Author Topic: THALL -- Thal Limited  (Read 79304 times)

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Offline SBM

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Re: THALL -- Thal Limited
« Sticky post on: October 19, 2013, 09:30:56 PM »
relationship of Thall with Metro cash & carry business


Thall owns 60% of habib metro pakistan (leaseholder of the land on which stores are built, rents it to operator)
thall owns 25% of metro habib cash and carry      (operator of 9 METRO  branded stores )
thall owns   100%     of makro-habib pakistan ( leaseholder of the land of the disputed saddar store )

habib metro pays dividends to the extent of rent it receives from the operator (330 million this year )
metro habib c & c made a loss of 1.562 billion in 6 months ending june and 520 million last year & may need equity injection going forward.



« Last Edit: October 19, 2013, 09:33:31 PM by ouulman »
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Re: THALL -- Thal Limited
« Reply #299 on: October 19, 2013, 09:30:56 PM »

Offline Mightee

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Re: THALL -- Thal Limited
« Reply #300 on: January 23, 2017, 01:03:41 PM »
Thanks Sabir bhai

Offline Mightee

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Re: THALL -- Thal Limited
« Reply #301 on: January 31, 2017, 11:54:58 AM »
Sabir bhai is it the right time to enter?

Offline aghapk

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Re: THALL -- Thal Limited
« Reply #302 on: February 02, 2017, 10:15:33 AM »
This forum is so quiet. I guess no interest in Thall. Can any senior guide?

Offline SageX

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Re: THALL -- Thal Limited
« Reply #303 on: May 29, 2017, 11:16:37 PM »
This share has quietly Appreciated from 600 to 700 (+16%) since inclusion in msci. No coverage at all given to this. Any short to mid term TP for this?

Offline Farzooq

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Re: THALL -- Thal Limited
« Reply #304 on: June 07, 2017, 02:06:46 PM »
Thal Limited: Orange Cab Scheme to rev up earnings

We lift our earnings estimates for Thal Limited (THALL) post (i) release of 9MFY17 accounts, (ii) announcement of orange cab scheme by Punjab govt. and (iii) upward revision in INDU’s earnings estimates.
As a result, our EPS estimates for THALL have increased by 3%-5% over FY17-FY21F while our revised TP (SOTP-based) for the scrip is PKR776, up 17% from previous TP. We maintain our ‘Overweight’ stance on THALL.
We have also taken this opportunity to incorporate value of THALL’s investment in Sindh Engro Coal Mining Company (SECMC) and estimate it to add PKR47/sh to Thall’s valuation.
Punjab govt. recently announced plans of distributing 50,000 automobiles under ‘Apna Rozgar Scheme’ to the unemployed youth of the province. We believe, this project is likely to give significant impetus to sales of THALL’s engineering segment.
At current levels, THALL provides 15% upside to our revised TP of PKR776/share along with a dividend yield of 3%. THALL is currently trading at an attractive P/E of 11.2x as compared to 15.4x for the sector (implying a discount of 37.5%).
Estimates revised up; maintain ‘Overweight’: We revise up our earnings forecast for THALL by 3%-5% over FY17-FY21F incorporating for (i) improvement in volumetric sales outlook post announcement of ‘Orange Cab Scheme’ and (ii) upward revision in our earnings forecast for associated company INDU. Furthermore, we also take this opportunity to incorporate value of THALL’s shareholding in Sindh Engro Coal Mining Company (PKR46.7/share) in our valuations. Consequently, our TP on THALL has been revised to PKR776, reflecting an increase of 17% from our previous TP.

Orange Cab Scheme & tractor scheme to speed up engineering segment sales: According to media reports, Punjab govt. is set to launch yet another taxi scheme under which 50,000 units would be distributed amongst unemployed youth on interest free instalments. Punjab govt. has allocated PKR35bn for the project in Budget FY18. THALL, being one of the largest suppliers of automobile parts and components in the country, would benefit from increase in automobile sales by way of increased sales of its engineering segment. Taking this project into account, we have increased our volumetric sale assumption for THALL over FY18-19F, by 1%-8%. Furthermore, govt. of Sindh has also earmarked PKR2bn subsidy for purchase of tractors in its budget FY18. Although, we have not included increased sales due to this scheme in our estimates (as the case is under litigation), it represents a significant upside to our valuations.

