Security Papers Limited (SEPL) - June 2023

Security Papers Limited (SEPL) – June 2023

Research Team

Table of Contents

Corporate Briefing Notes

Security Papers Limited (SEPL) held its corporate briefing session to discuss the financial results for 9MFY23 and its future roadmap.

Key Highlights

● To recall, net sales of the company clocked in at PKR3.6bn down by 6% YoY in 9MFY23 as compared to PKR3.9bn in SPLY. Whereas, gross profit also shrunk to 17% during the said period against 37% during SPLY. The deviation is primarily attributed to pending price adjustment for the whole year from the biggest customer Pakistan Security Printing Corporation which is expected to be received before the close of this year. Additionally, the prevailing inflationary environment increased costs but due to a cost-plus formula with its biggest customer the company expects the adjustment from PSPC to bring financial performance up to par with last year.
● Moreover, the bottom line reflected a significant decline of 52% YoY to PKR431mn (EPS: PKR7.27/sh) in 9MFY23, compared to PKR895mn (EPS: PKR15.11/sh) in SPLY.
● Company has successfully completed the construction of building for storage of cotton comber, and solar power project of 40KW during the period.
● The company’s major products include Banknote Paper, Prize Bond Paper, Passport Paper, Ballot Paper and Stamp Paper. Whereas, major customers are the Pakistan security printing corporation, NADRA, National security printing company, Government of Punjab, and universities.
● In 2022 the company developed special watermark security paper for ballot and as such has begun supply of the same to ECP.

Future Outlook

● Going-forward, Pakistan economy has been facing challenges with low Foreign Exchange reserves, steep inflation, and rising interest rates. However, the company is optimistic to remain focused on innovation, improving productivity, and adopting new technologies that can further improve its performance. Moreover, the management expect the demand for Banknote Paper (BNP) and Other Security Paper (OSP) will continue to grow as long term outlook. The company also plans to use its significant cash reserves to bring an international consultant to carry out improvements to their plant.

Important Disclosures


This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.

Analyst certification:

The research analyst for this report certifies that 1.all of the views expressed in this report accurately reflect her personal views about the subject and 2.no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.

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