ASTL_Capacity constraints to keep earnings in check
Previewing 2QFY18 result for ASTL, we expect the company to post NPAT of PkR217mn (EPS: PkR0.73) versus NPAT of PKR256mn (EPS: PkR0.86) in 2QFY17- down 16%YoY. Higher admin (likley to go up 58%YoY) and finance cost (expected to remain 51%YoY higher) in the wake of the company's expansionary efforts along with resumption of normal tax regime (post IPO exemption period) are anticipated to push earnings lower. On a cumulative basis, we expect the earnings to stand 15%YoY lower in 1HFY18E, with NPAT clocking in at PkR412mn (EPS: PkR1.39) vs. PkR482mn (EPS: PkR1.62) in 1HFY17. Apart from the aforementioned factors, lower dispatches (down 23%YoY) on account of capacity constraint and one off trading activity last year (expected to go down by 23%YoY) further dampens earnings. Moreover, updating on recent judgment by Sindh High Court, we highlight that the court's verdict bears no significance for the steel sector, as it only seeks to repeal RD imposed through recent SRO 1037 (I) 2017, while the duty structure for steel products remains unchanged. In this backdrop, we reiterate our buy call on ASTL (DCF based TP of PkR132/sh, upside: 41%) citing strong earnings growth outlook (5yr forward NPAT CAGR of 25%).
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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