Intermarket Pulse: Pakistan Steel: Mixed trend expected in 4Q earnings of rebar producers
We expect the steel rebar producers – ASTL and MUGHAL – to post sequential earnings decline in 4QFY17 results. We thus tweak our expectations for annual results accordingly. The expected decline is due to slower sales, but it will be moderated by uptick in margins, in our view.
ASTL is expected to post 10% lower earnings QoQ due to lower sales expectation. Meanwhile, MUGHAL is expected to post a 6% QoQ increase due to higher margins with higher sales of premium rebars expected for the quarter. For full-year FY17, we now expect MUGHAL to post EPS of PRs3.95 (+11%YoY) and ASTL to post EPS of PRs 3.77 (-13%YoY).
We are Neutral on both MUGHAL (TP: PRs78/sh) and ASTL (revised TP: PRs118/sh; TP is subject to tweaks once the company announces details of financing arrangements pertaining to its second round of expansions in SITE and Dhabeji).
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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