Jehangir Siddiqui & Company lost Rs 14.4 billion in FY09. Compared with robust earnings of Rs 17.2 billion the year before, this is a huge blow; yet, it seems the worst will soon be over for the firm with equity market gradually reviving on the back of improved macroeconomic indicators.
The company's equity that was wiped out by Rs 11.2 billion in the first nine months of FY09 - averaging Rs 3.73 billion per quarter - is estimated to have reduced by only Rs 535 million in the last quarter to stand at about Rs 19.3 billion by the year ending June.
In the last quarter, JSCL recorded a loss of Rs 12.4 billion but that was primarily due to change in accounting standards that required charging the impairment in investments available for sale, to profit and loss account, which was previously booked in the balance sheet. These losses stemmed from massive fall in the country's main equity market where Rs 1.7 trillion were wiped out in FY09.
However, with the KSE-100 index gaining 29 percent since the start of current fiscal year, JSCL is likely to see a positive impact as the unrealised loss of about Rs 16.8 billion on investment positions (available for sale) might reverse in July-September period.
The positions, as per FY08 annual accounts, include Eye Television (18% holding), BankIslami (18.75% holding), EFU general (16.24%), EFU Life (21.92%), Pakistan Reinsurance (6.1%), Attock Petroleum (6.44%) and PICT (19.52% holding). With share prices of these firms showing sharp northward movement during the past few months, it seems logical to conclude that it will lead JSCL's profits in the same direction.
The company gained only Rs 2.6 billion on sale of investments in FY09 (versus Rs 19.3 bn in the previous year), but with market bouncing back both in terms of capitalisation and value traded, the shrewd management of JSCL would be all set to capture it.
Incorporating this financial performance, investors have mostly been sellers in JSCL stock - sending the scrip down to its year-low of about Rs 23.90, lessthan-half from its beginning of the year price of Rs 52.28 per share. Although, JSCL is still underperforming the broader market, it has gradually recovered nearly 25 percent in the past month as investors believe that much of the negativity has already been priced in - with its future perhaps looking positive.
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JSCL
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RS (MN) FY09 FY08 % CHANGE
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Income 3,149 19,086 -83%
Return on Investment 554 630 -12%
Gain on sale of investment 2,575 19,255 -87%
Loss on reval of investment (391) (880) -56%
Expenditure (17,562) (1,885) 832%
Operating &Admin expenses (228) (846) -73%
Finance Cost (572) (943) -39%
Impairment on investments (16,761) (96) 17377%
Profit before taxation (14,412) 17,201 -
Profit after tax (14,413) 17,202 -
EPS (PKR) (18.88) 22.96 -
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