margin: Gross Profit 19.4% 19.3% 17.9% EBITDA 21.3% 20.1% 18.1% Operating Profit 16.7% 16.2% 14.8% Net Profit 10.0% 9.5% 8.3% Growth: Sales 18.2% 11.0% 13.0% Gross Profit 2.3% 10.4% 5.0% Operating Profit 5.2% 8.1% 2.8% Net Profit 25.5% 5.0% -1.2% Profitability: ROA 5.8% 5.9% 5.3% ROE 10.7% 11.0% 10.6% Leverage: Debt Ratio 36.0% 38.6% 45.1% Debt-Equity 66.5% 72.5% 95.3% Int. Coverage ratio Valuation: Restated EPS (BDT) Restated NAVPS (BDT) P/E (x) P/NAV (x) *Financial Data of has been annualized based on latest Q2, declaration. Company Overview Company Profile Shasha Denims Ltd. (SDL) is a 100% export oriented company that manufactures and exports denim fabrics. Incorporation: 28 October, 1996 Listing Year: CSE (17 January, 2015), DSE (18 February, 2015) Commercial Operation: July, 2000 Factory Location: Savar, Dhaka Key Personnel: Parveen Mahmud FCA (Chairman), Shams Mahmud (Managing Director), Aslam Ahmed Khan FCA (Company Secretary) and Md. Sarwar Hossain ACA (CFO) Shareholding Pattern: Sponsor/ Govt. Institute Foreign Public Director As on Jan 31, % 0.00% 14.23% 4.28% 34.97% As on Jun 30, % 0.00% 15.76% 4.30% 33.43% As on Jun 30, % 0.00% 16.14% 7.97% 29.38% Business Profile SDL delivers backward linkage to the garments unit of textile industry. The denim fibers produced by the company are delivered to export oriented garments company that exports the fabrics in the form of finished products. The existing capacity of the company is 21.6 million yards. Ultimate consumer brands: Marks & Spencer, George, Polo, Next, Tesco, Mexx, Walmart, JC Penny, Tommy, Gap, Lee Hang Fat, Adams, Woolworth, Gulden Pfenning, Li & Fung. Subsidiary summary: Name of the subsidiaries Energies Power Corporation Ltd. (EPCL) Shasha Garments Ltd. (SGL) Shasha Textiles Ltd. Details It was incorporated on 28 December, The Authorized and Paid up capital are BDT 1500 mn and BDT 983.7mn respectively. The principal activity of the company is to generate and supply electricity to National Grid. The capacity of captive power plant is 55MW. The power supply agreement between the company and Bangladesh Power Development Board (BPDB) has been extended for 5 years from 9 February, It is a 100% export-oriented readymade garments producing company that was incorporated on 18 November, The authorized and paid up capital of the company are BDT 50 mn and BDT 15.6 mn respectively. Principal activity of SGL is to produce readymade garments of denims fabrics. It was incorporated on 18 September, Authorized capital and paid up capital are BDT 500 mn and BDT 70 mn respectively. Due to delay of gas connection, the company has not started the commercial operation yet. % of Ownership 99.97% 96.46% 99.57%

2 Revenue Breakdown: Particulars Amount (BDT, mn) % of total Amount (BDT, mn) % of total Export Bill- 4, , SDL Rental Received Energy sale Heavy Furnace Oil Service Charge Export Bill SGL Total 6, , Industry Overview Textile sector of Bangladesh is mainly divided into two major parts- Primary Textile Sector (PTS) and Export-oriented Ready- Made Garments (RMG). RMG is the largest exporting sector in Bangladesh. Bangladesh received 82% of total export earnings from Readymade Garments (Woven and Knitwear). The contribution of RMG in exports is increasing over years which is creating a large opportunity to create global image of Bangladesh. GDP at constant price for is BDT 9,475.4 billion (Source: Bangladesh Bank) in which almost 16% contribution has been made by textile sector. Bangladesh s global market share in clothing has become 6.4% in 2016 according to World Trade Statistical Review 2017 (Source: Dhakatribune) being the second largest exporter of RMG products. The major raw materials for textile industry is cotton and in Bangladesh cotton is mainly imported to meet the raw material demand of textile companies. In recent periods raw cotton price has showed increasing trend Jan-17 Source: macrotrends.net and EBLSL Research In Bangladesh, major portion of raw cotton is imported from India. Cotton consumption in India has increased highly as India is expanding its RMG sector. This is alarming