Tariq Glass Limited - Growth prospects to unlock premium valuations; Buy (Initiating Coverage) -31-08-2016
- We initiate coverage on Tariq Glass (TGL) - one of Pakistan’s leading glass manufacturers - with a Buy rating and TP of PkR120/sh, which offers an attractive upside of 33%. TGL is well leveraged to the Pakistan infrastructure up-cycle; we estimate a 3yr (FY16F-19F) sales CAGR of 14% led by CPEC-led infrastructure activities and resolution of TGL’s supply chain bottlenecks.
- Game changing energy mix shift – from imminent commissioning of 10.5MW RFO based power unit and more reliable gas supply courtesy LNG imports – is likely to unlock fast-track growth with margins leaping to all-time high levels, in our view. Strong glass demand and preference for TGL’s brand further bolster the case for swift growth.
- We expect TGL to trade at premium valuations (FY17F P/E of 7.6x is at a sharp discount of 19%/26% to the KSE-100/IMS Cement Universe), as its earnings growth become more visible. We build dividends from FY19F onwards; earlier payouts are possible but dependent on whether the company diversifies into other product categories (pharma/beverage bottles), which continues to see double-digit growth.
Tariq Glass Industries Ltd. Tariq Glass Industries Limited is a Pakistan-based glass manufacturing company. The Company is primarily engaged in the manufacture and sale of glass containers, tableware and float glass. The Company's brands include Toyo Nasic, Omroc and Nova. The Company's plant has a production capacity of 300 metric tons of glass tableware per day. The Company has a combination of single and double gob press machines, as well as H-28 press and blow and stretch machines for a range of products. The Company has a capability of printing six colors simultaneously, including gold and silver banding. The Company's tableware product category includes Press & Blow, including Goblets, Ice Cream Cups, Tumblers and Decorated Items, and Pressware, including Ashtray, Cake Sets, Fruit Set, Jugs, Mugs, Tea Sets and Water Sets. The Company's float glass product category includes Clear, Mirror, Sandblasted, and Tinted/Reflective. The Company has presence in India and Afghanistan, among others.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.