NML & NCL_ FY19 Result Previews (AKD Daily, Sep 18, 2019)
- NML is slated to announce its FY19 results tomorrow (Sep 19’19), where it is expected to report NPAT of PkR5,738mn (EPS: PkR16.26) vs. PkR4,097mn (EPS: PkR11.65), up 40%YoY. The earnings growth primarily emanates from strong core business performance. As such, core textile earnings are likely to increase 3.6xYoY, largely driven by i) double digit topline growth (+18%YoY) arising from higher realized prices following Rupee weakness and ii) margin accretion (+242bpsYoY). Other income though expected to increase 5%YoY, this is largely due to one-off exchange gains, as dividend income from portfolio companies remains 12%YoY lower. In 4QFY19, NML’s earnings are expected to clock in at PkR1,580mn (EPS: PkR4.49) vs. PkR1,332mn (EPS: PkR3.79), up 19%YoY. Solid performance in core business and higher materialization of dividend income in the last quarter are key drivers pushing earnings higher. Core earnings are expected to jump 1.6xYoY, driven by topline growth (+8%YoY) and margin accretion (+76bpsYoY). Sequentially, 4QFY19F earnings likely to go up 62%QoQ, where materialization of dividend income from portfolio companies in the last quarter is key contributor. Accompanying results, NML is expected to announce a final cash dividend of PkR5.5/sh.
- Previewing FY19F results for NCL, we expect the company to report NPAT of PkR3,169mn (EPS: PkR13.19) vs. PkR2,363mn (EPS: PkR9.84), up 34%YoY. The bottomline growth is primarily driven by one-off exchange gains following bouts of currency devaluation, pushing other income up 94%YoY. Core earnings however are expected to decline by 7%YoY, where higher financing cost (+60%YoY) offsets the impact of topline growth (+12%YoY) and margin improvement at gross level (+84bpsYoY). In 4QFY19, we expect the company to record NPAT of PkR728mn (EPS: PkR3.03), down 37%YoY. The decline is primarily due to core earnings, which are hit by cycle normalization (4.38ppts margin contraction as a result of narrowing cotton-yarn spreads) and higher financing cost (+85%YoY). Non-core earnings however are likely to go up 55%YoY as a result of higher payouts from power subsidiary. Sequentially, 4QFY19F earnings are expected to remain 72%QoQ higher, where materialization of dividend income from power subsidiary in the last quarter is key contributor. Accompanying results, NCL is expected to announce a final cash dividend of PKR3/sh, taking full year payout to PkR4.5/sh
AKD Research
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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