for Bangladesh and Bangladesh will face a dearth of cotton if alternative sources are not found soon (Source: The Daily Star). CIS India AFZ Other Australia United States Feb-17 Mar-17 Price (USD per pound) Apr-17 May-17 Jun-17 Source: Cotlook.com (CIS: Commonwealth Independent States; AFZ: Ajman Free Zone) Jul-17 Aug-17 Sep-17 Oct-17 Total Imports of Cotton by Bangladesh in 2016 (MT) 56,239 87, , , ,400 Nov-17 Dec ,149 For , NBR has reduced the income tax rate for garments and textile exporters to 12% which was 15% in Along with this, source tax has been kept unchanged at 0.70% on RMG exports for and export oriented textile company enjoys 4% cash incentive over total export from Bangladesh Government. Denim Market (Global and Local): The value of global denim market is USD 60 billion. It is estimated that the global Denim market will reach to USD billion by Bangladesh has 30 Denim Mills with investment of around USD 1 billion. The collective production capacity of the mills per year is 435 million yards a year (Source: The Daily Star) and monthly production of Denim in Bangladesh is around 30 million yards (Source: Bangladesh Denim Expo). Bangladesh Denim export is forecasted to reach up to USD 7 billion by the end of Bangladeshi entrepreneurs supply denim products to major global retailers including Levi's, Diesel, G-Star RAW, H&M, Uniqlo, Tesco, Wrangler, s.oliver, Hugo Boss, Walmart, and Gap. Annually 2.1 billion pieces of denim are sold globally from Bangladesh. Bangladesh has overtaken China and has become the largest denim supplier to European Union. Bangladesh holds around 21.80% market share in EU and around 12.03% market share in US market, another major global market. Bangladesh has become the third largest supplier of Denim products to US. Textile Sector in Bangladesh Capital Market: There are 48 textile companies in capital market where number of Denim manufacturing companies is 4. Company Paid up (mn) Rev (mn) NPAT (mn) ARGONDENIM 1,200 3, ENVOYTEX 1,644 7, PDL 1,271 2, SHASHADNIM 1,128 7, *Revenue, NPAT and EPS have been shown according to latest Q2, declaration. Financial Performance of Parent and Subsidiaries Latest Yearly Performance Shasha Denims Ltd. (Parent): During , the company has experienced YoY 1.78% topline de-growth. The company has posted Gross profit margin (GPM) 19.2%, Operating profit margin (OPM) 15.7% and Net profit margin (NPM) 10.6% while they were 18.2%, 15.4% and 10.9% respectively during same period of Financial expense of the company decreased by BDT 2mn and financial income decreased by BDT 57.1 million. Financial income of the company is mainly generated by the interest income on FDR which was produced using IPO fund. Over the utilization of IPO fund, amount of FDR is decreasing and so do the financial income. Though total debt of the company has increased by BDT 8.2 million, long term debt has been paid fully in Energies Power Corporation Ltd. (EPCL): During , the company has recorded YoY 76.6% topline growth. The company has posted Gross profit margin (GPM) 24.4%, Operating profit margin (OPM) 21.8% and Net profit margin (NPM) 6.9% while they were 36.5%, 33.4% and 9.5% respectively during same period of Financial expense of the company has increased by BDT 16.1 million where total debt has decreased by BDT 9.3 million. Shasha Garments Ltd. (SGL): During , the company has recorded YoY 28.7% topline growth. The company has posted Gross profit margin (GPM) 9.4%, Operating profit margin (OPM) 8.4% and Net profit margin (NPM) 6.9% while they were 5.1%, EPS P/E