Shareholding in SECMC valued at PKR47/share: THALL’s investment in SECMC project (11.9% shareholding) is estimated to add PKR3.8bn or PKR47/share to its value. SECMC is a joint venture where its shareholders include Government of Sindh, Engro Powergen, THALL, HUBC, HBL & China Machinery Engineering Corporation. It is currently developing a coal mine in Thar for power generation purposes. The project will be implemented in two phases. First phase would come online in FY19 and start producing 3.8mn tons of coal whereas, in the second phase mining capacity would be enhanced to 6.5mn tons by FY20. SECMC achieved financial close in Apr’16 and the total size of the project is estimated to be USD801.3mn with a debt /equity ratio of 75:25.

Improved volumes & margin jump in 9MFY17: THALL reported net earnings of PKR53.26 in 9MFY17, up 1.9x on a YoY basis. This impressive growth in net earnings came about as a result of (i) higher than expected gross margins (up 1.25ppts YoY) as higher capacity utilization levels allowed for improved absorption of fixed costs such as salaries, (ii) 9% growth in net sales as a result of soaring auto sales in the country, (iii) one-off gain from sale of associate Metro Habib Cash & Carry (PKR26.2/share), and (iv) absence of one-off loss this year emanating from write off of Saddar store (PKR13.8/share). Effective tax rate expanded by 2.9ppts during the period as core operations, which are taxed at a higher rate, made a larger contribution to net income (52%) as compared to same period of last year (-18%).

Investment Thesis: Looking ahead, we believe recently announced Punjab’s Orange cab scheme should provide impetus to volumes while THALL’s investment in SECMC is another strong trigger for valuations. A major upside to Thall’s valuation can come from progress on company’s 330MW, power project (Thall’s stake 50% stake). We maintain ‘Overweight’ stance on the scrip based on our revised SOTP-based TP of PKR776/sh (15% potential upside) and 3% dividend yield.

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Offline Koolfire

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Re: THALL -- Thal Limited
« Reply #305 on: August 29, 2017, 10:06:31 PM »
Failure Is Only a Temporary Change in Direction To Set You Straight For Your Next Success...Only Those Who Dare To Fail Greatly Can Ever Achieve Greatly...

Offline Koolfire

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Failure Is Only a Temporary Change in Direction To Set You Straight For Your Next Success...Only Those Who Dare To Fail Greatly Can Ever Achieve Greatly...

Offline Farzooq

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Re: THALL -- Thal Limited
« Reply #307 on: September 26, 2017, 03:40:06 PM »
Thal Limited: Multiple triggers lined up; reiterate ‘Overweight’

FY17 proved to be an excellent year for Thal Limited (THALL), wherein the company posted record high profit after tax of PKR5.1bn (EPS: PKR63.5), or 2.0x of FY16 earnings of PKR2.6bn.
This stellar growth can be explained by (i) improvement in core operations and, (ii) a one-off gain of PKR2.12bn on exercise of put option.
Going forward in FY18, we anticipate multiple triggers should keep THALL in limelight. These include; (i) prospect of higher sales, and (iii) financial close of IPP project in 3QFY18 that should add an additional PKR93/sh to our TP.
We have adjusted down our estimates for THALL by 2%-5% over FY18-FY22 post release of detailed FY17 accounts, however, our new TP for THALL has reduced only 1% to PKR767/sh as we incorporate new TP of PKR2,297/sh for Indus Motor Company (INDU, previous PKR1,950/sh).
We highlight THALL as low-risk investment in the auto space amid expectations of currency depreciation due to the company’s unique business model (cost plus pricing). At our TP of PKR767/sh THALL offers a 38% upside from last closing along with a dividend yield of 4%.
FY17 earnings boosted by one-off: FY17 proved to be an excellent year for Thal Limited (THALL) with the company posting earnings of PKR5.1bn, up 100% from PKR2.6bn in FY16. Topline of engineering segment increased by 7%YoY while the building materials & allied segment also expanded its sales by 21%YoY driven by 45%YoY and 11%YoY surge in production of paperbags and jute, respectively. Massive rise in jute production is attributable to higher demand from government procurement agencies in FY17 due to low carry-over stocks of wheat as compared to last year, whereas the paperbag segment continues to benefit from healthy dispatch growth of cement in the country. Trickling down, a one-off gain of PKR2.12bn on exercise of put option on its stake in Metro Habib Cash & Carry (Pvt) Ltd lifted THALL’s other income to PKR4.5bn (up 91%YoY). The one-off gain contributed PKR18/sh after taxes to FY17 earnings. Furthermore, absence of one-off loss this year booked on write off of sadder store in FY16 also helped in enhancing the bottom-line (other expenses down 72%YoY). THALL’s share of profit from associate also rose 14%YoY on the back swelling profits at INDU.

