Packages Limited (PKGS): 1Q2018 EPS Rs1.8, -88% YoY (-96% QoQ); (Below expectations)
- Packages Limited (PKGS) announced 1Q2018 consolidated earnings (attributable to equity holders) of Rs173mn (EPS Rs1.8/share, down 88% YoY, considerably lower than our estimates, mainly on the back of no dividend income from Tetra Pak Pakistan. This was due to difference in timing of the dividend and PKGS will continue receiving dividend income from Tetra Pak till 2018, as per our channel checks.
- Net revenues were up 2x YoY during 1Q2018 mainly owing to Bulleh Shah Packaging’s (BSPL) classification as a subsidiary.
- BSPL’s consolidation effect also led to 1) lower gross margins, down 6ppts YoY to 15%, 2) higher admin expenses, +50% YoY and 3) 162% YoY increase in financial charges, we believe.
- The company’s earnings would have been in-line with our expectations, had the company received dividend income from Tetra Pak.
- We flag 1) BSPL’s higher cost of production 2) decline in investment income and 3) higher than expected fuel & energy costs as key risks for PKGS.
Co. is a holding company which, through it subsidiaries, operates two businesses: packaging, and inks and lacquers. Co.'s packaging division is engaged in the manufacture and sale of paper, paperboard, packaging materials and tissue products. Co.'s inks and lacquers division manufacture and sale finished and semi finished inks and lacquers.
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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