SLGL down 25% since IPO. Here’s what you should know about the company

SLGL - Fundamental Analysis
Posted by: KSEStocks News 15

SLGL down 25% since IPO. Here’s what you should know about the company

SLGL, formerly known as Asia Capital Partner Private Limited, was established in 2013. The company recently raised approximately PKR 1.19 billion in equity through a combination of pre-IPO placement and IPO by listing on the Pakistan Stock Exchange.

Diverse Business Lines

SLGL has a diversified revenue stream from various business lines:

  • Traditional Logistics
  • Asset Tracking
  • Security Services

Financial Performance in CY23

In CY23, SLGL’s revenue reached around PKR 2.05 billion, showing a 15% increase compared to the previous year. This growth was primarily driven by higher earnings from the logistics division. The company also maintained a robust cost control system, achieving a gross margin of 41% in CY23.

Utilization of IPO Proceeds

The management reported that 85% of the total IPO proceeds were used to pay off the company’s debt, amounting to approximately PKR 981 million. This debt repayment is expected to result in markup savings of around PKR 132 million (post-tax) in CY24.

Expansion Plans

Warehouse Expansion

SLGL plans to expand its warehouse capacity, with each new warehouse requiring a capital expenditure of approximately PKR 40 million. The company aims to add eight warehouses by CY28.

Fleet Expansion and Upgradation

The company is planning to add five new small vehicles, bringing the total to 42 vehicles by mid-June 2024. The entire fleet is also undergoing an upgrade, expected to be completed by the end of May 2024. The first convoy is scheduled to start in June 2024.

Maintenance Costs

The maintenance charges for large and small trucks are approximately PKR 2.40/Km and PKR 1.30/Km, respectively. The maintenance charge for tires is around PKR 4.0/Km. At any given time, 5% of the fleet is grounded for repair and maintenance.

Improved Financial Ratios

The management expects the current ratio to reach 1.0x by the end of CY24, up from the current ratio of 0.6x.

Competitive Edge

Unlike competitors such as “Tukkr” and “Truck It In,” SLGL believes it can penetrate the market effectively due to its decade-long experience and strong client base.

Future Outlook

SLGL plans to expand its operations to a regional level by opening an office in Tashkent, with 30-40 trucks expected to run trans-border in the future. Additionally, the management is planning to open new warehouses in Export Processing Zones (EPZ), which will provide a 10-year tax break.


Disclaimer:

The information in this article is based on research by Taurus Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.

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