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1QCY19 Result Previews :PSMC, FFC, & FFBL

PSMC: 1QCY19 Result Preview

PSMC is slated to report 1QCY19 NLAT of PkR82mn (LPS:PkR1.00/sh) vs. NPAT of PkR905mn (EPS:PkR10.99) during 1QCY18 and NLAT of PkR94 (LPS:PkR1.15/sh) for 4QCY18, marking a descent into  the red for Pakistan's largest domestic auto assembling OEM. Key dampeners for profitability emanate from: 1) slow sales where cumulative sales of 36,412units rests lower by 4.4%YoY while facing 1.4%QoQ weakness in the PkR vs. US$, where limited price hikes lift margins incrementally, 2) GM's expected to rest at 3.6% vs. 8.3% during 1QCY18 and 3.2% for 4QCY18, and 3) higher below the line expenses, particularly finance costs (assumed at PkR190mn, up 1.6xYoY) pushing the bottom-line lower. Going forward, we expect PSMC's recent price hikes (for deliveries commencing April 1st) and other income form deposits made for Alto deliveries to supplement profitability, albeit at a slow pace. Even so, a return to the green is forecasted to be in full-swing from 3QCY19 onwards, where the deliveries for the Alto (expected from June'19) should firm-up topline growth and margins. â€‹ 

FFC: 1QCY19 Result Preview

FFC: Fauji Fertilizer Company Ltd (FFC) is expected to outshine the Fertilizer players in 1QCY19 by posting 2.2x YoY higher 1QCY19 earnings of PkR5.01bn (EPS: PkR3.94). The earnings however are expected to register a sequential decline of 15%, directionally in line with the sector-wide results. The increase in earnings on YoY basis will be led by: (i) 9% YoY increase in topline despite flattish Urea offtake, (ii) 7ppt YoY increase in gross margins to 33%, courtesy improved retention price, (iii) 79% YoY higher other income from increase in short term investments (GIDC accumulation), and (iv) 23% YoY lower finance cost due to deleveraging during the period. On a sequential basis, 35% QoQ lower topline amid lower offtake will translate into decline in the bottomline. FFC is also expected to announce its first interim cash dividend of PkR2.0/sh.

FFBL: 1QCY19 Result Preview

FFBL: Fauji Fertilizer Bin Qasim Ltd (FFBL), the sole local DAP producer, on the other hand is expected to post a dismal quarterly result, with LPAT of PkR2.4bn (LPS: PkR2.56) on a standalone basis, vs. LPAT of PkR449mn (LPS: PkR0.48) in 1QCY18. The increase in losses on a YoY basis is attributable to (i) 37% YoY lower topline, and (ii) aggravating cost pressures, resulting in a loss on gross levels. Due to seasonal slowdown, the result is expected to be down on a sequential basis as well, contrasting sharply with NPAT of PKR1.67bn (EPS: PkR1.76) in 4QCY18. The sequential decline in earnings is expected to be led by 86% QoQ lower DAP offtakes, aggravated by shrinking DAP margins amid hefty inventory and, higher fuel and power cost (gas price hike coupled with more expensive coal based power generation).