NML_FY21 Analyst Briefing Takeaways, (AKD, Off the Analyst's Desk, Nov 22, 2021)
AKD, Off the Analyst's Desk
NML : FY21 Analyst Briefing Takeaways
NML held its analyst briefing today to discuss FY21 results and future outlook of the company. To highlight, the company reported unconsolidated NPAT of PkR3.3bn (EPS: PkR9.36) in 1QFY22 vs. NPAT of PkR0.9bn (EPS: PkR2.69) in the same period last year. In FY21, earnings stood at PkR5.9bn (EPS: PkR16.8) vs NPAT of PkR3.5bn (EPS: PkR9.97). The company reported consolidated NPAT of PkR4.2bn (EPS: PkR11.91) in 1QFY22 vs. NPAT of PkR1.2bn (EPS: PkR3.52) in the same period last year. In FY21, earnings stood at PkR9.9bn (EPS: PkR28.15) vs NPAT of PkR6.4bn (EPS: PkR18.07).
Key highlights of the briefing were:
- Total unconsolidated revenue increased by 17.3%YoY to PkR71.4bn in FY21. Export sales clocked in at PkR46.4bn (+2.2%YoY) and local sales clocked in at PkR18bn (+84%YoY). Segment wise sales of Spinning/Weaving/Home Textile/Garments were PkR16.7/17.3/29.1/8.4bn with an increase of 44.6/12.2/6/28.6%YoY in FY21.
- Process & Home textile remains the largest contributor of revenue with 41%, followed by Weaving 24.2%, Spinning 23.3% and Garments 11.5%.
- Home Textile revenue largely came from export markets (77% in FY21) where major exporting regions were Europe 33% and Asia & Africa with 32.7% while Weaving revenue also came from export market 64% where major regions were Europe/Asia & Africa with contribution of 48/12% in FY21.
- Finance cost reduced by 22.2%YoY in FY21 as a result of the company paying off its short term loans while other income increased by 23.7%YoY in FY21 amid higher dividend income (+33.2%YoY in FY21) which helped in boosting the bottom line.
- Moving forward, the company is in process of increasing capacities of Spinning/Weaving where it added 130 looms which took total looms capacity to 920 looms. For terry segment, the company looks to increase capacity to 35towels/day – 40towels/day.
- The management expects spinning revenues to remain strong in 2HCY21 amid the current crop shortage and robust local downstream demand, resulting in higher local yarn margins. To note, company has already procured 70% of cotton required for FY22 at lower rates whereas total requirement stands at 475-500K bales for FY22.
- The current power needs of the company stands at 42-45MW where management also mentioned that it has enough coal (procure at lower rate) for its power generation while it also has alternative sources (government provided subsidized electricity from grid) if required.
- The company has invested PkR524mn in Nishat Sutas Dairy Limited and indicates further investment outlay of PkR426mn in FY22.
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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