Estimates revised downwards; maintain ‘overweight’: We tweak our estimates for THALL post availability of detailed FY17 accounts and revise our volumetric sales assumptions for engineering segment. We now expect THALL to post EPS of PKR57.03/63.17/68.30/sh in FY18/19/20, down 2%-5% from previous estimates.  Furthermore, we incorporate our new TP of PKR2,297/sh on INDU (previous TP PKR1,950/sh) to value THALL’s stake in its associate. Increase in TP of INDU adds an additional PKR21/sh to our TP of THALL. Consequently, our new TP on THALL is PKR767/sh which reflects 38% upside from last closing price. Furthermore, we would like to highlight that THALL’s engineering segment’s unique business model ensures pass through of cost pressures arising due to currency and commodity price movements. Therefore, it is well placed in current circumstances amidst fears of currency depreciation. At current levels, the scrip is trading at a 1yr forward P/E of 9.7x as compared to 8.2x for BMA universe.

Multiple positives on the horizon in FY18: Going forward in FY18, we foresee multiple positives lined up for THALL. These include:-

#1 Prospect of higher engineering segment sales: Launch of new face-lift model of corolla and potential commencement of orange cab scheme during election year could drive sales and profitability growth of the engineering segment in FY18.

#2 Localization of additional auto parts: Thal Boshuku Pakistan (pvt) Ltd, a 55% owned subsidiary of THALL, is planning to locally produce more auto parts thereby substituting imports. Although, we have not incorporated this in our estimates as we await granular details, any development on this front represents an upside risk to our valuations.

#3 Progress on energy sector investments can lead to price discovery: THALL’s investments in the energy sector, include Sindh Engro Coal Mining Company (SECMC) and a ThalNova Power Thar (pvt) Ltd (ThalNova). SECMC, in which THALL has 11.9% stake, is in construction phase and is ahead of schedule. To date 47mn BCM of overburden has been removed and the mine has reached a depth of 86 meters. We have incorporated SECMC in our valuations and it contributes PKR46.9/sh to our TP. SECM has also entered into a coal supply agreement with ThalNova, which is a JV between THALL and Novatex (pvt) Ltd. ThalNova has been granted upfront tariff and generation license by NEPRA while financial close of the project is expected by 3QFY18. We estimate that ThalNova could add an additional ~PKR93/sh to our TP. We particularly look forward to achievement of financial close of ThalNova as the impact of this project is currently not reflected in THALL’s share price.

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Offline MZ

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Re: THALL -- Thal Limited
« Reply #308 on: October 26, 2017, 04:48:21 PM »

Offline Koolfire

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Re: THALL -- Thal Limited
« Reply #309 on: February 23, 2018, 08:04:30 PM »
Failure Is Only a Temporary Change in Direction To Set You Straight For Your Next Success...Only Those Who Dare To Fail Greatly Can Ever Achieve Greatly...

Offline Farzooq

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Re: THALL -- Thal Limited
« Reply #310 on: March 13, 2018, 12:46:29 PM »
Thall Limited: Margins likely to recover in 2H; maintain ‘Buy’

