4 January 2009

200 AT CAPITAL RESEARCH

AT Capital Weekly Update
Key themes in this issue are:

Bangladesh Overview:
th
• On Dec 29 , Bangladesh saw a historically significant election. The Awami League led by
Sheikh Hasina Wajed secured a large parliamentary majority – Out of a total of 300 seats,
the AL won 230 seats on its own (up from 62 in 2001) with another 32 won by its allies
allies. The
Bangladesh Nationalist Party (BNP), more of whose leaders were targets of the interim
government’s anti-corruption
anti corruption drive, was left with only 29 seats (down from 193 in 2001),
Weekly News Update

with another 2 won by its ally, Jamaat-e-Islam.

Jamaat

• The electorate appeared tot resoundingly reject the policies of the 2001
2001-2006 BNP regime in
favour of change. There was a record turnout of youth as well as female voters amid a
participation rate of 85%, one of the highest seen globally and a testament to the vibrancy
of democracy in Bangladesh.

• At the time of writing, there are some encouraging signs that Begum Khaleda Zia and the
losing BNP’s rejection of the legitimacy and fairness of the poll seem to be fading away as
opposed to a return to the confrontational politics of street
street protests seen in the past.

• The DSE saw a strong rally on the back of the election results. Indeed, at -7% in 2008, it
was one of the best performers globally. However, while we expect domestic investment
spending to pick up with a return to democracy, the negative headwinds in the g global
economy still point to the risks of a significant Bangladesh slowdown in 2009. A defensive
stance on Bangladeshi equities is still warranted.

• The National Coal Policy needs to be adopted by the new government ASAP and the Asia
Energy project at Phulbari
Phulbari needs to be approved in order to tackle the energy crisis.

• We also review trends in the Telecoms sector in 2008 and the prospects for the GP IPO
and WIMAX in 2009.

EDITORS Global Overview:

• A barometer of the global nature of the downturns is reflected in o
one of the most open
economies, Singapore, where the government announced on Friday that it was slashing its
Ifty Islam growth forecasts for 2009 to -2% after a 12.5% quarter-on-quarter
quarter estimated fall in gross
Managing Partner domestic product during the last three months of 2008.
ifty.islam@at-capital.com
China is close to technical recession in the manufacturing industry on the basis that their
Asian Tiger Capital Partners

•
Syeed Khan Chinese manufacturing index has now been registering contraction for five consecutive
Partner
syeed.khan@at-capital.com
months. We discuss the impact of a slowdown in the one economy that was expectexpected to
offset the US slowdown.
Jisha Sarwar
Senior Research Associate
jisha.sarwar@at-capital.com
Year!!
Happy New Year

Asian Tiger DSE – One of the best performing market in 2008

Capital Partners
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FTSE 100
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KSE 100

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DGEN

0%
-10%
10% -5.5%
-20%
20%
-30%
30%
-40%
40% -29.4%
-35.4%
-50%
50% -42.1%
42.1%
-60%
60% -50.9%
-70%
70% -60.8% -66.8% -65.4%
4 January 2009 AT CAPITAL RESEARCH
Contents Page

Bangladesh Overview 3
Overwhelming Awami League Victory underlines expectations for change 3
DSE one of the best performing markets in 2008; but 2009 may be more challenging 4
Avoiding Politicization of Energy Policy Decisions critical, especially on Coal 5
Bangladesh Telecoms sector 2008 Review/2009 Outlook 5
Telecoms Review of 2008 5
Telecoms companies hit by VOIP fines 5
Grameenphone IPO, de-railed by shareholder dispute, slimmed down but back on track 5
Three WIMAX licenses auctioned 6
Telecom Prospects for 2009 6
Other Prospective IPOs 7
Telecoms Sector Data Appendix 8

Global Markets Overview 9

Global Manufacturing Downturn Intensifies 9
China Manufacturing Technically in Recession? 9
Week in Review – End-2008 Rally in Commodities and Risk Assets
10

11
Stock Market Weekly
Stock Market News 12

Economics 14
Economics News 15

Sector News 16
Agriculture/ Aviation 16
Banking 17
Healthcare/ Infrastructure & energy 18
Pharmaceuticals/Telecoms/ Textiles/ Tourism 19

_______________________________________________________________________________________
AT Capital Weekly Update 2
4 January 2009 AT CAPITAL RESEARCH
Ifty Islam, Managing Partner
ifty.islam@at-capital.com

Bangladesh Overview
Overwhelming Awami League Victory underlines
expectations for change
The Economist stated in its Jan 2 issue that this year’s
Bangladesh elections “went better than anyone dared hope.”
Indeed, with an extraordinary turnout rate and a well
organized, peaceful and transparent voting system, the
th
country’s first election in seven years on 29 December 2008
was perhaps the most credible one since the country’s
Independence in 1971. The Awami League e Alliance led by
Sheikh Hasina, who was Prime Minister from 1996-2001,
1996
won a grand victory. The League secured a large
parliamentary majority – Out of a total of 300 seats, the AL
won 230 seats on its own (up from 62 in 2001) with another
32 won by its allies. The Bangladesh Nationalist Party (B
(BNP),
more of whose leaders were targets of the interim
government’s anti-corruption
corruption drive, was left with only 29
seats (down from 193 in 2001), with another 2 won by its ally,
Jamaat-e-Islam.
Analyzing the percentage of votes cast in 299 constituencies,
the Election Commission (EC) stated that the turnout is most
likely to exceed 85%, a staggering 10% higher than the
previous record, and the highest in Bangladesh’s history.
According to the secretary
retary to the EC Secretariat In many
constituencies in the rural areas, turnout is between 85 to
90%; in some constituencies the turnout is as high as 94%;
in metropolitan areas, particularly in Dhaka and Chittagong,
the turnout however was lower, but abov
above 70%.
Perhaps it is not such a great surprise that the AL won. Apart
from the general trend of the AL and the BNP alternating in
power since 1991 (BNP was the ruling party from 1991-1996;
1991
AL from 1996-2001;
2001; BNP from 20012001-2006), Sheikh Hasina’s
slogan for “Change” was also well framed at a time when
voters, especially the young and first time voters, were
desperate to see change and improvement. For one one-third of
voters this was their first election; a further 23% voted just
once before, in 2001.

Election 2008 Election 2001

1 2 1 1
2 4
3
Awami League 17 8 6
27 BNP
29 BNP
62 Awami League
Jatiya Party
193 Jamat-e-Islami
230 JSD
Jatiya Party
Workers Party
Independent
Jammat-e-Islami
Jammat

A computerized photo voter list was introduced for the first
time, and 81mn genuine voters were registered. According to
the UNDP, an independent audit of the list by the
Washington-based
based International Foundation for Electoral
Systems (IFES) concluded that the list was compiled with a
“high degree of accuracy,” and no ‘ghost voters’ were found.
Given the catastrophic scale of the defeat for the BNP. There
were naturally fears of the traditional response of mass
protests, general strikes and a boycott of parliament. Begum
Khaleda Zia stated in the immediate aftermath of results that
the general election was stage-managed
managed are not acceptable
to her party. However, the Chief Election Commissioner
(CEC) confirmed that there would be no scope for any
quarter to reject the results of the ninth parliamentary
election. According to him, about 1,500 foreign and 0.2mn

Election Statistics
1991 1996 2001 2008
Bangladesh Nationalist Party (BNP) 140 116 193 29
Bangladesh Awami League 88 146 62 230
Jamaat-E-Islami Bangladesh 18 3 17 2

Jatya Party (Ershad) N/A N/A 14 27

Source: Bangladesh International Observer Network

_______________________________________________________________________________________
AT Capital Weekly Update 3
4 January 2009 AT CAPITAL RESEARCH
local observers are monitoring the whole election process,
and so, it will be impossible for anyone to reject the results. DSE General Index Return (%)
At the time of writing, the prospects for the BNP contesting
the election results through public protests appears to be 120% 103.8%
diminishing. 90.6%
100%
The fact that Hasina has told U.N. election observers after 80%
the elections that her party will work in unison with the
opposition in parliament to strengthen democracy and 60%
develop the nation, is promising.
romising. Furthermore, speaking at
her first post-election
election news conference, Hasina said that she 40%
would share power with the opposition despite winning a 14.4%
massive majority in the election, and was ready to offer a 20%
senior parliamentary post to her bitter political
tical rival, Begum -16.1% -3.6%
- -7.1%
Khaleda Zia. Hasina stated, “As winners, we have to deal
0%
with everything with a sense of forgiveness and -20%
accommodation instead of vengeance, to take the country 2003 2004 2005 2006 2007 2008
forward in cooperation with all irrespective of party affiliation.” -40%
Expectations
ations for the new government are very high – apart As the chart below illustrates, the DSE has been one of the
from hopes that the new administration will move away from best performing stockmarkets in the world in 2008 pm a
the previous 15 years and three democratic governments relative basis when compared to declines of 65% in China,
that was characterized by constant political vendetta, hopes 67% in Vietnam, 51% in India, 75% in Russia and 35% for
are invested in the new leaderr for tackling inflation, poverty, the S&P 500.
energy crisis, climate change, terrorism, and protecting the
economy from any major impact from the global financial

