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PREMA - FY23 Analyst Briefing Takeaways, (AKD Off the Analyst's Desk Nov 24, 2023)

At-Tahur Ltd (PREMA) held its corporate briefing session yesterday to brief investors about FY23 results and shed light on future outlook:

 

• Company’s revenue stood at PkR4.90bn during FY23, higher by 50%YoY (price escalation/volume growth: 32%/20%). Gross margins stood at 58.2% during the year (vs. 60% during FY22).
• Company’s retail operations span all over the Northern part of the country including Punjab, AJK and KPK, with third party distributors present in the South (Sindh and Balochistan).
• Company’s juice and ice tea segments have received positive responses till now. Company eventually plans to become a food company (moving away from sole dairy product line).
• With regards to distribution in South, management stated the transport time to Karachi and other parts is only 24-36 hours, hence shipping pasteurized milk long distances is doable. The average shelf life is 8-9 days, which is further prolonged in the winters.
• Pasteurized milk’s growth remains sustainable, with the country’s dairy market expanding rapidly every year. Company’s indigenous herd growth is ~6% per annum, for this reason company does not intend to import cattle in next 6-12 months.
• Landed price of an Australian cow is PkR850-900k (US$2.7-2.8k).
• Feed/fodder costs for milking/non-milk animals stood at PkR100-105/liter of milk.
• Company’s sale price for raw milk stands at ~PkR150/liter to farmers.
• Yields normally improve in winters, although depends on the quality of environment and feed provided. Company recently procured American genetic cows, which resulted in improved milking yields.
• In terms of exports, Afghanistan and the Middle East present potential opportunities. Management emphasized that the current capacity is limited, and embarking on export without planning could lead to the domestic demand being unmet.
• With regards to social boycotts for MNCs, management stated that consumers are price sensitive and the MNCs have the ability to reduce prices (due to shelf life of UHT milk). Consequently, the management does not anticipate a significant impact from the boycotts.
• Milk segment stands at 65% while other products (cheese, yogurt etc.) are 35% in terms of net revenue breakup. Punjab accounts for 60% of total sales.