OGDC, DGKC & CHCC: 1QFY23F Result Previews
OGDC to report earnings of PkR 10.30/sh for 1QFY23: Oil & Gas Development Company Limited (OGDC) is scheduled to release its 1QFY23 earnings later today, wherein we expect the company to post NPAT of PkR44,288mn (EPS PkR10.30), higher by 1.04xQoQ and 32%YoY. The earnings growth is expected to be driven by a 19%QoQ increase in OGDC’s topline, expected to clock
in at PkR113,295mn for the three-month period. The topline growth is attributable to the weaker PkR against the US$, which was offset to some extent by lower average crude oil prices during
the quarter when compared to the previous period, and lower production levels. To recall, the
exchange rate averaged PkR221/US$ in 1QFY23, compared to PkR194/US$ in the previous quarter. Other income is expected to clock in at PkR19,441mn for the quarter, higher by 14%QoQ,
with the growth attributable to exchange gains for the period. Exploration expenses for the
quarter are estimated at PkR3,181mn, lower by 46%QoQ, due to the absence of any substantial
dry well cost realized during the period. Alongside the earnings, we expect the company to announce a cash dividend of PkR2.00/sh. We have a Buy rating on the stock, with a Jun’23 TP of
PkR152/sh, representing an upside potential of 107% over the last close.
DGKC – earnings to clock in at PkR1.68/sh in 1QFY23F: DGKC is slated to announce its 1QFY23
result today, where we expect the company to record an unconsolidated nominal profit of
PkR0.74bn (EPS: PkR1.68) vs NPAT of PkR0.91bn (EPS: PkR2.07) in 1QFY22. For 1QFY23, the top
line is expected to increase 6/40% QoQ/YoY as the higher retention prices offset the decline in
offtakes (cement dispatches are likely to decline 15.3%QoQ). Likewise, gross margins are likely
to clock in at 17.9% vs 15.3% in 4QFY22. Dividend income from MCB, NML, and NCL is likely to
result in a gain of PkR0.6bn which will help bolster the company’s bottom line. Furthermore, the
higher finance cost (+15%QoQ) is likely to keep the pressure on the bottom line. Moreover, we
don’t expect DGKC to announce any payout in the upcoming financial result. The company currently trades at FY23 P/E of 7.6x with our SOTP-based TP of PkR85/sh providing an upside of
43% from the last close.
CHCC – earnings to clock in at PkR6.4/sh in 1QFY23F: CHCC is slated to announce its 1QFY23
result on 26th Oct’22, where we expect the company to record an unconsolidated nominal
profit of PkR1.24bn (EPS: PkR6.4) vs NPAT of PkR1.02bn (EPS: PkR5.2) in 4QFY22. For 1QFY23,
the top line is expected to increase by 27%YoY and decline 4.6%QoQ as the higher retention
prices offset the decline in offtakes (CHCC cement sales to see a decline of 18.5%QoQ). Likewise, gross margins are likely to clock in at 28.1% vs 28.5% in 4QFY22. Efficient inventory management using a mix of local and Afghan coal is likely to help the company maintain high gross
margins. Furthermore, finance cost (+15.3%QoQ) is likely to keep at the elevated level as CHCC
is relatively higher leveraged compared to its peers. The company currently trades at FY23 P/E
of 5.2x with our TP of PkR157/sh providing an upside of 27% from the last close.
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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