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Bottlers of soda drinks,
Pepsi, 7-Up and the like, are an exception in an
otherwise depressed market for small manufacturing
companies listed in the Iraq bourse, ISX. For the
second trade session in a row, bottlers of soda such
as Baghdad Beverages, or Baghdad Pepsi as is
commonly known and Northern Beverages, Northern
Pepsi as is commonly called, have been making
significant gains.
In fervent trade Northern Pepsi which is a private
soda bottler with two major plants in Northern
cities of Kirkuk and Mosul, gained on July 4 another
14 percent closing at ID 5.3. There were 153 million
shares traded in 113 contracts worth ID 793 million
or just over $0.5 million.
The company has 6.7 billion shares outstanding.
During 2004 the company raised its paid up capital
by 150 percent through the issue of new shares sold
for cash to shareholders for ID 1.5 per share. When
the shares of the company first entered the market,
late June, after the new share issue, it was trading
for ID 4. In less then two weeks the shares have
soared to ID 5.3 making a 32 percent leap. Punters
expect that this particular share has more steam in
it given that the company, unlike its Baghdad
sister, is fully private with no state ownership
whatsoever. Moreover, analysts say that Northern
Pepsi can easily dominate the soda market in
northern Iraq and Kurdistan. Nationwide the market
for soda is said to be worth at least $0.5 billion
per annum, the share of which in the north is no
less then 30 percent. The capitalization value of
the company at July fourth's closing price is about
$24 million. Analysts say that the company's assets
together with potential business and good name are
worth at least $30 million if not more.
Bottler of 7-Up soda, orange juice and a brewer of
Iraqi beer, the National Food Industries, is another
major beverage company to make quite gains in the
last few sessions. The company has three major
plants situated on huge plots of prime commercial
and industrial land located no more than a 20 minute
drive from the city center of Baghdad. In quite
trade the shares of this company gained eight
percent July 4 closing at ID 5.8. With 2.2 billion
shares outstanding, the market value of National
Food Industries is $8.8 million, which is way below
the value of its assets.
The poor performance of a once very prosperous and
highly profitable company is explained by years of
very bad management, plundering and illicit
profiteering. The bad blight of the company started
when protégées of the old regime linked to Uday
Saddam Hussain took effective control of the
company. It is ironic that the state even today
still holds a substantial part of outstanding shares
of National Food Industries in the form of stakes
held or controlled by the so-called Industrial Bank,
which is a state owned specialized bank ostensibly
established to support the private sector. Analysts
say that under new honest and transparent management
the company could easily restore its earlier glory.
Pepsi Baghdad with plants built on leased state land
located next to the National Food Industries is the
biggest of the beverage bottlers. It has an
outstanding 25 billion shares of which some 15
percent is still owned or controlled by the
Industrial Bank. In the last few weeks 2.5 billion
shares were sold by the Industrial Bank to private
investors in special orders. These transactions seem
to have stimulated interest in the company leading
to a six percent gain in July fourth's trade. The
shares of the company closed at ID 7.25. Some 56
million shares were traded in 113 contracts. Total
market value of Pepsi Baghdad is now $125 million.
According to financial analysts, a good proportion
of this value is explained by the size current and
potential market that this company can exploit.
ISX-Aman
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