Verdict: Pakgen’s H1 2026 numbers are best understood as a business-model reset, not a normal power-company quarter. The power purchase agreement ended on January 31, 2025, generation was discontinued, shareholders approved an investment-focused alternate business plan in April 2026, and the company changed its name to Pakgen Limited in June. The H1 loss after tax narrowed to Rs88.2 million from Rs412.1 million, while Q2 itself returned to a small Rs12.1 million profit. But the improvement came mainly because the legacy power-business loss collapsed, not because the new continuing business generated stronger earnings. Continuing revenue from investment gains and related income fell 46.4% year on year, and a Rs180.6 million fair-value recognition loss weighed on the new model. The next result cycle will therefore test whether Pakgen can turn its large pool of financial assets and its new 6.69% Rafhan Maize Products stake into a durable earnings base while monetising the remaining power assets. Official H1 2026 report
Results at a glance
Company Name: Pakgen Limited (formerly Pakgen Power Limited)
Ticker: PKGP
Reporting period: Half year and second quarter ended June 30, 2026. The condensed interim statements are unaudited. The statutory auditor reviewed the cumulative half-year statements under ISRE 2410 and issued an unmodified review conclusion; the separately presented three-month Q2 figures were not reviewed. The statements are company-only rather than consolidated. Auditor’s review and H1 report
Alpha QoQ Score: N/A
TTM Performance Score: 28.33
3Y Business Perf Score: N/A
Sector Leadership Score: 42.7852
These four scores are AlphaGen model outputs, not company-reported figures.
- H1 continuing revenue was Rs405.6 million versus Rs756.3 million a year earlier, a 46.4% decline. Net gains on sale of investments fell to Rs397.4 million from Rs715.0 million, while return on investments dropped to Rs0.4 million from Rs18.1 million. Official H1 2026 report
- After a Rs25.7 million unrealised gain on short-term investments and a Rs180.6 million loss on initial recognition of the Rafhan Maize investment at FVTOCI, profit from continuing operations was Rs203.2 million, down 74.4% from Rs794.2 million. Official H1 2026 report
- The legacy power business produced a Rs223.6 million loss from discontinued operations, compared with a Rs973.9 million loss in H1 2025. That 77.0% reduction was the biggest reason the headline loss narrowed despite weaker continuing earnings. Official H1 2026 report
- H1 loss before tax improved to Rs21.6 million from Rs214.9 million, and loss after tax narrowed to Rs88.2 million from Rs412.1 million. EPS improved to negative Rs0.46 from negative Rs1.11. The board declared no cash dividend, bonus or rights issue with the result. PSX financial-results filing
- Q2 was profitable at Rs12.1 million after tax versus a Rs442.5 million loss in Q2 2025. Yet Q2 continuing revenue still fell 51.9% to Rs263.6 million and continuing operating profit fell 89.6% to Rs61.1 million; the dramatic year-on-year swing came primarily from discontinued-operation losses falling to only Rs3.0 million from Rs824.5 million. Official H1 2026 report
What improved
The most important improvement was the shrinking drag from the old power business. Pakgen’s directors state that the power purchase agreement was terminated early with effect from January 31, 2025 and power generation stopped. H1 2025 therefore still carried a very large legacy loss in discontinued operations. By H1 2026 that loss had fallen by roughly three quarters, and in Q2 it was almost eliminated. Economically, this means the company is moving out of the costly transition phase in which legacy plant-related expenses overwhelmed the income statement. It does not, by itself, prove that the replacement business is stronger; it shows that the old business is becoming less damaging. Directors’ report
Q2 also marked a cleaner earnings profile than Q1. The half-year result implies a Q1 loss after tax of about Rs100.3 million, followed by Q2 profit of Rs12.1 million. The biggest bridge was not a surge in investment revenue: it was the reduction in discontinued-operation losses from about Rs220.6 million in Q1 to Rs3.0 million in Q2. That distinction matters because it prevents the Q2 profit from being mistaken for evidence of rapid growth in the new investment business. Official H1 2026 report
At June 30 the interim statement shows no interest-bearing debt, current liabilities of Rs225.2 million and total equity of Rs14.06 billion. That leaves substantial balance-sheet flexibility, but the central risk has shifted from debt servicing to capital allocation: future returns depend on what Pakgen owns and how those investments perform. Statement of financial position
What weakened / needs attention
The new continuing business earned less than the prior-year comparative. Pakgen now treats gains on sale of investments, dividend or investment returns and related financial income as revenue because investment activity is the principal business. On that basis, H1 revenue fell by nearly half and continuing profit from operations fell by almost three quarters. This is a very different earnings model from contracted generation: there is no conventional power volume, tariff or gross-margin story to analyse anymore. The relevant variables are portfolio turnover, realised gains, dividend income, fair-value movements and capital allocation. Accounting and business-model disclosure