Shaghai Composite
YTD performance of Major Stock Indices
crisis. Starting from businessmen to farmers, the public
expect the AL to demonstrate the changes that tthe party
promised in its manifestos. While talking to The Daily Star,

BSE SENSEX

NIKKEI 225
the AL said one of the first vital indications of 'change' would

VN Index

FTSE 100
S&P 500
KSE 100
be the formation of the cabinet, dropping many of the 'old
faces' and appointing new, honest and competent people in DGEN
charge
rge of various ministries. Other things that need to be
addressed urgently include keeping the ports of economic
facilities free from politicization, encouraging foreign direct 0%
investment, creation of jobs, and appointing competent
people to the energy ministry istry to strengthen the country's -10% -5.5%
energy security. Last but not the least, one of the most
important pre-requisites
requisites for attaining economic growth and -20%
attracting more FDI and investors, is a stable post election
-30%
climate, with minimal protests, strikes and street treet violence. -29.4%
Needless to say, the only way to attain stability will be for the -40% -35.4%
35.4%
opposition party to accept the results, and work in co- co
operation with the ruling party in the best interest of the
-42.1%
-50%
country. UN Secretary-General Ban Ki-Moon Moon stated that a -50.9%
stable post-election
election climate will be vital for the effectiveness -60%
and sustainability of the nation’s democracy. He urged all -60.8%
political parties, irrespective of their performance in the -70% -66.8% -65.4%
elections, to work together in a spirit of dialogue and
compromise, to address ess the challenges facing the nation. However, as the next chart illustrates, the PE ratio of
Such cooperation should include an enhanced role for the Bangladesh at 17.1 times look quite rich relative to many of
opposition in Parliament. its EM peers such as India, Pakistan, China and Russia.
Indeed even the UK stockmarket looks relatively cheap.
DSE one of the best performing markets in 2008; but 2009
may be more challenging Ultimately, a key consideration in assessing the sustainability
of current levels for the DSE comes down to the vulnerability
The DSE ended 2008 down 7.1% after the dramatic 91% 91 of the Bangladesh economy to the global slowdown as much
gain in 2007. However the absolute returns mask a very as strected valuations. On the one hand, there is an
strong performance in the context of the most severe bear expectation that weakk domestic investment spending that
market seen since the great depression amid the global has been held back by the anti-corruption
anti drive of the
financial crisis. caretaker government period is likely to pick up as BD
corporates regain an appetite to invest. But on the other
hand, as we discus in more detail in the Global Mark Markets
section of this issue, the stormclouds for the global economy
continue to darken with the Chinese manufacturing sector
technically in recession and Singapore now expected to
contract by 2% in 2009. On balance, we continue to believe
_______________________________________________________________________________________
AT Capital Weekly Update 4
4 January 2009 AT CAPITAL RESEARCH
the risks for Bangladesh
gladesh growth in 2009 are for a slowdown prices for electricity, gas and fuel towards a level that will
towards 5%. This in turn will depress corporate earnings and encourage
age both energy exploration and energy conservation.
argues for a defensive stance on Bangladesh equities at
current levels. Bangladesh Telecoms sector 2008 Review/2009 Outlook

2008 proved to be a significant year for the Bangladesh

PE Ratio of Different Markets Telecoms sector with three key events: The residual fallout
from the VOIP scandal with fines ines paid by all the major
Telcos; The on-off
off GrameenPhone IPO; the Wimax license
7.9 auctions . The prospective GP issue will likely see other
UK 12.4
4.4 Telecoms operators come to stockmarket so the sector is
Russia 13.0 likely to be of significantly greater focus for stockmarket
14.6 investors and
China 44.3
20.1
USA 20.5 Looking into 2009 and beyond, some key issues facing the
10.0
Pakistan 16.2 sector will be:
10.5
India 28.0 1) The prospective success of the GP IPO;
17.1
Dhaka 23.6 2) Consolidation in Telecoms sector as market-share
market
increasing strategies incurring losses prove increasingly
0 10 20 30 40 50 unsustainable;
3) The
he ability of BD Telecoms operators to persuade the
new government to support reduced SIM card taxes to
Current Beginning of the Year 2008 support increased Mobile penetration in rural areas and
among the poorer segments of society. This will be
critical if Bangladesh is to replicate the Pakistan
Pa mobile
Avoiding Politicization of Energy Policy Decisions critical, subscriber base of around 80 mn;
especially on Coal 4) The scope for Telecoms operators to slow rate of
Average Revenue Per User(ARPU) declines by
As we have highlighted on a number of previous occasions, increased sales of Value Added Services (VAS);
we believe that the newly-elected elected Awami League 5) The battle between Wimax and mainstream Telecoms
government should approve the National Coal Policy In operators via 3G in the battle for data delivery;
particular, it is important to move beyond the rhetoricfrom the
anti-coal lobby within Bangladesh.
ladesh. In the Jan 4 issue of New Telecoms Review of 2008
Age, Professor Anu Muhammad, member secretary on the
National Committee to Protect Oil, Gas, Mineral Resources Telecoms companies hit by VOIP fines
Power and Port stated that the ‘Leaders of the Awami In August, GrameenPhone (GP), the country's biggest cell cell-
League, Workers Party of Bangladesh and Jatiya phone company, was fined Tk 250 crore by the Bangladesh
Samajtantrik
ntrik Dal time and again expressed their solidarity Telecommunications Regulatory Commission (BTRC)
with us in our demand for a coal policy barring open
open-pit mine, providing E1 connectivity to third parties enabling the use of
cancellation of the agreement with Asia Energy and award of Voice over Internet Protocol (VoIP). Earlier in 2007,
offshore blocks to two international oil companies. As they GrameenPhone paid fines worth Tk 168.40 crore for similar
are set to form the government,
overnment, we hope they will meet our offence. The BTRC
TRC also fined CityCell Tk150 crore, AKTEL
demands’. However, any such strategy from the new Tk 145 crore, and Banglalink Tk 125 crore for illegal VoIP
government risks delaying the urgently needed coal trade. VoIP is a technology that allows someone to make
production. The Asia energy project has already done wide- wide voice calls using a broadband internet connection instead of
ranging feasibility studies and is ready to go. Evden then it a regular (or analog) phone line.
would take a minimum of three years, even if the project was
approved tomorrow, to start producing coal. Any fresh Grameenphone IPO, de- de-railed by shareholder dispute,
tenders do not make sense and would inevitably delay the slimmed down but back on track
ability of Bangladesh to egenrate energy from its intrinsic
coal reserves, something hing almost everyone agrees the In July 2008 Grameenphone, finalised its plan to raise $300
economy desperately needs, million (Tk 2,058 crore) -- $ 150 million from the stock market
and the rest through private placement or pre-IPO. The
He also stated that he hoped the new government will proposed IPO was an important event in the evolution of
implement fully the agreement the former BNP-led BNP Bangladesh’s capital markets. Its significance lies not only in
government signed with the committee to bar open-pit
open mining the fact that it is by far the largest proposed issue (at a
in Bangladesh and to expel Asia Energy from Bangladesh proposed USD 300mn of a USD 3.2bn valuation at the time),
commenting that ‘We also demand the new w government but also that:
should cancel the offshore bidding as the existing PSC has a
provision for export of 80 per cent of gas.” Given the current i) Greater Supply: The GP IPO would likely encourage other
gas shortage in the country, there is little logic in exporting corporates in Bangladesh to come to market as they become
gas as long as the Powercell agrees to pay market prices
pric for more convinced that the regulators are allowing “fairer” or
electricity which in turn means genuine prices for gas. The market-driven
driven valuations. We will also likely see greater
Bangladesh economy needs to use the collapse in energy supply fromom other Telecoms companies and potentially
prices in recent months to move away from the artificially low privatization issues.

