Secure Logistics — Trax Group Limited: performance and outlook

Secure Logistics – Trax Group Limited (PSX: SLGL), previously known as Asia Capital Partners (Private) Limited (ACPL) was incorporated in Pakistan in 2013. It served as a holding company for SecurLog (Private) Limited, Secure Track (Private) Limited, Fist Security (Private) Limited and TDM (Private) Limited.

The company was renamed as SLGL in 2016 and converted into a public limited company in 2021.

Historical Performance (2023-24)

The topline and bottomline of SLGL increased in both the years under consideration. Its margins also progressed over the period to attain their optimum level in 2024. The detailed performance review of the period under consideration is given below.

In 2023, SLGL’s revenue grew by 22.52 percent to clock in at Rs.2044.845 million. Logistics division which has the lion’s share in the overall revenue mix of the company was the major growth driver during the year. Revenue from distribution division, security services and closed protection duty also improved during the year.

Conversely, revenue from tracker division inched down in 2023. Cost of services ticked up by 12.21 percent in 2023 predominantly due to increased fuel charges.

The company was able to record 41.29 percent stronger gross profit in 2023 with GP margin clocking in at 40.88 percent versus GP margin of 35.45 percent posted in 2022.

Administrative expense mounted by 58.52 percent in 2023 due to higher payroll expense on account of inflationary pressure and workforce expansion from 106 employees in 2022 to 135 employees in 2023.

Loss on disposal of fixed assets also drove up administrative expense in 2023. Other income deteriorated by 39.12 percent in 2023 due to lesser income from non-financial assets.

SLGL recorded 33.38 percent improvement in its operating profit in 2023 with OP margin clocking in at 26.32 percent versus OP margin of 24.18 percent recorded in 2022. Finance cost escalated by 50.76 percent in 2023 due to monetary tightening and increased short-term borrowings.

Despite elevated borrowings, gearing ratio dipped from 35 percent in 2022 to 33 percent in 2023 due to higher accumulated profit. Net profit strengthened by 21.15 percent to clock in at Rs.352.717 million in 2023. This translated into NP margin of 17.25 percent in 2023 versus NP margin of 17.44 percent recorded in 2022. EPS clocked in at Rs.2.12 in 2023.

In 2024, SLGL’s revenue rebounded by 23.16 percent to clock in at Rs.2518.35 million. Revenue from logistics services, security services and closed protection duty posted considerable growth during the year. Conversely, revenue from tracker division and distribution division ticked down in 2024.

Cost of sales mounted by 17.85 percent in 2024 on the back of greater depreciation charges, fuel expense, way expense as well as car rental charges and repair & maintenance expense incurred during the year.

Gross profit enhanced by 30.83 percent in 2024 with GP margin clocking in at 43.43 percent. Administrative expense ticked down by 1.32 percent in 2024 due to high-base effect as the company recorded higher loss on the disposal of fixed assets in 2023. Payroll expense also ticked down in 2024 despite increase in the number of employees to 146.

Allowance booked for ECL escalated by 293.40 percent to clock in at Rs.3.43 million in 2024. Other income continued to decline to the tune of 32.67 percent in 2024. This was mainly on account of lesser scrap sales. Operating profit picked up by 47.26 percent in 2024 with OP margin clocking in at 31.47 percent.

Finance cost dipped by 16.72 percent in 2024 due to lesser outstanding borrowings. This coupled with increased accumulated profit resulted in a gearing ratio of 11 percent in 2024.

Net profit posted a phenomenal 70.30 percent growth to clock in at Rs.600.676 million in 2024. This translated into EPS of Rs.2.43 and NP margin of 23.85 percent in 2024.

Recent Performance (9MCY25)

During the nine-month period of CY25, SLGL’s net revenue grew by 24.23 percent to clock in at Rs.2355.869 million. Revenue from logistics services which greatly increased in the past two years, posted a decline in 9MCY25.

Revenue from distribution services, security services and closed protection duty also posted a decline during the period.

During 9MCY25, the company introduced domestic and international courier services which proved to be the main revenue growth driver. However, this change in revenue mix resulted in 1.48 percent dip in gross profit in 9MCY25 with GP margin clocking in at 37 percent versus GP margin of 46.68 percent recorded in 9MCY24.

Administrative expense surged by 132.80 percent in 9MCY25 apparently due to the introduction of new business line which might have required additional resources and workforce. SLGL booked reversal worth Rs.4.76 million of provisioning done for ECL in 9MCY25. This was against the provisioning of Rs.2.133 million done for ECL in 9MCY24.

Other income posted a tremendous growth of 1982.17 percent to clock in at Rs.209.86 million in 9MCY25. This was the consequence of acquisition of 100 percent shareholding of Trax Online (Private) Limited by investing Rs.1685.42 million. After this deal, Trax Online (Private) Limited became the wholly owned subsidiary of SLGL. Share of profit from the subsidiary company appears to have the major share in other income of SLGL in 9MCY25.

SLGL’s operating profit descended by 13.56 percent in 9MCY25 with OP margin clocking in at 24.88 percent versus OP margin of 35.76 percent posted in 9MCY24. Finance cost shrank by 68.70 percent in 9MCY25 due to monetary easing and payment of outstanding liabilities.

Net profit progressed by 83.61 percent to clock in at Rs.716.395 million in 9MCY25. This translated into EPS of Rs.2.16 in 9MCY25 versus EPS of Rs.1.43 recorded in 9MCY24. NP margin jumped up from 20.57 percent in 9MCY24 to 30.41 percent in 9MCY25.

Future Outlook

SLGL is constantly updating its revenue mix by prudent investment strategies. Acquisition of Trax Online (Private) Limited is also a step aimed to enhance the company’s penetration in the logistics business.

Recently, LogiServe (Private) Limited, a wholly owned subsidiary of SLGL has been issued NBFC license after which FinTech category has also been added to the company’s lines of business.