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FIPI Net (US$ mn) = (0.24) Foreign Corporates Net (US$ mn) = (0.50)

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Summary of PSX Important Notices

TOMCL: Fastest Growing Export Company in Food Sector Executive Summary We initiate coverage with a ‘Buy’ rating on The Organic Meat Company Limited (TOMCL), with DCF based target price of Rs53/share offering an upside potential of ~56%. With an annual revenue of $41mn and production capacity of 24mn kgs, TOMCL is the fastest growing food export company in Pakistan with last 3 year (FY22-FY24) revenue CAGR of 44%. TOMCL is the second largest meat exporter of Pakistan contributing 8% to country’s annual meat export of US$516mn. In last 3 years, Pakistan’s meat export grew by CAGR of 15% in USD and 39% in local currency. With abolition of Fixed Tax Regime for exporters in Budget FY25, TOMCL aggressively penetrated in local market during 1QFY25 as domestic net margin is similar to export market. Thus, during 1QFY25, local sales surged by 9x to Rs1bn which contributed 29% in overall revenue. Though net margin in local and export market is almost the same, local market has short cash cycle while UAE and Saudi markets have relatively longer cash cycle. We expect TOMCL to post revenue CAGR of 26% during next 3 years (FY25-27). Where company is focusing to retain volatile Saudi Arabian and UAE export markets, major efforts are being made to tap high margin Chinese market which is valued at US$24bn. The company has recently secured US$12mn export order for China while we expect company’s sales to China may touch US$30mn by FY27. We believe that the market has overreacted to the taxation issues and recent right offer as TOMCL has underperformed KSE-100 index by 34% during FY25TD. The company is trading at FY25 PE of 6.1x compared to its last 3 year adjusted PE of 21x (excluding non-recurring exchange gains).

Technical of the day

FIPI Net (US$ mn) = (5.03)‎ Foreign Corporates Net (US$ mn) = (3.68)‎

Summary of PSX Important Notices