EFERT 2QCY22 Result Review - Below expectation, (AKD Off the Analyst's Desk Jul 28, 2022)
AKD, Off the Analyst's Desk
EFERT 2QCY22 Result Review - Below expectation
Engro Fertilizer Limited (EFERT) has announced its 2QCY22 result, where it posted consolidated loss of PkR98mn (LPS: PkR0.07). This takes cumulative 1HCY22 PAT to PkR5.4bn (EPS: PkR4.05) vs PAT of PkR10.5bn (EPS: PkR7.87) in same period last year. The result is below our expectation due to higher effective tax rate and other operating expense.
- Company posted topline of PkR38.3bn vs PkR25.9bn in SPLY, depicting an increase of ~48%. The primary reason for higher sales is attributable to higher urea prices and better sales volume of phosphatic fertilizers. On QoQ basis, topline recorded a growth of ~4%.
- Gross margins clocked in at ~30.5% during 2QCY22, down by 750bps as compare to SPLY. The decline is due to absence of concessionary gas tariff and lower volumetric sales of trading portfolio.
- Finance cost witnessed a jump of 2%/23% on YoY/QoQ basis, amid rising financing cost.
- Other income clocked in at PkR588mn, up by 20%/15% YoY/QoQ. The increase is mainly attributable to higher profit rate on short term investments.
- Other expenses for 2QCY22, clocked in at PkR1.4bn, vs PkR0.38bn in 1QCY22. Company has recorded loss of PkR304mn as allowance on subsidy receivable from GoP.
- Effective tax rate for the quarter clocked in at ~101%, attributable to imposition of super tax and poverty alleviation tax announced in federal budget. The tax rate is way above our expectation of 79%. We await further clarity on this matter.
- Company has not announced any cash dividend.
AKD Research
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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