NCL: Result Preview FY13
Nishat Chunian Limited (NCL) is scheduled to announce its FY13 results on October 04, 2013. In today's Karachi Stock Exchange Analysis, we present a result preview for the results expected to be announced along with our recommendation on the same.
PAT to grow by 229% YoY (EPS 12.65) in FY13
We expect Nishat Chunian Limited (NCL) to post profit after tax of Rs2,303mn (EPS Rs12.65) in FY13, showing a massive increase of 229% YoY. This colossal growth in the bottom line is expected mainly due to i) a 13%YoY increase in net sales of the company on the back of increase in spinning and weaving exports to China and Hong Kong coupled with depreciation in PKR against USD ii) gross margins are expected to improve by 520bps to 16.4% owing to low cost cotton inventory built during FY12 iii) financial charges are likely to decline by 17%YoY as low interest scenario has reduced the financial burden of the company and iv) other income is also expected to post a 31%YoY increase on the back of rise in dividend income from its subsidiaries. We expect payout of Rs4.0/share to be declared along with FY13 results.
However, in 4QFY13, the company is expected to post a profit after tax of Rs580mn (EPS Rs3.19), registering a decline of 21%QoQ. The top line though is expected to depict essentially a flat trend (increasing by 3% QoQ), the other income is expected to be the main culprit for the turn down in bottom line, falling by 62% QoQ, due to the absence of dividend income from its subsidiary, NCPL.
Recommendation 'Hold' with Dec-13 TP of Rs61/share
At current levels, the scrip is trading at a discount of 2.5% to our Dec-13 TP of Rs61/sh. We recommend 'Hold' on Nishat Chunian Limited (NCL).