FFC_CY22 Analyst Briefing Takeaways,(AKD Off the Analyst's Desk Feb 07, 2022)
AKD, Off the Analyst's Desk
FFC: CY22 Analyst Briefing Takeaways
Fauji Fertilizer Company (FFC) held its analyst briefing today, where it apprised investors on the year ended Dec’22 along with its future outlook. The company posted unconsolidated earnings of PkR20.0bn in CY22, culminating into an EPS of PkR15.8. While on the consolidated basis, earnings for the year amounted to PkR33.7bn (EPS: PkR27.0) in CY22.
- Offtakes for the company clocked in at 2,423k tons for Urea and 70k tons for DAP, declining by 2%/66% compared to CY21. Furthermore, FFC has recorded a 37% market share for Urea in the country while posting 6% market share for DAP.
- Gross margins in 4QCY22 fell to 32% vs. 33% posted in the SPLY, while declining considerably from the 39% recorded last quarter as inventory losses on DAP amounting to PkR1.5bn dented the margins.
- The management apprised that the new project undertaken with MARI for the enhancement of gas pressure is expected the cost the company US$150mn over the next 3 years, after which smooth gas supply will be ensured for the next 5-7 years.
- Similarly, the company is ensuing another project with SNGP for a pipeline to be completed in the next 2 years. This will cost the company PkR2bn and will ensure a backup supply for the next 14 years.
- As majority CAPEX for the company is dollarized, the management stated that performance in dollarized terms is quite important for the company. With regards to the severe devaluation of the local currency, NPAT for CY22 has declined by 27%YoY in US$.
- Moreover, due to the crisis of FX reserves in the country, the company is facing issues in the opening for LCs of DAP, although the company is not looking to import the nutrient as of writing, as the demand for DAP has been severely dented on the back of surging prices for the nutrient.
- FCCEL supplied 89.5GWh of electricity to the grid, and recorded a net profit of PkR2.5bn for the year. The FWEL projects sold a combined 220.8GWh of electricity and recorded earnings of PkR6.3bn. FFF has commenced production on a new line in June, and the management expects the company to turn profitable in CY23, further boosting earnings.
AKD Research
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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