Image Pakistan Ltd (IMAGE) held its analyst briefing today to brief investors about FY24 financial results and shed light on the future outlook:
· Company posted topline of PkR3.9bn in FY24 compared to PkR2.7bn in FY23, marking an increase of 47%YoY. Retail store sales contribute 74% of the revenue, while online sales comprise 26%.
· Earnings for the year clocked in at PkR399mn (EPS: 2.78) vs PkR289mn (EPS: PkR2.65) in SPLY.
· Regarding gross margins, management mentioned that they are expected to vary each quarter due to seasonal effects and the pressure to remain competitive.
· Profitability in the last quarter of each fiscal year is dampened due to higher advertisement expenses. While these expenses are expected to yield benefits throughout the next year, their impact is not fully reflected in the topline for the current quarter.
· The company operates in 14 locations, opening a new outlet in Dolmen Mall Lahore in Nov‘24. Additionally, plans are to open one outlet in each of Faisalabad and Sialkot during the fiscal year.
· Regarding the expansion plan, out of the 30 multi-head machines, 8 have arrived and are in operation. Contracts for the remaining 22 machines have been finalized, with shipments expected to be completed by the end of this year. Operations for these machines are scheduled to begin in Feb’25.
· Capex required for the remaining 22 machines is expected to be around US$600k.
· The machinery upgrade will not increase capacity; however, it will enable the company to bring 25% of previously outsourced work in-house.
· The company plans to maintain its tax-exemption status by acquiring a subsidiary, IMAGE Global, which will manage the business related to local e-commerce and exports.
· Management noted that the rental cost for opening an outlet in a mall ranges between PkR8,000-10,000/sqft compared to PkR6,000/sqft for a standalone outlet.
· The company has previously experienced lower sales during the winter season due to the impact of festivities. To address this, a new Festive Collection has been launched to boost sales during the winter months.
· The script is not in our formal coverage.
Courtesy – AKD Research
