Fauji Fertilizer Bin Qasim declares Rs1.75/sh dividend – BMA, Topline, Elixir, Shajar and Global Research
By: Farid Aliani,
(9221) 111 262 111
BMA Capital Management Ltd.
Fauji Fertilizer Bin Qasim (FFBL) reported 1HCY13 PAT of PKR1.8bn (EPS: PKR1.95), up by whopping 1.8x YoY. For 2QCY13, the company posted bottom-line of PKR1.3bn (EPS: PKR1.42), showing impressive 29% growth YoY. The company also declared 1st interim dividend of PKR1.75/sh. The result and payout are inline with our expectations.
During 1HCY13, FFBL’s revenue rose by impressive 78% YoY on the back of revival in DAP sales (up ~120% YoY) and continuously rising DAP Primary Margins, which helped the company’s gross margins to rise by 450bps to 26%.
We maintain our BUY stance on the stock, still offering attractive dividend yield of 11%. Our Dec13 TP of the company stands at PKR46/sh, presenting 10% upside from current levels.
By: Asad I. Siddiqui,
Topline Securities Pvt Ltd.
Fauji Fertilizer Bin Qasim, (FFBL) announced 1H2013 earnings of Rs1.8bn translating into EPS of Rs1.95 as compared to profit of Rs644mn (EPS Rs0.7) in the same period previous year. The company also announced payout of Rs1.75 per share.
The company’s revenue increased by 78% to Rs20.1bn as against Rs11.3bn posted in the same period previous year. We cite higher DAP and urea sales behind increasing gross profitability.
DAP offtake increased by 71% to 162k tons in 1H2013. We believe favorable agricultural environment to be the prime factor behind the volumetric variance.
Other income of the company fell to Rs237mn in 1H2013 against Rs594mn in the same period last year, primarily due to loss of Rs121mn from its JV Pakistan Maroc Phosphore (PMP) compared to profit of Rs70mn last year.
We expect earnings of FFBL to further recover in coming quarters. Where urea sales are likely to be affected in short-term, however, impetus to the earnings will be provided by expanding margins and increasing sales of company’s flag ship product, DAP. We expect FFBL to post 2013 EPS of Rs6.1-6.25.
By: Shajar Capital Pakistan (Private) Limited
research@shajarcapital.com
(92 21) 32469141 50 Ext-541
Fauji Fertilizer Bin Qasim Ltd (FFBL) announced its 1HCY13 results today, posting an earnings of PkR1.82bn (EPS: 1.95), slightly below market consensus. As compared to the same period last year earnings are up 2.8x compared to PkR644mn (EPS: 0.69).
The company’s result announcement was accompanied with a cash payout of PkR1.75/share.
Higher earnings are primarily attributable to higher DAP offtake and better DAP margins. Although we await a detailed break-down, DAP offtake is likely to have improved by 119%YoY while margins are up 15%YoY, in our view.
Resultantly, the company’s net sales grew by 78%YoY to PkR20.14bn while gross profit rose by 2.16x YoY to PkR5.3bn during 1H2013.
FFBL’s other income declined by 60% to PkR237mn on account of loss in its PMP business.
During 2Q2013, earnings stood at PkR1.3bn (EPS: 1.42), compared to PkR1.03bn (EPS: 1.10) recorded in 2Q2012, up 29%. On a sequential basis, earnings are up 29% compared to the preceding quarter.
At current levels, we maintain ‘Hold’ on FFBL.
By: Sateesh Balani,
sbalani@elixirsec.com
(+92-21) 3569 4679
Elixir Securities Pakistan (Pvt.) Ltd.
Result announcement
Fauji Fertilizer Bin Qasim Limited (FFBL) announced its 1HCY13 financial results. The company announced profit of PKR1.8bn, translating into EPS of PKR1.95, up 1.8x YoY, against Elixir’s expectation of PKR2.67. 2Q EPS clocked in at PKR1.42, up 29% YoY. The company also announced interim cash payout of PKR1.75/share in line with our expectations.
Gross profit lagged expectations
Gross profit was substantially lower than our expectation mainly due to variance in top-line which would likely have been on account of lower than estimated volumetric sales for the quarter.
Higher finance cost dent earnings
Finance cost for the quarter clocked in at PKR358mn, higher than our expectation of PKR293mn primarily due to higher than expected ST borrowings. ST borrowings as of Jun-13 were PKR14.7bn, increasing by PKR2.4bn from Mar-13 levels. Increase in ST borrowings during the quarter was mainly due to steep reduction of PKR4.5bn in payables.
Investment perspective
We maintain our full year estimates of FFBL for CY13 as we await further clarity on DAP margins outlook and overall gas pricing regime for the sector. At last closing price, the stock offers CY13 dividend yield of 13% along with an upside of 3% to our Jun-14 PT of PKR43/share. We maintain our hold stance on the stock.
By: Yousuf Rahman,
yousuf.rahman@gslpk.com
+92.21.3245.7543
Global Securities Pakistan Ltd.
Fauji Fertilizer Bin Qasim (FFBL) announced its financial results for 1H CY13, reporting earnings of PKR 1,817mn (EPS: PKR 1.95), slightly lower than industry forecasts. Along with the result, the company announced an interim cash dividends of PKR 1.75/sh, slightly higher than Global Estimates of PKR 1.50/sh.
6mo ending
%
3mo ending
%
3mo ending
%
PKR mn
1H CY12
1H CY13
r
2Q CY12
2Q CY13
r
1Q CY13
2Q CY13
r
Urea Sales (mn MT)
0.140
0.117
(16)
0.132
0.066
(50)
0.051
0.066
31
DAP Sakes (mn MT)
0.110
0.255
132
0.086
0.161
87
0.094
0.161
72
Revenues
11,291
20,143
78
9,357
12,448
33
7,694
12,448
62
Gross Profit
2,432
5,262
116
2,697
3,614
34
1,648
3,614
119
Finance Cost
910
624
(31)
604
358
(41)
266
358
35
Profit after Tax
644
1,817
182
1,031
1,325
29
492
1,325
169
EPS (PKR)
0.69
1.95
182
1.10
1.42
29
0.53
1.42
170
DPS (PKR)
-
1.75
-
1.75
-
1.75
Source: Company Accounts, KSE Notice
Key Highlights
The company posted revenues of PKR 12.45bn during 2Q CY13, elevating by 33% YoY compared with revenues of PKR 9.36bn registered during 2Q CY12. This increase can mainly be attributed to rising DAP off-take, which increased by 87% YoY.
The company announced a cash payout of PKR 1.75/sh, higher than our estimates of PKR 1.5/sh. We had taken a conservative approach in this front due to anticipated large cash outflows caused by the future purchase of AKBL’s right shares. We estimate cash outflows in the range of PKR 966mn for this transaction, equivalent to PKR 1.04/sh. Despite anticipated outflows, we maintain our stance that FFBL will be able to pay a final full-year cash dividends of PKR 5.5/sh.
With Phosphoric Acid prices settling at USD 715/MT (Previous: USD 750/MT), we have increased our CY13’s DAP margins assumption to USD 300/MT, up from USD 280/MT. As a result we have raised our CY13’s full year EPS to PKR 6.00/sh. We, however, maintain our long-term margin assumptions at USD 250/MT for CY14 and beyond.
Our Dec13 TP for FFBL is currently at PKR 44/sh, offering an upside of 5%, along with an anticipated dividend yield of 13%. BUY!
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