Ali Aziz Soorty

LOTCHEM posted NPAT of PKR2.7bn (EPS: PKR1.79) in 3QCY22, up c.3.0x YoY and 91% QoQ. Revenues clocked in at PKR29.6bn, up 71% YoY (flat QoQ), and beating our expectation of c.PKR27.5bn. LOTCHEM skipped on a dividend payout out this Qtr, in contrast t...

ASTL has posted NPAT of PKR204mn (EPS: PKR0.69) in 1QFY23, down 71% YoY, while halving QoQ. ASTL has posted gross margins of 16.2%, up a sharp c.7ppt QoQ/2ppt YoY, higher than our expectation of 12.2%. Despite earnings beat, this is a weak result fro...

1Q result has come in higher than our expected EPS of PKR0.78, but lower distribution cost offset a miss on GMs. International Steels Ltd (ISL) has posted NPAT of PKR448mn (EPS: PKR1.03) in 1QFY23, down a sharp 83% YoY. ISL posted a gross margin of 1...

IMS Steel Universe is expected to post cumulative NPAT of c.PKR1.6bn in 1QFY23, down 55% QoQ (-82% YoY). IMS Steel Universe has underperformed KSE-100 Index by 24.1% CYTD, due to weak demand outlook, and lower pricing power. We have a preference for...

ICI posted consolidated net profit of PKR1.9bn in 1QFY23 (EPS: PKR19.49), down 50% YoY but up 2.7x QoQ. Net sales clocked in at PKR24.3bn, much lower than our expected topline of PKR26.9bn. GM dipped slightly by c.1.6ppt QoQ and 2.1ppt YoY to 20.3% i...

EPCL has posted NPAT of PKR2.3bn for 3QCY22 (EPS: PKR2.48); down 27%YoY/3%QoQ, in-line with our expectation PKR2.40. The company also announced an interim cash dividend of PKR2.50/sh vs. our estimated DPS of PKR2.25. Gross margin came in at 29.4%, do...

We expect IMS Chemicals Universe (LOTCHEM, EPCL and ICI) to post combined NPAT of c.PKR6.6bn up by 6%/12% QoQ/YoY. LOTCHEM’s primary margins have been relatively stable and remained upwards (+5% QoQ). Sales volumes of IMS Chemical universe are likely...

To recall, ISL posted a dull EPS of PKR0.13 in 4QFY22 (FY22 EPS of PKR12.44). According to management’s guidance and our estimates, ISL is expected to see a -4% contraction in volumetric output. Management is keen on the fact that pent up demand duri...

MUGHAL posted a profit of PKR1.0bn (EPS: PKR3.10) for 4QFY22, up from PKR0.8bn (EPS: PKR2.50) last quarter. Major deviation stemmed from lower than expected tax rate (28.7%) and finance cost. MUGHAL has posted gross margins of 13.9%, up 1.8ppt QoQ an...

Tariq Glass Ltd (TGL) has posted net profit of PKR295mn (EPS: PKR2.14) in 4QFY22, down c.38% YoY and 76% QoQ. TGL has posted a weak result with GMs declining substantially due to elevated RLNG cost & diminishing inventory gains. The result is accompa...

We expect TGL to post revenue of PKR7.6bn, up 14% QoQ and 50% YoY. The annual growth in FY22 profits is largely attributed to rise in volumes and glass prices. The company is expected to pay final cash dividend of PKR13.0/sh.

Soda Ash has become the company’s major cash cow with FY22 exports showing 87% record growth. ICI Pakistan recently announced record consolidated net profits of PKR8.8bn. With regards to PSF, ICI is the second largest domestic player with plant opera...

ISL has posted NPAT of PKR57mn (EPS: PKR0.13) in 4QFY22, down a sharp 95%/98% QoQ/YoY. deviation was majorly attributed to lower-than-expected sales volume and higher opex. ISL also announced a final cash dividend of PKR4.5/sh (FY22 DPS of PKR6.5/sh)...

ASTL posted a loss of PKR509mn (LPS: PKR1.71) for 4QFY22, down from a NPAT of PKR531mn (EPS: PKR1.79) last quarter. Deviation stemming from a variance in volumetric sales, PKR devaluation affected scrap costs, and FCA. Scrap costs have jumped c.9% Qo...

IMS Steel Universe underperformed KSE-100 Index by 16.5ppt, mainly due to lower volumes & primary margins going forward. IMS Steel Universe is expected to post cumulative NPAT of c.PKR1.6bn in 4QFY22, down 34% QoQ. We have a strong preference for MUG...

EPCL has posted NPAT of PKR2.3bn for 2QCY22 (EPS: PKR2.57); down 25% YoY and 50% QoQ. The company also announced an interim cash dividend of PKR2.5/sh vs. our estimated DPS of PKR1.25. Effective tax rate clocked in at 58% versus 25% in SPLY. The incr...

