Engro Polymer Chemical (EPCL): 3Q2020 EPS at Rs2.07, up 48% YoY (Result higher than industry expectations)
- Engro Polymer (EPCL) announced its 3Q2020 financial results today, where the company booked a consolidated profit of R1,881mn (EPS: Rs2.07) compared to Rs1,270mn (EPS: Rs1.4) in 3Q2019.
- It takes 9M2020 earnings to Rs2,103mn (EPS: Rs2.31), down by 25% YoY.
- The earnings came in higher-than-industry expectations due to higher-than-expected Gross Margins and lower-than-expected Other Expenses.
- Net sales of the company increased by 9% YoY during the quarter, primarily due to higher volumetric sales given pent-up demand from COVID-19 lockdown.
- Gross Margin increased by 7.7ppts YoY to 32% in 3Q2020 from 24% in 3Q2019, which is significantly higher than our estimate.
- Distribution and marketing expenses increased by 11% YoY to Rs88mn due to higher volumetric sales.
- Other Expenses significantly increased by 487% YoY to Rs103mn compared to Rs17mn, which we believe is attributable to exchange gains.
Along with the result, company also announced to resume work on earlier announced Hydrogen peroxide plant in 4Q2020, which is expected to achieve COD at the end of 2022.
Engro Polymer & Chemicals Limited is a chlor vinyl chemical company. The principal activity of the Company is to produce and market chlor-vinyl products, which include poly vinyl chloride (PVC), vinyl chloride monomer (VCM), caustic soda, hydrochloric acid and sodium hypochlorite. The Company operates through three segments: poly vinyl chloride (PVC) and allied chemicals, caustic soda and allied chemicals, and power supplies. The poly vinyl chloride (PVC) and allied chemicals segment manufactures and sells PVC and allied chemicals to various industrial customers, including pipe manufacturers, shoe and packaging industry. The caustic soda and allied chemicals segment manufactures and sells caustic soda and allied chemicals to textile and soap industry. The power supplies segment supplies surplus power generated from its power plants to Engro Fertilizers Limited. The Company manufactures and markets over four grades of PVC under the brand name SABZ.
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.
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