Engro Fertilizers (EFERT): 2Q2020 EPS at Rs2.91, up 22% YoY (Inline with industry expectations)
- Engro Fertilizers (EFERT) announced its 2Q2020 financial result today, where the company booked a consolidated profit of Rs3,886mn (EPS: Rs2.91) compared to Rs3,177mn (EPS: Rs2.38) in 2Q2019. It takes 1H2020 earnings to Rs4,457mn (EPS: Rs3.34), down by 38% YoY. The earnings announcement came inline with ours and industry expectations.
- Alongside result, the company announced first interim cash dividend of Rs4.0/share, which is higher than industry expectations.
- In 2Q2020, net sales of the company increased by 11% YoY due to increase in Urea offtake by 52% YoY to 696k tons compared to 458k tons in 2Q2019. However, DAP offtake declined by 24% YoY to 80k tons compared to 104k tons in 2Q2019.
- Gross Margin increased by 3.2ppts YoY to 34.7% in 2Q2020, which is in line with our expectations.
- Selling and distribution expenses increased by 36% YoY due to increase in volumetric sales of Urea.
- Other Income declined substantially by 83% YoY to Rs244mn in 2Q2020 due to absence of reversal of liability for Workers Welfare Fund recorded last year.
- Other Operating expenses increased substantially by 110% YoY Rs1,222mn as company has booked certain provisions on account of sales tax, as per our channel checks.
Effective tax rate clocked in at 33% in 2Q2020 vs. 48% in 2Q2019.
Engro Fertilizers Limited is a Pakistan-based company, which is engaged in manufacturing, purchasing and marketing of fertilizers. The Company's brands include Engro Urea, Engro NP, Engro DAP, Zingro, Engro MOP, Engro SSP and Engro Zarkhez. Engro NP is the Company's fertilizer brand with Nitrogen and Phosphorous content in equal quantity. Engro DAP primarily contains Di-Ammonium Phosphate, and is imported by Engro EXIMP and marketed by the Company. Engro DAP is marketed in approximately 50 kilogram bags. Zingro is a micronutrient fertilizer, and is imported by Engro EXIMP and marketed by the Company. Engro Zarkhez has Nitrogen, Phosphorous and Potassium, and is primarily offered for sugar cane, fruit orchards, vegetables, potato and tobacco farming. Engro Envy is primarily offered to urban market for gardens, lawns, flower beds, fruit plants and ornamental plants. The Company is a subsidiary of Engro Corporation.
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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