⚡ Flash Summary

Mubarak Textile Mills Limited’s 2025 annual report reveals a challenging financial year. The company experienced an operating loss of (9,775,671) Rupees, an improvement from the previous year’s (10,605,906) Rupees. Accumulated losses continue to weigh on the company, standing at 87.213 million Rupees. Auditors have issued an adverse opinion, casting doubt on the company’s ability to continue as a going concern, despite management’s plans for revival.

📌 Key Takeaways

• 1. 📉 Operating loss improved to (9,775,671) Rupees from (10,605,906) Rupees year-over-year.
• 2. ⚠️ Accumulated losses increased to 87.213 million Rupees.
• 3. 🏛️ Auditors issued an adverse opinion, questioning the going concern status.
• 4. 🏢 Current liabilities exceed current assets by 1.065 million Rupees.
• 5. ❌ Dividend is passed over due to tight liquidity.
• 6. 🏭 Operations ceased in 2011, with revenue primarily from rental income.
• 7. 🤝 Interest-free loans from sponsors amount to 47.387 million Rupees, terms not settled.
• 8. ⚖️ Winding-up petition filed by SECP is pending in Lahore High Court.
• 9. 🏢 The company recognized rental income of 9.904 million Rupees.
• 10. 📈 Revaluation surplus reported at 1.506 million Rupees.
• 11. 🗓️ Four Board meetings were held during the year, with full attendance.
• 12. 🤝 Relations between management and employees remained cordial.
• 13. 👨‍💼 Present auditors retired and offer themselves for reappointment.
• 14. 🎯 Management aims to revive company through stitching of Knitwear garments.
• 15. 📜 Board confirms compliance with Corporate Governance regulations, with some exceptions.

🎯 Investment Thesis

Given the adverse auditor opinion, accumulated losses, negative current ratios, and pending litigation, a SELL recommendation is warranted. The company’s financial statements reflect material uncertainty regarding its ability to continue as a going concern. The stock has little to no intrinsic value given its financial distress. The risks far outweigh any potential reward. Price target of zero, long term investment horizon.