Fauji Fertilizer Company (FFC): 2Q2019 EPS Rs5.3, up 165% YoY (Result above expectations)
- Fauji Fertilizer Company Limited (FFC) posted profit of Rs5.3/share, up 165% YoY on consolidated basis despite 5% YoY decline in volumetric urea sales. Higher earnings are could be attributed to increase in urea retention prices and higher DAP margins, we believe.
- Gross margins of fertilizer business were in line with our estimates of 33.6% (actual 33.8%). Earnings deviated from our estimates due to relatively higher other income and profit from associates/JV partners, we believe. We await for further clarity on these accounts.
- The finance cost increased substantially by 58% YoY amid increase in interest rate. Admin and distribution cost was down by 27% YoY due to decline in volumetric sales.
- Further, the company booked tax expense of 23% in 2Q2019 vs. 42% in 2Q2018.
- FFC also declared cash dividend of Rs2.85/share, taking 1H2019 DPS to Rs5.35/share.
- Key risks to FFC include 1) decline in international urea prices, 2) slower than expected urea sales, 3) unfavorable decision related to GIDC and 4) poor crop season.
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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