⚡ Flash Summary

Siddiqsons Tin Plate Limited (STPL) reported a challenging FY 2025, evidenced by a loss before tax of Rs. 229.8 million and a 50% decrease in net sales to Rs. 2.023 billion. The company faced difficulties due to high inflation, increased raw material costs, and unfavorable government policies, including continued sales tax exemptions in the FATA/PATA regions. Furthermore, the unconventional use of Galvalume sheets in food packaging exacerbated market distortions. Management is focusing on stabilizing operations, cost efficiency, and pursuing legal actions to address market distortions.

📌 Key Takeaways

• 📉 **Net Sales Decline**: Revenue decreased by 50% year-over-year to Rs. 2.023 billion.
• ⚠️ **Loss Before Tax**: Reported a loss before tax of Rs. 229.8 million.
• ❌ **Loss Per Share**: EPS showed a loss of Rs. (1.11) per share compared to (8.98) in prior year
• 🏭 **Production Drop**: Capacity utilization fell leading to higher costs, resulting in a 3% production decline with output at 5,600 metric tons vs. 8,335 tons prior year.
• ⬆️ **Gross Profit improvement**: Gross Profit improved significantly compared to prior year gross loss, increasing to Rs. 221.78 million
• ⚖️ **Legal Action**: Pursuing legal cases against FATA/PATA sales tax exemptions and Galvalume usage.
• 🚧 **CRM Project Impact**: Rs. 382 million in interest expenses, 70% related to the discontinued CRM project.
• 🇨🇳 **Chinese Competition**: Unable to compete with dumped prices from Chinese exporters.
• 🚫 **Operational Disruptions**: Faced labor issues, causing output halts and delays in raw material supply.
• 💹 **FATA/PATA Impact**: Tinplate imports into FATA/PATA increased by 26% impacting market prices.
• ✔️ **PACRA Rating Maintained**: Credit rating by PACRA retained at A- (long term) and A2 (short term).
• 🌐 **Export Focus**: Strategic emphasis on exports to the GCC, the United States, and Europe.
• 🧪 **Better Raw Materials**: Better quality local raw materials are improving standards
• ✨ **Stabilizing Signs**: Operating conditions are stabilizing, inventory improved

🎯 Investment Thesis

Based on the challenges outlined, including revenue decline, net losses, Chinese and FATA/PATA competition, this is a SELL recommendation. The company’s fundamental challenges need resolution before improving the outlook.