EFOODS: Fundamental issues remain deeply rooted
EFOODS has lost 52%CYTD struggling on account of continuous slowdown in earnings - 1HCY17 profits have been the lowest ever. Topline growth remains the biggest concern (down 22.5%YoY) in the backdrop of intensifying competition, with EFOODS losing out presence in all major dairy categories. Moreover, declining GM has added on to the pressure, straining profitability further. With international milk prices on an uptrend (FAO dairy index +44.3%YoY in 8MCY17) and effective marketing strategy deployment by new entrants (particularly in the tea whitener segment where EFOODS commands a leadership position), we see a challenging operating environment for EFOODS. Citing the aforementioned factors, we revise down our CY17F/CY18F earnings estimates by 55%/53% while consequently bringing down our TP to PkR84.20/sh. Going forward, fundamental weakness is likely to persist with pressure on volumes remaining intact. Product initiations under the new management remains the only bright spot, however nothing in this regard has been put forward yet. At current price level, the stock trades at unjustifiably high multiples (forward PE/PS at 80.3x/1.74x) vindicating our Reduce stance.
FrieslandCampina Engro Pakistan Ltd Formerly known as Engro Foods Ltd. FrieslandCampina Engro Pakistan Limited, formerly Engro Foods Limited, is a Pakistan based company engaged in the manufacturing, processing and marketing of dairy products, fruit drinks and frozen desserts. The Company also owns and operates a dairy farm. The Company's segments include Dairy and beverages; Ice cream and frozen dessert, dairy farm and Others. The Company's brands include Olper's, Olper's Lite, Omore, Dairy Omung, Olper's Lassi and Tarang. The Company offers frozen desserts in cups, sticks, cones and family packs. The Company's exports portfolio consists of branded products, anhydrous milk fat (AMF) and unsalted butter. Its branded products include milk, beverages, tea whitener and others. The Company offers olper's full cream milk, olper's lite, olper's cream, olper's tarrka and olper's dobala. Olper's Lite is a low-fat, hi-calcium milk. The Company has operations in countries, such as Mozambique, Sri Lanka, Singapore, Guinea, Libya and the United Arab Emirates.
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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