ASTL_3QFY21 Result Review, (AKD, Off the Analyst's Desk, April 20, 2021)
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AKD Research - Off the Analyst's Desk |
April 20, 2021 |
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ASTL: 3QFY21 Result Review (Above Expectations) |
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ASTL in its 3QFY21 result reported a net profit of PkR503mn (EPS: PkR1.69) vs. net loss of PkR375mn (LPS: PkR1.26) in 3QFY20 while on sequential basis, profitability improved by 61%QoQ. For 9MFY21, PAT stands at PkR925.7mn (EPS: PkR3.12) against loss after tax of PkR688mn (LPS: PkR2.23 9MFY20) The deviation came on account of i) higher than expected margins (GM: 13.9% vs. 9.6% our estimate) and ii) lower below the line expenses. Sequentially, the company witnessed significant improvement at operational level, with operating profits increasing 40%QoQ.
Key highlights of the 3QFY21 result: · Revenues were up by 26%YoY mainly reflecting price increase and robust demand. · Gross margins for the quarter clocked in at 13.9% against 6.4/10.8% for 3QFY20/2QFY21 where apart from the increase in prices, low cost inventory available from last quarter must have played a part. To note, inventory of raw material stood at PkR3.9bn as of Dec'20. · Below the line expenses were flattish on a YoY basis, though slightly declined sequentially (-10%QoQ). · Finance costs declined by 32%YoY and remained flat on QoQ basis reflecting interest rate cuts. A stellar result should keep the stock in limelight in near future however increasing cost of scrap should start reflecting from 4QFY21 which makes the role of price pass on critical in maintaining the margins. With scrap prices currently trading around USD454/ton, we expect further price increase in near future. We continue to maintain a favorable outlook for the stock with our TP of PkR61/sh proving an upside of 47.3%. |
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Amreli Steels Limited is a Pakistan-based steel manufacturing company. The Company is engaged in the manufacture and sale of steel bars and billets. The Company offers a range of steel bars for all construction needs.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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