_______________________________________________________________________________________
AT Capital Weekly Update 5
4 January 2009
ii) More Overseas Demand: It was also potentially a catalyst
for greater liquidity in the market and critically more overseas
investor involvement in the Bangladesh stock market. Larger
foreign investment companies have for some time been
waiting for sizeable and liquid issues to invest in.
However, optimism for a smooth IPO process was
undermined by an increasingly frictional and contentious
dispute between the two main shareholders, Telenor of
Norway and Grameen Telecom. Professor Yunus, the nobel-
prize-winning head of Grameen.
Among other comments, the Professor Yunus stated
September 4 that: "The recent activities (of Telenor-
controlled management) in Bangladesh leave me with little
alternative other than to investigate the possibility of taking
legal action”. He softened his stance on September 5 by
stating a lawsuit was only a "remote possibility (and that) this
is not an outcome that we think is necessary...It is a
possibility, a remote possibility…We are not the kind of people
to rush to the courts."
Dr. Yunus continues to claim that Telenor refused to honour
an agreement sealed in 1996 to transfer its majority holding
to his Grameen Telecom by 2002 stating that:
"Back in 1996, Telenor and we agreed that the joint company
within six years should be a locally operated company with
Bangladeshi management and Bangladeshi majority
ownership. This has not happened… Telenor now tells me
that it was a mistake to rely on their words. We now are
being told that the words of the written agreement in a legal
sense are non-committing statements. We relied on the
words of the agreement."
Telenor, however, has its own interpretation of the 1996
partnership deal. The company stated that "In the conflict
regarding the ownership of Grameenphone, Telenor
disagrees with Muhammad Yunus that we have an
agreement to sell our stake in the company to him… We
would like to emphasise that the shareholder agreement
clearly states that any disagreements should be resolved
through the Swedish courts."
What is more concerning is that this is not an isolated
argument or disagreement. In an Associated Press Report in
December 2006, it was reported that Norway's Telenor
rejected an offer to sell control of GP to partner Grameen
Telecom, saying its strategy is to own majority stakes in joint
ventures. Newspaper Dagbladet quoted Muhammad Yunus,
as saying Grameen Telecom was ready to offer Telenor NOK
2.6bn (USD 426.9mn) to buy a 13% stake in Grameenphone
and gain a majority.
One would be hard pressed to come up with a more
potentially damaging and confusing issue ahead of the
proposed IPO. Reports of Professor Yunus’ comments have
appeared in as diverse a range of media as Bloomberg, the
Guardian in the UK and Reuters, as well as extensive
coverage domestically. A public dispute between the two
main shareholders ahead of an IPO is pretty much
unprecedented in developed markets, especially for such a
large company offering.
It was likely the dispute rather than deteriorating international
markets that saw the delay of the IPO and the move away
_______________________________________________________________________________________
AT Capital Weekly Update
AT CAPITAL RESEARCH
from international investor participation to soley a domestic
one. The company, later in October, said it planned IPO to
$125 million -- half from stock market and rest through
private placement.
In the event, in December, Grameenphone Ltd. closed the
marketing of a pre-IPO private placement of its shares
amounting to US$60 million (BDT 413 crore) to local
institutional investors on December 4, 2008. The company
reported that the pre-IPO placement offer was over-
subscribed by three times due to strong support from more
than 50 local institutional investors. In the pre-IPO offer, the
company raised a total of USD 60 million at BDT 7.4 per
share, which was increased from earlier size due to the
strong demand. Grameenphone Ltd. has filed its final
application for an initial public offering (IPO) of US$65 million
(BDT 449 crore) with the Securities and Exchange
Commission (SEC) today (December 11, 2008).
Grameenphone's Board of Directors had earlier approved a
proposal for an IPO of its shares, subject to necessary
approvals and market conditions. The price for the IPO has
been proposed at BDT 7.00, subject to SEC approval.
Three WIMAX licenses auctioned
In September , Augere, BanglaLion Communications, BRAC
BDmail Network Ltd won licences for establishment,
operation and maintenance of broadband wireless access
services through WiMAX (worldwide interoperability for
microwave access) technology which allows wireless data to
travel over long distances by various means, from point-to-
point links to full mobile cellular type access. The licenses
were auctions for a record BDT 215 Crore ($ 31 mn ) versus
the previous record of the previous record for WiMAX license
fee was in Singapore (18 million Dollar). According to the
licence conditions, the winners were required to set up at
least 90 base stations in the first year and the entire country
will need to be brought under the WiMAX network in three
years. The licence acquisition fee, set by the commission
auction, will be supplemented by an annual licence fee of Tk
3 crore. Each of the companies have been alloted a chunk of
35 MHz frequency to operate. Mobile phone companies were
barred from participating in the auctions.
In the event Bracnet was unable to raise sufficient funds to
take up the Wimax license and the next three bidders were
also unwilling to commit. As a result, Mango Teleservices
have decided to take up the license.
Telecom Prospects for 2009
On the GP IPO, we believe, that the proposed price of Tk
7.00 looks fair relative to the original expectations of
seventeen times face value and a number of other issues in
the marketplace. The decline in Asian Telecoms valuations
has also seen GP reduce their own price expectations. While
the valuation relative to Indian Telecoms issues looks
somewhat on the rich side, it might be argued that GP’s
market dominance is unlikely to be challenged by the next
major players such as Banglalink, AKTEL, Warid and
Citycell. Indeed, it seems unlikely that the market can sustain
so many Telecoms operators and some degree of
consolidation seems likely. One potential catalyst for greater
competition in the Telecoms sector might be to introduce the
portability of numbers that might diminish the first-mover
6
4 January 2009
advantages GP has overt the newer arrivals. The biggest
uncertainties about the longer prospects for the GP issues
are primarily on the issue of their ability to expand Value
Added Services (VAS) to arrest the decline in ARPU as well
as any prospective shifts in the regulatory environment.
While there is nothing on the horizon, the events of 2008 with
respect to VOIP fines, Wimax licenses and so on, all suggest
a more activist regulator in Bangladesh than some other
comparable EM telecoms markets. It is also important for the
liquidity of the GP issues to attract more foreign investors.
Another uncertainty is the likely stance of the new
government on the level of SIM card taxation.
Over the longer-term, a major battleground in the Telecoms
sector, given the cut-throat nature of price competition in the
voice market, is whether GP’s GPRS data service and the
competing internet services from Banglalink and AKTEL can
continue to grow in the face of the rollout of WIMAX. One
school of thought is that as 3G is introduced in Bangladesh,
that Telecoms players like GP will remain competitive versus
WIMAX given the proliferation of 3G handsets and the
prospects for further cost reduction and pricing of future 3G
compatible handsets. On the other hand, we believe that the
population density of Bangladesh makes it attractive for
WIMAX players to be able to aggressively price their
broadband offerings, particularly if, as we expect, BTRC
maintains pressure on BTCL to continue to cut the wholesale
price of internet bandwidth over the course of 2009. The big
market opportunity for WIMAX is for greater broadband
penetration and the proliferation of more laptops and PCs
among a newer generation of internet-hungry consumers
who do not want to be limited to handset-based email usage
but rather wish to take up a broader range of web-based
content that is more suited to computer usage. On balance
we believe WIMAX will prove to be a more serious
competitor for the exisiting Telecoms players than is
assumed by the current consensus given well capitalized
overseas players such as Augere and other partnering with
the local companies that can cross-fertilize their experience
of WIMAX rollouts in other EM countries.
The success of GP VAS has been somewhat limited to date
with initiatives like Cell Bazaar mobile marketplace. But they
will need to maintain support and investment for the creation
of a broader range of phone-based data applications if they
are to limit further sharp declines in ARPU. The 30% stake in
AKTEL taken by NTT Docomo, the leading Japanese
Telecoms company, might also see GP face major
competitive threats when 3G rollout occurs given the
Japanese companies’ acknowledged expertise in 3G/4G
technologies.
Some other potential Telecoms issues include:
• Mobile banking and payments
Mobile payments have significant potential in cash-
based economy such as Bangladesh

User familiarity with stored-value usage of cell
phones (e.g. Flexiload)

In various other developing countries similar to
Bangladesh (e.g. Philippines, South Africa), stored-
value in cell phones is widely used to make
payments to vendors in lieu of cash
Mobile banking presents a compelling opportunity in the
following areas:
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AT Capital Weekly Update
AT CAPITAL RESEARCH

Electronic remittance: $8bn in annual remittances to
Bangladesh

Financial products (e.g. savings account,
insurance) targeting a large, under-banked segment
of population who depend on remittances
• Mobile content and advertising

Mobile gaming present compelling opportunity given
youthful subscriber base

Mobile advertising has a captive user base of
~50mm: more than most other medium
• Call centers

Growing telecom infrastructure, low cost of labor
and English proficiency can support growth of IT-
enabled services / BPO sector

Upside to telecom services provider capable of
delivering the bandwidth and services
Other Prospective IPOs
Apart from Grameenphone & Aktel IPO, there is at least 9
more prospective IPOs coming in the next three years:
• ICX IPOs: Currently other than state owned BTCL, there
are two interconnection exchange companies operating
in the country. They are Getco Telecommunications
Limited & M & H Telecom. According to licensing
requirement, they have to offload their share in the local
stock market within 3 years of the commencement of
their business.
• IGW IPOs: Currently 3 international gateway companies
operating in the country other than state owned BTCL.
They are Bangla Trac Communications Limited, Mir
Telecom & NovoTel Limited. They also have the same
licensing requirement for offloading IPO within 3 years of
operation.
• WiMax IPOs: 3 companies were selected to provide
WiMax service in the country. The companies are
Augere Wireless Broadband Bangladesh Limited &
BanglaLion Communications limited and Mango
Teleservices. These companies will have to come up
with IPO within 3 years of their operation.
• Other than these IPOs, state owned BTCL might come
in the stock market, because govt. has already
expressed its intention to sell 100% of BTCL share. But
yet they have not formulated the way how they are going
to offload those shares. Moreover, we believe once
Grameenphone & Aktel will be listed, there will be a
regulatory pressure on other mobile phone operators to
offload their share in local stock exchange. So they
might also get listed in next three years time. So their
will be a series of listing from the telecom industry of
Bangladesh in coming years.
7
4 January 2009 AT CAPITAL RESEARCH
Telecoms Sector Data Appendix

Mobile Phone Subscribers Bangladesh 30%

Mobile phone penetration in 27.4%
(mn) Bangladesh(%) 23.1%
60 70
80 50 20%
60 34.37 42.04 14.5%
40 10.44 21.204
20 10% 7.3%
0

