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