3 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec Equity Note on Shasha Denims Ltd. Date: 15 th February, % and 2.4% respectively during same period of Financial expense of the company has increased by BDT 1.42 million where short term debt has decreased by BDT 3.6 million. The company does not have any long term loan. Latest Consolidated Financial Performance (Quarterly) According to recent Q2, declaration, the company has posted YoY 23.4% topline growth. COGS of the company has increased to 82.4% as percentage of revenue while it was 79.9% in the same quarter of The company recorded OPM and NPM as 14.3% and 8.0% respectively while they were 17.0% and 10.2% respectively in the same period of previous year. Financial expense of the company increased by BDT 14.9 million and financial income decreased by BDT 15.4 million. Though total debt of the company has increased by BDT 1,606 million, long term debt has decreased by BDT 120 million. 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% Profitability Margins of SHASHADNIM GP Margin OP Margin PBT Margin NPAT Margin Four Year's EPS (BDT) EPS Investment Insight Company Positive The company is implementing an expansion project using its IPO fund. After the completion of the project, capacity of the company will increase to 23.8 million yards (Current capacity is 21.6 million yards). It is expected that the project will be completed by March, To source gas and electricity, SDL is independent as it possesses own gas generator (2,980KW capacity) and captive power plant (55 MW capacity) for electricity generation maintained by the subsidiary EPCL. It has provided competitive advantage to the company ensuring smooth production process considering recent power supply shortage by Govt Quarterly EPS Trend (BDT Investment Concern The company is showing declining trend in profitability margins. GPM, OPM and NPM of the company were 17.9%, 14.8% and 8.3% respectively in Q2, where they were 19.3%, 16.2% and 9.5% in Price of basic yarn is following increasing trend in global market. If this trend continues, it will affect the cost structure of the company. The company imports its major raw materials and exports product. As a result the company is exposed to exchange rate risk. Debt level of the company is increasing over years. As a result financial expense is increasing correspondingly which is affecting the profitability margins and thus the bottomline growth of the company. According to Q1 of , debt to equity ratio of the company was 73.5% while it was 72.5% in NBR is claiming to impose 15% VAT on the port services provided for all shipments of goods (Source: Daily Star). Imposition of such VAT will affect the import and export cost and thus the cost structure of company like Shasha Denims Ltd. that imports raw materials and exports product. The company couldn t meet the proposed deadline (mentioned duration in prospectus) for the completion of the IPO project. The company has revised the deadline for civil construction from 18 months to 39 months in its 20 th AGM Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Price-Volume Movement of SHASHADNIM VOLUME CLOSEP*

4 Pricing Based on Relative Valuation: EPS Multiple Value (BDT) Peer Forward P/E Sector Forward P/E NAVPS Multiple Value (BDT) Sector P/NAVPS Sensitivity Analysis 10 PE PE PE PE Concluding Remarks: Though the company is facing decreasing trend in its profitability margin, it is expected that the company will be able to bring positive turn after implementation of the IPO project. Source: Annual Reports, DSE Website, The Daily Sun, Dhaka Tribune, Company website and EBLSL Research Statement of Consolidated Income Particulars Year Year Year Net Turnover 5,634,908,505 6,256,605,210 7,070,497,066 Cost of sales 4,540,378,151 5,048,773,797 5,802,228,232 GROSS PROFIT 1,094,530,354 1,207,831,413 1,268,268,834 Other Operating Income (125,119) 5,544,062 14,433,734 Total Operating Income 1,094,405,235 1,213,375,475 1,282,702,568 Operating Expenses: 154,252, ,435, ,798,410 Administrative Expense 115,970, ,002, ,644,458 Selling and Dist. Expenses 38,282,204 45,433,320 45,153,952 PROFIT FROM OPERATIONS 940,152,790 1,015,940,022 1,043,904,158 Financial Expenses 368,355, ,801, ,694,414 Finance Income 89,915,542 32,845,521 14,152,528 PROFIT BEFORE WPPF 661,713, ,984, ,362,272 Allocation for WPPF 188, ,746 PROFIT BEFORE TAX 661,713, ,795, ,166,526 Provision for Income Tax 98,286,141 73,213,080 89,591, Provision for Deferred Income Tax (43,117) (180,307) -844,772 PROFIT AFTER TAX FOR THE YEAR 563,470, ,762, ,419,974 EPS *Financial Data of has been annualized based on latest Q2, declaration.