The Rs180.6 million loss on initial recognition of the Rafhan Maize investment at fair value through other comprehensive income was a major H1 drag on continuing profit. It is not the same thing as a recurring operating expense, but it illustrates the sensitivity of the new model to valuation and transaction accounting. The company also reported only Rs0.4 million of investment return income in H1, versus Rs18.1 million a year earlier. Investors should therefore separate realised trading gains, unrealised remeasurement, dividend or return income and one-off accounting effects rather than reading the single revenue line as a stable recurring stream. Official H1 2026 report
Tax also remained a meaningful drag. Pakgen moved from a Rs21.6 million pre-tax loss to an Rs88.2 million net loss after a Rs66.6 million tax charge, in addition to a Rs1.1 million levy. The interim filing reports those amounts but does not provide a single simple economic explanation that would justify treating the H1 tax charge as a clean recurring tax rate. For that reason, the safer interpretation is that pre-tax operating economics and reported net earnings should be monitored separately until the investment-led tax profile becomes clearer over more reporting periods. Official H1 2026 report
The structural break: Pakgen is no longer a conventional IPP
This quarter is unusually important because the financial statements formally reflect the new identity of the company. Shareholders approved the change in principal business, company name and disposal of legacy power assets on April 27, 2026. SECP approval followed, and the name changed from Pakgen Power Limited to Pakgen Limited on June 17. Under IFRS 5, the identified power-generation assets intended for sale were moved to assets held for sale, and the associated operating results, maintenance costs and disposal gains are now grouped in discontinued operations. Returns from investment activities are presented as continuing revenue. Directors’ report
That accounting reclassification changes how historical comparisons should be interpreted. H1 2025 contains a large discontinued-power loss, while H1 2026 contains a much smaller legacy loss and a newly defined investment business. A simple year-on-year change in PAT therefore mixes two transitions: the runoff of the old IPP economics and the emergence of the new portfolio model. The 78.6% reduction in the net loss is real, but it should not be described as a comparable operating growth rate. Official H1 2026 report
Cash flow looks strong — but the composition matters
Pakgen reported Rs7.23 billion of net cash generated from operating activities in H1 2026, up from Rs1.02 billion a year earlier. At first glance that looks much stronger than the Rs88.2 million accounting loss. The cash-flow notes explain why: because short-term investments are now part of the principal investment business, a Rs6.89 billion reduction in short-term investments appears inside working-capital movements and contributed most of the Rs7.45 billion cash generated from operations. Cash flow before working-capital changes was only Rs405.9 million. Cash-flow statement and Note 10
That does not make the cash flow artificial; selling or rotating investments is genuinely part of the new business. But it does mean conventional industrial cash-conversion language is less useful. The operating cash inflow largely reflects movement within the portfolio rather than cash earnings generated by producing electricity. The company then used Rs6.06 billion of investing cash flow to acquire a long-term strategic stake in Rafhan Maize Products and another Rs1.18 billion in financing cash flow for the final phase of its own-share buyback. Ending bank cash was only Rs17.6 million because capital was actively redeployed rather than left idle. Cash-flow statement
Rafhan Maize becomes the first major test of the new capital-allocation model
On June 23, Pakgen completed the acquisition of 618,294 Rafhan Maize Products Company Limited shares at Rs9,800 per share, representing 6.69% of RMPL. The directors report aggregate consideration of about Rs6.064 billion including transaction costs. At June 30, the long-term investment was carried at Rs5.886 billion after the initial FVTOCI recognition effect. This moved a large part of the balance sheet from short-term financial assets into a single strategic listed equity position and therefore raises the importance of concentration, dividend flow and long-term value creation from that holding. RMPL investment disclosure
The balance sheet illustrates that reallocation clearly. Short-term investments fell to Rs5.995 billion from Rs12.855 billion at December 2025, while long-term investments rose from nil to Rs5.886 billion. The directors report that shares, mutual funds and cash together stood at Rs11.899 billion at June 30. Meanwhile Rs1.415 billion of legacy plant and building assets were classified as held for sale, and Rs262.9 million of retained land/buildings were classified as investment property. The company is therefore becoming an investment balance sheet with a shrinking pool of legacy operating assets. Statement of financial position
The buyback changed the capital structure, not H1 operating profit
