AKD Quotidian about — PTC: CY13 Result Preview

Karachi, January 31, 2014 (PPI-OT): Pakistan Telecommunication Company Limited (PTCL) is scheduled to finalize its full-year CYI3 result over the weekend with result announcement on Monday Feb 314.

According to AKD Securities, on a consolidated basis, AKD Securities expects PTCL to post NPAT of PkRI5.O7bn (EPS: PkR2.95) in CY13 vs.

NPAT of PkR8.OObn (EPS: PkR1.57) in full-year CYi2 translating into growth of 88%YoY. However, factoring out extraordinary items (primarily the one-off VSS expense booked in 3QCYI2) results in normalized pre-tax growth of 10%YoY. Sequentially, AKD Securities expects 4QCYi3F consolidated earnings to clock in at a relatively weak PkR2.7lbn (EPS: PkRO.53), lower by 9%QoQ with the ICH mechanism resulting in lower incoming traffic (reportedly less than 500mn minutes per month vs. more than I .5bn minutes per month pre-ICH). On an unconsolidated basis, AKD Securities expects PTCL to post NPAT of PkRI2.OObn (EPS: PkR2.35) in full-year CYI3F. Alongside the result, AKD Securities expects PTC to announce a final dividend of PkRI/share, to bring the full-year CYI3 dividend to PkR2/share (payout ratio: 68%). However, there is the off chance that management decides to retain earnings ahead of the 3G auction. At current levels, PTC trades at a CYI4F PIE of 8.35x where AKD Securities’ target price of PkR29.7/share implies a Neutral stance. In AKD Securities’ view, a conviction call on PTC is dependent on pricing of the 3G auction, possible acquisition of Wand Telecom and clarity on the ICH mechanism post Telenor’s exit from the same.

EFERT: CY13 Result Preview

Engro Fertilizers Limited (EFERT) is scheduled to announce its full- year CYI3 result on Feb 714. AKD Securities expects the company to post earnings of PkR5.6bn (EPS: PkR4.36) in CVI SF compared to a loss of PkR2.9bn (LPS: PkR2.3) during full-year CYI2. In 4QCYI3 alone, AKD Securities expects the company to post earnings of PkR24bn (EPS: PkRI.87), a stellar growth of 34.1 %QoQ. AKD Securities’ earnings growth in 4QCYI3 is premised on i) urea volumes of 493.8k tons and combined phosphate (NP and NPK) volume of 29.0k tons, ii) GMs of-47.O%, iii) higher `other income’ at PkR38O.5mn with the company having combined ST Investments and cash balances of PkRI4.7bn at end 3QCYI3 and iv) flat financial charges at -PkR2.6bn. Following approval of concessionary gas rate for EFERT on Jan 1614, the scrip has witnessed tremendous investor interest, closing at consecutive upper locks in each trading session to-date. At a price of PkR47.4/share at close of today’s first trading session, AKD Securities believes buying interest may now start to wane. Going forward, while the GoP has approved the concessionary gas rate for Enven, confusion remains over the applicability of concessionary rate on gas from the Man network. Any clarity on this will likely resultin a second round of investor interest. At current levels, AKD Securities has an Accumulate stance on EFERT with a TP of PkR55.45/ share.