5 Statement of Financial Position Particulars Year Year Year ASSETS: Non-Current Assets: 4,545,834,747 4,660,580,169 5,033,990,941 Property, Plant and Equipment 3,797,320,238 3,740,858,223 3,668,670,768 Capital Work-in-Progress 696,238, ,735,521 1,313,587,839 Intangible Assets, net 3,855,390 3,566,236 3,312,145 Investment in associates 48,420,189 48,420,189 48,420,189 Current Assets: 5,155,228,759 5,447,861,522 7,007,203,808 Inventories 968,055,817 1,299,503,487 2,120,037,643 Accounts Receivables 2,486,151,728 2,475,634,359 3,143,272,450 Interest receivable 4,719,100 1,434,847 0 Advances,Deposits and Prepayments 361,219, ,942, ,126,256 Deposit for Shares 72,334, ,894,998 83,029,720 Material in transit 107,635, ,717,194 84,003,395 Cash and Cash Equivalents 1,155,112, ,733, ,734,344 TOTAL ASSETS 9,701,063,506 10,108,441,691 12,041,194,749 SHAREHOLDERS' EQUITY AND LIABILITIES: Shareholders' Equity: 5,257,355,090 5,375,233,705 5,693,501,074 Share Capital 1,127,876,300 1,127,876,300 1,195,548,870 Share Premium 1,250,000,000 1,250,000,000 1,250,000,000 Share Money Deposit 8,000,000 Revaluation Reserve 873,893, ,893, ,893,122 Retained Earnings/ Revenue Reserve 1,807,586,684 1,924,423,641 2,165,882,575 Non-Controlling Interest 197,998, ,040, ,176,507 Non-Current Liabilities: 1,060,331, ,135, ,937,996 Long Term Loans - Secured 599,481, ,983, ,490,124 Financial Liability 391,600, ,000, ,800,000 Deferred Tax Liability 69,250,565 69,151,836 68,647,872 Current Liabilities: 3,383,376,467 3,739,072,704 5,488,755,679 Short Term Loan 2,864,627,241 3,378,226,781 5,097,211,533 Long Term Loans - Current Portion 33,091,839 8,786,210 Accounts Payable 23,497,753 26,761,567 25,440,184 Liability for Expense 270,639,702 84,863,733 89,946,385 Income Tax Payable 188,062, ,983, ,720,649 IPO Fund Received 3,457,928 3,450,928 3,436,928 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 9,701,063,507 10,108,441,692 12,041,194,749 Net Asset Value (NAV) per share

6 Key Financial Indicators Particulars Year Year Year Liquidity Ratios: Current Ratio Quick Ratio Cash Ratio Operating Efficiency Ratios Inventory Turnover Ratio Receivable Turnover Ratio Operating Cycle (Days) A/C Payable Turnover Ratio Cash Conversion Cycle (Days) Operating Profitability Ratios Gross Profit Margin (GPM) 19.42% 19.30% 17.94% Operating Profit Margin (OPM) 16.68% 16.24% 14.76% Net Profit Margin (NPM) 10.00% 9.46% 8.27% Leverage Ratios Total Debt to Equity 66.52% 72.52% 95.3% Debt to Total Assets 36.05% 38.56% 45.1% Coverage Ratios Times Interest Earned (TIE) Valuation Ratios P/B (price to book) Ratio Book Value Per Share EPS P/E Ratio EV/EBITDA EV/Sales Sales/ Share Growth Rates EPS Growth Rate 25.49% 10.97% -6.53% Sales Growth Rate 18.20% 11.03% 13.01% Gross Profit Growth Rate 2.35% 10.35% 5.00% EBIT Growth Rate 5.21% 8.06% 2.75% Net Income Growth Rate 25.49% 5.02% -1.24% Other Data Stock price- Period End EV 7,068,285,934 12,038,991,138 11,963,240,049 DUPONT ANALYSIS Net Profit AT/Sales 10.00% 9.46% 8.27% Sales/Total Assets 58.09% 61.89% 63.84% ROA 5.81% 5.85% 5.28% Net Profit AT/Total Assets 5.81% 5.85% 5.28% Total Assets/Stockhldrs. Equity ROE 10.72% 11.01% 10.56%

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