EUR 9.10 For Business Accounts Only

INDU - MLCF 1QFY24, SYS - FABL 3QCY23 Result Previews, (AKD Daily Oct 25 2023)

AKD Daily

 

INDU - MLCF 1QFY24,  SYS - FABL 3QCY23 Result Previews

 

INDU– 1QFY24 earnings to clock in at PkR42.7/sh: INDU’s board is scheduled to announce its 1QFY24 results on Oct 26th, where we expect company to post a Profit after Tax of PkR3.4bn (EPS: PkR42.7) vs. PAT of PkR3.8bn (EPS: PkR48.6) in 4QFY23, a decline of 12%QoQ. This dip is primarily attributed to lower sales volume and a contraction in gross margins. Topline is expected to clock in at PkR30.5bn vs. PkR42.7bn, down 28%QoQ. The said decline in the topline is majorly attributable to lower sales volume during the quarter, with 4.5k units sold, down from 5.5k in the prior quarter and 8.9k units in SPLY, resulting in an 18%/49% QoQ/YoY drop. Gross margins are expected to shrink to 10.3% vs 18.1% in the previous quarter, due to inventory gains recorded in the preceding quarter. Meanwhile, Other income is expected to rise by 10%QoQ to PkR2.8bn (PkR32/sh), driven by higher interest rates and an increase in ST investments. Finally, we expect company to announce cash dividend of PkR25/sh for the said quarter. We have a “Buy” call on the script with Jun’24 target price of PkR1,200/sh, providing upside potential of 26% from the LDCP and FY24 D/Y of 8%.

 

MLCF—1QFY24 EPS of PkR1.9 expected: The board of MLCF is scheduled to announce its 1QFY24 results tomorrow, where we expect company to post unconsolidated earnings of PkR2.0bn (PkR1.9/sh) vs. LAT of PkR0.6bn (PkR0.5/sh) in the previous quarter. The significant quarterly improvement in the bottom line is attributed to the last quarter being affected by the retrospective implementation of the super tax. Topline of the company is expected to report at PkR16.2bn compared to PkR15.0bn in the quarter before, owing to an increase of 6%/2% in the retention prices and sales volumes, respectively. Gross margins are expected to improve to 30.8%, primarily due to higher retention prices and a decrease in per-ton Fuel and power costs (↓4%QoQ) amid falling coal prices and possible achievement of economies of scale. Furthermore, other income is expected to surge by 2.9xQoQ to PkR211mn, as the company raised its short-term investments by PkR3.0bn in the previous quarter. Additionally, finance cost is projected to clock in at PkR957mn vs. PkR1,003mn in the previous quarter (↓5%QoQ), attributed to a decline in borrowings.

 

SYS—3QCY23 earnings expected to clock in at PkR7.58/sh: SYS is going to announce their 3rd quarter results on Oct 26, 2023, wherein they are expected to announce a consolidated EPS of PkR7.58/sh vs. PkR4.86/sh in the previous quarter. Cumulatively, this takes earnings for 9MCFY23 to PkR25.76/sh vs. PkR18.47/sh in the SPLY, higher by 39%YoY. We believe the company will manage gross margins around the same level as last quarter, owing to continuing inflationary pressures globally (GM: ~28%). Revenues are expected to continue their growth story with the continued focus on BFSI segment within the MEA region, leveraging dynamic growth within the region (Revenue growth: ~15%QoQ). Furthermore, other income is expected to remain healthy at PkR463mn (↑62.1%/↓38.5% QoQ/YoY and finance cost at PkR208mn (↓17.1%/↑2x QoQ/YoY) over healthy cash balances and fluctuating short term borrowings situation. Further, we do not expect the company to pay out a dividend for the period considering their growth trajectory and obvious cash requirements. Overall, we have a “BUY” stance on SYS with a Jun-24 TP of PkR585/sh, up 41% from last close.

 

FABL – 3QCY23 earnings to clock in at PkR3.1/sh: Faysal Bank Limited (FABL) is set to report its earnings for the 1QCY23 on Thursday. We anticipate the bank will post earnings of PkR4.69bn (EPS: PkR3.09), marking an increase of 8.6%/43% on a QoQ/YoY basis. The rise in annual earnings is attributed to expanding NIMs, which are expected to reach 6.45% during the period, up from 6.35%/4.46% during 2QCY23/3QCY22, respectively. On the balance sheet front, we anticipate bank’s deposits to show a modest growth of 3.5%QoQ (amidst sharp increase of 13.5%QoQ during the previous quarter), alongside provisioning coverage of ~93% of total NPLs. To note, company’s deposit saw substantial growth during the past year, higher by 25%YoY to end 1HCY23 at PkR908bn. Overall, cost-to-income ratio is expected to remain stable at ~51%. Alongside the earnings, we expect the bank to announce a cash dividend of PkR1.0/sh for the quarter. Overall, we have a ‘Buy’ stance on the stock with a June’24 TP of PkR40/sh, offering a potential upside of 56% from last close.

 

 

AKD Research