LOTCHEM_9MCY23 Analyst Briefing Takeaways, (AKD Off the Analyst's Desk Nov 21, 2023)
LOTCHEM conducted its analyst briefing today to discuss its 9MCY23 financial performance and future outlook. Here are the key highlights:
- To recall, the company reported earnings of PkR3.2/sh in 9MCY23 compared to PkR5.35/sh in the same period last year, marking a 40%YoY decline. This decline can be attributed to reduced revenues, falling gross margins, and increased taxation.
- Management highlighted that production in 1HCY23 was significantly impacted by import restrictions, preventing the company from importing necessary raw materials.
- To address this, the company prudently increased its inventory over the nine-month period. However, the company is currently not facing any LC restrictions for imports.
- Management clarified that acetic acid accounts for 0.04% of the production quantity. Additionally, the duty on PTA import is 5%, and PX is 0%.
- Regarding exports, management mentioned that they are unviable for the company due to additional freight charges. Local market remains the sole revenue source for the company's products. Further, current PTA margin stands at US$80/ton.
- According to management, the PTA demand in the country is approximately 697k tons, with peak demand reaching 730k tons.
- The company is not facing any gas supply or pressure issues. However, the recent upward revision in gas prices is expected to impact the company's margins.
- Looking ahead, management expresses hope for an improvement in the country's overall economy, anticipating a better demand cycle for PTA.
Management informed that a maintenance plant shutdown would be reviewed in the year-end board meeting, and can be deferred due to frequent plant-shutdowns previously.
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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