AKD Quotidian about — NML: 9MFY12 Result Preview

Karachi: Nishat Mills Limited (NML) is scheduled to announce its 9MFY12 results on Apr 27’12.

According to AKD Securities, in this regard, AKD Securities estimates that NML will post NPAT of PkR3.15bn for 9MFY12 (EPS: PkR8.95), down by 9.6%YoY from NPAT of PkR3.48bn (EPS: PkR9.90) in the corresponding period last year. The decline is the result of higher base effect where cotton prices peaked in 9MFY11. AKD Securities estimates that NML will post NPAT of PkR1.24bn (EPS: PkR3.54) in 3QFY12, down by 13%YoY but sequentially up by 43%QoQ. Robust sequential earnings are expected on the back of 1) 5.8%QoQ growth in topline (led by spinning segment sales growth), 2) widening of gross margins by 0.5%QoQ to 184% given the low-cost procurement of raw cotton and 3) higher dividend income from investee companies. Dividend income is expected to augment the bottom-line by PkR459.9mn (EPS impact: PkR1.31) with MCB, NPL, PKPG contributing PkR158.9mn (EPS impact: PkR0.45), PkR162.5mn (EPS impact: PkR0.46) and PkR138.4mn (EPS impact: PkR0.39), respectively. Textile sector of Pakistan in general and spinning sector in particular is forecasted to show strong results going forward, given the surge in demand from China. By incorporating the recent uptick in portfolio value and revised earning forecasts into AKD Securities’ financial model, AKD Securities has raised AKD Securities’ Dec’12 target price to PkR68/share, implying 15% upside from current price where the scrip is trading at an undemanding FY12F P/E of 5.54x.

ENGRO: 1QCY12 Result Preview

ENGRO will be announcing its 1QCY12 results tomorrow. AKD Securities expects the company to slip into loss in 1QCY12 where AKD Securities expects the company’s NLAT to stand at PkR209mn (LPS: PkR0.41) against an NPAT of PkR2,054mn (EPS: PkR4.02) in 1QCY11. In this regard, earnings will be severely dented by the poor off take of both the urea and phosphate fertilizers. As such, Engro Fertilizer has already posted a heavy loss of PkR1,420mn in 1QCY12 (LPS: PkR2.78), while low off take of phosphates coupled with losses in the rice segment will likely result in Eximp also posting NLAT of PkR123mn in 1QCY12. On the flipside, marked improvement in earnings of EPCL (56% shareholding) and EFOODS (90% shareholding) will provide earnings support to Engro Corp. VOPAK earnings are forecast to improve by 19%YoY; however, sequentially the earnings will fall by 89%QoQ where 4QCY11 earnings were higher on a PkR2bn tax reversal, while lower phosacid imports would also likely contribute towards sequential decline in profitability. Power subsidiary is also expected to post NPAT of PkR487mn, which would represent slight sequential growth of 1%QoQ.