IGI Holdings Limited (IGIHL)

Dear Clients,

IGI Holdings Limited (IGIHL) has transformed itself from an insurance business to an investment holding company. The company has parked its main insurance business, brokerage business and investment company separately. 

IGIHL now derives its core value from the investment arm. The portfolio mainly comprises of FMCG company Packages Limited and Nestle Pakistan Limited among other listed names. Cumulatively, the two listed entities make up 63% of the entire investment portfolio.

The company has also invested in Packages Real Estate (Private) Limited.  The business runs and operates Packages Mall situated in Lahore, Pakistan. The 24.8% stake owned by IGI Investments is marked at its book value amounting to PkR0.8bn. Dividends are yet to commence from the company despite 95% occupancy level since last year as well as management guidance.

Historically, IGIHL has traded at a 54% discount to its market-based portfolio value since the past 5 years. Presently, the discount has steepened to 64% of the market-based SOTP value

IGI Holdings Limited enjoys dividend stream from IGI Investments and IGI General Insurance. Bulk of dividends coming in from listed companies in its portfolio have driven the income booked in the past.

NESTLE has announced CY20 dividends totaling to PkR194/sh while PKGS has announced CY20 dividends at PkR22.5/sh. As a result of increase in portfolio dividends, we see dividend income growing at 48% Y/Y for CY20E.

Stream of dividend is bound to grow steadily with growing profitability of its investment companies. The company is trading at its cheapest levels at a P/B of 1.69x as compared to historical average of 2.4x.

Regards,
KASB Research

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