EUR 40.00 For Business Accounts Only

Topline Flash Note: Engro Corporation Limited (ENGRO): Analyst briefing takeaways

• Revenues of ENGRO increased by 26% YoY in 1H2020, mainly contributed by Energy projects in Thar, followed by higher LPG volumes handled by Evopak, while some of this impact was offset by 1) lower revenues from EFERT primarily due to lower sales and 2) lower revenues from EPCL.
• The Enfrashare business has progressed well, acquiring a portfolio of over 1,500 towers catering to all MNOs in Pakistan. To highlight, ENGRO has set up Enfrashare business with an initial investment of Rs7.5bn.
• Along with Enfrashare business, company is working on a feasibility study for a Polypropylene facility in petrochemical segment. To note, pre-feasibility will be completed by end of 2020. Generally speaking, the project can cost up to US$1bn.
• In fertilizer business, after the decision of Supreme Court, the GIDC is applicable till Jul 30, 2020 and to be paid over twenty four months. There would be no impact on accounting earnings as company has already accounted for the cess. However, GIDC on EFERT’s Enven plant is a separate case and the management is confident that the decision will be in their favor. The case outflow on the base fertilizer plant is around Rs19bn and on EPCL is around Rs5bn (also accounted for by the company).
• In chemical business, PVC expansion and VCM debottlenecking, the company has revised its timeline and the management is targeting COD in 1Q2021.
• Engro Powergen Qadirpur Limited (EPQL) has signed MoU with the IPPs negotiation committee subject to cabinet, BOD and relevant regulatory authority approval. However, no discussion has started on power plant which comes under the 2015 policy.
• The recovery of receivables from the power sector is good with 65-70% recovery rate. Around 2/3rd of the receivables are the under 0-30 days category.
• Elengy terminal has handled 36 cargoes and fulfills more than 12% of the country’s gas requirement. The 5-year tax holiday is over, with applicable tax being 8% of the turnover or 29% of PBT, whichever is higher. 

Company is currently carrying Rs60bn cash that are parked in government securities and the company is actively looking for medium to long term investment opportunities.