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FFBL & BAHL_CY19 Result Previews, (AKD Daily, Jan 21, 2020)

FFBL: CY19 Result Preview

FFBL likely to post LPS of PkR0.48 in 4QCY19: The BoD of Fauji Fertilizer Bin Qasim Ltd (FFBL) is scheduled to announce the company’s full year result on 28th Jan’20. We foresee FFBL to post 4QCY19 NLAT of PkR450mn (LPS: PkR0.48) on a standalone basis, vs. 4QCY18 NPAT of PkR1,640mn (EPS: PkR1.76). This will take cumulative CY19 standalone NLAT to PkR2.8bn (LPS: PkR3.07) vs NPAT of PkR1,437mn (EPS: PkR1.54) in CY18. For full year CY19, the loss is expected on the back of (i) 3.7ppt YoY decline in gross margins due to higher gas price and PKR depreciation, (ii) 127%YoY higher finance cost, and (iii) higher taxation. For 4QCY19 alone, the YoY decline in earnings is expected largely on the back of (i) absence of dividend income from its power subsidiary leading to a 67%YoY decline in other income (ii) 113%YoY higher finance cost due to higher interest rate and increase in short term borrowing, (iii) absence of tax credit booked last year. On sequential basis, the losses are expected to remain flattish where higher gross margins (decline in PMP prices and PKR appreciation) is expected to be offset by absence of (i) dividend income from power subsidiary and (ii) absence of PkR423mn of gain recorded under the head of ‘other expenses’.

BAHL: CY19 Result Preview

BAHL CY19 earnings to clock-in at PkR9.98/sh: Bank AL Habib Limited (BAHL) is scheduled to announce its full CY19 results on 29th Jan’20. In this regard, we expect the bank to announce CY19 NPAT of PkR11.1bn, +31.1%YoY from PkR8.4bn in the same period last year. The result is likely to be accompanied by a dividend of PkR3.5/sh where we expect the bank to pursue higher CET-1 capital buffer (9MCY19: 2.1%). Confluence of robust growth in deposits (CY19E: 15.1% vs. industry growth of 9.6%; 72/26 branches added in CY18/9MCY19) and interest rate hikes could push NII growth to 38.7% in CY19 that coupled with stable contribution from NFI (15.2% of total income) are likely to aid earnings growth. On a quarterly basis, earnings are likely to grow by 60.2/62.6% QoQ/YoY to PkR4.1bn (EPS: PkR3.68) with impetus coming from, i) NIMs improvement (4QCY19E: 4.8% vs. 4.1% in 3QCY19) pulling up NII growth to 22.2%QoQ and ii) possible reversal of impairment expense (9MCY19 impairment expense: PkR1.4bn) offsetting higher potential credit costs due to downgrading of NPLs. CY19 earnings announcement is likely to provide fuel to stock performance where BAHL has underperformed our banking universe by 11.8ppts over the past 3M. Our Dec’20TP stands at PkR93.3/sh – Buy!

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