We cut our earnings estimates for Thal Limited (THALL) by 19/14/11% over FY18/19/20E, post: (i) acknowledging margin pressure in engineering and paper sack segment, (ii) actual 1HFY18 results, and (iii) revised earnings estimates of INDU.
Our liking for THALL remains unaltered and we reiterate a Buy with SOTP based TP of PKR723 (hinting at 49% upside). THALL provided direct exposure to growing auto sales of the country and Pakistan’s push to jack-up local coal-based production.
THALL’s subsidiary Thal Boshuku plans on introducing additional parts and components in its product line (seat track assembly), while it’s energy sector projects  are progressing at a decent pace and are likely to achieve COD by FY20/21.
THALL reported below expected consolidated EPS of PKR9.35/sh in 2QFY18, down 70% YoY, mainly as a result of (i) absence of one-off gain of PKR18.3/sh, (ii) contraction in gross margins to 19.7% in 2QFY18, and (iii) slower than expected sales growth in engineering segment.
Key downside risks include (i) delay in financial close of TNP, (ii) delay in commercial operations of SECMC, and (iii) spike in raw material cost.
Earnings revised on lower engineering segment sales and INDU earnings: We revise down our earnings estimates for Thal Limited (THALL) by 19/14/11% over FY18/19/20E, incorporating, (i) tweaked earnings estimates of INDU, (ii) downward revision in engineering segment sales, (iii) higher raw material prices faced by paper sacks division, and (iv) actual 1HFY18 results. We now expect THALL to post EPS of PKR46.3/54.2/60.8 in FY18/19/20E, while our new SoTP based TP on THALL comes in at PKR723/sh.

1HFY18 results underperformed expectations: THALL reported consolidated EPS of PKR9.35/sh in 2QFY18, down 70% YoY. This is primarily due to (i) absence of one-off gain of PKR18.3/sh (after tax) booked last year on exercise of put option on sale of stake in Metro Habib Cash and Carry (Pvt.) Ltd, (ii) contraction in gross margins to 19.7% in 2QFY18 from 23% in 1HFY17, and (iii) slower than expected sales growth. We believe contraction in gross margins was mainly led by downturn in margins of the building and allied material segment while lower than expected sales growth is a result of changing mix of domestic auto sales in favour of newer, higher end variants which have lower deletion levels.

#1 Engineering segment sales growth suffered due to changing sales mix of domestic industry: During 1HFY18, engineering segment posted sales growth of 5% while total automobile sales in the same period grew 28% to 63,669 units. Sub-par sales growth of the engineering segment is explained by rising proportion of newer, higher end models such as BR-V, Civic, Fortuner and Hilux that have lower parts deletion levels and as such do not contribute as much to sales of domestic auto parts manufacturers. On the other hand, volumes of variants with high deletion levels such as Corolla reduced 2% YoY in 1H.

#2 Building & allied material segment; margin pressure amid impressive sales growth: Ever since the start of FY18, the Euro has strengthened by 12% against the PKR. This has adversely impacted margins of the building and allied materials segment (420bps contraction in segment margin) as key raw material of papersack products (reported in building material & allied segment) i.e. kraft paper is imported from Europe. Our channel checks suggest that although the company has increased end product prices, it has not been able to completely pass on impact of increased raw material costs. However, we see high likelihood of further increase in prices during 2HFY18 which should lead to some margin recovery. On the other hand, net sales of the segment have posted an impressive 27% YoY growth in 1HFY18. This is explained by (i) continued growth in cement dispatches in the country (12% increase in dispatches in 1HFY18) which is a key customer of papersacks, (ii) higher jute exports in 1QFY18, and (iii) increase in papersack prices.

Energy sector projects coming along at a decent pace: THALL’s energy sector projects are coming along at a decent pace.

#1 SECMC to achieve commercial operations in Jun’19: Sindh Engro Coal Mining Company (SECMC) has achieved financial close and signed Coal Supply Agreements (CSA) with ThalNova Power and Thar Energy for supply of 1.9mn tons of lignite coal per annum, each. To date 72 mnbcm of overburden has been removed from the site and the mine has reached a depth of 120 meters. SECMC is expected to commence commercial operations from Jun’19. We value THALL’s 11.9% stake in the project at PKR46/sh.

#2 ThalNova Power Thar; financial close expected by 1QFY19: ThalNova Power Thar (Pvt) Ltd. (TNP) has signed Power Purchase Agreement (PPA) with Central Power Purchasing Agency Ltd. (CPPA) and CSA with SECMC for supply of 1.9mn tons of lignite coal per annum. TNP has gained all necessary approvals from relevant authorities(NEPRA, PPIB, SEPA, etc.) and completed all requisites with the exception of financial close which is now expected to be completed by 1QFY19 rather than previous management guidance of 3QFY18. We have not incorporated this project in our valuations as we await financial close, however, our estimates suggest that this project could add as much as PKR87/sh to our valuations and represents a key upside risk.
 

