Thndr Claps » Thndr Thinkers💭 » Hany Genena » Important lessons from Abu Qir Fertilizers – Part Two
1. It is imperative to not treat profits recorded in the income statements of Egyptian companies as the profits due to the shareholders until after verifying the dividends list.
2. A significant part of the net profits are distributed to the employees, the board of directors, and some other parties.
3. In the case of Abu Qir, as the below figures will show, the difference between the net profits recorded in the income statement and the net profits due to shareholders is huge, EGP 1.4 billion.
Net profit in the income statement = EGP 9 billion
Net income due to shareholders = EGP 7.6 billion
That is, the income due to shareholders is less than the recorded by about 15%.
Therefore, it is necessary to calculate the profitability multiplier using the net profit available to shareholders as follows:
P/E = MCAP/Net profit after distributions
P/E = 37.8 billion/7.6 billion = 5.0x
This was not written by Thndr and this is not investment advice, you should do your own research before making investment decisions.
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