⚡ Flash Summary

Dewan Khalid Textile Mills Limited (DKTM) reported its unaudited condensed interim financial results for the nine months ended March 31, 2024. The company’s operations remain suspended since August 2016 due to adverse industry conditions and working capital constraints, resulting in nil operational sales for the period. The financial statements have been prepared using the going concern assumption, as the company is in the process of restructuring its liabilities with lenders. The company sustained a loss after taxation of Rs. 33.583 million and had negative reserves of Rs. 757.023 million.

📌 Key Takeaways

• 🏭 Operations have been suspended since August 2016 due to adverse industry conditions and working capital constraints.
• 📉 Net loss after taxation for the nine months ended March 31, 2024, was Rs. 33.583 million.
• ⛔ Operational sales remained nil for the period due to the factory shutdown.
• 💰 The company has negative reserves of Rs. 757.023 million.
• 🤝 Company is in the process of restructuring liabilities with lenders.
• ⚠️ Financial statements are prepared using the going concern assumption.
• 🏛️ Compliance with Companies Act 2017 and corporate governance is maintained.
• 📊 Loss per share (basic and diluted) is reported at (Rs. 3.49).
• 🏦 Non-provisioning of markup on borrowings impacted loss by Rs. 58.927 million, a departure from IAS 23.
• 📉 Accumulated losses stand at Rs. (892,022,681).
• 🌱 Management expresses hope for resuming operations with optimized production capacity after restructuring.

🎯 Investment Thesis

Given the ongoing operational suspension, negative equity, and material uncertainty surrounding the company’s future, a SELL recommendation is warranted. The company’s ability to continue as a going concern is in serious doubt, and any potential upside is highly speculative and contingent upon successful debt restructuring and a full operational turnaround. Price target: Rs. 0. Time horizon: immediate.