NCL & NML_3QFY18E Result Previews
NCL is scheduled to announce its 3QFY18E results today (Thursday), where we expect the company to post earnings of PkR526mn (EPS: PkR2.19) vs. PkR276mn in 3QFY17 (EPS: PkR1.15), significantly up 91%YoY. The earnings rebound is primarily expected on account of: 1) double digit growth in topline (12%YoY) on the back of elevated yarn demand in domestic market and 2) one-off exchange gain of ~PkR250mn resulting from recent rupee depreciation. Sequentially, 3QFY18E earnings are expected to remain 10%QoQ lower due to absence of dividend income in the current quarter (vs. ~PkR188mn in the previous quarter), however earnings from core operations should continue to improve (core EPS: PkR1.11 in 3QFY18 vs. PkR0.72 in 2QFY18), as elevated yarn demand helps in GM recovery (+86bpsQoQ). On a cumulative basis, 9MFY18E earnings are expected to clock in at PkR1,018mn vs. PkR1,401mn in 9MFY17, down 27%YoY. The cumulative earnings decline is attributable to lower payout from power subsidiary (PKR188mn in 9MFY18E vs. PkR891mn in 9MFY17). Gaining 19%CYTD, NCL still trades at an attractive FY19F P/E(x) of 5.4 (vs. historic 3 yr. P/E(x) 10.48), where our SOTP based TP of PkR69.92/sh offers 29% upside. Buy!
Previewing 3QFY18E result for NML, we expect the company to post unconsolidated profit of PkR919mn (EPS: PkR2.61) vs. Pk538mn (EPS: PKR1.53) in 3QFY17, up 71%YoY. The growth in earnings is expected to arise from: 1) 7%YoY growth in topline primarily coming from weaving & garment segments (12%YoY/9%YoY growth expected in respective revenues) 2) GM accretion (+30bpsYoY) due to recovery in low value added product prices and higher capacity utilization in the new garment facility and 3) higher other income (PkR594mn vs. PkR312mn in 3QFY17). Sequentially, 3QFY18E earnings are likely to remain 53%QoQ lower, primarily on account lower other income (down 71%QoQ), as major chunk of investment portfolio income falls in the second quarter. However, NML’s core textile earnings are anticipated to significantly improve (core EPS: PkR1.09 in 3QFY18E vs. PkR0.26 in 2QFY18) on the back of GM recovery (+229bpsQoQ). On a cumulative basis, 9MFY18 earnings are expected to stand at PkR3,587mn (EPS: PkR10.20), up 16%YoY on back of higher payout from cement subsidiary and improvement in core earnings (core EPS: PkR1.65 in 9MFY18E vs. PkR1.34 in 9MFY17). Gaining 6.6%CYTD, NML now trades at FY19F PE of 9.2x where our Dec'18 TP of PkR169.5/sh offers an upside of 7.2% from current price level. Accumulate!
Nishat Mills is engaged in the business of textile manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing, stitching, buying, selling and otherwise dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fiber and cloth, and to generate, accumulated, distribute and supply electricity.
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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