Picture Pakistan restricted (PSX: IMAGE) was included in Pakistan as a public restricted firm in 1990. The corporate was previously referred to as Tri-star Polyester Restricted. The corporate modified its title in 2021. The corporate is engaged within the manufacturing and sale of embroidered cloth, polyester filament yarn and ready-to-wear clothes.

Sample of Shareholding

As of June 30, 2022, IMAGE has a complete of 99.538 million shares excellent that are held by 6,799 shareholders. Native common public have the bulk stake of 57.54 % within the firm adopted by Administrators, CEO, their partner and minor youngsters holding 31.39 % shares. Different corporations account for six.42 % shares of IMAGE whereas joint inventory corporations have an possession of 1.51 % shares. Banks, DFIs, NBFIs, Takaful, Pension and inventory funds maintain 1.28 % shares of the corporate. Modarbas and Mutual funds even have a share of 1.28 % within the excellent shares of IMAGE. The remaining shares are held by different classes of shareholders every having a stake of lower than 1 % within the firm.

Efficiency Path (2018-22)

The topline of IMAGE has proven a development momentum in all of the years into consideration with 2021 grabbing the limelight with a stupendous year-on-year topline development of 148 %. 2020, for all the plain causes associated to COVID-19 posted a marginal 4 % year-on-year topline development. The bottomline, nonetheless, transgresses from this sample whereby it slid in 2019 and 2020 regardless of topline development. An evaluation of monetary statements will reveal the underlying particulars behind this efficiency path.

In 2019, IMAGE, then referred to as Tri-star Polyester Restricted, posted a 20 % year-on-year development in topline which got here on the heels of value-added embroidered cloth whereas the polyester filament yarn enterprise was discontinued throughout the yr. Excessive price of gross sales allowed the gross revenue to develop by a meager 9 % year-on-year in 2019 with GP margin clocking in at 51 % from 57 % in 2018. Distribution and promoting expense posted an unlimited 153 % year-on-year rise in 2019 which is principally on account of improve in lease bills. Consequently, working revenue slid by 27 % year-on-year with an OP margin of 19 % in 2019 versus 32 % within the earlier yr. Finance price grew by 35 % year-on-year in 2019 on the again of improve in low cost price throughout the yr. The corporate’s finance price primarily contains of markup on diminishing Musharka finance facility. The rise in finance price was partially offset by different earnings recorded throughout the yr as a few of the liabilities of the corporate had been written again. Nonetheless, the bottomline slid by 32 % year-on-year in 2019 to clock in at Rs.52.67 million with an EPS of Rs. 0.93 versus Rs.1.5 within the earlier yr. NP margin additionally massively dropped from 24 % in 2018 to 14 % in 2019.

In 2020, the world economies had been hit onerous by the worldwide pandemic. In Pakistan, the lockdown started on the onset of spring-summer season when seasonal shopping for of cloth and clothes is on the height. As a consequence of lockdown, the shops of IMAGE couldn’t open throughout March-June, nonetheless, the topline attained a 4 % year-on-year development, due to the e-sales efficiency. The curtailed price on account of lockdown rendered an 8 % year-on-year development in gross revenue with a GP margin additionally ticking as much as 53 % in 2020. Working bills grew on the again on a rise in commercial bills and salaries and wages. This pushed the working revenue down by 12 % year-on-year. OP margin additionally dropped to 16 % in 2020. Finance price grew by a mere 2 % year-on-year in 2020 as the corporate diminished its diminishing musharka finance facility and purchased extra loans from related events. The online revenue slid by 57 % year-on-year in 2020 to clock in at Rs.22.41 million with an EPS of Rs.0.39. NP margin for the yr thinned down to six %.

