⚡ Flash Summary

Chakwal Spinning Mills Limited (CWSM) is undergoing a strategic transformation from a textile company to a provider of AI-enabled cloud infrastructure and data center services. The company aims to capitalize on Pakistan’s growing cloud market and the increasing demand for data localization driven by regulatory policies. CWSM has engaged Dawood Equities Limited (DEL) to oversee financial restructuring and capital raising, including a loan injection from directors and a fresh equity infusion through a rights share issuance. The company projects significant revenue growth, turning from a loss-making entity to a profitable AI-driven data center business by Year 5.

📌 Key Takeaways

• 🔄 CWSM is pivoting from textiles to AI-enabled cloud infrastructure.
• ☁️ The company aims to become Pakistan’s first multi-cloud provider.
• 🤝 Key partnerships are planned with Huawei, Microsoft, and Amazon.
• 🔒 A Tier III+ state-of-the-art data center is planned, designed for 99.982% uptime.
• 🇵🇰 Pakistan’s cloud market is projected to grow at a CAGR of 25% over the next five years.
• 🌐 The global cloud market is projected to reach USD 1 trillion by 2030 with a 17.9% CAGR.
• 💰 Initial investment in Year 0 totals PKR 874.6 million to install 8 racks.
• 🚀 Revenue is projected to surge to PKR 6.20 billion by Year 5.
• 📈 Gross Profit is projected to reach PKR 5.02 billion by Year 5.
• ✨ Net Profit is projected to reach PKR 2.59 billion in Year 5.
• 🏦 Total Assets are projected to rise from PKR 3.06 billion (Year 0) to PKR 8.16 billion (Year 5).
• 💸 A CAPEX of PKR 9.7 billion is allocated for the new data center construction over seven years.
• 🤝 Dawood Equities Limited (DEL) is engaged for financial restructuring.
• 🏦 Initial financing includes a PKR 126.95 million loan injection and a PKR 1.1 billion equity infusion.
• 🎯 CWSM targets 50% rack utilization in year 1 and 80%+ by year 5

🎯 Investment Thesis

BUY. CWSM’s strategic shift from textiles to the high-growth cloud infrastructure and AI-driven data center sector represents a compelling investment opportunity. The company is positioned to benefit from increasing demand for data localization and the expansion of Pakistan’s digital economy. Although there are execution and financial risks, the potential rewards justify a speculative buy recommendation. The projections show it will turn profitable and have significant revenue.