Pakgen’s share buyback is another major corporate action that should be kept separate from the earnings analysis. The company bought back 179.93 million shares under the programme approved in late 2025, paying about Rs11.37 billion in aggregate across the programme. The final 17.515 million shares were purchased in January 2026, and all repurchased shares were cancelled by May 15. As a result, issued shares fell from 372.08 million to 192.15 million. Nishat Mills’ proportionate holding rose to 58.57%, making Pakgen its subsidiary from May 15. The H1 cash-flow statement records Rs1.18 billion of buyback payments during the current period. Buyback disclosure
Recurring versus non-recurring earnings
The new definition of “recurring” needs care. Gains from buying and selling investments are now part of Pakgen’s principal business, so they are recurring in category even though the amount can vary sharply with portfolio turnover and market conditions. H1’s Rs397.4 million net gain on sale of investments therefore belongs to continuing operations, but it should not be annualised mechanically. The Rs25.7 million unrealised gain on short-term investments is explicitly market-value dependent, while the Rs180.6 million initial-recognition loss on the RMPL holding is a transaction-specific accounting effect rather than an ordinary running cost. Official H1 2026 report
The Rs223.6 million loss from discontinued operations is also economically real but belongs to the runoff of the former power business. It should diminish as assets are sold and preservation costs fall, although the timing of disposal remains important. By June 30, only a small portion of held-for-sale assets had been disposed: the company reported Rs17.064 million of sale proceeds against Rs14.838 million book value for assets sold, while the book value of remaining approved assets to be sold was Rs1.841 billion in the directors’ disposal-status table. Legacy asset-disposal disclosure
Post-period development: FESCO adds a second strategic path
After the reporting period, Pakgen’s board approved participation in a consortium seeking to acquire Faisalabad Electric Supply Company through the federal privatisation process. The H1 report stressed that no binding obligation had been assumed at that stage and participation remained subject to pre-qualification and approvals. Since then, the Privatisation Commission has named the Pakgen Limited consortium—alongside Nishat Mills, Nishat Power, Nishat Chunian Power, Lalpir, Pak Elektron and Kohinoor Energy—among ten prequalified interested parties for FESCO. This is a meaningful strategic development, but it is not an H1 earnings driver and there is not yet a completed acquisition to model as operating income. Pakgen H1 disclosure | Privatisation Commission
The government process offers investors 51% to 100% of FESCO with management control. For Pakgen, a successful bid would represent a return to the electricity value chain on the distribution side. Until consortium economics, funding commitments and any completed transaction are disclosed, FESCO should remain a strategic option rather than an assumed source of earnings. Government FESCO process
What to monitor next
- Continuing investment revenue: whether gains on sale of investments, dividend income and other portfolio returns recover from the H1 decline without relying on unusually large market gains. H1 earnings base
- The RMPL holding: dividend receipts, fair-value movements and any change in Pakgen’s strategic or accounting treatment of the 6.69% stake. The investment is now large enough to materially influence portfolio returns and balance-sheet composition. RMPL investment disclosure
- Legacy asset monetisation: progress against the roughly Rs1.84 billion book value of approved power assets still to be sold and whether discontinued-operation losses continue to fall toward zero. Asset-disposal status
- Cash-flow composition: distinguish portfolio liquidation and reinvestment from cash earnings. Under the new business model, a large operating-cash-flow number can reflect reductions in short-term investments rather than profit conversion in the conventional industrial sense. Cash-flow detail
- FESCO: whether the prequalified consortium advances through due diligence and bidding, and—if it does—what ownership share, funding requirement and governance role would fall to Pakgen. Privatisation Commission
- The tax profile of the investment business. H1 tax expense was large relative to pre-tax earnings, so future results need to show whether that relationship normalises as the new revenue mix matures. Official H1 2026 report
Bottom line
Pakgen’s H1 2026 result is a cleaner quarter than the headline loss suggests, but also a more complicated one. The legacy power drag is fading rapidly and the balance sheet is debt-free, which removes two major historical constraints. At the same time, continuing investment revenue and profit were materially lower than the prior-year comparative, and the new earnings model is inherently more sensitive to portfolio decisions and market values than a contracted IPP. The RMPL acquisition, ongoing disposal of generation assets and advancement of the Pakgen-led FESCO consortium mean the company is now being reshaped through capital allocation rather than plant utilisation. The most useful signal in the next result will not simply be whether PAT turns positive; it will be whether recurring investment returns strengthen, discontinued losses keep shrinking, and the company demonstrates disciplined conversion of its remaining capital into durable earnings. Official H1 2026 report