⏸️ FEM: HOLD Signal (5/10) – Transmission of Annual Report for the Year Ended June 30 2025

📌 Key Takeaways

• 📉 Loss for the year reduced to Rs. (8.28) million compared to Rs. (19.44) million last year.
• 📉 Loss per certificate improved to Rs. (0.16) versus Rs. (0.37) last year.
• 🏢 Consolidated loss is Rs. (232.2) million, an improvement from Rs. (414.095) million.
• 📈 Break-up value per certificate increased to Rs. 11.69 from Rs. 10.71.
• 🚫 No profit distribution announced due to sustained losses.
• 🗓️ Book closure for regulatory compliance: December 04-10, 2025.
• ⚠️ Auditors qualified opinion due to non-compliance with IFRS on fair value adjustments, impacting profit by Rs 54.37 million.
• 🏛️ The Modaraba believes adjusting costs to fair value would inappropriately distribute unrealized capital gains.
• 💪 Management anticipates continued momentum based on strong capital market performance.
• 🧶 The textile sector deteriorated, leading to potential asset sales of subsidiary Equity Textile Ltd (ETL).
• ⚠️ Withdrawal of tax exemptions for Modarabas impacts the sector.
• ⚖️ Monitoring Federal Shariat Court verdict for Shariah compliance.
• 🧑‍🤝‍🧑 Four board meetings held during the year.
• ⭐ Acknowledgment of Qaiser Ahmed Magoon’s contribution as independent director.

🎯 Investment Thesis

HOLD. The Modaraba shows some improvements but continues to make losses. Need to assess Equity Textile value and any asset sales. Given the risks and a hold rating reflects the uncertainty.