In 1QCY24, Fast Cables Limited (FCL) reported a net loss of PKR 206.76 million (EPS: PKR 0.33), compared to a net profit of PKR 329.02 million (EPS: PKR 0.66) in the corresponding period last year.
Net revenue increased 6% YoY, reaching PKR 7.20 billion in 1QCY24, up from PKR 6.80 billion. Of this growth, 25% was attributed to volumetric growth and 75% to price increases. Gross profit declined 4% YoY to PKR 1.06 billion in 1QCY24 from PKR 1.11 billion last year.
Capacity utilization was reported at 70-75% in FY24, with FCL operating 5-10% below maximum capacity. Management anticipates an increase in capacity by 2026 following expansion. Funds for other income have been allocated to working capital requirements. Finance costs were offset by other income in the same period.
Management indicated ongoing collaboration with the government on anti-dumping duty enforcement. Loans to associated companies amount to PKR 1.5 billion, expected to decline by year-end. FCL expects income from an associate company engaged in transmission business upon project completion within 1-2 months.
Cables constitute 90-95% of FCL’s business. The company faced pressures from finance costs and taxation in FY24, along with price pressure from copper and high competition affecting gross profit in 1QFY25.
Market segments include housing, trade, B2B sales to commercial/industrial entities, and institutions like NTDC, K-Electric, and DISCOs, with exports to the Middle East and Africa. Management foresees significant demand after the privatization of distribution companies and is negotiating with Saudi companies for exports.
The electric cables and wires industry is valued at PKR 200 billion, with formal players covering 50%, cottage industry 40%, and importers 8-10%. The formal players are capturing market share with import substitution.
Management expects the industry to double within five years, with an 8-year CAGR of 18%. LME prices remained stable at approximately $9,000/ton for copper and $2,000/ton in FY24. Management plans to increase production capacity and adopt advanced technologies with IPO funds.
Over the past five years, revenue grew at a 38% CAGR, reaching PKR 26 billion in FY24. Profit increased from PKR 167 million in FY20 to PKR 1.9 billion in FY24. Gross margins rose to 19% from 18% in the prior year. Operating and net profit margins remained stable at 13% and 5% in FY24, respectively.
The company’s primary client is K-Electric, which invests in network upgrades, while other DISCOs do not invest in transmission lines. For EV infrastructure, management plans to cater to household demand for EV charging cables and anticipates additional demand following the development of EV infrastructure in road networks.
Going forward, FCL expects sustained growth due to rising demand for cables and conductors across sectors, along with operational efficiencies. Management anticipates improved revenue and profitability in the upcoming quarters.
Important Disclosures
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