HCAR 2QMY24 & NCL 1QFY24 Result Previews, (AKD Daily Oct 30, 2023)
HCAR—2QMY24 EPS of PkR9.9 expected: The board of HCAR is expected to announce its 1QMY24 results sometime next month, where we expect the company to post earnings of PkR1.4bn (EPS: PkR9.9) vs. PAT of PkR145mn (EPS: PkR1.0) in previous quarter. Topline is expected to arrive at PkR15.3bn vs. PkR3.8bn in 1QMY24, up 3.1xQoQ. This significant increase is mainly due to improvement in sales volumes (up 3.2xQoQ), as previous quarter sales were significantly dampened due to LC restrictions (units sold: 2,501/601 in 2QMY24/1QMY24). Gross margins are anticipated to clock in at 12.8% vs. –3.9% owing to better absorption of fixed cost and ~7.3%QoQ decline in CRC prices. Operating expenses are expected to increase by 23%QoQ, largely attributable to high distribution expenses. Furthermore, we anticipate other income to witness a decline of 3%YoY amidst drop in the ST investments in preceding quarter. Overall, for 1HMY24, earnings accumulates to PkR10.9/sh, an increase of 4.6xYoY, owing to improvement in gross margins and increased other income.
NCL—1QFY24 EPS of PkR4.0 expected: The board of NCL is scheduled to announce its 1QFY24 results on Monday, where we expect the company to post earnings of PkR960mn (EPS: PkR4.0) vs. PAT of PkR448mn (EPS: PkR1.9) in 4QCY23, an increase of 1.1xQoQ. The said improvement in the bottom line is due to higher expected gross margins, amid decline in the local cotton prices. Topline is expected to marginally increase by 2%/38% QoQ/YoY to clock in at PkR21.1bn vs. PkR20.5bn in the previous quarter. The quarterly increase is mainly due to expected 3%QoQ increase in the exports, while annual growth is primarily due to US$ appreciation (up 32%YoY). Gross margins are expected to improve to 17.9% during the quarter vs. 14.1% in 4QCY23, driven by declining local cotton prices amidst significant improvement in domestic production. Furthermore, finance cost is expected to increase by 5%QoQ/77%YoY over rise in effective interest rates.
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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