Annual EPS stood at BDT70.55 (BDT 1,074mn), down by 13% YoY. 4Q 20 EPS declined by c9% YoY to BDT22.71 (BDT346mn). Price competition from regional players in the electrode and healthcare (HC) gas business might have a hand in this.
BDT40.0 dividend per share (payout 57%, vs BDT50.0 in CY 19, 62% payout) missed our expectation of BDT50/share.
LINDE BD reported 1Q CY 21 NPAT of BDT287mn (EPS: BDT18.86), implying a c7% decline against NPAT of BDT310mn (EPS: BDT20.37) in 1Q CY 20. 9% topline degrowth along with a 420 bps increase in opex/sales eroded the impact of gross margin expansion (+536 bps YoY). Also, the decline in net finance income (BDT5.25mn vs BDT20.7mn in Q1 20) pushed down the earnings further.
1Q 21 revenue decreased by c9% YoY to BDT 1,275mn which can be attributed to the slowdown in construction activities from mid-march as the second wave of the pandemic loomed. Also, some subsectors such as real estate, and the shipbuilding industry, are yet to rebound fully. Moreover, price competition from the regional electrode and HC gas makers also put a dent in LINDE’s topline.
LINDE recorded a historic high quarterly GPM. 1Q CY 21 GPM stood at 50.7%, up by 536bps YoY. The company was able to cash on the cheap commodities amid the shutdown of economic activities in covid-lockdown last year.
We reiterate BUY recommendation with TP at BDT1,638 for December 2021, suggesting an ETR of +31.7%. This reflects the impact of top-line & bottom-line growth expectation of c12% & c10% CY2021-26 CAGR respectively. Our TP implies 2021f P/E of 19.8x and EV/EBITDA of 11.4x. LINDE BD is trading at 15.5x CY2021f which is cheaper compared to 18.2x 7Y median PE.
Risks to our recommendation include the continuation of multiple disastrous waves of the novel coronavirus, prolonged economic impact thereof, volatility in the commodity market, and price competition among the electrode makers.