NML_NCL & HUBC_1QFY18 Result Previews
NML: 1QFY18 Result Preview
Previewing 1QFY18E result for NML, we expect the company to post unconsolidated profit of PkR876mn (EPS: PkR2.49) vs. PkR641mn (EPS: PKR1.82) in 1QFY17, reflecting growth of 37%YoY. The growth in earnings is expected to arise from: 1) 16%YoY uptick in the topline led by garment (+2.31xYoY) and processed cloth (+12%YoY) segment, 2) margin accretion of 27bpsYoY supported both by export package and company focus towards value added segment where margins remain strong, and 3) rising dividend income (+25%YoY) from the portfolio companies. Sequentially, 1QFY18 earnings are expected to remain 25%QoQ lower as the significant portion of dividend income falls in the last quarter. However, NML's core earnings are likely to see significant improvement (Core EPS: PkR0.94 in 4QFY18 vs. Core LPS: PkR0.12 in 4QFY17) on the back of recovering gross margin (+291bps). Correcting 12%FYTD, NML now trades at FY18F PE of 8.6x where our Jun'18 TP of PkR185.3/sh offers an upside of 32% from current price level. BUY!
NCL: 1QFY18 Result Preview
NCL is scheduled to announce its 1QFY18 results today (Oct 26'17) where we expect the company to post earnings of PkR303.54mn (EPS: PkR1.26) vs. PkR564.7mn in 1QFY17 (EPS: PkR2.35), down 46%YoY. The expected decline in total earnings is attributable to the absence of dividend income from subsidiary company, however earnings from core operations are likely to increase by 16%YoY (core EPS: PkR1.14) primarily on account of robust topline growth (+19%YoY). On a sequential basis, NCL's 1QFY18 earnings are expected to move upward (+38%QoQ) largely led by recovery in gross margin (+3.1ppts) accruing from efficiencies achieved via in house low cost power generation and rehabilitation of core operations. At current price levels, the stock is trading at an attractive FY18F P/E(x) of 6.3 (vs. historic 3 yr. P/E(x) 10.48), also offers a forward D/Y of 6.5% and has an upside potential of 16% to its SOTP based TP of PkR69.92/sh. Accumulate!
HUBC: 1QFY18 Result Preview
HUBC is scheduled to release its 1QFY18 financial results on Monday, Oct 30'17, where we expect the holding company to post earnings of PkR2.98bn (EPS: PkR2.57), against PkR2.47bn (EPS: PkR2.13/sh) in 1QFY17. Increase in earnings is attributable to lower O&M costs as the company undertook overhaul of one unit of base plant and maintenance of Narowal plant in 1QFY17 while notifying in the annual report that 72% engines of Narowal plant had been overhauled in FY17. Payables to PSO are expected to surge this quarter by ~PkR7bn, while the company paid ~PkR0.7bn on account of LPS to PSO, where both the events are expected to raise finance costs of the company by 13%YoY. The result is anticipated to be accompanied by a dividend of PkR1.5/sh.
Hub Power Company is a holding company. Through its subsidiaries, Co. is engaged as a power producer in Pakistan that focuses on developing, owning, operating and maintaining power stations. Co. supplies electricity to Water and Power Development Authority and National Transmission and Despatch Company under long term Power Purchase Agreements for its Hub and Narowal plants respectively.
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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