⚡ Flash Summary

Dewan Cement Limited’s 2025 annual report reveals a challenging year marked by a 4% decline in net sales revenue, primarily due to periodic plant maintenance and increased government duties. Despite the revenue dip, the company demonstrated improved profitability, achieving a gross profit margin of 7% compared to 2% in the prior year, due to enhanced cost management and operational efficiencies. The company successfully transformed a loss before levies and taxes into a profit. However, auditors have raised concerns about the classification of Pre-IPO investment and provision for markup.

📌 Key Takeaways

• ⚠️ Net sales decreased by 4% due to maintenance and government duties.
• ✅ Gross profit margin improved significantly from 2% to 7% year-over-year.
• ⬆️ Company transformed a loss before levies into a profit of Rs. 351 million.
• ⬇️ Loss per share increased to Rs. (2.00) from Rs. (1.05).
• 🏭 Dispatches decreased by 9.40% to 1,428,020 tons.
• ☀️ Company installed 6 MW solar power projects, reducing reliance on conventional energy.
• 📈 Pakistan’s GDP shows marginal increase from 2.5% to 2.65%, with expected expansion.
• 🏦 Policy rate reduced from 22% to 11%, boosting economic activity.
• 💼 Auditors qualified their report on Pre-IPO investment and provision for markup.
• ⚖️ Ongoing recovery suits instituted by banks are being defended.
• 🚫 No dividend declared due to loss for the year.
• 🤝 Company emphasizes strong Corporate Social Responsibility (CSR) initiatives.
• ♀️ Gender Pay Gap reported: Mean 13.96%, Median 9.52%.
• 🌱 Company focuses on sustainable practices and renewable energy initiatives.

🎯 Investment Thesis

Given the going concern warnings, and audit qualifications, a HOLD rating seems most appropriate. The company needs to resolve its outstanding debts and legal matters and improve the quality of management and their reporting before it would be considered for purchase.