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Karachi, July 05, 2012 (PPI-OT): FFBL: Strong Jun-12 sales to prop up bottom line
The meeting of the board of directors of Fauji Fertilizer Bin Qasim Limited (FFBL) is scheduled for July 13, 2012, to approve the financial results for 1HCY12.
Jun-12 offtake to save the day
Unofficial fertilizer offtake figures doing the rounds in the industry indicate that total urea sales for the month of Jun-12 have stood around 900-1000 kTons, as a result of pre-buying by dealers under threat of another price hike.
According to Arif Habib Limited, meanwhile, reports suggest that FFBL has managed to sell 45 kTons of DAP in the month of June, taking its 1HCY12 total to 113 kTons of DAP and 109 kTons of urea sales. Arif Habib Limited expects an improved performance by FFBL in 2QCY12, primarily stemming from an anticipated 12x QoQ improvement in urea offtake, along with a 271% QoQ rise in DAP sales. Resultantly, FFBL’s top-line is anticipated to be higher by 359% QoQ to PKR 8.9 billion.
FFBL expected to post EPS of PKR 1.30 in 2QCY12
Arif Habib Limited expects FFBL to post profit after tax (PAT) of PKR 1,217 million (EPS: PKR 1.30) in 2QCY12. This is in stark contrast to the net loss of PKR 387 million (LPS: 0.41) posted by the company in 1QCY12. 1HCY12 PAT however, is likely to be around PKR 830 million (EPS: PKR 0.89), which is 76% lower YoY on account of the dismal first quarter. In 1QCY12, the Company was subject to winter gas curtailment and also undertook the annual turnaround of its plant. The Company also faced stiff competition in the form of imported urea which was subsidized by the Government of Pakistan. An interim dividend payout of PKR 1.0 per share is also likely.
| 2QCY12 | 1QCY12 | QoQ | 1HCY12 | 1HCY11 | YoY | |
| Net sales |
8,871 |
1,934 |
359% |
10,805 |
18,017 |
-40% |
| Gross profit/(loss) |
2,638 |
(265) |
NM |
2,373 |
6,929 |
-66% |
| Selling and admin expenses |
456 |
342 |
33% |
798 |
1,344 |
-41% |
| Other operating expenses |
170 |
745 |
-77% |
915 |
406 |
125% |
| Operating profit/(loss) |
2,012 |
(1,352) |
NM |
660 |
5,179 |
-87% |
| Other income |
430 |
512 |
-16% |
942 |
741 |
27% |
| Profit/(loss) before taxation |
1,872 |
(402) |
NM |
1,470 |
5,547 |
-73% |
| Tax |
655 |
15 |
4267% |
670 |
2,034 |
-67% |
| Profit/(loss) after tax |
1,217 |
(387) |
NM |
830 |
3,514 |
-76% |
| Earnings/(loss) per share (PKR) |
1.30 |
(0.41) |
0.89 |
3.76 |
|
|
| Source: Company Accounts and AHL Estimates | ||||||
Recommendation
From last closing of PKR 42.1 per share, the scrip of FFBL offers an upside potential of 7.6% to Arif Habib Limited’s Dec-12 DCF based target price of PKR 45.3 per share. Arif Habib Limited thus recommends a ‘Hold’ stance on the scrip. The stock is currently trading at a CY12E PER of 6.4x and offers a dividend yield of 14%.