EPCL 3QCY23 Result review, (AKD Off the Analyst's Desk Oct 18, 2023)
AKD, Off the Analyst's Desk
EPCL: 3QCY23 Result Review - Earnings surge on revenue boost
Engro Polymer & Chemicals Ltd (EPCL) announced its 3QCY23 results today, reporting consolidated earnings of PkR2.6bn (EPS-diluted PkR2.2), a significant increase compared to NPAT of PkR1.6bn (EPS PkR1.3) in the preceding quarter. The result beats our expectations due to a higher-than-anticipated topline.
- Topline of the company clocked in at PkR25bn, a notable increase of 31%/48% MoM/YoY. This surge can possibly be attributable to potential increases in sales volumes, while international PVC prices remained flat QoQ. Another plausible reason could be the company charging higher prices due to a slowdown in imports, although we await clarity on this.
- Gross margins of the company shrunk by 250bps to clock in at 26.1% compared to 28.6% in the previous quarter. The said contraction is attributable to the increase in gas prices, as the company is charged at a mix rate of 25%/75% RLNG/Indigenous gas prices, respectively, in the last two months of the previous quarter (calculated ~PkR1,992/mmbtu).
- Additionally, the finance cost for the quarter is reported at PkR1.2bn (in-line with our expectations), reflecting a 42% YoY increase due to higher financing rates.
- Cumulatively, FY23 earnings reached PkR5.4bn vs PkR9.3bn in SPLY, indicating a 76%YoY decline, primarily attributed to a reduction in Ethylene-PVC core delta.
- Finally, the company declared a cash dividend of PkR2.5/sh, bringing the nine-month dividend to PkR5.0/sh.
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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