TRG: Listing of E-Telequote is expected to be completed by July-August’21

June 30, 2021 (MLN): TRG Pakistan Limited, a public investment holding company recently conducted a corporate briefing session, apprising investors with the future business outlook of its main business segments whilst also highlighting financial and operational performance during the outgoing FY20 and current 9MFY21.

To recall, TRG posted a Profit After Tax of Rs7.2bn (Rs13.25 per share) as against Rs19.2mn (Rs0.04 per share) during the same period last year.

Currently, the company has a 43% holding in TRG International Limited (TRGIL). TRGIL, which is a portfolio company currently holds 37.9% in Affiniti, 63.5% in Ibex, and 70% in E-Telequote.

While apprising the business performance of its subsidiaries, the management stated that during 6mFY21, Afiniti and e-Telequote had an annualized revenue of $237mn and $193mn, respectively, with historical growth rates of 75% and 52%, respectively. Whereas IBEX posted net sales of $446mn versus $405mn in FY20. The company has seen 10% historical growth in revenues and 15% growth in EBIDTA over the years. The management claims Afiniti’s business model is unique even in international markets. This means that the company not just leads the market but effectively commands it.

Recently, TRGIL has entered into a final agreement to sell all of its stake in its eTelequote (health insurance marketing subsidiary) to a leading US-based financial services company, Primerica Inc. This deal is expected to close by July-Aug 2021.

By this deal, TRGIL is expected to receive nearly $300mn, a portion of which will be set aside for emergency funding of Afiniti and Ibex, while the remainder is planned to be distributed in a manner that provides maximum benefits to the shareholders. As per the CEO, the management is considering two main options for payouts include dividend payouts and buybacks. The final decision will depend on the tax implications of its shareholders.

 Commenting on the long-term plans for TRGI, the management shared that there are no plans to make further investments.

Elaborating further on Afiniti’s unique business model, the company shared that there are no direct competitors of the subsidiary in the public market, even in the international market the business model is unique, meaning that the company not just leads the market but effectively commands it. Affinity has also established an office in China and management believes that China will be a major market for the company’s revenue.

While Afiniti meets the minimum listing threshold of $100mn revenues, the listing of the company may be pushed to 2022, the management said.

With regards to the recent proposal by G7 nations to set a global minimum corporate tax rate of at least 15 percent, the management believes that it will have a significant impact on company’s profitability since it is based in Bermuda which is a zero-tax shelter. However, the company does not see an immediate impact as approval and implementation of this may take a long time.

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