EFERT 2QCY23 & HCAR 1QMY24 Result Previews, (AKD Daily Jul 25, 2023)
AKD Daily
EFERT 2QCY23 & HCAR 1QMY24 Result Previews
EFERT—2QCY23 earnings expected to clock in at PkR3.87/sh: We expect EFERT to post a consolidated EPS of PkR3.87/sh against earnings of PkR3.30/sh in 1QCY23 and a loss of PkR0.07/sh in 2QCY22. Revenues are expected to remain flat QoQ while rising by ~14%YoY, over an increase in urea prices witnessed at the end of 1QCY23 while quarterly decline in urea offtakes. Furthermore, we expect gross margins to improve to ~35% vs. ~24% in 1QCY23 and ~31% in 2QCY22 due to the above mentioned increase in urea price, passing on higher gas costs and inflationary pressures. Finance cost is estimated at PkR0.7bn, remaining relatively stable following company’s policy of reducing debt, however the record high interest rates keep debt servicing costs on the higher side. Further, the government has levied a 10% supertax which is expected to dent earnings as 6% is to be charged retrospectively on FY23 earnings hence, our effective rate comes out at ~50%. We expect a ~PkR3.25/sh dividend payout for the quarter, following a PkR3.5/sh payout in 1QCY23.
HCAR—1QMY24 LPS of PkR1.7 expected: The board of HCAR is scheduled today to announce its 1QMY24 results, where we expect company to post a Loss after Tax of PkR246mn (LPS: PkR1.7) vs. PAT of PkR659mn (EPS: PkR4.6) in SPLY. Topline is expected to shrink by 89%YoY to clock in at PkR3.4bn vs. PkR30.2bn SPLY. This decline is mainly due to an 88%/94% QoQ/YoY sales volume decrease caused by hampered production. The company witnessed more than 45 days of closedown in the said quarter due to supply chain concerns from import restrictions. Despite the improvement in gross margins, anticipated to be at 8.1% in 1QMY24 compared to 6.3% during SPLY, the company is expected to report an operational level loss. Additionally, the retrospective implementation of the super tax will further erode the bottom line.
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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