FFBL & INDU_Result Previews, (AKD Daily, Oct 25, 2021)
AKD, Off the Analyst's Desk
FFBL & INDU: Result Previews
FFBL earnings to rise by 110%YoY in 3QCY21: Fauji Fertilizer Bin Qasim Limited (FFBL) is expected to post 3QCY21 unconsolidated NPAT of PkR6.95bn (EPS: PkR5.39) as opposed to NPAT of PkR3.3bn (EPS:PkR2.56) in the same period last year (+110%YoY) and NPAT of PkR2.6bn (EPS: PkR2.02) in the previous quarter (+167%QoQ), taking the 9MCY21 NPAT to PkR10.8bn (EPS: PkR8.39) as opposed to a loss of PkR901mn in 9MCY20 (LPS: PkR0.7). The growth in earnings is attributed to higher expected offtake in i) Urea (+17%QoQ/35%YoY), and ii) DAP (+145%QoQ). In addition to this, the company has successfully completed the sale transaction of Foundation Wind Energy Limited I & II (FWEL I & II) resulting in one-off gain of PkR2.3/sh. Similarly, we expect the gross margin to hover around ~20% in 3QCY21 (vs 15.7% in 3QCY21) on account of higher DAP margins in contrast to same period last year (DAP margin: US$122/MT in 3QCY21 vs US$31/MT in 3QCY20). We reiterate our BUY stance on FFBL (TP:PkR37/sh), implying an upside of 60% from the last close.
INDU to post 1QFY22 EPS of PkR58.6: We expect Indus Motor Company Limited (INDU) to post 1QFY22 NPAT of PkR4.5bn (EPS: PkR58.6), a whopping increase of 149%YoY and 4.4%QoQ basis. We expect the topline to swell by 87%YoY on account of 59%YoY higher offtake in volumes compared to same period last year. In comparison to the previous quarter, we expect the topline to inflate by 33%QoQ on account of 28%QoQ growth in volumes, led by Hilux (+79%QoQ), Fortuner (+46%QoQ), Corolla (+29%QoQ) and Yaris (+10%QoQ). On cumulative basis, total volume offtake for INDU in 1QFY22 stands at 18,646 units, registering all time high volumes in a quarter. In addition to this, the company has a gigantic reserve of PkR82bn in short term investments, providing a cushion to earnings in form of other income (PkR16.8/sh after tax). Lastly, we expect INDU to maintain the payout ratio of 65%, resulting in a dividend of PkR38/sh in 1QFY22. We maintain our Buy stance on INDU with a target price of PkR1,587/sh, implying an upside of 42% in addition to DY of 11%.
AKD Research
Fauji Fertilizer Bin Qasim Limited is a Pakistan-based holding company. The Company manufactures, purchases and markets fertilizers. It is involved in meat, dairy and coal based energy generation sectors. It has identified its potential business segments and has undertaken investments in the areas of food, financial, power sector and wind energy projects. Its products include Granular Urea, such as Sona Urea, and Di Ammonium Phosphate (DAP), such as Sona DAP. Sona Urea is a synthetic organic compound containing nitrogen in amide form available in the form of white solid prills. It is applied to soil and also suitable in solution form as spray application. Sona DAP contains nutrient element, phosphorous besides nitrogen available in flowing granular form Granules are stronger, harder and of uniform size. It is suitable for various crops and soils recommended for initial application. It produces over 791,260 metric tons (MT) of DAP and approximately 433,610 MT of Urea.
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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