FFC_CY19 EPS up 19%YoY, (AKD, Off the Analyst's Desk, Jan 30, 2020)
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FFC: CY19 EPS up 19%YoY |
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§ Fauji Fertilizer Company Ltd (FFC) announced 19% YoY higher CY19 NPAT of PkR17.1bn (EPS: PkR13.45). The increase in earnings was on the back of (i) 102bps YoY higher GMs amid flattish topline, (ii) and 85% YoY higher ‘other income’ backed by interest earned on GIDC accumulation and higher dividend income. However, (i) 51% YoY higher finance cost due to increase in discount rates and (ii) 62% YoY higher other expenses kept the bottomline growth in check.
§ For 4QCY19 alone, the earnings clocked in at PkR4.6bn (EPS: PkR3.65), down 21% YoY, but up 30% QoQ, below expected due to lower than expected gross profits and higher than expected other expense (EPS impact: PkR0.25). The sequential increase in earnings resulted from: (i) 23% QoQ higher topline resulting from 19%QoQ higher urea offtake, and (ii) 207 bps QoQ higher gross margins of 28% amid higher retention price.
§ FFC also announced a final interim cash dividend of PkR3.25/sh, taking CY19 payout to PKR10.8/sh vs. PKR8.85/sh during CY18. Our TP of PkR111/sh implies a total return of 16.1% at last close, implying a Buy stance.
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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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