EPCL_announced 3QCY21 EPS of PkR 3.43 - In line with expectation, (AKD, Off the Analyst's Desk, Oct 18, 2021)
AKD, Off the Analyst's Desk
EPCL: announced 3QCY21 EPS of PkR 3.43 - In line with expectation
- Engro Polymer & Chemicals Ltd (EPCL) announced 3QCY21 NPAT of PkR3.12bn (EPS: PkR3.43), up 65.9%YoY and flat QoQ, taking 9MCY21 NPAT to PkR10.4bn (EPS: PkR11.45) vs. PkR2.05bn (EPS: PkR2.25) in 9MCY20.
- The result was in line with our expectation, the company however, surprised with an interim cash dividend of PkR3.0/sh, taking 9MCY21 payout to PkR11.80/sh, translating into +100% payout vs. 5yr historical payout ratio of 30%.
- Earnings increased by 66%YoY and remained flat QoQ in 3QCY21: Earnings was led by (i) increase in revenues by 27/87.2%QoQ/YoY, however, gross margins clocked in at 28% in 3QCY21 vs. 35% in the previous quarter, due to 14%QoQ decrease in PVC ethylene margins (US$852/MT), (ii) other income increased by 23/54.7%QoQ/YoY, and (iii) 5%QoQ decrease in finance cost.
- We look forward to the management call before updating our earnings and payout estimates for EPCL. The stock currently trades at CY21/22F P/E of 3.5/6.6x. Our TP of PkR74/sh implies an upside of 27.6% from last close – Buy!
AKD Research
Engro Polymer & Chemicals Limited is a chlor vinyl chemical company. The principal activity of the Company is to produce and market chlor-vinyl products, which include poly vinyl chloride (PVC), vinyl chloride monomer (VCM), caustic soda, hydrochloric acid and sodium hypochlorite. The Company operates through three segments: poly vinyl chloride (PVC) and allied chemicals, caustic soda and allied chemicals, and power supplies. The poly vinyl chloride (PVC) and allied chemicals segment manufactures and sells PVC and allied chemicals to various industrial customers, including pipe manufacturers, shoe and packaging industry. The caustic soda and allied chemicals segment manufactures and sells caustic soda and allied chemicals to textile and soap industry. The power supplies segment supplies surplus power generated from its power plants to Engro Fertilizers Limited. The Company manufactures and markets over four grades of PVC under the brand name SABZ.
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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