Karachi, September 29, 2021 (PPI-OT): KTML: Key takeaways from the Annual General Meeting
Kohinoor Textile Mills Limited (KTML) held its virtual Annual General Meeting yesterday to discuss FY21 results and the outlook of the company. We present key takeaways from the session.
The company shared that it has firm export orders for the coming 2-3 months. The management believes that it can also use Home textile segment’s excess capacity to cater to export orders.
The management shared that local business has been more profitable, where on the other hand it has partially passed on the impact of rupee devaluation over to export consumers.
Company has been facing some supply chain issues due to shipping bottlenecks and the management is of the view that this can delay exports for a month or two. Container costs have also increased by 4-5x during the period.
KTML is continually striving to bring in efficiencies in its processes for which it has planned a BMR on its machinery.
The company has also invested in a solar plant which meets 7-10% of the energy requirements and because of which the overall per unit electricity cost has trimmed by Re1/unit. The management is hopeful that there would be no impact of a potential energy price increase on exporters.
The group announced an expansion of 2mn tons for its cement business (Maple Leaf Cement Factory) a few months ago and expansion plans for the textile business are also under evaluation which will soon be presented to the board.
About its subsidiary – Maple Leaf Capital, the company apprised that it has significant exposure in the IT sector and has invested in equities with a long term view.
Valuation:
KTML’s portfolio is largely dominated by MLCF, which we conservatively value at ~Rs48/share, after applying 30% portfolio discount to MLCF’s market price (KTML owns 606.5mn shares of MLCF). Add to this ~Rs21/share net value of Maple Leaf Capital and KTML’s portfolio works out to Rs70/share, almost equal to its last closing price.
The current market price suggests zero value assigned to its core operations, which we value at Rs32/share, based on a tentative P/E of 4x on FY22E earnings.