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IMAGE_FY23 Analyst Briefing takeaways (AKD Off the Analyst's Desk Nov 08, 2023)

IMAGE: FY23 Analyst Briefing takeaways

Image Pakistan Limited (IMAGE) held its analyst briefing today to notify investors about their performance in FY23 and to bring their future outlook to light:

• Image Tech Limited, a tech subsidiary was incorporated to manage and operate the e-commerce division of IMAGE Pakistan. The division is facilitated by various fulfilment centers in UK, US and other Middle-East markets. Online sales provide cost savings of 5% more than retail outlet sales.
• The company generates substantial revenue from the (local and export) e-commerce sales that comprise of 35% of the company’s total revenue. Whereby, the share of local to export is 27%/73% respectively.
• Furthermore, the management highlighted that they aim to continue the revenue growth trajectory by increasing volumes by 15-20% and the rest by increasing selling price and maintaining healthy GMs.
• The company has 11 operational sales outlets in the Karachi, Lahore, Islamabad (KLI) region, which cumulatively generate a revenue of ~PkR2bn annually. The company is set to add another retail outlet to its 11 establishments by commissioning an outlet in DHA, Lahore.
• On the macro-economic woes, management stated that IMAGE caters to high income bracket individuals and maintains high profitability, by cost cutting to ensure production of the same product at a more affordable rate than other competitors.
• The management also shed light on the disposal of their Polyester Filament Yarn (PFY) plant, due to the uncertainty and crisis of PFY industry in Pakistan in consequence of which 16-18 PFY plants were shut down nationwide over the span of 20 years.
• Going forward the company foresees the revenue target of PkR3.7bn for FY24 and PkR5bn for FY25, by optimizing their retail sales incorporating retail sensing measures through footfall devices to monitoring the conversion per visiting customers on all of their retail outlets.
• Additionally, the management plans to increase its capacity so as to decrease dependency on outsourced production to meet their requirements. Management highlighted they would need to incur capex of approx. ~US$1.0mn to generate PkR1bn in sales to meet the revenue targets set for the coming years. This increase in CAPEX will in turn lead to a lower ETR in the years to come.