The management of TPL Properties Limited (TPLP) held analyst briefing session post announcement of 1HFY22’s financial results to discuss company’s performance together with throwing some light on outlook. Please find key takeaways of the session below:

Brief Takeaways

· While briefing on TPL Corp’s group structure, the management told that the strategic holding of TPL Corp (TPL) in TPL properties (TPLP) has increased from 35% to 40% through acquisition of 42.6mn additional shares during June-Dec ’21.

· Highlighting the company’s financial performance, management mentioned that during 1HFY22, the company posted a consolidated profit after tax of PKR 3.5bn (EPS: PKR 10.3) as compared to Loss after tax of PKR 8.4mn (LPS: PKR 0.02) during SPLY. The increase in profitability is mainly attributable to fair value gain from Mangrove project and Technology Park.

· The management mentioned that currently there is no new revenue stream at this point in time, albeit with structure in place, it will largely be driven by dividend income.

· So far, the company has raised PKR 18.35bn (USD 100mn), with PKR 7.5bn of investment being made by TPLP being a strategic investor with remaining investments being made by the institutional investors. The disbursements are expected to be made by mid of April’ 22. The company is targeting to raise USD 500mn through initiating further funding rounds. REIT Fund I will be acquiring 3 major SPVs from TPLP under its initial asset portfolio by the end of April’ 22.

· This transfer will enable TPLP to realize distributable gains of PKR 4.3bn (PKR 8.5/share). The management highlighted that once the assets get transferred to the REIT, the company will become debt free.

· Proceeds from short term borrowing will be utilized to finance acquisition of mangrove, which is expected by 15th April ’22, the management added.

· Approvals with respect to STZA (Special Technology Zones) licensing for Technology Park from authorities is expected within the next few weeks.

· TPLP will derive dividend income from TPL REIT Management Company, TPL developments, TPL properties and REIT Fund I; with the Fund’s NAV appreciation further adding to its gains, given the fact that it has 40% shareholding in it.

· TPL investments management, held by TPL REIT Management Company is running different feeder funds and will allow international investors to invest directly into TPL REIT Fund I. This will enable the fund to grow at a much faster pace

· While responding to the Q&A session, the management mentioned that for the first 12 months the company is in a very comfortable position for financing its projects.

· It further added that it has sufficient investments coming in through REIT I to finance construction expenses, at least for the next 2-2.5 years.

Courtesy – AHL Research