Outlook- Multiple triggers in the offing: Going forward, we foresee THALL’s gross margins and earnings to recover on a sequential basis, as company gradually passes on the impact of rise in kraft paper prices. Furthermore, localization of recently introduced variants are also likely to rise with the passage of time due to govt.’s deletion targets, which would aid sales growth of engineering segment. Moreover, we highlight potential financial close of TNP in 1QFY19 as a key event to watch out, as investors may begin to incorporate impact of TNP in market price of THALL and as such aid price discovery in the scrip.

Valuations; maintain ‘Buy’: We revise down our SoTP based TP on THALL to PKR723/sh but maintain our ‘Buy’ stance on the scrip. At last closing, the scrip offers an upside of 49% along with 4% dividend yield.

Key risks: Key upside risks to our estimates include (i) financial close of TNP project, and (ii) increase in engineering segment sales on the back of rising localization levels and auto sales. On the other hand, key downside risks include (i) delay in financial close of TNP, (ii) delay in commercial operations of SECMC, and (iii) spike in raw material cost.

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Offline Farzooq

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Re: THALL -- Thal Limited
« Reply #311 on: May 17, 2018, 12:09:49 PM »
Thall Limited : Progress on energy sector projects is key near term catalyst

We revise down our earnings estimates of Thal Limited (THALL) by 8-20% over FY18-FY22E incorporating (i) lower earnings for INDU, (ii) actual corolla sales in FY18TD, and (iii) drop in auto sales in FY19 due to budgetary measure by govt. Consequently, we arrive at a SoTP-based TP of PKR653/sh.
Despite earnings estimates cut, we maintain our liking and Buy recommendation on the stock. Growing product portfolio in engineering, impressive sales in building & allied materials segment, near-term triggers in power segment underpin our liking.
THALL is all set to offer complete automobile seat solution via capex in new facility at its subsidiary (THALL owns 55%), which currently makes only few parts for seat. New product may offer major upside to our numbers.
Both of THALL’s energy sector projects are progressing at a decent pace where financial close of its 330MW coal based power plant is key near-term upside trigger while commissioning of coal mining venture is targeted in 2HFY19.
Key risks to our thesis include (i) prolonged adverse regulatory action on car sales, (ii) delay in energy sector projects, and (iii) sharp hike in raw material prices of jute and papersack segments.
Earnings revised down; Buy maintained: We revise down our earnings estimates of Thal Limited (THALL) by 8-20% over FY18-FY22E on account of (i) 3-20% lower EPS estimates for Indus Motor Company Limited (INDU), (ii) lower than expected Corolla sales in FY18TD due to capacity constraints, and (iii) expected drop in auto sales in FY19 due to budgetary measures by govt. to bar non-filers from buying cars. We also take this opportunity to incorporate new TP of INDU of PKR1,938/sh and consequently arrive at our new SoTP-based TP for THALL of PKR653/sh, reflecting an upside of 31% along with dividend yield of 3%, therefore, we maintain our Buy call on the scrip.

Engineering segment sales to suffer in case ban on non-filers remains: In budget FY19, govt. banned non-filers from purchasing new automobiles. This is likely to significantly affect auto sales momentum in the country as approximately 40% of automobile sales are made to non-filers. However, our channel checks reveal that some options are available to non-filers to circumvent this ban which includes: (i) purchasing cars through third parties who are tax filers, and (ii) leasing cars from banks/lease companies where the ownership is generally transferred at the end of lease term.  Furthermore, banning non-filers from purchasing cars also runs counter to govt.’s objective of attracting fresh investment under ADP-2016-2021 and therefore might be reviewed, going forward. Although, we foresee this ban to be watered down, it may reduce THALL’s volumetric sales by 7-9% in FY19. Beyond FY19, auto sales and consequently, engineering segment sales would recover, in our view, as govt. realizes potential loss of revenue (various taxes on auto sales) and investment from continuation of this ban.

