Engro Fertilizers (EFERT): 3Q2020 EPS at Rs5.27, up 111% YoY (higher than industry expectations)
- Engro Fertilizers (EFERT) announced its 3Q2020 financial result today, where the company booked a consolidated profit of Rs7,034mn (EPS: Rs5.27) compared to Rs3,326mn (EPS: Rs2.49) in 3Q2019. It takes 9M2020 earnings to Rs11,491mn (EPS: Rs8.61), up by 9% YoY.
- The earnings came higher-than-industry expectations due to lower-than-expected effective tax rate.
- Alongside result, the company announced interim cash dividend of Rs5.0/share, taking cumulative dividend in 9M2020 to Rs9.0/share.
- In 3Q2020, Net Sales of the company increased by 38% YoY due to increase in Urea and DAP offtake by 35% YoY to 616k and 90% YoY to 183k tons, respectively.
- Gross Margins declined by 3.6ppts YoY to 29% in 3Q2020, which is in line with our expectations.
- Selling and Distribution expenses increased by 24% YoY due to increase in volumetric sales of Urea and DAP.
- Other Income declined substantially by 59% YoY to Rs501mn in 3Q2020 due to lower short term investments and lower interest rates.
Effective tax rate clocked in at 2% in 3Q2020 vs. 44% in 3Q2019 due to tax reversal as per channel check.
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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