Report
EUR 9.34 For Business Accounts Only

NML & NCL_1QFY20 Result Previews, (AKD Daily, Oct 28, 2019)

NML – Absence of one-offs and weak core earnings push earnings lower: NML is scheduled to announce its 1QFY20F results tomorrow (Oct 29’19), where it is expected to report NPAT of PkR600mn (EPS: PkR1.71) vs. PkR995mn (EPS: PkR2.83) in 1QFY19, down 40%YoY. Weak core earnings (core EPS: PkR0.76 in 1QFY20, down52%YoY) and lower other income (-23%YoY) are the key factors, pulling earnings down. The weakness in core earnings stems from: i) cyclical headwinds in the low value added segments (i.e. narrowing cotton-yarn spreads) and ii) elevated finance cost due to interest rate hikes (+112%YoY). Sequentially, earnings are likely to come off by 69%YoY, where the absence of i) dividend income from power portfolio and ii) one-off FX gains recorded in the last quarter, are key dampeners. Additionally, rupee gains (~2%) in the outgoing quarter pose a downside risk to our quarterly earnings forecast, where we might potentially see a reversal of some of the exchange gains recorded in the last quarter.

NCL – All good things come to an end: Previewing 1QFY20F results for NCL, we expect the company to report NPAT of PkR58mn (EPS: PkR0.24) vs. PkR852mn (EPS: PkR3.55) in 1QFY19, down 93%YoY. Numerous factors are at play contributing to earnings plunge: i) margin contraction (-5.83ppts.YoY) due to cyclical headwinds in the lower end of value chain, ii) elevated finance cost (62%YoY) due to interest rate hikes, and iii) absence of FX gains (vs. PkR188mn last year). Sequentially, headline earnings are likely to come off by 92%QoQ, where earnings decline is primarily due to absence of i) dividend income from power subsidiary (vs. PkR376mn last quarter) and ii) one-off FX gain recorded in the last quarter. Moreover, since the Rupee has gained ~2% against the US$, we might potentially see a reversal of some of the exchange gains recorded in the last quarter, thus rupee appreciation poses a downside risk to our quarterly earnings forecast.

Underlying
Nishat Mills Ltd.

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.

Provider
AKD Securities Limited
AKD Securities Limited

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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