Pakistan: Post-IPO results: Al Shaheer’s profit up by 168%

By Farooq Baloch

KARACHI: In its first financial results since it went public earlier this year, Al Shaheer Corporation Limited reported more than two-fold increase in net profit to almost Rs200 million for the year ended June 30, 2015, according to a notification sent to the Karachi Stock Exchange on Wednesday.

The Karachi-based parent of Meat One – a high-end retail chain of butcheries – reported a net profit of

Increase was mainly because of tax reversal, says analyst. PHOTO: ATHAR KHAN/ EXPRESS
Increase was mainly because of tax reversal, says analyst. PHOTO: ATHAR KHAN/ EXPRESS

Rs196 million or Rs3.23 per share, up by a whopping 168% compared to Rs73 million or Rs1.33 per share during fiscal year 2014.

One of the largest exporters of meat, Al Shaheer saw its revenues for the year rise 12% to Rs5 billion compared to Rs4.4 billion in FY14.

The result was in line with market expectations, according to Zeeshan Afzal, Head of Research at Taurus Securities. He, however, added the increase in profit was mainly because of the tax reversal and not necessarily driven by performance.

The company booked a tax reversal of Rs29 million in FY15. In the budget for 2015-16, the government has allowed a tax holiday of four years to new Halal meat producers, who set up their facilities and acquire Halal certificates by December 2016.

The company is exempted from sales tax on both local and international sales. Furthermore, its income from exports is also taxed at a favourable rate of 1% against the normal rate of 33%.

Its stock, which traded at Rs83.5 per share the previous day, declined by 1.5% or Rs1.26 to settle at Rs82.24 at the close of market on Wednesday with 2.5 million shares changing hands – its highest turnover since September 4 when more than 3 million shares were traded.

Afzal said the company’s distribution cost was also high because of marketing as it was in the process of increasing the number of retail outlets. But this was covered by the tax reversal, he said.

After recording a phenomenal business growth in the last couple of years, the company was listed on the KSE earlier this year in what was the first Initial Public Offering (IPO) by a local food company in four years since the 2011 listing of Engro Foods.

The money raised will be used to fund its nationwide expansion and help the company take an early-mover advantage in the country’s Rs1.25 trillion meat market, which remains largely untapped.

In a recent interview with The Express Tribune, CEO Kamran Ahmed Khalili said, “We will construct modern slaughterhouses and meat processing units for both red and white meat near Lahore and expand into poultry segment, which is double the size of the red meat market.”

Starting in 2008, Al Shaheer set up a slaughterhouse in Karachi and soon became one of the largest exporters of meat to the Middle East region. It entered the local retail market in 2010 by launching Meat One that offers varieties of beef, chicken and mutton cuts.

Published in The Express Tribune, October 8th, 2015.