ASL (Aisha Steel Mills Limited)
Technical Analysis
Feb 2017 high 29.63
Sep 2023 low 4.90
High low range is 24.75 most important resistance resides at 50% or price level of 17.27
On monthly chart 1:8 angle drawn from 4.90 low is strong support angle implying price around 7.50 as a safe buying area for long positions with a stop loss at 6 or 5.90
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Financial Overview (FY2024)
• Market Capitalization: PKR 9.88 billion
• Share Price Range (52 weeks): PKR 6.17 – PKR 13.80
• Shares Outstanding: Approximately 924.8 million
• Free Float: 35.2%
• Beta: 1.28 (indicates higher volatility compared to the market)
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Profitability Metrics
• Revenue (TTM): PKR 33.11 billion
• Earnings (TTM): -PKR 1.84 billion
• Earnings Per Share (EPS): -PKR 1.50 (latest quarter)
• Price-to-Earnings (P/E) Ratio: -5.4x (reflects negative earnings)
• Price-to-Sales (P/S) Ratio: 0.3x (suggests undervaluation relative to sales)
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Margin & Return Ratios
• Gross Profit Margin: 6.47% (FY2023)
• Net Profit Margin: -10.34% (FY2023)
• EBITDA Margin: -0.90% (FY2023)
• Return on Equity (ROE): -21.63% (FY2023)
• Return on Capital Employed (ROCE): -6.20% (FY2023)
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Balance Sheet & Liquidity
• Debt-to-Equity Ratio: 0.71 (indicates moderate leverage)
• Current Ratio: 0.90 (below the ideal threshold of 1.0)
• Quick Ratio: 0.42 (suggests potential liquidity concerns)
• Interest Coverage Ratio: 0.00 (implies earnings are insufficient to cover interest expenses)
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Valuation Metrics
• Price-to-Book (P/B) Ratio: 0.61 (indicates the stock is trading below its book value)
• Enterprise Value to EBITDA (EV/EBITDA): Approximately 3.14x (lower than industry average, suggesting potential undervaluation)
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Key Observations
• Financial Performance: The company has faced challenges in recent years, with declining profitability and negative earnings impacting key financial ratios.
• Liquidity Position: Current and quick ratios below 1.0 raise concerns about the company’s short-term liquidity and ability to meet immediate obligations.
• Valuation: Despite financial challenges, valuation metrics like P/B and EV/EBITDA suggest the stock may be undervalued compared to industry peers.
• Market Volatility: A beta of 1.28 indicates higher volatility, which may appeal to risk-tolerant investors seeking potential upside.
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Conclusion
Aisha Steel Mills Limited presents a mixed investment profile. While valuation metrics suggest potential undervaluation, the company’s recent financial performance and liquidity concerns warrant caution. Investors should conduct thorough due diligence and consider their risk tolerance before making investment decisions.