NCL - 2QFY23 Result Review, (AKD Off the Analyst's Desk Feb 28, 2023)
Nishat Chunian Limited (NCL) posted its 2QFY23 financial result earlier today, wherein the company posted a Loss of PkR1.7bn (LPS: PkR7.1)—substantially lower than our estimates of a loss of PkR0.19/sh. For 1HFY23, the company posted a loss of PkR1.8bn or PkR7.7/sh.
- The lower than estimated earnings during the quarter can be attributed to the substantial drop in gross margins in 2QFY23, clocking in at 2%, compared to 11.2%/22.7% in 1QFY23/2QFY22, respectively. This is likely being driven by the procurement of cotton at higher rates during the quarter.
- Net Sales for the quarter clocked in at PkR14.4bn, lower by 5%QoQ. The sequential dip in sales was expected as a result of the lower export orders garnered during the three-month period, as evident by the 9.8%QoQ dip in textile exports as reported by the PBS.
- Earnings were further dented by the higher-than-anticipated finance costs, which increased by 47%QoQ to PkR1.4bn in 2QFY23. This can be attributed to increased interest rates in the country, along with increased short-term borrowing requirements for working capital needs.
- The company was able to keep its overheads in check, with the distribution and admin expenses dropping from 3.7% of net sales in 1QFY23 to 3.2% of net sales in 2QFY23.
- NCL posted an operating loss of PkR118mn for the quarter, compared to the earlier quarter’s profit of PkR993mn.
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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