⚡ Flash Summary

LSE Financial Services Limited (LSEFSL) reported a significant strategic shift for the year ending June 30, 2025, including surrendering its NBFC license and focusing solely on general investment activities. The company executed a Scheme of Compromises, Arrangement, and Reconstruction with Digital Custodian Company Limited. Financial performance showed a decrease in operating income from PKR 39.348 million to PKR 30.790 million and a decrease in net profit from PKR 61.268 million to PKR 18.186 million. Despite the decline, the company remained committed to Corporate Social Responsibility and Environmental Management.

📌 Key Takeaways

• 📉 Operating Income decreased from PKR 39.348 million to PKR 30.790 million.
• 😔 Net Profit significantly dropped from PKR 61.268 million to PKR 18.186 million.
• ❌ No cash dividend was recommended for 2025, compared to PKR 0.5 per share in 2024.
• ⚠️ Earnings per share (EPS) declined from PKR 1.72 to PKR 0.51.
• 👍🏽 Equity + Revaluation Surplus saw a slight increase from PKR 453.735 million to PKR 456.979 million.
• 👍🏽 Net Asset value increased slightly from PKR 453.735 million to PKR 456.979 million.
• 👎 Total Assets decreased from PKR 544.414 million to PKR 489.180 million.
• 👎 Total Liabilities decreased substantially from PKR 90.679.55 million to PKR 32.200.63 million.
• 👍🏽 The benchmark KSE-100 Index registered a phenomenal growth of 57.79%.
• 💼 LSEFSL surrendered its NBFC License and shifted focus to general investment activities.
• 🤝 Scheme of Compromises, Arrangement, and Reconstruction with Digital Custodian Company Limited was executed.
• 🤝 VIS Credit Rating Company Limited reaffirmed the entity ratings of LSEFSL at ‘A/A-1’.
• ✅ Compliance with the Code of Corporate Governance was duly ensured.

🎯 Investment Thesis

Given the substantial decline in profitability and uncertainties surrounding the strategic shift, a HOLD recommendation is appropriate. The company needs to demonstrate a successful transition to general investment activities and a return to sustainable profitability before a more positive outlook can be considered. The price target rationale is based on needing more information. The time horizon is MEDIUM_TERM, pending a turnaround in financial performance.