EFERT - Analyst Briefing Takeaway, (AKD Off the Analyst's Desk Aug 01, 2023)
To recall, the company posted a consolidated PAT of PkR1.1bn/PkR5.5bn (EPS: PkR0.79/ sh/PkR4.09/sh) for the 1QCY23/1HCY23. The major factor eating away the bottom line remained the newly levied super tax through the FY24 Finance Act. An interim dividend of PkR3.0/sh was also paid out for the outgoing quarter, taking total 1HCY23 dividend payout to PkR6.5/sh.
- The company booked a hefty PkR3.8bn tax charge on account of super tax alone, creating an effective charge of ~85.1% on it’s PBT. For perspective, the company mentioned that without the said charge, EPS would have been PkR4.80/sh (↑9.1% QoQ). Further, the retrospective part of the tax may be challenged legally.
- 5% FED on all fertilizers, plus an additional 5% GST levy on DAP has been implemented and passed on final prices (PkR175/bag increased effective 1st July on urea, representing PkR150/bag for FED pass on and PkR25/bag on account of dealer margin).
- The base plant experienced a 21 day unplanned outage during the quarter, and such issues have been taken up by the BoD to mitigate any future lost production days.
- No material change in urea sales (↓~5% against SPLY and market share remained in the 33% region) but DAP sales declined by ~15% (market share at 18% vs. 22%) against SPLY due to high prices owing to PkR devaluation, despite falling international prices.
- Market size for urea is expected to be at 6.5MT and DAP should remain in the region of 1.3-1.4MT annually, as per the company.
- Despite being on the Mari network, the company receives concessionary gas at PkR510/mmbtu in contrast to PkR302/mmbtu Mari gas price at the Enven plant, and the Base plant majorly runs on the costlier PP-12 dollarized price.
· No major turnarounds are planned for the remaining half of the year.
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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