AKD Securities Limited - Fauji Fertilizer Bin Qasim Ltd. (FFBL) FFBL_9MCY20 Result Review, (AKD, Off the Analysts Desk, Oct 27, 2020)

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AKD Securities Limited

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FFBL_9MCY20 Result Review, (AKD, Off the Analyst's Desk, Oct 27, 2020)

FFBL: 9MCY20 Result Review

· Fauji Fertilizer Bin Qasim Ltd (FFBL) announced 3QCY20 NPAT of PkR3.3bn (EPS: PkR3.54), as opposed to a loss of PkR1.2bn (LPS: PkR1.24) in 2QCY20. This takes 9MCY20 NLAT to PkR901mn (LPS: PkR0.97), vs PkR2.4bn (LPS: PkR2.59) in the same period last year.

· The earnings beat our expectation on the upside as a result of higher than expected other income of PkR2.5bn (EPS impact: PkR2.28) due to dividend income from power subsidiaries in 3Q.

· Barring the impact of other income, core earnings also posted a turnaround in 3Q, clocking in at PkR1.22/sh vs. core loss of PkR2.49/2.37 per share in 2QCY20/3QCY19.

· The turnaround in core earnings is on the back of (i) 14/65% YoY/QoQ increase in topline, courtesy 22/115% YoY/QoQ uptick in DAP offtake, (ii) 5.4/3.0 ppt YoY/QoQ increase in GMs to 15.7%, courtesy DAP price hike and GIDC elimination and (iii) 43/33% YoY/QoQ decline in finance cost, amid decline in interest rates.

· In 9MCY20, 2.4xYoY higher other expenses (impairment charges of PkR1.1bn on FML) overshadowed improvement in core business dynamics, dragging down the cumulative earnings for the period.

· We currently have a Buy call on the scrip with a TP of PkR30.0/sh, implying an upside of 26% at last close. FFBL has recently announced right issue of PkR5bn amidst GIDC payment of PkR22bn over next two years, where sell-off of wind power subsidiary could also provide support to FFBL's liquidity situation.

27/10/2020 1 EN

Underlying

Fauji Fertilizer Bin Qasim Ltd.

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.

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PK0074601011 Pakistan Stock Exchange Pakistan

Provider

AKD Securities Limited

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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FFBL_9MCY20 Result Review, (AKD, Off the Analyst's Desk, Oct 27, 2020)

Fauji Fertilizer Bin Qasim Ltd: 1QCY23 Review - Depressed margins and exchange losses

Fauji Fertilizer Bin Qasim Ltd: 4QCY22 Review - Higher expenses and tax rate behind earnings miss

Fauji Fertilizer Bin Qasim Ltd: 3QCY22 Result Review - Hefty exchange losses drain earnings

KOHC 3QFY24 Result Review - Lower offtakes lead to profit decline (AKD Off the Analyst's Desk Apr 25, 2024)

CHCC_3QFY24 Result Review —Gross margin contraction leads to earnings decline(AKD Off the Analyst's Desk Apr 25, 2024)

FFBL 1QCY24 Result Review—Increased earnings amidst normalized tax charge, (AKD Off the Analyst's Desk Apr 25, 2024)

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