Irfan Ahmed

Investors’ sentiment towards TRG Pakistan improved after the semi-annual review by global index provider Morgan Stanley Capital International (MSCI) added the firm to one of its indices. The MSCI has also included three other listed companies in its index.

Owned by TRG International, the firm is one of the best performing IT platforms in Pakistan.  Additionally, it has been included in the MSCI Frontier Market FM100 Index.  Ibex, an investment platform of the company, accounts for about 86% of its revenue. Investments are made in businesses that provide top-notch business operations. Tahir Hassan, Marketing Manager at TRG Pakistan, told WealthPK that the company will grow organically as well as through hiring of other business process outsourcing companies that can profit from ‘our expertise’.

“We will achieve long-term success by recruiting and developing the best human capital in the industry.” He said TRG has delivered promising results despite the challenging global macroeconomic environment. “The major driver of this performance is the hard work and untiring efforts of our human capital,” he added. As per MSCI FM100 index methodology, the eligibility criteria for any securities company requires that it must not be subject to a limited ‘invest ability’ factor.

It should have ATVR (average liquidity market) over 10% for the last 12 months and should have started trading at least two months before the index review. Speaking to WealthPK, Muhammad Irfan, financial analyst at Arif Habib Limited, said that the fiscal year 2022 represented a year of consolidation for TRG Pakistan. “TRG's share price currently stands at Rs147.14 per share, and we expect it to rise further to as high as Rs200 in near future.” He, however, said that political instability and market rumours impeded the price growth of TRG shares.

According to TRG’s financial report, the most significant item on its balance sheet is the value of the company’s share in The Resource Group International Limited (TRGIL). “As of June 30, 2022, the value of our share in TRGIL stood at Rs56.7 billion, representing an increase of Rs7.1 billion compared to Rs49.6 billion on June 30, 2021.” In addition to the company’s stake in TRGIL, it also has other assets worth Rs0.04 billion and liabilities of R9.2 billion (primarily relating to deferred taxes), resulting in net assets of R47.5 billion.

The company declared an interest income of Rs8.5 million in its income statement, whereas it incurred expenses of Rs46.4 million. It also declared ‘other’ income of Rs23.1 million. Besides, the firm posted a net loss of Rs5 billion during the year ended June 30, 2022. Year-on-year, the company's earnings per share (EPS) remained negative at Rs-9.132 in 2022 compared to Rs47.402 in 2021. “We always strive to come up to the expectations of our stakeholders and improve the quality of our work,” Tahir Hassan, the company’s marketing manager said. TRG’s earnings per share were Rs10.726 for the three-month period that ended September 30, 2022, against Rs0.058 over the corresponding period of 2021. 

The profitability is primarily attributable to the substantial increase in the share of profit in the account investee and the rupee depreciation. The total number of TRG shares floating in the market is 543.4 million, with 381.7 million free floating shares. Muhammad Irfan, the financial analyst at Arif Habib Limited, said that TRG Pakistan has the opportunity to attract foreign direct investment into Pakistan after being added to the MSCI index. “TRG Pakistan is one of the companies in the technology sector that have made a windfall profit in the last one and half years due to long-term and high-value projects awarded by foreign companies.” 

According to its latest financial statement, the company declared an interest income of Rs375,000 during the first quarter of the ongoing fiscal year 2022-23 (1QFY23), showing a decline of 90% YoY. Whereas it incurred expenses of Rs19.76 million during the period. Resultantly, the company incurred an operating loss of Rs19.38 million.  Notably, the share of profit in account investee recorded a massive surge during the 1QFY23 as it clocked in at Rs6.9 billion compared to Rs38.22 million over the same period last year. The company has remained focused on enhancing the value of portfolio assets and then monetising them in due course to maximise value and liquidity to shareholders, said stock market experts.  In a nutshell, TRG Pakistan has attracted foreign investors' attention with its higher weighting and has a wider exposure due to a larger canvas and penetration in the MSCI.

 Credit : Independent News Pakistan-WealthPk