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EFERT & MCB CY22E Result Previews, (AKD Daily, Feb 07, 2023)

AKD Daily

MCB & EFERT CY22E Result Previews

 

EFERT – 4QCY22 earnings to clock in at PkR3.5/sh: We expect Engro Fertilizers Limited (EFERT) to post a NPAT of PkR4.6bn (EPS: PkR3.5) in 4QCY22, taking total earnings for CY22 to PkR14.6bn. This culminates into a decline of 31%YoY, mainly on the back of higher taxation owing to the Supertax applicable in CY22, while earnings for the final quarter of the year show an improvement of 10%QoQ as offtakes for the quarter rose, boosting revenue by 28% when compared to 3QCY22. Margins for the quarter are expected to clock in at 25.6%, a decrease from the 27.3%/32.9% recorded in 3QCY22/4QCY21 as urea offtakes took a hit. EFERT is likely to post an Operating Profit of PkR7.8bn in 4QCY22, taking total for the year to PkR32.2bn, remaining relatively flat when compared to last year’s PkR33.6bn. Finance costs are expected to clock in at PkR762mn as higher ST borrowings along with risen interest rates increase the charge for the company. Other Income is expected to increase to PkR254mn, helping offset the increase in finance costs. Taxation for the year is likely to clock in at PkR13.7bn for the year, culminating to an ETR of 48% for the year as the impact of the Supertax hit the company hard. We expect the company to announce a dividend of PkR4.0/sh for the closure of the year, taking total payout for CY22 to PkR12.5/sh to end up with a D/Y of 15.1%

 

 

MCB - CY22 unconsolidated earnings estimated at PkR6.7/sh for 4QCY22: MCB Bank Limited (MCB) is scheduled to announce its earnings later this week, wherein we expect the company to post NPAT of PkR7.9bn (EPS: PkR6.7) for 4QCY22, lower by 4%YoY/9%QoQ. For the full year, we estimate the bank to post earnings of PkR27.8bn (EPS: PkR23.4), lower by 10%YoY. The earnings attrition during the final quarter of the year is attributable to lower FX income anticipated for the quarter, due to the lackluster volumes in the FX market during the three-month period, along with minimal movement in the currency. As a result, we anticipate MCB to post FX income of PkR1.9bn in 4QCY22, compared to PkR3.9bn in the earlier quarter. Net interest income is expected to expand by a conservative 4%QoQ, coming in at PkR23.4bn for 4QCY22. The muted sequential growth in the net interest income is attributable to the interest rate hike during the period, of 100bps in Nov’22. Alongside the earnings, we estimate the bank to announce a cash dividend of PkR4.5/sh for the quarter, taking the full year payout to PkR17/sh, corresponding to ~72.5% of CY22 earnings. MCB is one of our top picks from the banking sector, with a Dec’23 TP of PkR160/sh, offering an upside potential of 42% over the last close. However, more importantly, the scrip offers a dividend yield of 23% in CY23.

 

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