FFBL & EFERT_2QCY17 earnings preview
​FFBL: 2QCY17 earnings preview
FFBL is scheduled to announce earnings for 2QCY17 tomorrow (Jul 26'17) where we expect the company to post net profit of PkR192mn (EPS: PkR0.21) in 2QCY17F vs. net loss of PkR381mn (LPS: PkR0.41) in 2QCY16. This recovery from loss is expected on the back of: 1) 9%YoY recovery in topline to PkR8.11bn reflecting 34%YoY expected increase in urea off-take to ~120k tons & flattish DAP offtake (90k tons) and 2) 2.9ptsYoY improvement in GM to 20.2% (including subsidy) in 2QCY17 due to significant decline in phosphoric acid prices (down 18%YoY) limiting the effect of reduction in DAP prices (down 8%YoY). On a half year basis, FFBL earnings are expected to reach PkR58mn (EPS: PkR0.06) in 1HCY17 compared with net loss of PkR895bn (LPS: PkR0.96) in 1HCY16. Despite encouraging volumetric growth seen from 4QCY16, we feel an improvement in local & international pricing dynamics would be necessary for sustainability of the earnings trend, going forward. Having lost 28%CYTD, our Jun'18 SOTP-based TP of PkR52.8/sh (upside: 42%), advocates a Buy stance.
EFERT: 2QCY17 earnings preview
EFERT is scheduled to announce its 2QCY17 financial results on Friday (Aug 04' 17), where we expect EFERT's earnings to clock in at PkR3.19bn (EPS: PkR2.40) - up 4.7xYoY. This significant uptick in earnings is expected on the back of: 1) strong 68%YoY/74%QoQ growth in topline to PkR17.49bn caused by 2.27xYoY/2.04xQoQ increase in Urea offtake to ~550k tons and 2) 18%YoY decrease in finance cost on account of swift deleveraging and low interest rate environment. On a cumulative basis, we expect 1HCY17F earnings to stand at PkR4.84bn (EPS: PkR3.64) compared to PkR2.79bn (EPS: PkR2.10) in 1HCY16, up 73%YoY. Alongwith the result, we also expect an interim cash dividend of PkR2.25/sh. Having lost 17%CYTD, the stock currently trades at CY17F PE of 7.9x where our Jun'18 TP of PkR72.1/sh offers an upside of 27% from current price level. Buy!
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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