Apr 20, 2017 - Earnings to clock in at PKR 1.05/share for 1QCY17 ... No. of shares 2,100.0 ..... Room # 719, 7th Floor,
BRP - 009
Day Break Thursday, 20 April 2017
COMPANY UPDATE
Fertilizer Preview
F A T IMA F ERT ILIZ ER COMPA N Y LIMIT ED FERTILIZER
Rec ommendation
BUY
Target Price Last Closing 19-Apr-17 Upside Mar k et D at a Bloomberg Tkr. Shares (mn) Free Float Shares (mn) Free Float Shares (%) Market Cap (PKRbn | USDmn) Exchange P r ic e I n fo . 90D Abs. Return (14.8) Lo 33.3 Hi 41.3 K ey C o m p an y Fin an c ials Period End: Dec PKRbn C Y1 6 A C Y1 7 E
42.1 33.2 26.7 FATIMA PA 2,100.0 420.0 20.0% 69.8 665.5 KSE 100 180D 365D 1.2 7.4 31.9 30.0 41.3 41.3
C Y1 8 F
C Y1 9 F
Total Revenue
29.7
33.8
37.6
37.1
Net Income
9.25
9.8
10.4
10.9
EPS (PKR)
4.4
4.7
5.0
5.2
DPS (PKR)
-
3.3
2.9
3.1
96.4 43.2
91.7 47.5
92.0 51.9
22.7 7.1 1.6
22.0 6.7 1.5
21.1 6.4 1.3
Total Assets 94.8 Total Equity 40.2 K ey Fin an c ial R at io s ROE (%) 23.0 P/E (x) 7.5 P/B (x) 1.7
DY (%) 9.8 8.9 R elat iv e P r ic e P er fo r m an c e & Sh ar eh o ld in g 60%
FATIMA
9.3
KSE 100 3%
30% 20% 10%
0% J-16
A-16 O-16 D-16
F-17
A-17
Dir. 32 Ind. %
Assoc. Others
Ab o u t t h e C o m p an y The Company is a public limited company incorporated in Pakistan. The principal activity of the Company is to manufacture, process and sell of dairy, beverages, and frozen desserts.
Source: Bloomberg, KSE 100 & IGI Research An j ali K u k r ej a Research Analyst
[email protected] Tel: (+92-21) 111-234-234 Ext.: 957
Fatima Fertilizer Company Ltd.’s (FATIMA) board meeting is scheduled to announce its 1QCY17 financial result on 20th Apr-17, where we expect company to post earnings of PKR 2.2bn (EPS PKR 1.05) up by +96%xYoY in 1QCY17.
Industry’s inventory rose to 1.19mn tons in Feb-17 as the higher production created the supply glut of urea. However, with the 0.3mn tons of export till May-17 (Govt has agreed to extend deadline for urea export till May-17).
We recommend “BUY” call on FATIMA with our Dec-17 target price of PKR 42/share offering upside of +27% from its last closing. The company is currently trading at a CY17E P/E of 7.1x and dividend yield of 9.8%.
Earnings to clock in at PKR 1.05/share for 1QCY17 Fatima Fertilizer Company Ltd.’s (FATIMA) board meeting is scheduled to announce its 1QCY17 financial result on 20th Apr-17, where we expect company to post earnings of PKR 2.2bn (EPS PKR 1.05) up by +96%YoY in 1QCY17. Our estimates are based on a) +61%YoY growth in topline on the back of +2.2x/+2.1x/1.48xYoY increase in urea/CAN/NP offtake due to lower prices, b) decline in finance cost by 16%YoY as company has decreased its long and short term borrowing. However, +2.3xYoY increase in distribution expense is expected to dilute earnings growth in 1QCY17.
