TRG Pakistan incurs loss of Rs30.8bn in FY24

TRG Pakistan Limited reported its financial results for the year ended 30th June 2024, with a loss after tax of Rs30.8 billion or Rs56 per share.

It reported that this accounting loss was primarily due to the decline in the book value of its holding in affiliate, TRG International, going from Rs78.1 billion on June 30, 2023 to Rs40.5 billion on June 30, 2024.

Analysts covering TRG Pakistan mentioned that as an investment holding company, TRG Pakistan’s results are subject to significant volatility because a portion of its indirect holdings are in publicly traded securities that are marked to market.

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For example, the share price of its indirect portfolio company, NASDAQ-listed IBEX Limited, declined 24% from US$21.23 on June 30, 2023 to US$16.18 on June 30, 2024, but has increased since then to US$20 currently.

The analysts also highlighted TRG Pakistan’s indirect holding in privately-held Afiniti Ltd.

The value of Afiniti attributable to TRG Pakistan appears to have been written down substantially as of June 30, 2024, which is because of the recently announced debt restructuring of Afiniti.

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Since the restructuring appears to be taking place as an in-court process, analysts added that the most relevant point in time to assess the value of TRG Pakistan’s indirect stake in Afiniti would be once the restructuring transaction is completed, reportedly by the end of the calendar year.

In its PSX disclosure and its financial statements, TRG Pakistan reported that on a percentage basis, the value of its fully-diluted indirect shareholding in Afiniti will be “substantially retained” which implies that once the restructuring is complete, TRG Pakistan will still have the opportunity to benefit from an upside in Afiniti.

Following these results, the book value of TRG Pakistan’s equity reflected on its financial statements as of 30th June 2024 is Rs33.3 billion or Rs61 per share.

As of mid-morning, TRG Pakistan’s shares were trading at Rs46.1, or at a 24% discount to its book value as of June 30, 2024.

Brokerage house Topline Securities said the result was in-line with expectations in 4QFY24 – where the company posted a loss of Rs14.1 billion – due to expected valuation based losses in indirect assets of TRG Pakistan through TRG International.

“We believe that going forward, due to improved business performance of Afiniti, valuations will also improve. This improved valuation would be reflected in TRG Pakistan results in the future,” Topline Securities added in the note.