ENGRO Corporation (ENGRO): 3Q2018 EPS Rs7.36, +23% YoY ( +103% QoQ); DPS Rs7/share (Below expectations)
- ENGRO Corporation (ENGRO) announced its financial results for 3Q2018, where the company reported EPS of Rs7.36, up by 23% YoY mainly on the back of higher earnings contribution from fertilizer and petrochemical businesses, up 81% YoY and 20% YoY respectively.
- Fertilizer business (Engro Fertilizer or EFERT) showed robust performance on the back of improved urea prices coupled with lower discounts. Similarly, petrochemical business performance was improved due to cost efficiencies where the company has successfully brought down its breakeven level to US$175/ton.
- Consolidated admin expenses of the company were up by 70% YoY, where substantial increase was seen in its core operations with rise in aforesaid cost by 124%. Higher admin cost was due to ongoing assignments of the company, and same cost will be recovered after completion of those assignments.
- Share of income from JV & associates was down by 32% YoY to Rs305mn due to poor performance by food business.
- Finance cost of the company increased by 15% YoY to Rs1.2bn on the back of higher interest bearing liabilities and increasing interest rates.
- We highlight 1) poor crop season, 2) scarcity of water for sowing season 3) volatility in Polymer margins and 4) change in regulatory structure in energy division as key risks for the holding company.
Engro Corporation is an agri based company. Co.'s core business is the manufacturing, purchasing and marketing of chemical fertilizers and seeds. Co. is engaged in the production of Urea fertilizer in Pakistan which is manufactured at Daharki and marketed under brand name Engro. Co. also maintains a seed business and is marketing imported hybrid and open pollinated seeds of maize and sunflower crop under the brand name of Bemisal. Co. has investments in joint ventures engaged in chemical terminal and storage, PVC resin manufacturing and marketing and Automation and Controls businesses.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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