Maintain liking despite earnings revision: Despite earnings estimates cut, we maintain our liking and Buy recommendation on the stock. Growing product portfolio in engineering, impressive sales in building & allied materials segment, near-term triggers in power segment underpin our liking. At our revised SoTP based TP of PKR653/sh, THALL offers a total return of 34.5% (D/Y: 3.3%). Reiterate Buy!

Engineering segment continues to be the key earnings driver for THALL: THALL’s engineering segment continues to be the key earnings driver of the company representing 78% of net sales. THALL’s market leading position in several auto parts such as thermal systems (Denso A/C), wire harnesses coupled with its initiatives to increase its auto parts portfolio and rising motorization in the country would keep earnings momentum strong, in our view.

THALL’s subsidiary setting up new manufacturing plant: THALL’s 55% owned subsidiary Thal Boshoku (Pvt) Ltd. is setting up a completely new factory at Port Qasim at an estimated cost of ~PKR0.8-1.2bn. At present, Thal Boshoku assembles seat components (side frame, seat track) in Pakistan which would be replaced by complete manufacture. This should allow Thal Boshuku to increase realized revenue per unit sold and thus result in higher profitability. Furthermore, Thal Boshoku has a high reliance on sales to INDU, however, this could change with commencement of complete manufacture of seats and potentially lead to sales to other OEMs in the country as well.

Financial close of power project is a key near-term upside trigger: THALL’s energy sector projects ThalNova Power and Sindh Engro Coal Mining Company (SECMC) are coming along at a decent pace. SECMC has achieved financial close and signed Coal Supply Agreements (CSA) with ThalNova Power and Thar Energy for supply of 1.9mn tons of lignite coal per annum, each. To date, 82bcm of overburden has been removed from the site and the mine has reached a depth of 120meters. SECMC is expected to commence commercial operations from 2HFY19. We value THALL’s 11.9% stake in the SECMC at PKR46/sh. ThalNova Power Thar (Pvt) Ltd. (TNP) has signed all material agreements (Power Purchase Agreement,  CSA) and gained all necessary approvals from relevant authorities (NEPRA, PPIB, SEPA, etc.) with the exception of achieving financial close which is expected to be completed by 1QFY19. We have not incorporated this project in our valuation as we await financial close, however, our estimates suggest that this project could add as much as PKR87/sh to our valuations and represents a key upside risk.

Absence of one off gain pulled down earnings in 9MFY18: THALL reported net profit of PKR2.4bn (PKR29.7/sh) in 9MFY18, down 44% from same period of last year. Net sales of the company during the period rose 8% YoY, however, this was counter acted by 14% YoY hike in COGS and as a result gross margins contracted 3.6ppts. Other income of the company reduced by a massive 57% YoY primarily due to absence of one-off gain of PKR18.3/sh (after tax) booked on sale of 40% stake in Metro Habib Cash & Carry on exercise of put option in same period of last year.

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Offline Farzooq

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Re: THALL -- Thal Limited
« Reply #312 on: November 14, 2018, 01:18:36 PM »
Thall Limited : Share price yet to reflect earnings growth emanating from SECMC

 
We revise our earnings estimates for THALL by -5%/+43%/+36% over FY19/20/21 to PKR40.8/72.6/82.3, incorporating (i) reduction in earnings expectation of INDU and (ii) earnings impact of SECMC. Accordingly, we arrive our new SoTP based TP of PKR607/sh.

THALL’s share price has underperformed significantly in the past 6 months (rel. 14%) due to concerns on volumes of engineering segment on the back of adverse regulatory changes in recent budget.

While we acknowledge pressure on earnings, the market seems to have completely discounted THALL’s foray into the energy sector. Just to highlight, share of profit from SECMC is expected to contribute PKR26/sh in FY20 (36% of bottom-line).   

At current price level, THALL is trading at a FY19/20F P/E of 10.6/5.9x. To note, if SECMC achieves COD 6 months ahead of our expectation, FY19 P/E goes down to 8.2x. At our TP of PKR607/sh, the scrips offers a lucrative total return of 43% (D/Y: 3%). 

Key downside risks to our call include (i) delay in COD of SECMC and (ii) greater than expected slowdown in auto sales. Key upside risks include (i) earlier than expected COD of SECMC and (ii) reversal/water-down of ban on sale of cars to non filers.   

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