0%
2005 2006 2007 May 2008

Grameenphone Banglalink Aktel CityCell Warid Teletalk

Start of Operation 1997 1997 1997 1993 2007 2005

Ownership Telenor 62% Orascom Telekom Malaysia Dhabi 100% owned by

100% 70% Group
Grameen Telecom NTT DoCoMo 100% Bangladesh
38% 30% Government
Subscriber 20.84mn 9.9mn 7.98mn 1.67mn 3.48mn 0.93mn
(as of July 2008)
Market Share 46.50% 22.10% 17.80% 3.70% 7.80% 2.10%
Net subscriber 5.7mn 4.38mn 0.6mn 0.31mn 2.15mn -0.03mn
Addition (2007)
Churn
Market Share of 43.47% 33.42% 4.58% 2.36% 16.40% -0.23%
net addition
AMPU
ARPU 4.13 2.8
(Q1’08 USD)
Revenue (2007) 793.1 193 210.2

EBITDA (2007) 389.7 -42 63.3

BTS (EOY 2007) 5,700 3,200 3,905

Frequency 14.6 MHz 12.4 12.8MHz 10MHz 15MHz 15.2MHz

(As of Aug’08)

_______________________________________________________________________________________
AT Capital Weekly Update 8
 4 January 2009
Global Markets Overview
Global Manufacturing downturn intensifies
The JPMorgan Global Manufacturing PMI hit 33.2 in
December, a series record. More to the point you can get a
comparison between what is happening now and the 2001
"recession lite" with only a swift glance, and, of course, the
2009 long recession is only just getting started. Some
forecasts are predicting that Global Steel Output could
decline 13% or more in 2009, the worst since World War II.
The Global Manufacturing Input Prices Index posted 31.3, its
lowest ever reading. The rate of deflation was especially
marked in the US, were purchase prices fell to the greatest
extent since June 1949.
Source: JP Morgan
A barometer of the global nature of the downturns are
reflected in two major trading economies, Singapore and
Japan. Singapore's government announced Friday that it
was slashing its growth forecasts for 2009 after a 12.5%
quarter-on-quarter estimated fall in gross domestic product
during the last three months of 2008. The contraction was far
sharper than the -3.4% expected by economists, and as one
of the first economies in Asia to post results for the fourth
quarter, the data poses worrying signs for the rest of the
region.
Singapore officially fell into recession back in October, as
declining demand from key customers like the United States
and Europe began to hurt exports, but the spillover into the
city-state's wider economy has intensified since then. The
slump in manufacturing and financial services is now starting
to affect the services industry, with the latest estimates from
the sector on Friday showing year-on-year growth at 1.1%--
down from 5.3% in the previous quarter.
Singapore's Ministry of Trade and Industry said there had
been a "collapse" in world trade and warned that the knock-
on effects would continue into 2009. Property, retail and
business services were all expected to suffer. The
government now expects GDP to contract 2% in 2009.
Analysts from Barclays Capital expect Japan to post an
annualized 12.1% drop in gross domestic product for the
fourth quarter of 2008, which would be the sharpest
contraction in 34 years.
China Manufacturing Technically in Recession?
CLSA Asia-Pacific Markets, who compile the China
Purchasing Managers Index, have suggested that China is
"close to technical recession in manufacturing industry" on
the basis that their Chinese manufacturing index has now
been registering contraction for five consecutive months.
_______________________________________________________________________________________
AT Capital Weekly Update
AT CAPITAL RESEARCH
China’s composite manufacturing index contracted for the
fifth consecutive month in December as recessions in the
U.S., Europe and Japan bit deep into demand for exports -
indeed China's exports fell year on year for the first time in
seven years in November. The CLSA China Purchasing
Managers’ Index registered a seasonally adjusted 41.2,
compared to a record low of 40.9 in November. On such
indexes any reading below 50 reflects a contraction.
Prof Nouriel Roubini of New York University in a recent
article in the Asia-Pacific Journal has underlined the high
probability of a hard landing. He notes that “In a country with
the potential growth of China, a hard landing would occur if
the growth rate of the economy were to slow down to 5-6%
as China needs a growth rate of 9-10% to absorb about 24
million folks joining the labor force every year; it needs a
growth rate of 9-10% to move every year about 12-14 million
poor rural farmers to the modern industrial/manufacturing
urban sector. The whole social and political legitimacy of the
regime of the ruling Communist party rests on continuing to
deliver this high growth great transformation of the economy.
Thus, a slowdown of growth from 12% to 5-6% would be the
equivalent of a hard landing or a recession for China. And
now a variety of macro indicators suggest that China is
indeed headed towards a hard landing.”
Prof Roubini goes on to note that China is an economy that is
structurally dependent on exports: net exports (or the trade
balance surplus) are close to 12% of GDP (up from 2%
earlier in the decade) and exports represent about 40% of
GDP. Real investment in China is about 45% of GDP and,
leaving aside the part of this investment that is housing and
infrastructure spending, about half of this capex spending
goes towards the production of new capital goods that
produces more exportable goods. So, with the sum of
exports and investment representing about 80% of GDP,
most of the Chinese aggregate demand depends on its
ability to sustain an export based economic growth.
The trouble, however, is that the main outlet of Chinese
exports – the U.S. consumer – is now collapsing for the first
time in two decades. Chinese exports to the U.S. were
growing at an annualized rate of over 20% a year ago, while
the most recent bilateral trade data from the U.S. show that
this export growth has now fallen to 0%. But the worst is still
to come in the next few quarters: after an ok second quarter
in the U.S. (boosted by the tax rebates) U.S. retailers hoped
that the consumer downturn would be minor: they thus
placed over the summer massive orders for Chinese (and
other imported) goods for Q3 and Q4. But now the U.S.
9
4 January 2009
holiday season clearly looks like the worst that the U.S. will
experience in decades and the result of it will be a huge
overhang of unsold Chinese goods. Thus, you can expect
that orders of Chinese goods for Q1 of 2009 and the rest of
2009 will sharply decline, dragging Chinese exports to the
U.S. into negative territory. And it is not just Chinese exports
to the U.S.
AT CAPITAL RESEARCH
However, looking at 2008 overall, commodity prices still had
their worst year on record. As the charts below courtesy of
Bespoke.com illustrates, oil is still off around 75% from its
2008 highs.

Until a few months ago the U.S. was starting to contract but
the rest of the advanced economies (Europe, Canada, Japan
and Australia/New Zealand) were growing at a sustained
rate, thus boosting Chinese exports. But there is strong
evidence that a severe recession has now started in almost
all of the advanced economies. You can thus expect that
Chinese export growth to Europe, Canada, Japan, etc. will
sharply decelerate in the next few quarters, thus adding to
the fall in Chinese net exports. And once Chinese export
growth sharply decelerates and net exports sharply fall you
can expect a severe fall in capex spending in China as there
is already a large excess capacity of exportable goods given
the massive overinvestment of the last few years. Thus, a
sharp fall in net exports and a sharp fall in real investment
will likely trigger a hard landing in China. Considering the And relative to bonds, the US Dollar and even equities, oil
certainty of a recession in advanced economies and the high remains by a wide margin the worst performer of the year
likelihood of a global recession, there is now a very high
probability that Chinese growth could slow down to 7% or
even lower in 2009 (7% growth for China is indeed now the
forecast of a leading EM focused bank such as Standard
Chartered); and 7% is just a notch above the 6% that would
represent a near hard landing for China.

Week in Review – End-

End-2008 Rally in Commodities and Risk
Assets

Most global stockmarkets enjoyed an end-year rally after the

“annus horribilis” that was 2008. Among the major asset
classes, the ongoing crisis in the Gaza strip fuelled a 22.9%
jump in oil prices and US equities were able to shrug off
ongoing weak economic data in terms of plunging consumer
confidence, ISM and Case-Shiller home prices.

_______________________________________________________________________________________
AT Capital Weekly Update 10
4 January 2009 AT CAPITAL RESEARCH
Stock Market Weekly
DSE performance: 52 weeks
weeks Market news

• Trading of Maksons Spinning, National Housing

st
begins
begins on 1 January 2009

• DSE sixth best performing stock exchange in the

world until November

DSE performance: 30 days Regional stock market performance (last week)

15.5 50 10%
6.7% DGEN, Dhaka
Turnover in USD Mn
Market Cap. in USD Bn

15.0 6.2%
40
14.5 5%
30 2.0%
14.0 CASPI, Chittago
13.5 20 ng
0%
13.0 10
BSE
10-Nov-08
12-Nov-08
16-Nov-08
18-Nov-08
20-Nov-08
24-Nov-08
26-Nov-08
30-Nov-08

