Corporate Briefing Notes
Service Global Footwear Limited (SGF) held its corporate briefing session today to discuss the financial performance of CY22 and discussed its future outlook.
● With total market capitalization of PKR6bn, the Company reported a total revenue of PKR12bn, contributed by the 98% exports and 2% local sales.
● Net profit of the Company plunged by 15% YoY to PKR342mn in CY22 compared to PKR403mn in FY21. As per management, the European recession and inflationary pressure in Pakistan had negatively impacted the net profit of the company.
● The gross export sales of SGF stood at PKR11.5bn (3.6mn pairs) while local sales amounted to PKR257mn (0.26mn) during FY22.
● Management highlighted that the sales of PKR9bn exported to the primary European markets of Italy and Germany.
● The global market size of safety shoes is PKR30bn and SGF is committed to acquire three-fourth of the share by investing in the latest technology.
● Besides earnings, the company also announced a cash dividend of PKR3.5/sh. ROE remained stable at 6% during CY21 and CY22. However, the market price increased by 28% YoY to Rs.46.36 in CY22 vs PKR13.22 in CY21.
● The management highlighted that tax to profit ratio has increased by 50% due to the imposition of super tax in CY22.
● The total assets of the SGFL increased by 95% in four years and amounted to PKR14.4bn as of Dec’22.
● Regarding Service long march, the company is targeting Brazil and USA along with improved capacity utilization to 90% in next year. To note, current capacity utilization is 70-75%.
● The consolidated performance of the company remained solid with revenue growth of 18% YoY followed by gross profit 43%, EBITDA 41% and net profit by 43%, respectively.
Going forward, SGFL aims to achieve the sales target of PKR15-16bn in the next fiscal year. The management also shared the strategic alliance with a footwear company in the United States to pursue expansion and increase exports. Moreover, a subsidiary in China is likely to provide a competitive edge to the SGF regarding the technology, cost efficiency and sale proceeds.
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