AKD Quotidian about — EFOODS: 1HCY13 Result Preview

Karachi, July 26, 2013 (PPI-OT): EFOODS will be announcing its IHCYI3 result on Jul 30’13. AKD Securities expects the company to post NPAT of PkR1,254mn (EPS: PRRI.65) in 1 HCYI3, which would denote a VoY rise of 23%.

According to AKD Securities for 2QCYI3, forecast EFOODS to post NPAT of PkR601mn (EPS: PRR0.79), which would be a rise of 13%YoY however compared to 1 QCYI3, earnings are estimated to fall by 8%.

While AKD Securities expects revenues to advance by 8%QoQ, driven by seasonally higher Ice-Cream segment sales, gross margins are estimated to slip by 1ppt to 28.5% owing to higher contribution of low margin Ice-Cream sales. At current levels AKD Securities has a Neutral stance on EFOODS which offers limited upside of 4% to AKD Securities TP of PkR1 58/share.

EFOODS: 1HCY13 Result Preview

                  1HCY13F  YoY  2QCY13F  QoQ
Net sales         19,995    1%   10371   8%
Gross profit        5799   20%   2958    4%
S and A expense        3423   19%   1788    9%
Operating profile    2376   21%   1170   -3%
Financial charges    430   -3%    230   15%
NFBT                1897   24%    925   -5%
NPAT                1254   23%    601   -8%

EPS (PKR)            165         0.79

FFC: 1HCY13 Result Preview

Fauji Fertilizer Company (EFC) is scheduled to announce its IHCYIS result on Jul 2913. AKD Securities expects the company to post NPAT of PkR9,202 (EPS: PkR7.23) in IHCYI3, a decline of 11%YoY where AKD Securities expects flat urea off take and lower dividend income from FFBL to pull down earnings.

In this regard, urea off take in IHCY13 is expected at 1.l6mn tons, a muted increase of 3%YoY while dividend income from FFBL is expected to clock in at PkR1,069mn, lower by 55%YoY (FFBL did not announce a cash payout with its 1QCYI3 result).

On a sequential basis, AKD Securities expects FFCs earnings to decline by 13%QoQ to PkR4,292mn (EPS: PkR3.37) in 2QCYI3, where the decline in other income is expected to drag down earnings. While the recent announcement of rights issue by AKBL had raised expectations of a potential clip in payout by FFC, taking cue from FFBLs dividend announcement today (DPS: PkR1.75), AKD Securities expects FFC to announce a cash payout of PkR3.5/share alongside the result, taking cumulative payout for 1 HCYI3 to PkR7/share.

From an investment perspective, while there are concerns over the company’s ability to pass on a potential hike in gas tariffs after Ramzan, AKD Securities maintain Buy stance on FFC (TP: PkR142/share) until any concrete developments in this regard.