After a long hiatus, TRG Pakistan held an analyst briefing last week. The presentation was focused on showing that TRG Pakistan is actually a holding company which owns 60pc of TRG International.

TRG International, in turn has substantial stake in five different businesses. Since two of the companies have been listed abroad on London Stock Exchange's AIM (a market for smaller growing companies), the market value of those businesses has been unlocked. The company plans to list its third company — Etelequote — in coming weeks as well, which will further unlock its market price.

Based on the different entities worth (details given above), the share price of TRG Pakistan stands at around Rs28/share without applying any holding discount. However, since TRG Pakistan is basically a holding company (like a mutual fund), a holding company discount is warranted, similar to what is applied in the case of Engro, DAWH, Nishat Group companies etc. Applying the two layers of holding discount of 30pc, TRG Pakistan’s share price comes down toRs14/ share.

However, if the SATMAP business does turn out to be a star as highlighted by the management, its listed market value may turn out to be much higher than current management estimates. Post listing of the TRG International next year, clarity over theTRG Pakistan’s worth will also increase substantially and only one layer of holding discount will be warranted.

The management also stated that due to changes in IFRS 10 rule globally, the TRG International will not be booking the earnings/losses of group companies, but will rather become like a holding company resulting in substantial gain (write up of around $10m) compared to its current book value of listed entities. They expect the new IFRS law to be applied to the TRG Pakistan’s account by next fiscal year (subject to approval by ICAP). According to the management, consolidated earnings of TRG Pakistan would be in a profit from second half of fiscal year 2015.

To quote the management, the real star in their portfolio is SATMAP, which aims to improve call centre flow using artificial intelligence. This business is showing tremendous revenue growth and can potentially be worth much more than the $75m worth estimated by the management. Its listing is expected by the year end after it becomes profitable.

Taha Khan Javed is head of research department, Taurus Securities