The development of the stock market requires issuers to take certain actions, which implies openness, transparency and willingness to switch to modern methods of working with shareholders and investors. Holding an event in the format of the “Issuer Day” implies direct interaction of representatives of joint-stock companies with shareholders, investors, and professional participants in the stock market, which will further contribute to increasing the level of trust and recognition of the issuer among investors.
For the first time, the Issuer Day, dedicated to the activities of Quartz JSC, was held online due to restrictions of the coronavirus pandemic.The event was organized by the Toshkent Republican Stock Exchange and FE Freedom Finance LLC with support of the State Assets Management Agency of the Republic of Uzbekistan according to the letter of recommendation of the Capital Market Development Agency of the Republic of Uzbekistan.
The event was attended by representatives of the Toshkent RSE, FEFreedom Finance LLC, State Assets Management Agency of the Republic of Uzbekistan, the Federation of Euro-Asian Stock Exchanges (FEAS) and the media. During the conference, information about the current state of the plant and its development prospects was covered, speakers discussed the latest developments in the stock market and answered questions from investors.
The Chairman of the Board of the RSE “Toshkent” Bekzod Usmonov made a welcoming speech, emphasizing the need for transparency at the current stage of development of the stock market: “Today it is one of the most active issuers in the stock market. Speaking about activity, it implies not only the participation of securities in exchange trading, but also ensuring the transparency of corporate actions for its shareholders and investors. We all remember two public offerings of the plant’s securities: an IPO in 2018 and an SPO in 2019, during which representatives of the company boldly and openly communicated with professional stock market participants and investors over the entire period of the road show”.
It is worth noting that the plant’s shares are traded on the stock exchange almost on a daily basis. Despite the fall in prices after the SPO in December last year, in 2020 there was not a single day for the shares of Quartz JSC not to bid. This is a good indicator of liquidity and investor confidence. In 2019, with the shares of the company, in addition to deals under the SPO, 3 857 deals were recorded, which is 11.7% of the total number of transactions with securities of all issuers included in the stock quotation list. For the first 5 months of 2020, the same indicator amounted to 15.4% or 2 507 deals.
Akmal Buriev, the interim Chairman of the Board of Quartz JSC, acquainted the participants with the activities of the enterprise, talked about the results of 2019, further plans for the development and construction of a new float line: “The expected completion date and production is Q4 of 2020, after which net profit is expected to increase in 2-3 times. The crisis caused by the coronavirus pandemic hit most sectors of the economy; glass production was no exception. The price and demand for products decreased. The quarantine caused disruptions in logistics, which led to the accumulation of released glass in the warehouse of the plant. At the same time, production volumes did not decrease and production did not stop. When demand returns to the level before the pandemic, the cost of production will increase. Restrictions and the abolition of benefits for the import of glass can contribute to this”.
The new float line will produce up to 22.2 million square meters offlat glass per year. To implement the plans, the capacity of the glass-melting furnace will be increased to 400 tons per day. Such a volume will fully cover the domestic demand of Uzbekistan for high quality flat glass and will even allow to export the material. The company will spend more than $70 million on the construction of a new line. $41.5 million out of those is a loan from Asakabank, the rest is own funds. Repayment of the credit line will begin in the Q1 of 2021.
Revenue in 2019 amounted to 247 billion UZS, and in 2018 – 300 billion UZS. Net profit in 2019 amounted to 39 billion UZS, and in 2018 – 83 billion UZS. The return on assets in 2019 was 9% comparedto 26% in 2018.
“According to Freedom Finance analysts and experts, the resulting obligations and the construction of a new line will reduce the company’s net profit and profitability in the near future, but a significant expansion of production will positively affect free cash flows in the future. With the commissioning of the new line, experts expect rapid growth in revenue, EBIT and ROIC”– commented Yevgeny Mozheiko, Executive Director of Freedom Finance in Uzbekistan.
The price of shares of Quartz JSC rapidly fell in the first half of 2019 due to split, that is, the existing shareholders of the plant were issued shares on a one-to-one basis due to the distribution of net profit, which doubled the number of existing shares in circulation. This increased the liquidity of the shares of Quartz JSC, making them more attractive.
After the SPO of Quartz JSC in December 2019, the price of shares of the plant began to fall, which was caused by a number of factors that were not related to the fundamental price of the plant and the attractiveness of this investment. These are situations associated with an increase in capital expenditures for the construction of a new line and quarantine due to the coronavirus pandemic, which paralyzed business life and left many people without savings, so that people had to actively sell the company’s shares at the spot price. We expect a normalization of the market situation soon after quarantine restrictions are completely lifted and the country returns to its former life.
Note: Holding securities and other financial instruments is always risky. The choice of securities as an object of investment and, accordingly, the consequences of this choice are the risk of the investor.