Many brokers recommend GLAS as a BUY and past performance seems to be good and the trend is upward.
Dividend yield is above 5% and asset value per share @ 3.2x is very attractive.
Quarterly financial report(3/31) is yet to come and figures may have gone up further.
But there are some worrying concerns.
-Company is enjoying a BOI tax free period of 5 years. This get expired at the end of this year.
After that company is liable to pay 10% tax for 2 years and 20% there after.
GLAS enjoys the business monopoly and will be able to pass the tax burden to customers,
but definitely this will have an impact on overall profit.
-Glass production requires a great amount of energy.
Recent increase in electricity and fuel cost will increase the production cost at least by 30% (my estimate).
Being a BOI company and export enterprise, company gets electricity at a very low cost.
(less than Rs.3 per kwh while a normal house hold pays nearly Rs.5)
I don't know whether this tariff will change with the loss of BOI status.
Any way the cost of furnace oil and gas will have a direct impact on production cost.
Please share your idea on future prospect of the industry.