AKD Quotidian about — PTC – 1QCY13 Result Preview

Karachi, April 12, 2013 (PPI-OT): PTC will be announcing its IQCYI3 result on Monday. Apr 1513. Expects consolidated profitability to jump by 106%YoY to PkR4, 940mn (EPS: PkRO.97) in 1QCYI3.

According to AKD Securities however, on a QoQ basis, earnings are expected to decline by 48% following a -23% decline in int’l incoming call minutes as well as normalization of tax rates, where the company booked the tax benefit of VSS expense in the last quarter. On a standalone basis, AKD Securities estimates PTCs IQCYI3 profitability at PkR3,923mn (EPS: PkRO.77), up 189%YoY, while QoQ earnings are estimated to decline by 54%.

Besides the revenue jump from ICH, the broadband and other data segments arc also expected to contribute towards the IQCYI3 earnings growth. To illustrate, consolidated data revenues for 2HCY12 were recorded at PkRI 3.4bn, representing 62% of the data revenues for FY12. As per the FY13 budget, the GoP had estimated dividend income from PTC at PkR6.5bn (DPS: PkR2.O) where given the fiscal constraints AKD Securities does not rule out an interim dividend announcement of PkRO5-PkRO.75 per share with the result. AKD Securities maintains 1Buy’ call on PTC with a TP of PkR37.7/share.

Cotton Update Apr’13
USDA recently released its monthly cotton report for Apr’13 according to which outlook for ending global stocks for MY12/13 (Marketing Year: Aug-Jul) remained virtually unchanged from a month earlier. In this regard, global ending stocks for IQIYI3 are estimated at 82.45mn bales, a slight change from the previous month’s closing inventory estimate of 81 .l4mn bales, primarily due to a revision in beginning inventory estimates.

Global production estimates were revised downwards by O.llmn bales to 119.7mn bales, even as global domestic consumption estimates were revised upwards. Global trade was revised upwards on continuing strong demand from China. In this regard, Chinese cotton imports were revised upwards by 1.5mn bales to 16.5mn bales. Chinese production also saw an upward revision by I mn bales to 35mn bales. With no change in domestic consumption of cotton in China, Chinese ending cotton inventory estimates clocked in at 45.6lmn bales, higher by I .5mn bales MoM.

Exports from India were revised upwards for the second consecutive month this time, increasing by 1.5mn bales to 7mn bales. On the local front, estimates for Pakistan remained unchanged apart from a slight revision in beginning inventory estimates.Going forward, AKD Securities sees yarn demand from China to continue as the Chinese Government sticks with its cotton support policy.

Moreover, positive statement by the EU ambassador to Pakistan saying that GSP Plus status for Pakistan will likely be approved before the end of the year is likely to bode well for manufacturers of higher value added textile products. In this regard AKD Securities maintains liking for NML, where AKD Securities TP of PkRI 08/share offers an upside of 284% from current levels.