Unity Analyst Briefing Notes,(AKD Daily, De 09, 2019)
- Unity Foods Limited (UNITY) held its corporate briefing on 6th Dec’19. Previously targeting B2B segment mainly, the company occupies ~2% market share in edible oil industry (B2B sales occupy 89.4% of sales), however after the acquisition of 500tpd crude palm oil refinery, foothold in retail segment is expected to increase.
- Forward integration of the recently acquired Port Qasim Plant (see side table) has been pun in motion while an oil terminal (CoD: CY21) is also in the pipeline. The refinery acquisition has equipped the company with the capacity to refine crude palm oil which is more economical than imported oil-seed crushing.
- UNITY, pursuant to right shares issuance, has gained 9.8% (since Mar’19) outperforming the market by 3.7ppt. Given downside risk to core performance with, i) crude palm oil prices increasing by 22%CYTD to US$685/MT and, ii) potentially higher below-the-line expense as the company expands its market for ‘Dastak’ and penetrates into loose oil segment, stock performance could come under pressure in the near term.
- UNITY posted 1QFY20 NPAT of PkR92mn (EPS: PkR0.17), up 68% QoQ, but down 17% YoY. 1QFY20 sales were up 46% YoY, with gross margins increasing by 250bps YoY to 9%. However, 3.0x YoY higher finance cost and 6.0x YoY higher selling expenses resulted in YoY EPS decline.
Unity Foods Limited is a Pakistan-based company. The Company is principally engaged in oil-processing business. The Company has its solvent extraction plant located in Kotri, Sindh and edible oil refinery located at a site area, Karachi.
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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