Secure Logistics Group Limited (SLGL) held its analyst briefing on May 21 to apprise investors of the CY23 result and future outlook.

The following are the highlights:

·         Net Sales for CY23 were reported at PkR2.04bn, up 23%YoY, while gross margins improved to 41% for the full year (vs. 35% in CY22).

·         SLGL benefits from diversified cash flow streams generated by its four subsidiaries, operating in the Logistics & Asset Tracking Division and the Security Service Division.

·         Logiserve, one of the company’s subsidiary, is situated and licensed in the Special Tech Zone in Islamabad. The company benefits from a 10-year tax break, allowing SLGL to maintain an effective tax rate between 12-14%. Additionally, there’s a 10-year customs duty exemption for importing tech hardware, with warehouses strategically located in the SEZ for further tax exemptions.

·         SLGL plans to launch the Logiserve app, which will facilitate the operation of its fleet as well as third-party vehicles.

·         The company is planning future capex for warehousing over the next four years, aiming to enhance storage capacity and optimize logistics efficiency.

·         SLGL is poised to sign 25-30 third-party vehicle agreements in June’24, operating on a commission basis, there-by eliminating the need for capex.

·         Company estimates 80-90% cargo transportation by road and sees a demand and supply gap in the local market, especially after the axle load restriction imposed by the government.

·         The company anticipates receiving its license during the current month to operate in the Central Asia region. It is hopeful for its first cargos to begin operating on the Tashkent route by June/July’24.

·         SLGL plans to deploy owned cargo trucks in the regional market while leveraging partner vehicles through its app for the domestic market to maximize yield on assets.

·         Company raised Rs585mn through Pre-IPO, where 85% of the proceeds were used to pay off bank debts in the first week to reduce financing cost for the upcoming months.

·         Due to deleveraging, PACRA revised the credit rating from A to A+.

·         Company plans to start work on its software blueprint by hiring a CTO, expected to launch by July/August’24.

·         Management maintains high reserves of spare parts due to a consistent price differential of 20-25% between imported and local parts for the trucks.

·         Company plans to give out dividend at the end of CY24.

 Courtesy – AKD Research