EUR 9.10 For Business Accounts Only

FFC & FFBL 4QCY23 | HCAR 3QMY24 Result Previews, (AKD Daily Jan 24, 2024)

FFC & FFBL 4QCY23 | HCAR 3QMY24 Result Previews,

 

FFC 4QCY23 earnings expected at PkR9.7/sh: FFC is scheduled to announce its 4QCY23 results on Jan 26th (Friday), wherein we expect company to post PAT of PkR12.4bn (EPS: PkR9.7) vs. earnings of PkR9.1bn (PkR7.2/sh) in 3QCY23, up 36%QoQ, primarily attributed to the possible reversal of higher gas prices recorded prudently in the quarter before. To note, revised gas prices for the fertilizer sector under the MARI were to be applicable from Oct 1st, 2023. For this reason, we anticipate a PkR4.6bn reversal in COGS, resulting in an after-tax impact of PkR2.2/sh. Excluding the said reversal charge, we project an EPS of PkR7.5/sh for the quarter. Further, topline for the quarter is projected at PkR42.5bn, ↓4%QoQ, primarily due to a 10%QoQ decline in Urea volumes. However, an 11%QoQ increase in Urea prices not only offsets the impact on the topline but also raises our gross margin estimate to 49.5% (38.5% excluding one-off reversal impact) . Other income is expected to decline by 26%QoQ amid absence of dividends from power subsidiaries. Lastly, we anticipate a PkR7.0/sh cash dividend, taking full-year dividend to PkR18.4/sh.

 

FFBL—4QCY23 EPS of PkR4.67 expected: The board of FFBL is scheduled to announce its 4QCY23 results on Thursday, where we expect company to post a PAT of PkR5.9bn (EPS: PkR4.6) compared to earnings of PkR5.3bn (EPS: PkR4.1) in the previous quarter, an increase of 11%QoQ. The said earnings boost is predominantly driven by enhanced gross margins, primarily due to 15%QoQ surge in DAP prices, taking premium from imported DAP to above PkR4.1k/bag vs. PkR3.0k/bag in previous quarter. Another positive aspect is 34%QoQ decline in the financial charges owing to falling debt levels, where-in the company decreased its total debt standing from PkR46.5bn to PkR25.5bn during Sep’23. Overall, this result is expected to take full year earnings to PkR5.9bn (EPS: PkR4.8) vs. PkR2.2bn (EPS: PkR1.8), up 1.7xYoY. Moreover, we do not expect company to declare any payouts due to elevated debt levels  (D/E: 1.1x).

 

HCAR– 3QMY24 earnings to clock in at PkR4.1/sh: HCAR is expected to announce its 3QMY24 result today, where-in the company is expected to report earnings of PkR590mn (EPS: PkR4.1) vs. PkR675mn (EPS: PkR4.7) in the previous quarter, a decline of 13%/27% QoQ/YoY. The said falling profitability on a quarterly basis is due to falling sales volumes, where the total sales volume squeezed to 2,375 units (↓5%/57% QoQ/YoY). Specifically, HCAR’s premium priced “Civic” sales are estimated to have declined by 75%QoQ to <250units. We estimate gross margins to contract to 9.1% (vs. 10.9% in the quarter before) largely attributable to falling retail prices at Oct-end. Furthermore, other income is expected to contract by 43%QoQ as well, owing to decline in company's ST investments to PkR3.8bn at Sept-end from PkR10.1bn in Jun’23. Overall, 9MMY24 earnings would accumulate to PkR9.9/sh (up 30%YoY), primarily led by improvements in gross margins and 41%YoY surge in other income, driven by higher interest rates.