The poor buyer site visitors on the retailers in 2020 was reversed in 2021 whereby not solely bodily gross sales grew massively however on-line gross sales additionally outshone the final yr’s determine. The corporate grew to become the primary authorized Pakistani vendor on Amazon in 2021 which offered additional impetus to the e-sales of the corporate and allowed the corporate to have entry to clients within the UK, the US and Canada. Whereas the topline did a splendid job in 2021, the GP margin significantly shrank to 44 % on account of hike in uncooked supplies costs. Working bills additionally soared totally on the again of a rise in commercial expense and salaries expense, but working earnings was in a position to boast a 206 % year-on-year development with OP margin rising as much as 20 % in 2021. Though downward revisions had been made within the low cost price throughout the yr, finance price expanded on the again of improve within the excellent debt of the corporate. The bottomline posted a surprising year-on-year development of 414 % in 2021 to clock in at Rs.115.10 million with an EPS of Rs. 2.02. NP margin additionally considerably improved to 11 % in 2021.

2022 was characterised by retailer optimization actions whereby the corporate opened its shops within the prime places of the important thing metropolitan cities and refurbished the present ones so as to add additional momentum to its in-store gross sales. The corporate additionally expanded its on-line retailer. This culminated right into a year-on-year topline development of 72 % in 2022. Nonetheless, excessive price of gross sales on the again of skyrocketing uncooked materials costs in addition to gas and vitality costs put stress on the GP margin which narrowed all the way down to 43 % in 2022 regardless of a 69 % year-on-year development within the gross revenue. Working bills additionally grew considerably on the again of an increase in commercial finances coupled with improve in salaries, lease expense, upkeep and utility expense in addition to charge and subscription costs. The working revenue managed to realize a 23 % year-on-year development however OP margin tapered off to 14 % – the bottom in all of the years into consideration. The corporate additionally made different loss value Rs. 34.36 million because it booked provisions towards NIT items. Regardless of low cost price ticking up, the corporate was in a position to scale back its finance price by 11 % on the again of lesser borrowings. The bottomline posted a momentous development of 81 % throughout the yr to face at Rs.208.17 million in 2022 with an EPS of Rs.2.37. NP margin barely improved to 12 % throughout the yr.

Current Efficiency (1HFY23)

Throughout the interval into consideration the topline boasted a year-on-year development of 52 %. This got here on the again of the well timed launch of Lawnkari and Printkari assortment. The corporate has additionally gained a robust foothold within the export markets. Whereas majority of uncooked supplies consumed by the corporate is domestically sourced which maintain it insulated from the present import restrictions which marred the efficiency of many native corporations, towering inflation didn’t spare the corporate and elevated its price of gross sales by 60 % throughout 1HFY23 which narrowed its GP margin to 42 % from 45 % in 1HFY22. Distribution expense additionally grew by 49 % year-on-year throughout 1HFY23 whereas admin and common bills confirmed some respite and slid by 4 % year-on-year. This enabled the working revenue to develop by 64 % in 1HFY23 with a slight enchancment in OP margin from 18 % in 1HFY22 to 19 % throughout the present interval. Finance price marginally ticked up which is likely to be on account of financial institution costs as the corporate has settled all of the liabilities with the financial institution which saved it from rising low cost price. The online revenue boasted a 71 % rise to clock in at Rs. 172.36 million in 1HFY23 with an EPS of Rs.1.67 versus Rs. 1.32 in 1HFY22. NP margin additionally boasted an enchancment from 15 % in 1HFY22 to 17 % in 1HFY23.

Future Outlook

Whereas the nation in underneath extreme financial and political headwinds, the corporate has recognized varied methods to maintain itself shielded from the storms and maintain elevating its bar excessive. Firstly, a vigorously rising export market will maintain the topline sturdy amidst sharp devaluation in Pak Rupee. Secondly, native uncooked materials sourcing will defend its operations from a standstill owing to import restrictions. Thirdly, an fairness dominated capital construction will stop it intense financial tightening. These components coupled with widespread enchancment within the buyer expertise by way of product high quality in addition to purchasing expertise – each in bodily and on-line gross sales – will maintain its topline wholesome and margins sturdy within the coming occasions.