GGL & GGGL_Analyst Briefing Notes, (AKD Daily, Nov 20, 2020)
- Ghani Global Holdings Limited (GGL), and Ghani Global Glass Limited (GGGL) held their analyst briefing yesterday. By way of background, GGL is a holding company with a stake of, 99.4% in Ghani Chemicals Limited (GCIL) and 50.1% in Ghani Global Glass Limited (GGGL). The company reported consolidated earnings of PkR0.66/sh in 1QFY21 compared to PkR0.21/sh in the same period last year and –ve PkR0.34/sh in the previous quarter.
- Turnaround in performance is attributable to, i) uptick in average volumes of gases (GCIL) as a result of COVID (+35-40%YoY/month) of which ~50% is sustainable in the near term, and ii) penetration by glass segment (GGGL) in the local market which along with diversification to exports and value added segments contributed in pulling up margins to 31.2% in 1QFY21 from 29.5% same period last year.
- Furthermore, GCIL has locked in long term contracts with EPCL and ATRL (supply of Liquid Nitrogen), providing additional thrust and sustainability to earnings going forward. The contract with EPCL will result in 20% increase in share of Argon gas (premium product) in the overall sales mix (currently 12%) thereby improving margins.
- GGL is currently trading at a P/E of 4.5x, where volumetric growth in gas segment through uptick in economic activity as well as organic factors (as highlighted above) could drive stock performance in the near term. GGGL has gained 12.0% CYTD to trade at a P/E of 9.9x where management’s plan of raising a mix of equity and debt to finance expansion plans could open up valuations.
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