ASTL & FFC_Result Previews, (AKD Daily, Oct 26, 2021)
AKD Daily
ASTL & FFC: Result Previews
ASTL – Earnings to remain solid in 1QFY22: ASTL is slated to announce its 1QFY22 result (26th Oct'21), where we expect the company to record NPAT of PkR467mn (EPS: PkR1.57) vs NPAT of PkR111mn (EPS: PkR0.37) in 1QFY21. The expected earnings primarily emanate from: i) 61/6%YoY/QoQ growth in the topline largely on account of higher rebar prices (+15.4%QoQ), and ii) 21%YoY lower finance cost. Gross margin is likely to remain flat compared to YoY and QoQ basis (GM: 10.9% in 1QFY22E vs. 10.9% in 1QFY21 and 10.77% in 4QFY21), where input cost pressures coupled with higher freight cost, electricity rate hikes and PkR depreciation are key factors. Moreover, earnings are likely to see an improvement of 5.4%QoQ. The company currently trades at FY22F P/E of 6.08x while 3-yr PEG stands at 0.32x with our TP of PkR57/sh provides a capital upside of 56% from last close – Buy.
FFC – Earnings to rise by 47%YoY in 3QCY21: Fauji Fertilizer Company Ltd (FFC) is expected to announce NPAT of PkR6.79bn (EPS: PkR5.34) in 3QCY21, swelling by 87%QoQ/47%YoY. This will take 9MCY21 NPAT to PkR16.2bn (EPS: PkR12.75), up 18%YoY. The increase in earnings is majorly driven by i) higher expected offtake in Urea (+17%QoQ/+15%YoY) and ii) higher gross margin (GMs: 39% in 3QCY21 vs 34% in 3QCY20) owing to better Urea pricing in 3QCY21. The current Urea price stands at PkR1,725/bag (cumulative hike of PkR125/bag CYTD). In addition to this, the company is expected to announce third interim cash dividend of PkR4.0/sh taking cumulative payout to PkR10.1/sh for 9MCY21 owing to healthy EBITDA margin, enabling the company to maintain its historical payout ratio of 70%+, despite upcoming GIDC payments as per Supreme Court’s decision. Our TP of PkR145/sh implies an upside of 45% from last close – Buy! `
AKD Research
Fauji Fertilizer is engaged in the manufacturing, purchasing and marketing of fertilizers including the investment in other fertilizer manufacturing operations. As of Dec 31 2004, Co. had a design capacity of 2,455,000 tonnes for urea production and 445,000 tonnes for DAP production.
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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