AKD Quotidian about — NML: Result Preview FY13

Karachi, September 24, 2013 (PPI-OT): NML is set to hold its BoD meeting on Sep 25’13 to discuss annual results for FY13.

According to AKD Securities in this regard, expect NML to post earnings of PkR5,395mn (EPS: PkR15.35) during FY13, up by a sharp 53%YoY led by an expansion in the topline due to volumetric increase in sales and expansion of gross margins. For 4QFY13 AKD Securities expects NML to book NPAT of PkR1,284mn (EPS: PkR3.65). AKD Securities also expect NML to announce a final cash dividend of PkR4.5/share along with the results. NML is trading at a FY14F P/E of 5.6x and offers an upside of 33% from current levels to AKD Securities Jun’14 TP of PkR131/share. Buy!

FY13 Preview: NML is set to hold its BoD meeting on Sep 25’13 to discuss annual results for FY13. In this regard, AKD Securities expects NML to post earnings of PkR5,395mn (EPS: PkR15.35) during FY13, up by a sharp 53%YoY led by an expansion in the top line due to volumetric increase in sales and expansion of gross margins.

Sales are expected to clock in at PkR51.6bn, a significant increase of 15%YoY. Stable cotton prices and procurement of cotton at favourable rates for FY13 will lead to an expansion in gross margins by 2.06ppt to 17%. AKD Securities also expect NML to announce a final cash dividend of PkR4.5/share along with the results.

4QFY13 in focus: For 4QFY13 AKD Securities expects NML to book NPAT of PkR1,284mn (EPS: PkR3.65) depicting a sharp growth of 28%YoY. Growth over the corresponding period last year will likely be led by growth in revenues and margins expansion due to NML’s focus on achieving cost efficiency. Dividend income from MCB and PKGP are expected to provide further support to the bottom-line during the quarter under review.

NML: Result Preview
(PkRmn)                        FY13E     YoY       4QFY13E        QoQ       YoY
Net Sales                     51,679     15%        12,783        2%         3%
Gross profit                   8,875     31%         2,253        1%        14%
Gross Margins                    17%                   18%
S and A                        3,406      4%           831        -4%      -23%
Other operating income         2,421     -10%          484       -11%      -32%
Profit from operations         7,568     30%         1,827        -1%       17%
Finance cost                   1,610      -9%          379        -5%       -6%
Profit before tax              5,958     46%         1,448        0%        25%
Provision for tax               563       2%           164       -13%        7%
PAT                            5,395     53%         1,284        2%        28%
EPS (PkR)                      15.35                  3.65
DPS (PkR)                       4.50

Source: Company Report and AKD Research

Investment Perspective: Going forward, capacity expansions in processing, stitching and weaving should allow NML to capitalize on the opportunity presented by the EU GSP Plus status, expected to be granted to Pakistan with effect from Jan’14. NML is trading at a FY14F P/E of 5.6x and offers an upside of 33% from current levels to KASB Securities Limited Jun’14 TP of PkR131/share. Buy!

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