Beating street estimates, LOTCHEM posted NPAT of PKR2.79bn (EPS: PKR1.84) in 2QCY22, up a sharp 189% YoY and 7% QoQ. This is against our estimate of PKR1.2bn (EPS: PKR0.81), where the major deviation stemmed from higher-than-expected PTA-PX spreads and topline growth. PKR26.2bn, up 82% YoY and 46% QoQ. The strong revenue growth is likely due to robust textile demand, coupled with strong PTA-PX spread. Other income came in at PKR458mn, up 48% YoY and 22% QoQ owed to higher short term investments and interest rates. This is slightly lower than our estimation of PKR526mn.

ICI posted consolidated net profit of PKR663mn for 4QFY22 (EPS: PKR7.18) against our estimate of PKR4.90, majorly due to higher than expected topline and gross margins. ICI in a surprising turn of events announced a dividend payout this quarter of PKR15/sh. Revenue clocked in at PKR28.3bn versus our expected topline of PKR25.6bn. Among other line items i) finance cost clocked in at PKR415mn, up 77%/22% YoY/QoQ amid higher interest bearing debt and interest rates ii) other income of PKR121mn, was relatively in line with our expectations iii) exchange losses clocked in at PKR384mn, which were elevated compared to previous quarters.

We expect IMS Chemicals Universe (LOTCHEM, EPCL and ICI) to post combined NPAT of c. We expect our Chemicals Universe (EPCL, LOTCHEM and ICI) to post combined net profits of c. Previously, PTA-PX spreads expanded because of an oversupply of PX led by new PX capacities in China while there were delays in commissioning of new PTA capacities. ICI is likely to post a NPAT of PKR452mn (EPS: PKR4.90) for 4QFY22, down a whopping c.80%/50% QoQ/YoY. Earnings have been majorly hindered by a one-off higher taxation of c. Along with super tax, variable cost has seen a drastic increase.

ICI Pakistan Limited (ICI) has announced intention to acquire approximately 75.01% shareholding or (1,135.86mn shares) of Lotte Chemicals Pakistan Limited. ICI owns 51% of NutriCo and its Board of Directors has already granted in-principal approval to move forward with divestment of 26.5% only. PKR9.5bn, with a one-off gain for ICI of c. The intention to acquire LOTCHEM leads to strong likelihood of ICI skipping its year-end dividend, so as to fund the potential acquisition. Lotte is currently the sole producer of PTA in Pakistan with an active capacity of 500,000tpa. It is important to remember that in 1998, ICI initially commenced PTA business.

The government has attempted to leapfrog gas price rationalization. A move that will not only help overcome the revenue requirement of GasCos (SNGP and SSGC), but also slowdown gas-based circular debt generation; the current stock of PKR1.2tn is nearly half of total circular debt. Back in Feb’22, when amendments were made, the prequel to the removal of ring-fencing of RLNG prices had assumed a gas price hike in a piecemeal fashion. However, authorities have approved an abrupt hike, effective from 01Jul’22.

There has been a category shift from Poverty Alleviation Tax to Super Tax which taxes high earnings of more than PKR150mn; highest tax bracket of 4% for more than PKR300mn income. These sectors include, Airlines, Automobiles, Beverages, Cement, Chemicals, Cigarette and Tobacco, Fertilizer, Iron and Steel, LNG terminal, OMCs, Refineries, Oil & Gas Exploration, Pharmaceuticals, Sugar and Textiles. We estimate that the lowering of payout capacity will reduce the expected dividend yield from 10.3% to 9.6% for FY23f. Banks meeting this criteria are MEBL, BAFL and BAHL.

MUGHAL has posted a NPAT of PKR0.8bn (EPS: PKR2.50) for 3QFY22, down 24% yoy and 54% qoq. Distribution costs are down 36% yoy (while more than doubling qoq) to PKR92mn, likely due to lower sales volumes during the quarter, in our view. Admin expenses declined by 3% yoy. Additionally, the company booked a tax reversal in 3Q, vs. an ETR of 13.2% in 3QFY21. MUGHAL has posted a weak result; mostly due to depressed Ferrous segment revenues and profitability (elevated input costs). Also, enhanced copper flows will positively contribute to the overall profitability, in our view.

LOTCHEM has reported NPAT of PKR2.6bn (EPS: PKR1.73) in 1QCY21, up a sharp 60% yoy and 85% qoq. The result accomplished without any payout, in line with our expectation, as the company has track record of paying dividends in 3Q. Revenues have clocked in at PKR20.3bn, in line with our expectation of c. PKR20.0bn, up 39% yoy and 7% qoq. The strong revenue growth is due robust sales to the Textile sector, in our view. To recall, Textile sector exports have increased by a sharp c.25% yoy during in 1QCY22. Premium over international PTA prices is likely to have led to the deviation vs our estimated GMs of 10.3%, in our view.