FFC & FFBL 2QCY23 Result Previews ,(AKD Daily, Jul 21, 2023)
FFC—2QCY23 earnings expected to clock in at PkR5.15/sh: We expect FFC to continue with strong results on the back of uninterrupted gas supplies and lowest gas cost in the sector leading to higher gross margins. We forecast earnings to dip slightly from PkR6.08/sh in 1QCY23 to PkR5.15/sh (↓15%/↑95% QoQ/YoY) due to lower offtakes compared to 1QCY23, higher financial charges and higher taxation (effective rate: 44% compared to 35% last quarter). Retrospective application of the super tax levied in the FY24 Finance Act will pressurize earnings moving forward. We estimate revenue to clock in at PkR32bn vs. PkR36bn (↓10%/↑15% QoQ/YoY) and gross margin to remain higher at 42% due to advantage from urea price increases and lower COGS comparatively. Other income is expected to arrive at PkR3.9bn due to healthy cash balances and short term investments. We project a dividend payout of 70%, amounting to PkR3.5/sh against PkR4.3/sh in 1QCY23, continuing with it’s regular interim and annual payouts.
FFBL—2QCY23 earnings expected to clock in at PkR1.30/sh: We expect FFBL to post an EPS of PkR1.30/sh against a loss of PkR4.20/sh in 1QCY23 and profit of PkR1.91/sh in 2QCY22. Revenues are expected to rise by 18%QoQ, but depicting a 19%YoY decline owing to strained demand for DAP. Although we are witnessing a fall in phosacid and DAP prices internationally, faltering US$/PkR parity keeps the import bill on the higher side. Our projected gross margin arrives at 17% almost at par with 19% in 2QCY22, compared to 7% in 1QCY23 due to better sales and higher prices of urea. Finance cost is estimated at PkR2.7bn owing to record high interest rates. Further, the government has levied a 10% supertax which is expected to dent earnings moving forward. We do not expect any interim dividend payout for the period.
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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