15-Dec-08
18-Dec-08
22-Dec-08
24-Dec-08
30-Dec-08
2-Dec-08
4-Dec-08

-5% Sensex, Mumba

i
-10% KSE100, Karachi

Market Cap. Turnover -11.3%

11.3%
-15%

Market summary Valuation snapshot

DSE General Sector P/E

Index performance DSE 20
Index Aug-08 Sep
Sep-08 Oct-08 Nov-08
Opening of this week 2,630.1 2,196.2 Banks 19.08 18.24 15.62 15.62
Closing of this week 2,807.6 2,316.5 Cement 10.96 10.34 10.32 8.91
Change within a week (%) 6.7% 5.5% Ceramic 49.92 43.93 41.76 32.17
Change within a week (Point) 177.5 120.4 Engineering 39.11 41.36 40.8 31.94
Food & Allied 17.85 19.44 17.09 14.77
Fuel & Power 17.81 20.2 19.14 16.29
This Last %
Capitalization and turnover Insurance 23.17 24.77 23.12 17.69
Week Week Change
Investment 45.08 55.48 28.93 21.42
Number of Trading Days 3 4
IT 41.44 45.64 47.89 33.96
Market Capitalization (USD bn) 15.30 14.49 5.57%
Jute 16.16 16.16 14.18 14.18
Total Turnover (USD mn) 168 78 116.8%
Miscellaneous 25.46 33.95 32.2 23.32
Daily Avg. Turnover (USD mn) 56 19 189.0%
Paper & Printing 8.36 8.08 9.97 7.32
Total Volume (mn) 83 67 23.9%
Pharmaceuticals 23.97 28.45 30.25 26.26
Daily Avg. Volume (mn) 28 17 65.2%
Service & Real Estate 20.57 22.87 23.55 18.74
Tannery 19.05 19.89 18.44 14.87
This Last
Weighted avg. P/E Ratio* Issues Textiles 15.74 15.45 14.55 12.43
Week Week
Source: Dhaka Stock Exchange
This Week 18.1 Advanced 196 221
Last Week 17.2 Declined 39 27
% Change 5.31% Unchanged 8 6
*Weighted on Market Cap. Not Traded 36 52

_______________________________________________________________________________________
AT Capital Weekly Update 11
4 January 2009 AT CAPITAL RESEARCH
Stock Market News
st st
Trading of Maksons Spinning, National Housing begins
begins on 1
January 2009
The Financial Express, Wednesday December 31, 2008

Maksons Spinning Mills Limited and National Housing

Finance and Investment Limited started trading on the Dhaka
Stock Exchange (DSE) and the Chittagong Stock Exchange
st
(CSE) from 1 January 2009.

Maksons Spinning floated 8mn ordinary shares at a face

value of BDT 10 (US 14.52 Cents) each, raising BDT 80mn
(USD 1.16mn) from the stock market. The paid-up capital of
the company was BDT 340mn (USD 4.94mn) as of April 26,
2008. Maksons Spinning is the 40th listed textile company on
DSE.

The National Housing Finance and Investment Limited

floated 0.5mn ordinary shares at a face value of BDT 100
(USD 1.45) each, raising BDT 50mn (USD 0.73mn) from the
stock market. The pre-IPO paid up capital was BDT 400mn
(USD 5.81mn) as of December 31, 2007.

http://www.thefinancialexpress-
bd.com/search_index.php?page=detail_news&news_id=54636

DSE sixth best performing stock exchange in the world until

November
The Financial Express, Tuesday December 30, 2008

While globally most stock markets have suffered from the

financial crisis, Dhaka and Chittagong stock exchanges have
performed reasonably well in 2008. According to Bloomberg,
during the first eleven months of 2008, the Dhaka Stock
Exchange (DSE) was the sixth best performing stock
exchange in the world on a currency adjusted basis.

During the first half of the year, the stock market performed
well. The rise in the indices were driven by strong
performance from the banks’ impressive yearly results.

However, stock prices declined in the second half of the

year. The weakness during the second half was driven by
pullout from retail investors worried about foreign portfolio
investors withdrawing as they did in Russia, India, China, etc.
Additionally, the uncertainty about the political situation also
discouraged significant inflow into the market. However, the
market recuperated in December 2008.

http://www.thefinancialexpress-
bd.com/search_index.php?page=detail_news&news_id=54513

_______________________________________________________________________________________
AT Capital Weekly Update 12
4 January 2009 AT CAPITAL RESEARCH
DGEN Performance LTM DGEN Performance YTD

3,400
3,200
3,200
3,000
3,000 2,800
Market cap. by sector*
2,800 2,600
Banks 51.0%
2,600 Fuel & Power
2,400 13.8%
Pharmaceuticals
2,200 11.6%
2,400 Insurance 5.5%

25-Aug-08
14-Jan-08
29-Jan-08
12-Feb-08
27-Feb-08
12-Mar-08
30-Mar-08
13-Apr-08
28-Apr-08
13-May-08
28-May-08
11-Jun-08
25-Jun-08

7-Aug-08

8-Sep-08
22-Sep-08
14-Oct-08
28-Oct-08
11-Nov-08
25-Nov-08
18-Dec-08
10-Jul-08
24-Jul-08
Feb'08

Apr'08

May'08

Jun'08

Jul'08

Aug'08

Sept'08
Jan'08

Mar'08

Oct'08

Nov'08

Dec'08
Cement 5.1%
Miscellaneous 3.0%
Engineering 2.4%
Foods 2.1%
Turnover leaders Best performers*
Textile Worst performers*
1.9%
(All figures in mn) BDT USD Service &%Real Estate
Change 1.2% % Change
Beximco Pharma 1028 14.9 Samata Leather Tannery 27.4% Shaympur Sugar 1.2% -11.6
Summit Power 891 12.9 Olympic Industries Ceramics 23.1% Renwick Jajneswar0.7% -11.6
Titas Gas 734 10.7 Bangladesh Online IT 21.2% Meghna Condensed 0.5% -11.1
Grameen One: Scheme2 480 7.0 BDCOM Online Ltd. Paper & Printing20.9% Eastern Lubricants0.1% -10.3
BEXIMCO 461 6.7 Summit Power Jute 20.4% Bangla Process 0.03% -9.0
ACI Formulation Limited 448 6.5 Aims 1st M.F. Total 19.3% Zeal Bangla Sugar100% -7.8
Shinepukur Ceramics Grameen Mutual One *As of November
18.7% Meghna Pet , 2008 -7.0
416
Limited 6.0
CMC Kamal 17.5% Dulamia Cotton -5.6
ACI Limited 372 5.4
BCIL 17.3% Perfume Chemicals -5.2
NBL 356 5.2
Beximco Synthetics 16.9% Dhaka Fisheries -4.2
Uttara Bank 255 3.7
Source: Dhaka Stock Exchange *By closing price
Source: Dhaka Stock Exchange
Market cap. by sector*
Banks 51.0% Correlation with other indices*
Fuel & Power 13.8%
S&P500 Sensex NIKKEI225 KSE100 SSECI FTSE100 Hangseng DSE
Pharmaceuticals 11.6%
Insurance 5.5% S&P500 1.00
Cement 5.1% Sensex 0.52 1.00
Miscellaneous 3.0% NIKKEI225 0.41 0.53 1.00
Engineering 2.4%
KSE100 0.16 0.32 0.15 1.00
Foods 2.1%
SSECI 0.24 0.36 0.20 0.06 1.00
Textile 1.9%
Service & Real Estate 1.2% FTSE100 0.81 0.53 0.44 0.24 0.34 1.00
Tannery 1.2% Hangseng 0.65 0.62 0.48 0.13 0.45 0.74 1.00
Ceramics 0.7% DSE 0.07 0.12 0.05 0.02 0.02 0.08 0.09 1
IT 0.5% * Based on the last 83 months’ USD returns
Paper & Printing 0.1% Source: AT Capital Research
Jute 0.03%
Total 100%
*As of November , 2008

Research Team

Ifty Islam Syeed Khan

Managing Partner Partner
ifty.islam@at-capital.com syeed.khan@at-capital.com

Mohammad Emran Hasan

Senior Associate
emran.hasan@at-capital.com

_______________________________________________________________________________________
AT Capital Weekly Update 13
4 January 2009 AT CAPITAL RESEARCH
Economics

Selected macroeconomic indicators Market news

30-
30-Dec-
Dec-
30-
30-Dec-
Dec-07 15-
15-Dec-
Dec-08
08
Forex reserves (USD mn) 5546.23 5,561.80 5787.80 • USD 9bn remittance in 2008
USD-BDT average rate 68.5761 68.8897 68.9349
Call money rate 7.61 9.75 13.39 • Ebbing inflation marks year-
year-end

• Economy rides past strong 2008

Nov-
Nov-07 Nov-
Nov-08 2007-
2007-08
• Taka depreciates against US dollar marginally again
Remittances (USD mn) 617.39 761.38 7,914.78
Annual %age change 3.12 23.32 32.39

P
Oct-
Oct-07 Oct-
Oct-08 2007-
2007-08
Imports (USD mn) 1,649.90 2,090.40 21,629.00
Annual %age change 27.18 26.70 26.07

Oct -07 Oct -08P 2007-

2007-08
Exports (USD mn) 941.48 867.69 14,110.80
Annual %age change 8.12 -7.84 15.87

P
Sep-
Sep-07 Sep-
Sep-08 2007-
2007-08
Current A/C Balance (USD mn) 20.00 46.00 672.00 Exports
xports in Oct 08 declined to USD 867.69mn
867.69mn from
USD1478.02
USD1478.02mn
1478.02mn in Sept 08
P
Nov-
Nov-07 Nov-
Nov-08 2007-
2007-08
Tax revenue (USD mn) 506.24 551.57 6,868.43 Monthly Exports
1700
Annual %age change 26.59 8.96 27.06

