⚡ Flash Summary

First Tri-Star Modaraba reported a loss for the year ended June 30, 2025, contrasting with a profit in the previous year. The company experienced a significant decrease in operating profit and a substantial loss after taxation, primarily driven by increased administrative expenses and financial charges. Despite a rise in income from academic activities, the company’s profitability suffered. The balance sheet shows a slight increase in total assets, but a decrease in certificate holders’ equity due to the current year’s loss.

📌 Key Takeaways

• 📉 First Tri-Star Modaraba reported a loss of PKR 15.03 million for the year ended June 30, 2025, compared to a profit of PKR 1.66 million in 2024.
• 📉 Loss per certificate (basic and diluted) stood at PKR (0.71) in 2025, against earnings of PKR 0.08 in 2024.
• ⬆️ Income from academic activities increased to PKR 36.18 million in 2025 from PKR 34.83 million in 2024, a 3.9% rise.
• ⬆️ Administrative expenses surged to PKR 56.78 million in 2025 from PKR 33.07 million in 2024.
• ⬆️ Financial charges increased to PKR 2.11 million in 2025 from PKR 1.91 million in 2024.
• ⬇️ Operating loss amounted to PKR 13.61 million in 2025, compared to an operating profit of PKR 0.58 million in 2024.
• ⬆️ Other comprehensive income increased substantially to PKR 53.97 million in 2025 from PKR 38.42 million in 2024.
• ⬆️ Total assets increased to PKR 586.60 million in 2025 from PKR 565.31 million in 2024.
• ⬇️ Certificate holders’ equity decreased to PKR 353.38 million in 2025 from PKR 410.73 million in 2024.
• ⬆️ Surplus on revaluation of investments increased to PKR 89.04 million in 2025 from PKR 35.07 million in 2024.
• ⬆️ Short-term investments increased to PKR 0.49 million in 2025 from PKR 0.39 million in 2024.
• ⬆️ Cash and bank balances increased to PKR 2.99 million in 2025 from PKR 1.61 million in 2024.
• ⬆️ Accrued and other liabilities increased to PKR 43.01 million in 2025 from PKR 29.51 million in 2024.

🎯 Investment Thesis

Given the loss reported, the rising administrative costs, and the overall negative trajectory, a SELL recommendation is warranted. The company’s financial performance raises significant concerns about its ability to generate sustainable profits. While the increase in assets looks good, liability is a real concern. In the absence of a clear turnaround strategy and considering the limited information about the Modaraba’s operations and sector, the downside risk outweighs any potential upside. I’d avoid the stock with a target price of PKR 7 which will be book value, which is unlikely to be achieved in the short term, considering the current financials and a time horizon of 6-12 months.