Home / Brokerage / AKD Quotidian about —: FFC: 9MCY11 Result Preview

AKD Quotidian about —: FFC: 9MCY11 Result Preview

Karachi : FFC will be finalizing its 9MCY11 result on Oct 29′ll.

According to AKD Securities, they expect FFC to post NPAT of PKR13.8bn (EPS: PKR16.27) in 9MCY11 which would represent a substantial growth of 66%YoY. For 3QCY11, AKD forecasts NPAT to stand at PKR5.6bn (EPS: PKR6.62) which would be a sequential increase of 38%QoQ. Additionally, AKD expects the company to announce an interim cash dividend of PKR5.75/share, which would be a slight deviation from its historical near 100% payout as the company might hold back some cash for investment in its wind power project.

Higher urea price to boost 3QCYII margins: Sequential rise in urea prices (+13%QoQ) should boost FFCs gross margins to 62.5% in 3QCY11, where increase in urea price should more than compensate for the 13.5% hike in fuel gas price. Higher dividend income from FFBL (+80%QoQ to PKR1,069mn) would be another major earnings driver for FFC during 3QCY11.

AKD Securities finds FFC highly attractive at current rates which offer rich upside of 53% to its target price of PKR272/share and a one year rolling dividend yield of 14%.

ENGRO Corp: 9MCY11 Result Preview
ENGRO Corp is scheduled to announce its 9MCY1I result on Oct 31′ 11. AKD Securities forecasts ENGRO’s NPAT for 9MCYI1 to grow by 35%YoY to PKR5.9bn (EPS: PKR15.10). For 3QCYII AKD Securities estimates NPAT of PKR2.6bn (EPS: PKR6.50), which would represent a growth of 93%QoQ over 2QCY1I. AKD doesn’t expect any cash payout with the announcement.

3QCY11 earnings to grow by 93%QoQ: AKD Securities expects ENGRO to record solid profitability growth of 93%QoQ in 3QCY11 where improved performance from Fertilizer, Eximp and a one-off gain on offer for sale of EF00DS shares would boost 3QCY11 earnings. Fertilizer earnings in 3QCY11 were up by 72%QoQ following higher urea production and prices. A 86%QoQ rise in phosphate sales should elevate Eximp earnings by 160%QoQ, although losses from the rice business would be a slight earnings drag. The Power subsidiary would continue to add stability to ENGRO Corp earnings where AKD Securities estimates its 3QCY11 NPAT to stand at PKR374mn.

AKD Securities views current market price of ENGRO as highly depressed where the current market price implies zero percent capacity utilization for the new urea plant. While AKD does remain cognizant of the near term risks emanating from the gas crisis and weak 4QCY11 earnings ahead, gas supply to Enven will likely resume in 1QCY12, where AKD should see a rebound in earnings particularly given the recent hike in urea price and potential for further hikes given extension of gas curtailment to urea plants and imposition of gas development cess. AKD Securities recommends Buy on ENGRO with a target price of PKR266/share.

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