FFBL & FFC 4QCY17 Earnings Preview
FFBL: 4QCY17 earnings preview
FFBL is scheduled to announce earnings for 4QCY17 on Friday (Jan 26'18) where we expect the company to post net profit of PkR2.65bn (EPS: PkR2.83) in 4QCY17F vs. net profit of PkR2.39bn (EPS: PkR2.56) in 4QCY16 – up 11%YoY. This improvement in earnings is expected on the back of: 1) 5.6ptsYoY jump in GM to 21.6% (including subsidy) in 4QCY17 due to significant decline in phosphoric acid prices (down 19%YoY) and upward trend in DAP/Urea prices (reduction in discount offerings) and 2) 53%YoY expected increase in urea off-take to ~202k tons, partly countering the effect of 16%YoY anticipated decline in DAP offtake. On a full year basis, FFBL earnings are expected to clock in at PkR2.37bn (EPS: PkR2.54) in CY17F compared with net profit of PkR1.34bn (EPS: PkR1.43) in CY16. Alongwith the result, we also expect a final cash dividend of PkR1.0/sh taking CY17 total payout to PkR1.1/sh (payout ratio: 43%). Having lost 6.5%FYTD, the stock currently trades at a forward P/E of 13.5x where our Dec'18 TP of PkR48.1/sh offers an upside of 20% from current price level. BUY!
FFC: 4QCY17 Earnings Preview
FFC is scheduled to announce its 4QCY17 financial results on Tuesday (Jan 30'18) where we expect FFC's earnings to clock in at PkR4.94bn (EPS: PkR3.88) against PkR4.28bn (EPS: PkR3.66) - up 15%YoY. This increase in earnings is expected on the back of: 1) 47bps YoY improvement in GMs to 30.5% (includes subsidy) on account of higher urea prices (reduction in discounts offering as urea inventory normalizes amid higher int’l prices) and 2) healthy Urea/DAP offtake of 824k/176k tons during the period. On a cumulative basis, we expect CY17F earnings to stand at PkR10.87bn (EPS: PkR8.54) compared to PkR11.78bn (EPS: PkR9.26) in CY16, down 8%YoY. Alongwith the result, we also expect a final cash dividend of PkR3.50/sh taking CY17 total payout to PkR7.50/sh (payout ratio: 88%). Having gained 10.4%FYTD, the stock currently trades at a forward P/E of 10.1x where our Dec'18 TP of PkR96.9/sh offers an upside of 6% from current price level. ACCUMULATE!
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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