⚡ Flash Summary

Shield Corporation Limited (SCL) has announced its intention to delist from the Pakistan Stock Exchange (PSX) under Rule 5.14 of the Voluntary Delisting Rules. The Board of Directors has resolved to pursue this delisting, citing low liquidity, recent financial losses, and a desire to reduce complexity and focus on the core business. The sponsors of the company will buy back shares from minority shareholders at a price to be determined by the PSX or SECP. This move aims to provide minority shareholders with an exit opportunity.

📌 Key Takeaways

• 🚨 SCL’s Board of Directors has resolved to delist from the PSX.
• 📉 Delisting is pursued under Rule 5.14 of Voluntary Delisting Rules.
• 💰 Sponsors will buy back shares from minority shareholders.
• ⚖️ Buy-back price will be determined by PSX or SECP regulations.
• 📉 Low liquidity is a key reason, with only 923 average daily traded shares.
• ❌ The company has incurred losses over the past two financial years.
• 🚫 No dividends have been paid after 2021.
• 🏢 Delisting aims to reduce complexity and free up management time.
• ✅ A formal application will be submitted to the PSX for delisting.
• 🤝 Shareholders’ general meeting will be held within 30 days of PSX agreement on the minimum purchase price.
• 🗓️ The register of members will be closed for 7 days before the shareholder meeting.
• 🧑‍💼 Authorized officers are empowered to negotiate the delisting.
• ✔️ The delisting must still be approved by the PSX.

🎯 Investment Thesis

Given the company’s recent financial performance (losses and no dividends since 2021) and the intent to delist, a SELL recommendation is appropriate. The buy-back price is uncertain, and investors may face difficulty finding a buyer in the open market. The price target would be the expected buyback price whenever this is announced, and the time horizon is SHORT_TERM, depending on the finalization of the delisting process.