Analyst Briefing: Ghani Global Glass to increase export volume; eyes Russian, MENA, African markets

November 20, 2020 (MLN): Ghani Global Glass Limited (GGGL) recently conducted its analyst briefing to discuss the latest financial performance, as well as the ongoing projects of the company.

To recall, the company had reported earnings of Rs 0.35 per share, up by 2.2 times YoY for 1QFY21 ended September 3, 2020. The improvement in earnings was attributable to Gross margins, (31.2% in 1QFY21 from 29.5% same period last year), reduction in finance costs (down by 26.8%YoY) owing to a sharp decline in interest rates, and a lower effective tax rate of 7.4% as a result of brought forward losses and tax credit.

Ghani Global Glass Limited (GGGL), a subsidiary of Ghani Global Holdings Limited (GGL), is in the business of manufacturing tube glass where major competition arises from imports from Europe and China.

According to AKD Securities, GGGL has a share of 90% in the Chinese glass tube market whereas the market share in the European glass tube market stands at 15-20%. The latter is used mainly by high-end National companies and MNCs. The current melting capacity is slated at 80-90 tons/day where viable production stands at 15-16 tons/day where with the addition of a second furnace, total viable production would reach 20-22 tons per day.

Sharing their insight on the latest as well as future performance, the management plans BMR of the first furnace once the second furnace comes online. The company is expected to set up another glass furnace (in addition to the second which is already in process) for which the company plans to raise a mix of debt and equity. In the first phase, the expansion would include a capital expenditure of Rs 600-700 million.

With regards to the value-added segment, the company has started production of Ampoules and Vials from in-house glass which has contributed to increasing margins. GGGL has 22 ampoules’ machines with a production capacity of 50 million units per month. With the refurbishment of 7 ampoules, the management informed that the production capacity will increase to 60 million per month, the research of Taurus Securities highlighted.

On the export front, the company is currently exporting mainly to Bangladesh, Argentina, Mexico, and Egypt while it is further exploring Russian, MENA, and African markets. The company earns higher margins in exports vs. local sales since no duty protection currently exists on local products, the AKD research added.

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