FATIMA Financial Highlights
40%
-1 0% A-16
Exhibit:
0% 1%
50%
FATIMA: Volumetric sales to increase earnings in 1QCY17
PKRmn (Period end=Dec) Net Sales Gross Profit Mkting. / Dist. Cost Other Op. Income Finance Cost Pre-Tax Profits Profit After Tax EPS (PKR) DPS (PKR) KEY RATIOS Gross Profit Margins EBIT Margins Effective tax rate
1QCY17E 8,447 4,692 591 78 532 3,201 2,208 1.05 -
1QCY16 5,260 2,737 254 154 636 1,652 1,125 0.54 -
55.6% 44.2% 31.0%
52.0% 43.5% 31.9%
Source: IGI Research, Company Financials
YoY 61% 71% 133% -49% -16% 94% 96% 96%
4QCY16 10,857 6,019 914 170 815 4,072 3,412 1.62 2.00
QoQ -22% -22% -35% -54% -35% -21% -35%
55.4% 45.0% 16.2% No. of shares
2,100.0
Page | 1
Thursday, 20 April 2017
Outlook Industry’s inventory rose to 1.19mn tons in Feb-17 as the higher production created the supply glut of urea. However, with the 0.3mn tons of export till May-17 (Govt has agreed to extend deadline for urea export till May-17), we expect inventory levels to ease down as a result. Whereas margins are anticipated to be on the lower side as international prices are down to USD 221/ton from high USD 275/ton recorded in Mar-17. Recommendation We recommend “BUY” call on FATIMA with our Dec-17 target price of PKR 42/share offering upside of +27% from its last closing. The company is currently trading at a CY17E P/E of 7.1x and dividend yield of 9.8%.
Page | 2
BRP - 00 09
Imp portant Disclaim mer and Disclos sures Resea arch Analyst(s) Certification: The T Research An nalyst(s) hereby certify that the views v about the company/compa c anies and th he security/securrities discussed in this report acccurately reflect hiis or her or their personal views and that he/she has not received and will not n receive direc ct or indirect com mpensation in exxchange for exprressing specific recommendation r ns or views in this report. The analyst(s) is principally respo onsible for the prreparation of thiss research reporrt and that he/sh he or his/her close family/rrelative does no ot own 1% or more of a cla ass of common equity securitie es of the follow wing compa any/companies covered c in this re eport. Discla aimer: The information and opinions contained d herein are pre epared by IGI Finex F Securitiess Limited and iss for inform mation purposes only. Whilst every e effort hass been made to t ensure that all the informa ation (including any recom mmendations or opinions o express sed) contained in n this document (the information) is not misleading or unreliable, IGI Finex Securities Limite ed makes no rep presentation as to o the accuracy or completeness of the information. Neither, IGI Finex Securities Limited norr any director, officer or employe ee of IGI Finex Securities Limited shall in any manner be liable or respon nsible for any lo oss that may be occasioned as consequence off a party relying on the information. This docum ment takes no account of th he investment ob bjectives, financial situation and particular needss of investors, wh ho shall seek furrther professsional advice be efore making any investment de ecision. This doccument and the information mayy not be reproduced, distributed or published by any recipien nt for any purposse. This report iss not directed or intended i for distrribution to, or use by any pe erson or entity no ot a client of IGI Finex Securities Limited, else dirrected for distribu ution. Rating g system: IGI Finex F Securities employs three tier t ratings syste em, depending upon u expected to otal return (returrn is define ed as capital gain n exclusive of tax x) of the security in stated time pe eriod, as follows: mmendation Recom
Rating System m
Buy
If target price on o aforementione ed security(ies) iss more than 10% %, from its last clo osing price(s)
Hold
If target priceon aforementione ed security(ies) iss in between -10% % and 10%, from m its last closing price(s)
Sell
If target price on o aforementione ed security(ies) iss less than -10% %, from its last clo osing price(s)
Time Horizon: Dec - 2017 2 Valuation Methodolo ogy: The analyst(s) has used folllowing valuation methodology to arrive at the tarrget price of the said security (ies): DCF (Discounted Cash h Flow) Risk: Investment in securities s are su ubject to econom mic risk, market risk, interest ratte risks, currenccy risks, credit riisks, politica al and geopoliticcal risks. The performance of com mpany(ies) cove ered herein migh htunfavorably be affected by multiple factorss including, business, economic,, and political co onditions. Hence,, there is no asssurance or guara antee that estima ates, recom mmendation, opin nion, etc. given about the securityy(ies)/company(ie es) in the report will w be achieved.. Basic Definitions and d Terminologies s used: Target Price: P A price target is the projeccted price level of o a financial security stated d by an investme ent analyst or adv visor. It represen nts a security's price p that, if achieved, results in a trader recognizing the be est possible outccome for his inve estment. Market Cap.: Market ca apitalization is ca alculated by multtiplying a compa any's sharess outstanding byy current trading price. ROE: Retturn on equity is the amount of net n income return ned as a percenttage of sha areholders’ equitty. P/E: Price to Earnings ratio of o a company's share price to itts per-share earrnings. P/B: Pricce to Book ratio used to com mpare a stock's market value to its book value. DY: D The dividend d yield is dividen nd per share, divided by the e price per share..
