Monday, 26 August 2013

Today's Karachi Stock Exchange News & Briefing

Engro Polymer & Chemicals (EPCL): Karachi Stock Exchange Analyst Briefing – Key Takeaways
  • We have revisited our investment case on EPCL with an upgraded TP of PKR18.1/sh and CY14-CY15 EPS of PKR2.1-PKR2.5 (up by 7% than previous estimate) to account for recent expansion in capacity
  • EPCL, in their Analyst Briefing held on Thursday 22 August, 2013, highlighted 1) better volumetric sales, 2) higher margins and 3) reduced finance cost as prime reasons behind 7.1x YoY higher 1HFY13 EPS which clocked in at PKR0.64
  • During 3QCY13, the company has successfully implemented the hot water charging project thereby increasing their PVC capacity to 156k tons (up by 6k tons) from Aug13.
  • In the second phase, the company further plans to increase its capacity by 15k tons to 171k tons (targeted in 2QCY14)
  • The healthy trend in margins expected in 2HCY13 will mainly accrue from 1) better demand post monsoon season and 2) annual turnaround in Asian PVC plants
  • Based on our Dec13 TP of PKR18.1/share, we maintain our “BUY” stance on the stock with an upside potential of 40% against current market price

Lotte Chemicals Pakistan (LOTCHEM): Karachi Stock Exchange 2QCY13 to witness turnaround in earnings
  • LOTCHEM is expected to witness turnaround in earnings as PAT of the company is estimated to clock in at PKR169mn (EPS: PKR0.11) in 1HCY13 compared to loss after tax of PKR294mn (LPS: PKR0.19) posted in the same period last year
  • In 2QCY13 alone, the company will report PAT of PKR333mn (EPS: PKR0.22/sh) compared to loss per share of PKR 0.29 in 2QCY12 and LPS of PKR0.11/sh in 1QCY13
  • Marked improvement in earnings can be attributed to sharp improvement in PTA-PX primary margins, power/fuel cost savings and reduced finance cost.
  • We expect PTA primary margins to remain steady above USD100/ton in the remaining 2HFY13 period on account of stable PTA demand and upward sticky feedstock PX prices
  • Based on our Dec13 TP of PKR10.5/share, we maintain our “BUY” stance on the stock offering a total return of 41% against current trading levels.

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