Ghani Glass Limited (PSX: GHGL) is one of the leading players in the glass manufacturing industry of Pakistan. It is part of the reputable Ghani group, which has interest in float glass, container glass, value-added glass, automobiles and beverage products. The group is also involved in mining for silica sand, coal and rock salt.
Ghani Glass is the flagship company of the group operating since the last 25 years. The company was listed on the stock exchange in 1992. Commercial operations of the company started in 1995. Over the years, Ghani Glass has expanded its production capacity and product portfolio to cater to various segments and industries. Ghani's plants were the first ones in Pakistan to get ISO 9001:2000 and 14001 certifications. Recently, these plants have achieved ISO 9001:2008 and 14001:2 certifications as well.
The production capacity of Ghani Glass at the end of 2016 was 395,833 tons per annum. Apart from local sales, Ghani Glass also exports its products to more than twenty countries.
Ghani glass has a wide range of customers, which include many top FMCG and pharmaceutical companies such as Sanofi-Aventis, Pfizer, Coca-Cola, National Foods, Unilever, Abbott Laboratories, GlaxoSmithKline, etc.
Historical performance
Over the last six years, Ghani Glass has been showing constant improvement in its performance. The top line of the company has shown double-digit growth (CAGR 11 percent) from FY11-FY16. The gross margins, after dropping down in FY13 to 22 percent, have gone up to 31 percent in FY16.
Surge in sales and profitability can be attributed to the growing demand of FMCG and pharmaceutical products in Pakistan. Ghani Glass, over the years, has maintained its quality and standing in the market which has enabled it to get orders from companies across the board. The company also increased its capacity ahead of time which also helped it in taking market share when demand kicked in.
Ghani Group also prides itself in operating on minimum debt and same strategy has been adopted with Ghani Glass as well. The main priority of the management and sponsors is to pay off any long-term and short-term debt in the quickest manner possible.
1QFY16 snapshot
During the first quarter of the financial year, Ghani Glass increased its earnings by a remarkable 32 percent as compared to the same period last year. The major reason for this increase was the drop in raw material cost, cheaper fuel and increased capacity. Going with their policy and group strategy, the company also reduced their finance cost by a massive 77 percent by repaying long-term debt.
Share of profit from associate companies also increased by 45 percent which gave a positive boost to the bottom line. The net margin of the company increased by 4 percent compared to previous year.
Shareholding pattern
As of June 30, 2016, over 55 percent of the shareholding is with the directors of the company. The general public holds about 28 percent of the shares. Mutual funds and banks have very small holdings in the company.
The company needs to engage itself with institutional investors so that its share price gets the correct price discovery.
Share price performance
GHGL share price performance since the start of the year has been mixed. At the start of the year, after the announcement of the right issue, the stock price went up. During mid-year, the volumes in the stock declined and there was barely any activity.
On the other hand, the benchmark KSE-100 index marched along and outperformed the script until August. During the last couple of months, the stock has rallied over 40 percent as investors look forward to another positive year of earnings after good guidance by the company in its first quarter result.
Outlook
Being a leader in of the growing sectors of the economy, GHGL's future seems bright. The company management also seems confident; and in their recent report, they have stated that the company's upcoming expansion would enable them to grab a large chunk of the orders coming from CPEC-related activities. Also, the pharmaceutical and beverage sectors' sales are growing each year. That makes Ghani the top beneficiary as it supplies to all top companies.
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