The company maintains robust financial health as is evidenced from its solvency and liquidity ratios and uninterrupted yearly profit which has been constantly trending upward during the last six years. This has enabled the company to support its attractive profit distribution profile.
Hence its stockholders, among whom majority are individual investors, have been receiving good returns on their investments. Consequently this has provided stimulous to the market value of its share triggering it to remain at high market value.
During FY06, the company posted net sales at Rs 471.43 million (FY05: Rs 348.75 million) and gross profit at Rs 101.34 million (FY05: Rs 18.93 million) showing impressive growth of 35% and 435% respectively over corresponding figures of last year. Other income net was on much higher side. Finance cost slightly went up. Profit before tax at Rs 36.74 million (FY05: Rs 25.26 million) and Net Profit after taxation at Rs 33.31 million (FY05: Rs 19.44 million) shot up by 9.3% and 71% respectively over corresponding period of last year. Rising demand of its product give optimistic note.
Habib-ADM Ltd (Habib Archer Daniels Midland Co Ltd) was incorporated in the province of Sindh on July 10, 1980. The registered office of the company is situated at 2nd Floor UBL Building, I.I. Chundrigar Road Karachi. The company is listed on stock exchanges in Karachi and Lahore. It is pioneer producer of rice based starch, sugar and protein and is engaged in the conversion of rice into glucose, dextrose, fructose, sorbitol and maltodextrine. Habib-ADM Ltd's products, are essential ingredients of pharma products, confectionary products, cosmetics and health care products poultry feeds, animal feeds, acquatic feeds, food and beverages, powdered energy drinks and breads and biscuits.
The designed capacity of its plant is 45,000 metric tonnes p.a. of high fructose syrup. Its utilised capacity has been recorded at 42.03% as against 29.06% in FY05, the previous year. Market constraints have been the main factor for low capacity utilisation.
The company's manufacturing facilities are located in the province of Balochistan at Hub Industrial Trading Estate.
As regards external business environments for the company, the company chairman Ghaffar Habib said that his products are carrying higher demand. Because during the period under review high oil prices triggered a higher inclusion of ethanol in motor spirits - diverting sugar to alcohol instead of crystal sugar, which in turn lead to higher sugar prices hence induced higher demand for Habib-ADM's sweeteners.
As regards future prospects, his prediction is that there will be continuing demand for his products supported by high oil prices and this leaves optimistic note for the forthcoming period.
The company's plant has been in operation since 1983/84 and needs replacements of ageing sections such as boiler, generators etc to restore the plant. It is reported that steps have been taken to import the required equipment which is expected to cost approximately Rs 100 million.
The paid up capital of the company has remained constant at Rs 200 million but its shareholders equity has increased to Rs 372.48 million in FY06, the year under review. This translates into book value of the share at Rs 9.31 per five-rupee share carrying 86.20% premium over the par value.
On the other hand recently, the share in the company has been quoted at the stock exchange at Rs 15.50 per share, which is more than three times of its par value. Its shares invariably carry high market value as can be seen from the published statistics of last one year in Daily Business Recorder. During the last 52 weeks the market value of its share was quoted between Rs 6 and Rs 19.95 per share.
As regards ownership of its equity, the company directors and their family members owned 49.97% of the company's total 40.00 million shares. Thirty four joint stock companies owned 19.78% of its stocks. Remaining shares were owned by other individual and institutional investors.
The company has attractive profit distribution profile as during the last six years it has announced dividends for five years while the missing year is 2004. For the year FY06 the directors announced cash dividend @12% (FY05: @10%).
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Performance Statistics (Million Rupees)
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30 June 2006 2005
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Share Capital Paid-up: 200.00 200.00
Reserves & Surplus: 172.48 159.18
Shareholders Equity: 372.48 359.18
Current Liabilities: 101.94 105.17
Tangible Fixed Assets: 223.19 232.75
L.T. Deposits: 3.10 5.83
L.T. Investments in Share
Capital of Subsidiary Company: 1.00 1.00
Deferred Tax: 0.96 -
Current Assets: 245.45 224.77
Total Assets: 474.42 464.35
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Sales, Profit & Pay Out:
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Sales-Net: 471.43 348.75
Gross Profit: 101.34 18.93
Operating Profit/(Loss): 15.84 (46.87)
Other Income-Net: 32.53 18.15
Financial (Cost): (9.56) (7.70)
(Depreciation): (16.76) (16.24)
Profit Before Taxation: 36.74 25.26
Profit After Taxation: 33.31 19.44
Earning Per Share (Rs): 0.83 0.49
Dividend Cash (%): 12.00 10.00
5-Rupee Share Price (Rs)
on 01/03/2007: 15.50 -
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Financial Ratios:
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Price/Earning Ratio: 18.67 -
Book Value Per 5-rupee Share: 9.31 8.98
Price/Book Value Ratio: 1.66 -
Debt/Equity Ratio: 0:100 0:100
Current Ratio: 2.41 2.14
Asset Turn Over Ratio: 0.99 0.75
Days Receivables: 86 106
Days Inventory: 85 88
Gross Profit Margin (%): 21.50 5.42
Net Profit Margin (%): 7.07 5.57
R.O.A (%): 7.02 4.18
R.O.C.E (%): 8.94 5.41
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