1500
Source: Selected indicators by Bangladesh Bank, 17 December 2008
1300
Mn USD

1100
Latest Bangladesh Inflation Rates
900
Sep-
Sep-08 Oct-
Oct-08 Nov-
Nov-08
700 Sourc
General 210.14 209.31 207.14
July Aug Sep Oct
Inflation 10.19 7.26 6.12
Food 227.66 226.88 223.98 Source: Bangladesh Bank
Inflation 12.07 8.08 6.68
Non-food 187.10 186.13 184.95
Inflation 7.19 5.95 5.25
Source: Bangladesh Bank

Jisha Sarwar
Senior Research Associate
Jisha.sarwar@at-capital.com

_______________________________________________________________________________________
AT Capital Weekly Update 14
4 January 2009
Economic News
USD 9bn
9bn remittance in 2008
The Daily Star, Friday January 2nd, 2009
2008 saw a record number of over 875,000 Bangladeshis
going overseas for employment compared to about 832,000
people in 2007.
The country also received a record amount of approximately
US$9bn in remittances in 2008.
http://www.thedailystar.net/story.php?nid=69632
Ebbing inflation marks year-
year-end
The Daily Star, Thursday January 1st, 2009
Inflation dropped significantly at the end of 2008, although
commodity prices, especially of food items including rice, are
still high.
GDP growth is expected to decline this year due to the
ongoing global economic recession despite the economy
having grown at a reasonable pace for the past several
years,
Inflation has been increasing for the past few years, crossing
11% on a point-to-point basis in 2008. However, in
November 2008 inflation came down to 6.12%. Economists
expect it to drop further in the coming days. But commodity
prices still remain a concern.
Multilateral donor agencies are predicting GDP growth to
slow to 5.5% in 2008 or even 4.8% in the worst case
scenario, although the government claims growth could be
still be at around 6%.
The ADP (annual development programme) implementation
rate has not been very impressive during the first five months
of FY 2009 with only 18% of the ADP implemented.
However, the country's export and remittance inflow
continues to be healthy despite the global financial
meltdown. Exports grew by 30.7% while remittance grew by
33.6% during the first four months of FY 09.
http://www.thedailystar.net/story.php?nid=69509
Economy rides past strong 2008
The Daily Star, Thursday January 1st, 2009
The economy remained resilient in 2008 despite an
unfavourable domestic investment climate and the
surrounding global economic meltdown.
Economic indicators such as private-sector credit growth, call
money rate, foreign currency, foreign exchange reserves,
inflation, exports, import and remittances, were all positive in
2008.
Bangladesh’s credit market remained unaffected by the
global financial crisis - private-sector credit grew more than
26% in 2008.
Domestic credit recorded an increase of BDT 174,130mn
(USD 2527mn) or 7% during Q1 FY 09 compared to a rise of
_______________________________________________________________________________________
AT Capital Weekly Update
AT CAPITAL RESEARCH
BDT 100,070mn (USD 1452mn) or 4.9% a year ago. The rise
in domestic credit during the period was due to a significant
rise in private-sector credit, by BDT 103,700nm (USD
1505mn) or 5.5%, according to Bangladesh Bank data.
The taka remained generally stable at 68.50-69.50 against
the USD throughout the year. However, the euro and the
pound were extremely volatile against the taka in 2008. The
euro went up to 111 against the taka in the mid-July and
declined as low as 88 in November before bouncing back to
100. The pound went up to141 against the taka in March but
declined to 103 in November.
Import growth was 25.6% during FY 09 against export growth
of 15.7%; however, remittance inflow increased by 32%
easing pressures on the balance of payments. Exports
receipts in Q1 FY09 increased by 30.7% to USD 5,251.5mn
from USD 4,018.7mn in Q1 FY09. Import payments in Q1
FY09 rose by 34.9% to USD 6,324.7mn from USD
4,687.5mn in Q1 FY08.
Gross foreign exchange reserves stood at USD 5,245.4mn at
the end of November 2008 compared to USD 5,095.3mn a
year ago.
The inflation rate on a point-to-point basis also decreased to
6.12% in November 2008 from 7.26% the previous month.
The local money market experienced some volatility in 2008.
The market remained calm in 2007, due to the surplus
liquidity in the system. Call rates hovered between 7% and
15% in 2008, compared to between 6.5% and 9.5% in 2007.
http://www.thedailystar.net/story.php?nid=69467
Taka depreciates against US dollar marginally again
again
The Financial Express, Wednesday December 31st, 2008
Bangladesh taka (BDT) was depreciated marginally by
0.04% against the US dollar on Tuesday, the last working
day of calendar year 2008, following a rise in demand for the
greenback in the market.
US dollar traded at BDT 68.95 in the foreign exchange
market on the day against BDT 68.92 on the previous
working day.
In 2008, BDT was depreciated marginally by 0.54% against
the US dollar mainly due to a short supply of the greenback
in the inter-bank foreign exchange market.
Compared to the previous four years, BDT/USD exchange
rate was fairly stable in 2008, according to Citibank’s recently
published annual market update 2008.
http://www.thefinancialexpress-
bd.info/search_index.php?page=detail_news&news_id=54632
15
 4 January 2009
Sector News
Agriculture
Low wholesale price of edible oil yet to impact retail market
The Daily Star, Friday, January 2, 2008
Although prices of different types of edible oil have declined
in the wholesale market, it is yet to have any impact on the
retail market. Price of palm oil went up by BDT 100 (USD
1.45) and was selling at BDT 1,700 (USD 24.37) a maund,
whereas the wholesale price of non-branded edible oil
including soya bean and super palm oil declined by BDT 200
(USD 2.9) to BDT 700 (USD 10.1) per maund (37.32 Kg)
within a week due to an increase in supply and a sharp fall in
prices in the international market. But price declines are yet
to have any impact on retail markets as traders were selling
from old stocks, according to wholesalers.
http://www.thedailystar.net/story.php?nid=69631
Fertilizer price hike hampers potato production in Northern
Northern
district
districts
ricts
The Financial Express, Thursday, January 1, 2008
Potato growers of Northern districts (Rangpur and Dinajpur
region) fear that if prices of fertilizers continue to increase,
potato cultivation will be badly affected. At present a sack of
Tripple Super Phosphate (TSP) is being sold at BDT 3,800
(USD 55.1) up from BDT 1,800 (USD 26.1); a sack of Muriate
of Potash (MOP) is sold at BDT 2,200 (USD 31.9) up from
BDT 1,000 (USD 14.5) previously. A sack of urea fertilizer is
being sold at BDT 600 (USD 8.7) up from BDT 300 (USD
4.3). Thus poor farmers are being compelled to use less than
the necessary quantity of fertilizers. The Department of
Agriculture Extension (DAE) sources said potato cultivation
target had been fixed at 176,900 hectares of land in eight
districts of greater Rangpur, Dinajpur region with production
target of 3,007,300 MT. Sources also said that a number of
traders, taking advantage of the higher demand for fertilizers,
have been selling sub-standard fertilizers at cheaper rates.
http://www.thefinancialexpress-
bd.info/search_index.php?page=detail_news&news_id=54738
Grape cultivation gains popularity in Northern
Northern region of
Bangladesh
The Financial Express, Wednesday, December 31, 2008
Grape cultivation is becoming popular in the northern region
of Bangladesh, as growers are earning good profits.
According to agriculturists, the soil and climate of Dinajpur,
Rangpur, Thakurgaon and Panchagarh1 are suitable for
grape cultivation. Presently, grapes are being cultivated on a
limited scale due to inadequate supply of seeds and other
facilities. According to local growers, proper training along
with financial and technical assistance can pave the way for
large-scale commercial production of grapes across the
northern region. Most of the grapes produced in the areas
are in the moderate grade variety called 'Jatka'. They also
cultivate a number of high-grade varieties like Black Ruby,
1
Areas in the Northern region of Bangladesh
_______________________________________________________________________________________
AT Capital Weekly Update
AT CAPITAL RESEARCH
Cardinal, Pearl, Blue etc. These local grapes are
comparatively sweeter in taste than the imported ones.
http://www.thefinancialexpress-bd.com/2008/12/31/54641.html
Agri credit
credit disbursement posts 27.2%
27.2% growth in Jul-
Jul-Nov
The Financial Express, Monday, December 29, 2008
Agricultural credit disbursement recorded a robust growth of
27.2% in the first five months of the current fiscal year. Eight
state-owned banks and financial institutions along with
private commercial banks (PCBs) disbursed BDT 33.77bn
(USD 493mn) as agri credit during the July-November period
of FY 09 compared to BDT 26.55bn (USD 387.5mn) during
the corresponding period of FY 08, according to the central
bank statistics.
The loans have been given to eight agro-based sub-sectors
such as crops, irrigation equipment, livestock, agricultural
products marketing, and fisheries. Banks and financial
institutions have achieved 36.02% of their annual agri credit
disbursement target, which has been fixed at BDT 94bn
(USD 1.37bn).
http://www.thefinancialexpress-bd.com/2008/12/29/54469.html
Aviation
Biman back in the black after four years
The Daily Star, Sunday January 04, 2009
Biman Bangladesh Airlines returned to the black in fiscal
year 2007-08 with a BDT 190mn (USD 2.75mn) profit after
four years, as the national flag carrier improved its overall
efficiency in maintaining routes and flight schedule, and
stopping pilferage. The carrier has incurred losses from
2004, mainly due to mismanagement, corruption and fuel-
guzzling and decade-old aircrafts. Profits increased due to an
improvement in efficiency in route planning, such as flight
reduction on routes, temporary suspension of flights on
unprofitable routes and flight schedule maintenance.
Reduction in maintenance costs and an overall return of
discipline to the Biman administration also contributed to
profitability.
http://www.thedailystar.net/newDesign/news-details.php?nid=69956
16
4 January 2009
GMG adds aircraft to fleet
The Daily Star, Sunday January 04, 2009
GMG Airlines yesterday added an MD-83 aircraft to its fleet,
totaling its number of planes to six.
Shahab Sattar, managing director of GMG, said the MD-83
aircraft with 150-passenger seating capacity and powerful
engines, would help open new routes for the private airline.
The airline’s destinations include Singapore, Bangkok,
Karachi and Dubai.
http://www.thedailystar.net/newDesign/news-details.php?nid=69930
Banking
Meltdown expected to reduce central bank's profit
The Financial Express, Sunday January 4th, 2009
According to Bangladesh Bank (BB) officials, the global
financial meltdown has affected the central bank's income,
following the withdrawal of its investments from international
banks.
"Almost 90% of the bank's investments have already been
withdrawn from international banks," stated BB’s executive
director, Yasin Ali.
The BB earned a record profit of BDT 25bn (USD 362.8mn)
in FY 08, and more than 72% of the earning was given to the
government exchequer.
"But the BB income from investments in foreign banks and
financial institutions has become almost nil after those were
withdrawn following the onslaught of the global financial
crisis," said the official.
Many US and European banks have already been hit by the
worst global recession since the 1930s.
Credit ratings agency Standard & Poor's last week slashed
the ratings on 11 U.S. and European banks and cut the
outlook of another bank due the meltdown, according to
Bloomberg.
It cut ratings for Bank of America, Barclays Bank, Citibank,
Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan
Chase Bank, Morgan Stanley, Royal Bank of Scotland, UBS
and Wells Fargo Bank. HSBC Bank's outlook was revised to
negative, though its rating remained unchanged. Amid such
a gloomy scenario in the US and Europe, the BB officials
stated that the central bank was forced to withdraw its
investments from the leading international investment banks.
http://www.thefinancialexpress-bd.info/2009/01/04/55055.html
PCBs post rise in profit
The Daily Star, Friday January 2nd, 2009
Private commercial banks (PCBs) performed well in 2008
despite a global and domestic slowdown in business activity,
according to data received from different PCBs. Profits of
PCBs rose considerably in 2008 - the highest increase in
operating profits was 97%, while the lowest was 23%.
According to bankers, profits increased in 2008 due to a rise
in prices of commodities.
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AT CAPITAL RESEARCH
The operating profit of Al-Arafah Islami Bank rose by 97.5%
to BDT1580mn (USD 22.9mn) in 2008 from BDT 800mn
(USD 11.6mn) in 2007. In 2008 profits of Shahjalal Bank and
Islami Bank increased by 57% and 55%, respectively.
National Credit and Commerce Bank recorded a 33% rise in
