International Steels (ISL): 4QFY18 EPS Rs2.6,+10% YoY (+7% QoQ); DPS Rs3/share (In-line with Expectations)
- International Steels (ISL) reported its financial results for 4QFY18, where company reported earnings of Rs2.6/share, up by 10% YoY due to increase in net sales by 43% YoY. While, FY18 earnings grew by 43% YoY to Rs10/share due to higher sales and lower effective tax rate of 25% in FY18 vs. 34% in FY17.
- Effective tax rate of the company during 4QFY18 hovered at around 12% due to availability of tax rebates on recent capex, we believe.
- Gross margins of the company contracted by 1.7ppts QoQ to 14.1% during 4QFY18 due to increase in HRC prices and rupee devaluation. Full year (FY18) gross margins fell by 1.6ppt YoY to 15.9%.
- Finance cost of the company increased by 60% YoY and 44% QoQ due to increase in debt borrowings by the company to finance increasing cost of its working capital.
- Exchange losses on foreign currency payables enhanced other operating expenses of the company by 56% YoY to Rs662mn during FY18.
- We flag 1) downward revision in duty structure, 2) volatility in commodity prices, 3) dumping from countries not protected by anti-dumping duties, & 4) devaluation beyond our assumptions, as key risks.
International Steels Limited is a producer of flat steel products. The Company manufactures cold rolled steel coils, galvanized coils and color coated steel. Its cold rolled steel is available in thicknesses ranging from 0.25 millimeter (mm) to 3.0 mm; galvanized steel is available in thicknesses of 0.25 mm to 2.0 mm, and color coated steel is available in thickness range of 0.20 to 1.50 mm. Its rolling capacity is 500,000 metric tons (MT). It produces approximately 400,000 MT of galvanized products. It produces color coated sheets on various substrates, including cold rolled, galvanized, galvalume, aluminum and stainless steel sheets. Its cold rolled steel offers applications, such as ceiling lights, tube lights, ceiling fans, oil drums, lube drums and motor cycle frame; galvanized steel has applications, such as packaging, furniture, washing machines, gas ovens and microwave ovens, and color coated steel offers applications, such as ice boxes, tubs, buckets and storage bins.
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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