Thanks for the correction bro.
I noticed this a week ago and should have corrected it. My apologies for that. Now I have some expectations of cash dividend 1.50-2 per share, as well.
The company has not adopted the strategy to accelerate debt repayments, instead it has adopted growth strategy (13,000 new spindles+1.5bn investment in Fatima share (48 per share). so I think it will undertake more long term debt for new spindles whereas equity contribution in Fatima energy can be financed through internal cash flows, as it would be required over 2-3 years.
if they pay 2 rupees cash, that is roughly 10% of cash profit (+ DEPRECIATION). I think if next year textile co's will earn profits similar to what they have earned during 2013, the shares prices will appreciate by 50% in my view as investors remain always worried about the sustainability of earnings from textile companies therefore they discount the valuation by large.
rewm has been profitable since 2010 and has been paying off dividends, this will be the fourth year and next year would be the 5th year, so investor would have more comfort on the business and financials. I am holding this stock for long term as I believe Pakistan competitive position has improved due to high cost of cotton and labor in china, whose textile sector is more than 20 times larger than Pakistan.
I believe the share should trade at least 80% of its book value including the revaluation surpluses as Pakistan currency has depreciated significantly and replacement cost of a similar unit would be quite higher than the book value of the company.
