Morning Call about – Result Previews – Arif Habib Limited

Karachi, August 20, 2014 (PPI-OT): 1HCY14 earnings to jump by 25%YoY to PKR 9.27/share, BUY!

ENGRO to post 25% YoY jump in 1HCY14 earnings

Engro Corporation Limited is scheduled to announce its 1HCY14 result on August 20 th , 2014, where Arif Habib Limited expects the company to post consolidated net earnings of PKR 4,790mn (EPS: PKR 9.27) up massively by 25% YoY compared to PKR 3,827 (EPS: PKR 7.40) corresponding period last year.

EFERT: Major contributor towards ENGRO’s profitability

Engro Fertilizer remains the major contributor in 1HCY14 earnings as company posted PAT of PKR 3,375mn in 1HCY14 contributing 70% towards ENGRO’s profitability during the period. Better production and efficiencies amid, Guddu gas availability since Jul`13 coupled with 41% YoY jump in urea off-take were the major driver for remarkable growth during the period.

EPCL: lower margins lead towards earnings decline

Furthermore, chemical segment (Engro Polymer Limited) registered PAT of PKR 219mn, compared to PAT of PKR 239mn last year, down 8% YoY in 1HCY14.

Lower PVC, domestic caustic soda margins and PKR appreciation led towards this decline during the period.

EFOODS: still struggling hard

On the other hand, Food segment remained depressed as (Engro Foods Limited) posted PAT of PKR 329mn down by 70% YoY in 1HCY14. The turndown in food segment is due to lower margins taking impact of cost push inflation, as management focus remain towards gaining volumes rather than margins.

EXIMP: some improvement expected

Furthermore, Arif Habib Limited expects some recover in EXIMP business as DAP off-take jumped by a huge 20% YoY in 1HCY14 amid lower DAP prices as compared to competitor’s and better agri-dynamics during the year.

Recommendation

At current price level of PKR 176/share, the stock of ENGRO offers a massive upside potential of 70% to Arif Habib Limited’s SOTP based Dec’14 price target of PKR 300/share. Based on aforementioned, Arif Habib Limited recommends a strong ‘BUY’.

The post Morning Call about – Result Previews – Arif Habib Limited appeared first on Business News Pakistan.

The post Morning Call about – Result Previews – Arif Habib Limited appeared first on AsiaNet-Pakistan.

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