⚡ Flash Summary

Pak Leather Crafts Limited (PAKL) reported a decrease in sales from Rs. 89.395 million in 2024 to Rs. 60.094 million in 2025, primarily due to global economic recession and decreased demand. Despite lower revenue, the company managed to improve its profit after tax from Rs. 8.127 million to Rs. 9.023 million by implementing strategic decisions, including the disposal of plant and machinery and shifting to toll manufacturing. The company faces significant financial challenges, including accumulated losses of Rs. 353.35 million and negative equity of Rs. 319.35 million, raising concerns about its ability to continue as a going concern. The directors are exploring operational revival strategies, including toll manufacturing, to improve the company’s financial position.

📌 Key Takeaways

• 📉 Sales decreased from Rs. 89.395M to Rs. 60.094M due to economic recession.
• ✅ Profit after tax improved from Rs. 8.127M to Rs. 9.023M despite lower sales.
• 🏭 Plant and machinery were disposed of as part of a strategic revival plan, yielding a gain of Rs. 4.166M.
• 🏭 Company shifted to toll manufacturing to reduce production costs.
• ❌ Accumulated losses remain high at Rs. 353.35M.
• ⚠️ Negative equity persists at Rs. 319.35M.
• ⚖️ Current liabilities exceed current assets by Rs. 320.95M.
• 🏦 Facing litigation from banks and financial institutions for recovery of overdue finances.
• 🤝 Company reached a settlement agreement with one lender, demonstrating operational cash generation.
• 🌱 Exploring further negotiated settlements with other lenders.
• 🛠️ Operational revival strategies are showing positive results.
• 💼 Directors have committed to providing financial support as needed.
• 🌍 Export sales declined by over 7%.
• 💼 Earnings / (loss) per share is Rs.2.65
• 🗓️ 38th Annual General Meeting scheduled for October 28, 2025

🎯 Investment Thesis

HOLD. The company faces significant financial challenges but is actively pursuing revival strategies. While the improved profit after tax and commitment from directors are positive signs, the negative equity and ongoing litigation warrant caution. A wait-and-see approach is appropriate until the success of the revival plan is more evident.