IGI Fin nex Securities Limited
Rese earch Analyst(s) Resea arch Identity Num mber: BRP009 © Copyyright 2016 IGI Fine ex Securities Limite ed
BRP ‐ 009
Contact Details Research Team Saad Khan Abdullah Farhan Jawad Ameer Ali Anjali Kukreja Umesh Solanki
Deputy Head of Research Research Analyst Research Analyst Research Analyst Database Manager
Tel: (+92‐21) 111‐234‐234 Ext: 810 Tel: (+92‐21) 111‐234‐234 Ext: 912 Tel: (+92‐21) 111‐234‐234 Ext: 816 Tel: (+92‐21) 111‐234‐234 Ext: 957 Tel: (+92‐21) 111‐234‐234 Ext: 974
[email protected] [email protected] [email protected] [email protected] [email protected]
Head of Equities Regional Head (North) Branch Manager (Islamabad) Branch Manager (Faisalabad) Branch Manager (RY Khan) Branch Manager (Multan) Branch Manager (Abbottabad)
Tel: (+92‐21) 35301779 Tel: (+92‐42) 35777863‐70 Tel: (+92‐51) 2604861‐62 Tel: (+92‐41) 2540843‐45 Tel: (+92‐68) 5871652‐56 Tel: (+92‐61) 4512003 Tel: (+92‐992) 408243‐44
[email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]
Equity Sales Faisal Jawed Khan Zaeem Haider Khan Muhammad Naveed Gul Hussain Asif Saleem Mehtab Ali Zeeshan Kayani
IGI Finex Securities Limited
Lahore Office
Islamabad Office
Trading Rights Entitlement Certificate (TREC) Holder of Pakistan Stock Exchange Limited | Corporate member of Pakistan Mercantile Exchange Limited
5‐F.C.C. Ground Floor, Syed Maratib Ali Road, Gulberg II, Lahore Tel: (+92‐42) 35777863‐70, 35876075‐76 Fax: (+92‐42) 35763542
Mezzanine Floor, Office 5, 6 & 7, Kashmir Plaza, Block‐ B, Jinnah Avenue, Blue Area, Islamabad Tel: (+92‐51) 2604861‐2, 2604864, 2273439 Fax: (+92‐51) 2273861
Head Office
Faisalabad Office
Rahim Yar Khan Office
Suite No 701‐713, 7th Floor, The Forum, G‐20, Khayaban‐e‐Jami Block‐09, Clifton, Karachi‐75600 UAN: (+92‐21) 111‐444‐001 | (+92‐21) 111‐234‐234 Fax: (+92‐21) 35309169, 35301780 Website: w w w .igisecurities.com.pk
Room #: 515‐516, 5th Floor, State Life Building, 2‐ Liaqat Road, Faisalabad Tel: (+92‐41) 2540843‐45 Fax: (+92‐41) 2540815
Plot # 12, Basement of Khalid Market, Model Town, Town Hall Road, Rahim Yar Khan Tel: (+92‐68) 5871653‐6, 5871652 Fax: (+92‐68) 5871651
Multan Office
Abbottabad Office
Stock Exchange Office
Mezzanine Floor, Abdali Tower, Abdali Road, Multan Phone: (92‐992) 408243 ‐ 44
Ground Floor, Al Fatah ShoppinigCenter , Opp. Radio Station, MansehraRoad, Abbottabad Phone: (+92‐99) 2408243 ‐ 44
Room # 719, 7th Floor, KSE Building, Stock Exchange Road, Karachi. Tel: (+92‐21) 32429613‐4, 32462651‐2 , Fax: (+92‐21) 32429607
© Copyright 2016 IGI Finex Securities Limited www.jamapunji.pk
