Spectrum Securities Limited hosted a corporate briefing of Roshan packages limited to discuss the FY22 and Q1FY23 results, along with the outlook of the company.

Corporate Briefing Key Takeaways

• To recall, Roshan Packages Limited posted a total revenue of PKR8.9bn (up by 26.7%YoY) in FY22 with a 5-Year CAGR of 21.8. The company has successfully dispatched 44,884 metric tons in comparison to the 40,074 metric tons in FY 2021 which reflects a 12.0% growth in volumes. The gross profit increased by 3.6% YoY to PKR 915mn. Profit after tax decreased to PKR 265mn in FY22 (down by 23.4%YoY) from PKR 346mn in FY21. The decline in PAT was primarily induced by (i) the increase in resin prices (ii) the rapid surge in fuel rates (iii) the devaluation of PKR (iv) high transportation and shipping costs and (v) a hike in interest rate. Earing per share for FY22 was at 1.87/share.

• In terms of Q1 results, the Company has posted remarkable improvement and growth in both Sales and Profitability. Net sales have increased by 40.2%QoQ to PKR2.7bn in 1QFY23 from PKR1.9bn 1QFY22 with gross profit surging by 80.2%QoQ in 1QFY23 to PKR325mn with an increase in gross profit margin from 9.4% to 12.1% which reflects an improvement in customer pricing, operation efficiencies and cost optimization going forward. Similarly Profit after tax increased by 130.7% from PKR25mn in Q1 2021-22 to PKR57mn in Q1 2022-23.

Both segments equally contributed to the sales volume growth with a healthy product mix.

• As per the management, the top contributors to the sales growth were MNC clientele including Coke, Pepsi and Nestle along with Ceramics sector, and stated 5 major sectors (Construction, Pharma, Electronics, Fruit, FMCG) generating 80% of sales volume with 57.3% volume driven by FMCG. As per the revenue mix approximately 60% of the revenue is driven from Top 15 Corporate (Multinational and National) customers. The Company is focusing on improving quality, timely delivery, and customer service which is a key pillar for customer satisfaction and confidence in building growth.

Future Outlook

• The management has exhibited future projects for backward integration, the company has acquired land and the new plant is expected to commence operations two years after all regulatory approvals. BOI’s necessary approval is expected to be finalized soon and notification is awaited. The backward integration will improve the quality and uninterrupted supply of raw materials and aims to be an important player in Pakistan’s new green economy.

• RPL is focusing on enhancing customer service, generating growth, and engaging with top MNCs and corporate sectors and optimizing stock levels by increasing warehousing capacity in the near future.
Courtesy – Spectrum Research