Corporate Briefing: TRG Pakistan Ltd

The management of TRG Pakistan held a Corporate Briefing session today (28th Jun’21) to discuss the financial results of and future outlook of the company.

Key Takeaways

· To recall, the company posted a Net Profit of PKR 7,226mn (EPS: PKR 13.25) in 9MFY21 against PKR 19mn in SPLY, given company received a higher share of profit in equity of PKR 8,413mn.

· Currently, TRG Pakistan Limited has a 43% holding in TRG International (TRGI). While TRGI has 37.9%, 63.5% and 70% stake in Afiniti, Ibex and e-Telequote, respectively.

· During 6MFY21, the company’s subsidiary Afiniti and e-Telequote had an annualized revenue of USD 237mn and USD 193mn, respectively, with historical growth rate of 75% and 52%, respectively. Whereas in 9MFY21, Ibex (another subsidiary) posted annualized net sales of USD 446mn.

· The company’s subsidiary e-Telequote is expected to be sold to a USA based company; the transaction may be finalized by Jul-Aug’21. The subsidiary’s enterprise valuation as per the company is USD 455mn (after deduction of net debts worth USD 57mn). The company plans to utilize the proceeds to i) distribute as dividend for stakeholders, or ii) buyback shares of subsidiaries/TRG International as a whole, after consideration by management. It pertinent to mention here that there can be possible tax implications once the transaction is completed.

· TRGI (Bermuda) shall be controlling the sales proceeds

· During 9MFY21, the company successfully listed Ibex Global on Nasdaq.

· New office of subsidiary Afiniti has now been setup in Beijing, China after an office was established in Hong Kong. With this, the company aims to tap into the huge Chinese market.

· Upon a question of announcement of 15% technology tax by G7 countries, the company explained that since it is based in Bermuda, this will have an impact on company’s earnings. However, the company does not see implementation of this in the coming 4-5 years.

· As per company management, TRG was impacted by COVID-19 as the lockdown limited call center services. While customer calls increased significantly by 20%-40% and benefited the company post lockdown as customers preferred more home services instead of going to the market in person.

· Regarding question of a 5-yr plan the company stated that it has no plans to make further investments.

Courtesy – AHL Research

 

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