operating profit to BDT 2360mn (USD 34.25mn) in 2008 from
a year ago. Profits of UCB and NBL, two first-generation
PCBs, grew by 24% and 28%, respectively, in 2008. In 2008
operating profits of BRAC Bank, a third-generation private
bank, also increased by over 23% to BDT 2000mn (USD
29mn).
Prime Bank's operating profit soared to BDT 4100mn (USD
59.5mn) in 2008 from BDT 3260mn (USD 47.3mn) in 2007.
Southeast Bank posted BDT 3000mn (USD 43.54mn) in
operating profit, up from BD 2910 (USD 42.2mn) in 2007.
EXIM earned BDT 2600mn (USD 37.73), Dhaka Bank BDT
2540mn (USD 36.86mn), Dutch-Bangla BDT 2210mn (USD
32.07), Mercantile BDT 1900mn (27.57mn), IFIC BDT
1770mn (USD 25.69), Basic BDT 1750mn (USD 25.39),
Standard Bank BDT 1560mn (USD 22.64mn), Trust Bank
BDT 1380mn (USD 20mn), Jamuna Bank BDT 1200mn
(USD 17.41mn), One Bank BDT 1100mn (USD 15.96) and
Social Investment Bank BDT 1000mn (USD 14.51mn).
AB Bank's operating profit however declined by BDT150mn
(USD 2.17mn) to BDT 4500mn (USD 65mn) in 2008.
The operating profit of PCBs increased by nearly BDT
1,5000mn (USD 21.8mn) to BDT 5,2000mn (USD 754.7mn)
in 2007.
http://www.thedailystar.net/story.php?nid=69626
IBBL deposit records
records 21pc, remittance 67 per cent growth
The Financial Express, Friday January 2nd, 2009
The total deposit of Islami Bank Bangladesh Limited reached
BDT 201.1bn (USD 2.91bn) at the end of 2008, growing by
21% from a year ago.
In 2008 the bank’s total investment was BDT 198.7bn (USD
2.87bn), growing by 14% from 2007.
The largest private commercial bank handled BDT 402.7bn
(USD 5.85bn) worth of foreign trade in 2008 (an increase of
40% since 2007); this included import income of BDT
168.3bn (USD 2.43bn) (rose 23%), export earnings of BDT
93.96bn (USD 1.36bn) (rose 41%) and remittance income of
BDT 140.4bn (USD 2bn) (rose 67%).
http://www.thefinancialexpress-
bd.info/search_index.php?page=detail_news&news_id=54854
Basel-
Basel-II comes into effect today to consolidate capital base
of banks
The Financial Express, Thursday January 1st, 2009
The Basel-II accord will come into effect in Bangladesh from
today (Thursday) alongside the Basel-I to consolidate capital
base of banks.
“The banks will be allowed to follow both Basel-II and Basel-
I frameworks for 2009 to calculate their capital adequacy. But
the banks will have to implement the Basel-II framework from
17
4 January 2009
January 2010.” a senior official of Bangladesh Bank (BB) told
the FE.
The central bank issued guidelines on 'Risk-based Capital
Adequacy for Banks' on Wednesday aiming to start
implementation of the Basel-II framework in the country's
banking system.
The new Basel accord has been prepared on the basis of
three pillars: minimum capital requirement, supervisory
review process and market discipline.
Three types of risks -- credit risk, market risk and operational
risk -- have to be considered under the minimum capital
requirement.
A study carried out by local banks suggested that the Basel-II
should initially be implemented with three specific
approaches - a standardized approach for calculating risk
weighted assets (RWA) against credit risk, a standardized
(rule-based) approach for calculating RAW against market
risk, and a basic indicator approach for calculating RWA
against operational risk.
Credit rating is to be determined on the basis of risk profile
assessed by the External Credit Assessment Institutions
(ECAIs), according to the standardized approach of the risk-
based capital adequacy framework of the Basel-II.
The central bank earlier issued guidelines for recognition of
eligible ECAIs to assess credit risks in line with the Basel-II
framework.
Currently, two local credit rating agencies - Credit Rating
Information and Services Limited (CRISL) and Credit Rating
Agency of Bangladesh (CRAB) - are operating in
Bangladesh.
The central bank has already increased the amount of the
required minimum capital for commercial banks to 10% of
their risk-weighted assets from 9.0% to consolidate its capital
base, aiming to implement the Basel-II framework.
Bangladesh is now following Basel-I framework for the
banks' capital adequacy requirement. Risk-based capital
ratio was 8.0% when it was first adopted in 1996. In 2002,
the ratio was increased to 9.0%.
http://www.thefinancialexpress-
bd.info/search_index.php?page=detail_news&news_id=54730
Healthcare
National
National guideline for management of malnourished children
launched
The Daily Star, Sunday December 31, 2008
A national guideline prepared by the Institute of Public Health
and Nutrition (IPHN) for management of severely
th
malnourished children was launched on the 30 of
December. Speaking at the launching ceremony, Health
Adviser AMM Shawkat Ali suggested publishing the Bengali
version of the guideline so that common people can
understand it easily. The guideline has been prepared by
local consultants and is applicable for underweight children
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AT Capital Weekly Update
AT CAPITAL RESEARCH
and will be useful for all government and non-government
hospitals.
http://www.thedailystar.net/newDesign/news-details.php?nid=69441
Infrastructure & Energy
Power distribution companie
companies
mpanies propose tariff hike
The Daily Star, Friday January 2, 2009
Dhaka Power Distribution Company Ltd (DPDC), West Zone
Power Distribution Company Ltd (WZPDC) and Dhaka
Electric Supply Company Ltd (DESCO) have proposed tariff
hikes at the consumer level, of 14.77%, 15.18% and 14.77%
respectively. The Bangladesh Energy Regulatory
Commission (BERC) considered the proposals and decided
to hold open meetings individually with the companies.
The Rural Electrification Board (REB) has also submitted a
proposal for a tariff increase of 11.52% at the subscriber
level. But the BERC found the proposal to be incomplete and
asked for a new proposal from the REB.
http://www.thedailystar.net/story.php?nid=69674
GTCL earns BDT 2.73bn (USD 39.65mn) as pre-
pre-tax profit in
FY 08
The Financial Express, Tuesday December 30, 2008
Gas Transmission Company Limited (GTCL) earned BDT
2.73bn (USD 39.65mn) as pre-tax profit in FY 08. The
company earned BDT 4.17bn (USD 60.57mn) on account of
transport of gas and condensate which is up 18.3% from a
year ago.
http://www.thefinancialexpress-
bd.com/search_index.php?page=detail_news&news_id=54530
Indian ships leave Bangladesh waters
The Daily Star, Sunday December 28, 2008
Tension over India's trespassing into Bangladeshi maritime
boundary mitigated on December 27 as the three Indian oil
and gas survey ships withdrew from Bangladeshi waters.
Navy sources said immediately after the survey ships left, an
Indian coastguard vessel went to the spot and asked the
Bangladeshi offshore patrol vessels there to leave the spot
claiming it to be Indian waters. Foreign Secretary Touhid
Hossain, who lodged the formal government protest, said
that the Indian high commission was asked to stop any
survey or development activities and remove the ships from
the area until disputes regarding the maritime boundary are
settled by "mutual agreement". The Indian envoy proposed
that Bangladesh send a technical team to India as soon as
possible to discuss the maritime issue as the two countries
started talks on delimitation of the maritime boundary in
September 2008 after a lapse of 22 years.
The location is seven miles into Bangladeshi maritime
boundary, which is also situated within Bangladeshi deep-
sea oil and gas exploration Block-14.
http://www.thedailystar.net/story.php?nid=69074
18
4 January 2009
Pharmaceuticals
Aristopharma to add 3 more export destinations in 2009
2009
The Financial Express, Sunday, December 28, 2008
One of the leading pharmaceuticals manufacturers,
Aristopharma, has set a sales target of BDT 3bn (USD
43.8mn) for 2009, as the local drug manufacturer aims to
strengthen its position among the top 10 players in the
country. The company would like to add three more export
destinations, namely, Malaysia, Lebanon and Nigeria to its
current list of nine export countries.
This year, the company became the first pharmaceutical
manufacturer in Bangladesh to conduct bio-equivalence
research for its medicine. The company has introduced 30
new products in the market, and has grown by more than
20%, which is almost twice as much as the overall growth of
this industry in the country. Aristopharma’s current market
share is about 5.2%, and the company aims to establish itself
as one of the top five players by the end of 2009.
http://www.thefinancialexpress-bd.com/2008/12/28/54352.html
Telecoms
Telecoms
Grameenphone to introduce BillPay for DESCO subscribers
soon
The Financial Express, Tuesday, December 30, 2008
All subscribers of the Dhaka Electric Supply Company
(DESCO) will soon be able to pay their electric bills either
from their Grameenphone (GP) handset or from any GP-
authorized BillPay outlets at anytime from any location.
Earlier this year, GP won the contract through an open bid
initiated by the DESCO. The service aims to remove
consumers' hassles associated with standing in long queues,
travelling, limited payment hours and various post payment
harassment. In the initial phase, DESCO consumers will
enjoy easy access to BillPay outlets at convenient locations.
Consumers with mobile phones will get an immediate
confirmation of bill payment from DESCO when bills are paid.
Customers will also be able to make queries regarding
present and past bill status via SMS or can receive
assistance from GP's BillPay helpdesk. DESCO will enjoy
fully automated reconciliation processes, reduced time
between bill receipt and posting - resulting in faster available
funds as well as improved cash-flows and reduction of
manual processing costs and errors.
http://www.thefinancialexpress-bd.com/2008/12/30/54540.html
Textiles
BGMEA calls for reducing
reducing Chittagong port service charges
The Financial Express, Tuesday, December 30, 2008
The Bangladesh Garments Manufactures and Exporters'
Association (BGMEA) has asked for a reduction in charges
for different services offered by the Chittagong Port (CP).
The Chittagong Port Authority (CPA) raised different port
charges last June, resulting in increased garments owners’
expenses for exporting their products.
Freight charges of 20 feet containers rose to USD 6 from
USD 1.5 and that of 40 feet containers was re-fixed at USD
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AT Capital Weekly Update
AT CAPITAL RESEARCH
12 from USD 3. The charge for importing goods was
increased to BDT 816 (USD 11.9) from BDT 408 (USD 6)
export charges rose to BDT 368 (USD 5.4) from BDT 184
(USD 2.7).
http://www.thefinancialexpress-bd.com/2008/12/30/54533.html
2 2
Indian company 5.86mn in Karnaphuli EPZ
company to invest USD 5.86m
The Financial Express, Tuesday, December 30, 2008
An Indian company will set up a knit garments manufacturing
factory in the Karnaphuli Export Processing Zone (EPZ). M/s
White House Clothing BD (Pvt) Limited, a 100% Indian
company, will invest USD 5.86mn in the project. The
company will create employment opportunity for 1,203
people, including 24 foreign nationals.
http://www.thefinancialexpress-bd.com/2008/12/30/54546.html
Export growth of woven sub-
sub-sector declines
The Financial Express, Monday, December 29, 2008
The country's apparel sector, especially the woven sub-
sector, suffered slightly in November 2008, as import by the
foreign countries declined due to the ongoing financial crisis.
According to industry insiders, the industry is now waiting for
orders to be negotiated in January-February when retail
stores will reopen in foreign countries after the Christmas
and year-end sales. The flow of new orders will determine
whether the local textiles sector remains safe in face of the
global financial turmoil.
http://www.thefinancialexpress-bd.com/2008/12/29/54432.html
Tourism
Search for Sheraton operator hits snags
The Daily Star, Sunday January 04, 2009
The government's search for a new company to operate and
manage Dhaka Sheraton Hotel is being held up temporarily.
The hotel requires a one-year closure, which means profit
loss for the government and temporary job losses for the
hotel's 600 employees. The government continues talks with
Ramada Plaza, a three-star hotel of US-based international
chain Wyndham Worldwide, and Marriott International. A
Marriott team is expected to arrive in Dhaka by the end of
this week for negotiations. The government has bargained
with at least seven international hotel chains in the last six
months mainly on renovating Sheraton without closing it. The
cost of renovations will be around USD 20mn.
In November, Starwood, the management company of
Dhaka Sheraton, extended its contract with the government
till March 31. Starwood's 25-year deal expired on December
31.
Sheraton made an operating profit of USD 4.16mn last year
and forecasts 10% profit growth this year, according to
Trevor MacDonald, general manager of Dhaka Sheraton.
http://www.thedailystar.net/newDesign/news-details.php?nid=69959
2
One of the top EPZ’s at Chittagong
19
4 January 2009 AT CAPITAL RESEARCH

