Interloop: Pakistan’s $500M Export Giant & a future multibagger stock?

From 10 knitting machines in 1992 to 5,000+ machines today, exporting $500M+ worth of products annually!

Most textile companies operate at a net margin of 5-7%, but Interloop has consistently operated at double-digit net margins. You might wonder—why does this company earn so much more than other textile companies?

The reason is premium customers.

There are two types of retailers in the world:

Low-cost retailers - Compete on price.

Branded retailers - Compete on brand value.

Low-cost retailers typically spend 40-60% of the product’s cost on manufacturing, while the rest covers operations and profit margins. Since their customers are extremely price-sensitive, they constantly look for cheaper suppliers.

If they find a supplier that offers even 5% lower prices, they may shift their entire supply chain, even to another country.

On the other hand, branded retailers only spend 15-30% of their costs on manufacturing. The rest is spent on endorsements, celebrity affiliations, and expensive retail outlets. While price matters to them, they prioritize quality, timely delivery, and environmental sustainability.

Interloop has built strong working relationships with top global brands through supply chain certifications and on-time deliveries. Some of their major clients include Adidas, Nike, and Tommy Hilfiger.

1/ For certain brands, Interloop even holds an "Inspection-Free Status" due to its long-standing business relationships and operational excellence.
This competitive edge (or "moat" in investing terms  means Interloop has advantages that other companies cannot easily replicate.

This is why the company has been able to maintain high margins. Plus even interloop has only achieved ‘moat’ in the socks segment.

They are trying to achieve it on denim and other segments too but it's still in progress. This makes their hosiery segment highly profitable than others.
They have strong working relationships with top global brands through supply chain certifications and on-time deliveries.

Their major clients include Adidas, Nike, and Tommy Hilfiger, making them the top player leading the food chain.

Interloop business break down:

Interloop primarily operates in three segments:

Socks (Major Profit Driver) – Generates 20-25% operating profit margins.

- Exports a dozen socks at $6-7 per dozen, with $1.5-2 in operating profit per dozen.

Denim and Apparel (New Ventures) –

Lower margins, still in development.

Recently, Interloop announced a $58 million investment in a new socks plant, expected to produce 15 million dozen socks annually. If the company earns $1 profit per dozen, this project could yield a 25% ROIC in dollar terms—an exceptional return.

2/

🇵🇰🇵🇰 largest power company explained👇🏻

Launching BYD cars 🚗🚗 in Pakistan.

🧵 Thread 🧵

PSX 🇵🇰🇵🇰 top two dividend paying companies, Fauji Fertilizer & Engro Fertilizer announced their results today.

Confused why FFC's dividends are now higher than EFERT & want to understand what is going on?

🧵 Thread 🧵

Sole Producer of Beverage Cans in 🇵🇰🇵🇰

🧵Thread🧵 on Pakistan Aluminium Beverage Cans (PABC)

🔶 $$$ based Pricing with Duty Protection

🔶 Local Cans Market has 3X in 5 Years

🔶 Aluminium Price ⬆️⬇️ do not affect Margins

🔶 What P/E multiple to use ??

🔶 PABCs Future 1st Aluminium Cans Facility in 🇵🇰🇵🇰 was established in Allama Iqbal SEZ (Faisalabad) by Ashmore in 2017

With installed Capacity of 700Mn Cans, Early years saw low utilisation

2021 was the first year with 70%+ production & Earnings potential of PABC became visible 💯💯

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Pakistans two Largest IPPs, combined 5000MW+ Capacity

A thread on HUBCO & KAPCO

🔸 HUBCOs Growth Story 💯

🔸 Profits ❌ ROE Component ✅

🔸 25% Dividend Tax on 2015 IPPs major Value Killer‼️

🔸 KAPCO PPA Expiring soon .. what to expect 🤔

🔸 Circular Debt & CTBCM outlook First of all, some Ground Knowledge about HUBCOs multiple Projects

Old Projects

1) 1292 MW Furnace Oil Hub Plant. 100% owned. Contract Expiring in 2027

2) 225 MW Furnace Oil Narrowal Plant. 100% owned. COD 2011

3) 84 MW Hydel Laraib Project. 75% owned. COD 2012

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Operator of 🇵🇰🇵🇰 Largest Gas Field & Backbone of Food Security

🧵 Thread 🧵on Mari Petroleum

⚡️Magic of Two Tiered Gas Pricing
 
⚡️Earnings will 2X with Sachal Gas Processing Project
 
⚡️Cash Earnings much better than Peers
 
⚡️Worth Investing ?? Valuation

#KSE100 #PSX Mari Field is truly a National treasure

More than 10 TCF Gas reserves at a relatively shallow Depth of 1000-2000m 💯💯
 
Despite 55 years of continuous production, Mari Field has reserves of approx. 5TCF still remaining (15 years at current production levels)
 
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Business Tycoons @MAliTabba & Arif Habib shared some insights into 🇵🇰🇵🇰 Economy/Business

Here are some Important 💎💎💎

1) Foreign Inflows only solution to our Boom/Bust Cycle

2) Handicaps for our Industries 

3) Businesses are Good but Govt Finances are Bleeding

🧵 Thread 🧵 No way Pak Economy can achieve Sustainable Growth until Foreign Inflows reach $85-90Bn. There are 3 sources👇🏼

Exports
Remittances
FDI

We have to generate an additional $15-20Bn in Foreign Inflows. Govt should not push for Stimulus/Growth until this gap is closed

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How to Invest in IPPs (Power Sector) 💰💰💰

1)Understand the PPA (Power Purchase Agreement)

2)Never Ever Look at GP Margins %%

3)Build Late Payments into your Valuation

4)Keep an Eye on Disputes between IPPs and Power Purchaser
 
🧶🧶 Thread 🧶🧶

#PSX #KSE100 #IPPs PPA is the Holy Grail to value an IPP. Most Important aspects include  

➡️Total Project Cost

➡️%age of Equity in Total Cost

➡️ Return on Equity

1/20

Today I will be Busting @MiftahIsmail "Too Good to be True" Electricity Claims

⚡️Using Monthly Variable Cost of the top 60% Cheapest Plants is WRONG ❌❌

⚡️Capacity Payments of 1200Bn will be allocated in Budget❓

⚡️Soultion👉🏻Reduce T&D Losses✅✅

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Top 50% Electricity is Generated at Rs2/unit Variable Cost (VC)

👉🏻25% is Hydel ➡️ Almost Rs0 VC

👉🏻Next 15% is Nuclear ➡️ Rs1 VC

👉🏻Another 15% from Wind, Solar, Local Gas and Local Coal ➡️ Rs5 VC

Then Expensive Coal, RLNG, FO & Diesel kick in and take Avg VC to Rs8-9/unit

2/4

Many Cement companies down 50% from Highs of last year, now is a good time to review this Cyclical Industry for future Investments

♦️"Cement cannot Travel"

♦️Coal and Power usage 👉🏻 Low Cost producers

♦️Use Cyclicality to your advantage

🧶 Thread 🧶

#Cement #KSE100 #PSX Cement is a very low value Commodity ($40-$50/Ton) and cannot absorb Road Freight Charges of $30(South to North). Plants are setup in proximity of Demand Centers

It is vital to Bifurcate North and South players. Local Sales, Exports of both regions should never be combined

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