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HUBC, SYS & FATIMA_ Result Previews, (AKD Daily, Aug 25, 2022)

AKD Daily

HUBC, SYS & FATIMA_ Result Previews,

HUBC – FY22 earnings to clock in at PkR22.33/sh: We expect The HUB Power Company Limited (HUBC) to post NPAT of PkR7.5bn (EPS: PkR5.79) in the closing quarter of FY22, down 14%YoY/19%QoQ compared to PkR8.8bn (EPS: PkR6.76) in SPLY and PkR9.2bn (EPS: PkR7.12) in 3QFY22. This will take cumulative FY22 earnings to PkR29.0bn (EPS: PkR22.3/sh), down 14%YoY. We expect the company to post a revenue of PkR31.3bn (+98%YoY/67%QoQ) in 4QFY22 owing to higher utilization of the base and Narowal plants by CPPA-G, bringing FY22 revenue to PkR96.4bn (+76%YoY). On the flipside, gross profit will decline by 8%YoY and 6%QoQ to reach PkR8.2bn, due to low efficiency of the base plant. CPHGC and SECMC are expected to contribute PkR4.6bn to the earnings of HUBC in the quarter. With the Narowal plant receiving payment a tranche for debt clearance by NEPRA of PkR7.5/sh, we expect the company to announce a dividend of PkR4.0/sh for the end of the financial year. Hence, cumulative DPS in FY22 will be PkR10.5/sh, given the special dividend of PkR6.5/sh announced earlier in the year.

 

SYS – PkR6.18/sh earnings for 2QCY22: We expect Systems Limited (SYS) to post NPAT of PkR1.7bn in 2QCY22, up 88%YoY and increasing by 43%QoQ. This will take earnings for the first half of the year to PkR2.9bn (EPS: PkR10.49), increasing by 93%YoY compared to PkR1.5bn in SPLY. Revenue for 2QCY22 will clock in at PkR6.4bn (+82%YoY) owing to strong export growth along with the Rupee depreciation. The company has been expanding in new regions which are expected to start bearing fruit in this quarter as revenue will be up by 19%YoY. At the same time, gross profit is expected to increase by 23%QoQ to reach PkR2.0bn, due to margins increasing to 31% compared to 30% in the last quarter. To recall, Systems has seen 2 quarters of relatively lower margins (29% & 30%) in 4QCY21 and 1QCY22 due to the surge in hiring witnessed in CY21 impacting the cost of sales. We expect exuberant exchange gains of PkR612mn (PkR2.65/sh), with the currency depreciating 15.6% in the last quarter, hence bringing other income to PkR737mn. One caveat to note, Systems may record a gain on the revaluation of Retailistan, with its product Jugnu raising US$22.5mn in funding.

 

FATIMA – 2QCY22 EPS expected to clock in at PkR1.74/sh: Fatima Fertilizer Company Limited is scheduled to announce its 2QCY22 result today, where we expect company to post PAT of PkR3.6bn (EPS: PkR1.74) vs PAT of PkR5.5bn (EPS: PkR2.64) in SPLY. The decline in earnings is primarily attributable to imposition of super tax. We expect company to post revenue of PkR38.3bn in 2QCY22, up by 49%/32% YoY/QoQ. The increase in revenue is primarily attributable to higher prices of all products. During the period under review, urea prices increased by 22%/9% YoY/QoQ. Following the same trajectory, CAN prices also recorded an increase of 17%/9% YoY/QoQ. Similarly, NP price witnessed an increase of ~65%/4% YoY/QoQ, amid sky-rocketing DAP prices. However, due to expiry of concessionary gas tariff and higher phos rock prices, the company’s gross margins are expected to fall by ~700ps on YoY basis. Taxation charge is likely to witness a huge jump of 117&/154% YoY/QoQ, taking Fatima’s effective tax rate to around 64%. This comes on the back of one-off super tax hit. Fatima also carries deferred tax liability of ~PkR20bn on its book, which can further increase the tax liability, beyond our estimates in the quarter and may result in earnings miss.