AT Capital Team – Dhaka

Ifty Islam Managing Partner (880-2)-8155144, ext. 132 ifty.islam@at-capital.com
Syeed Khan Partner (880-2)-8155144, ext. 109 syeed.khan@at-capital.com
Akther Ahmed Senior Advisor (880-2)-8155144, ext. 108 akther.ahmed@at-capital.com
Masud Khan Senior Advisor (880-2)-8155144, ext. 113 masud.khan@at-capital.com

Jisha Sarwar Senior Research Associate (880-2)-8155144, ext. 119 jisha.sarwar@at-capital.com

Mohammad Emran Hasan Senior Associate (880-2)-8155144, ext. 120 emran.hasan@at-capital.com

Ahmad Sajid Research Associate (880-2)-8155144, ext. 135 ahmad.sajid@at-capital.com

Abdullah-Al-Farooq Research Analyst (880-2)-8155144, ext. 133 abdullah.farooq@at-capital.com
M. Emrul Hasan Research Analyst (880-2)-8155144, ext. 138 emrul.hasan@at-capital.com
Md. Zahidur Rahman IT Analyst (880-2)-8155144, ext. 140 zahidur.rahman@at-capital.com
Sohana Alam Seraj Office Manager (880-2)-8155144, ext. 132 sohana.alamseraj@at-capital.com

AT Capital Team – North America/Asia

Zarif Munir Senior Advisor zarif.munir@at-capital.com
Professor Jahangir Sultan, Ph.D. Senior Advisor jahangir.sultan@at-capital.com
M. Nasim Ali Senior Advisor nasim.ali@at-capital.com
Iqbal Hussain Senior Advisor iqbal.hussain@doctors.org.uk
Robert Kraybill Senior Advisor robert.kraybill@at-capital.com

© Copyright 2008. Asian Tiger Capital Partners Limited, Level 16, UTC Tower, Panthapath, Dhaka –
1215, Dhaka, Bangladesh. All rights reserved. When quoting please cite “AT Capital Research”. The
above information does not constitute the provision of investment, legal or tax advice. Any views
expressed reflect the current views of the author, which do not necessarily correspond to the opinions of
Asian Tigers Capital Partners or its affiliates. Opinions expressed may change without notice. Opinions
expressed may differ from views set out in other documents, including research, published by Asian
Tigers Capital Partners Limited. The above information is provided for informational purposes only and
without any obligation, whether contractual or otherwise. No warranty or representation is made as to the
correctness, completeness and accuracy of the information given or the assessments made.

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AT Capital Weekly Update 20