Anda di halaman 1dari 2

BMAFlashnote

ResearchEntityNotificationNumber:REP005

EFERT:1QCY16earningsclockinatPKR1.6,down31%YoY

Monday April 25,2016

EngroFertilizersLimited(EFERT)reportedNPATofPKR2.1bn(EPS:PKR1.6)for1QCY16
against NPAT of PKR3.1bn (EPS: PKR2.3) in the same period last year, depicting a
declineof31%YoY

The decline in earnings was primarily due to 29%YoY lower topline on account of
declineinureaofftakecoupledwith2%YoYlowereffectiveureaprice.

OnaQoQbasis,earningsdepicteda63%declineasrevenueslumped64%QoQdueto
seasonal factors and inherent slowdown in urea demand. At the same time, 210bps
QoQincreaseineffectivetaxratealsosubduedearnings.Thatsaid,25%QoQdeclinein
financialcostsmitigatedtheoveralldeclineinearnings.

While we currently have an Overweight stance on EFERT with a target price of


PKR99/sh, the scrips price performance may remain limited in the near term on
accountofdismalbusinessoperatingconditions.

FinancialSummary
1QCY16

4QCY16

1QCY15

12,605

35,339

64%

17,673

29%

G.P

4,938

11,429

57%

6,770

27%

PBT

3,088

8,038

62%

4,592

33%

PAT

2,121

5,692

63%

3,059

31%

EPS

1.6

4.3

63%

2.3

31%

(PKRmn)
Sales

Source:PSX,BMAResearch

SajjadHussain
sajjad.hussain@bmacapital.com
+92111262111Ext:2062

BMACapitalManagementLtd.801Unitower,I.I.ChundrigarRoad,Karachi,74000,PakistanForfurtherqueries,pleasecontact:
bmaresearch@bmacapital.comorcallUAN:+9221111262111

www.jamapunji.pk
1

Disclaimer
Thisresearchreportisforinformationpurposesonlyanddoesnotconstitutenorisitintendedasanofferorsolicitationforthepurchaseorsaleofsecuritiesorother
financialinstruments.Neithertheinformationcontainedinthisresearchreportnoranyfutureinformationmadeavailablewiththesubjectmattercontainedhereinwill
formthebasisofanycontract.InformationandopinionscontainedhereinhavebeencompiledorarrivedatbyBMACapitalManagementLimitedfrompubliclyavailable
informationandsourcesthatBMACapitalManagementLimitedbelievedtobereliable.Whilsteverycarehasbeentakeninpreparingthisresearchreport,noresearch
analyst,director,officer,employee,agentoradviserofanymemberofBMACapitalManagementLimitedgivesormakesanyrepresentation,warrantyorundertaking,
whetherexpressorimplied,andacceptsnoresponsibilityorliabilityastothereliability,accuracyorcompletenessoftheinformationsetoutinthisresearchreport.Any
responsibilityorliabilityforanyinformationcontainedhereinisexpresslydisclaimed.Allinformationcontainedhereinissubjecttochangeatanytimewithoutnotice.No
memberofBMACapitalManagementLimitedhasanobligationtoupdate,modifyoramendthisresearchreportortootherwisenotifyareaderthereofintheeventthat
anymatterstatedherein,oranyopinion,projection,forecastorestimatesetforthherein,changesorsubsequentlybecomesinaccurate,orifresearchonthesubject
companyiswithdrawn.Furthermore,pastperformanceisnotindicativeoffutureresults.
Theinvestmentsandstrategiesdiscussedherein may notbesuitableforallinvestorsoranyparticularclassofinvestor.Investorsshould make theirowninvestment
decisionsusingtheirownindependentadvisorsastheybelievenecessaryandbasedupontheirspecificfinancialsituationsandinvestmentobjectiveswheninvesting.
Investorsshouldconsulttheirindependentadvisorsiftheyhaveanydoubtsastotheapplicabilitytotheirbusinessorinvestmentobjectivesoftheinformationandthe
strategies discussed herein. This research report is being furnished to certain persons as permitted by applicable law, and accordingly may not be reproduced or
circulatedtoanyotherpersonwithoutthepriorwrittenconsentofamemberofBMACapitalManagementLimited.Thisresearchreportmaynotberelieduponbyany
retail customers or person to whom this research report may not be provided by law. Unauthorized use or disclosure of this research report is strictly prohibited.
Members of BMA Capital Management and/or their respective principals, directors, officers and employees may own, have positions or effect transactions in the
securitiesorfinancialinstrumentsreferredhereinorintheinvestmentsofanyissuersdiscussedherein,mayengageinsecuritiestransactionsinamannerinconsistent
with the research contained in this research report and with respect to securities or financial instruments covered by this research report, may sell to or buy from
customersonaprincipalbasisandmayserveoractasdirector,placementagent,advisororlender,ormakeamarketin,ormayhavebeenamanageroracomanager
ofthemostrecentpublicofferinginrespectofanyinvestmentsorissuersofsuchsecuritiesorfinancialinstrumentsreferencedinthisresearchreportormayperform
anyotherinvestmentbankingorotherservicesfor,orsolicitinvestmentbankingorotherbusinessfromanycompanymentionedinthisresearchreport.Investingin
Pakistaninvolvesahighdegreeofriskandmanypersons,physicalandlegal,mayberestrictedfromdealinginthesecuritiesmarketofPakistan.Investorsshouldperform
theirownduediligencebeforeinvesting.Nopartofthecompensationoftheauthorsofthisresearchreportwas,isorwillbedirectlyorindirectlyrelatedtothespecific
recommendationsorviewscontainedintheresearchreport.Byacceptingthisresearchreport,youagreetobeboundbytheforegoinglimitations.
BMACapitalManagementLimitedand/oranyofitsaffiliates,whichoperateoutsidePakistan,doandseektodobusinesswiththecompany(s)coveredinthisresearch
document.Investorsshouldconsiderthisresearchreportasonlyasinglefactorinmakingtheirinvestmentdecision.BMAResearchPolicyprohibitsresearchpersonnel
fromdisclosingarecommendation,investmentrating,orinvestmentthesisforreviewbyanissuer/companypriortothepublicationofaresearchreportcontainingsuch
rating,recommendationorinvestmentthesis.

StockRating
Investors should carefully read the definitions of all rating used within every research reports. In addition, research reports carry an analysts independent view and
investorsshouldensurecarefulreadingoftheentireresearchreportsandnotinferitscontentsfromtheratingascribedbytheanalyst.Ratingsshouldnotbeusedor
relieduponasinvestmentadvice.Aninvestorsdecisiontobuy,holdorsellastockshoulddepend onsaid individualscircumstancesandotherconsiderations.BMA
CapitalLimitedusesathreetierratingsystem:i)Overweight,ii)Marketweightandiii)Underweight(newratingsystemeffectiveFeb2916)withourratingbeingbased
ontotalstockreturnsversusBMAsindextargetreturnfortheyear.AtablepresentingBMAsratingdefinitionsisgivenbelow:

Ratingdefinitions

Overweight

Totalstockreturn>expectedmarketreturn+2%

Marketweight

Expectedmarketreturn2%

Underweight

Totalstockreturn<expectedmarketreturn2%

*Totalstockreturn=capitalgain+dividendyield

Oldratingsystem(discardedeffectiveFeb2916)

Buy

>20%upsidepotential

Accumulate

>=5%to<=20%upsidepotential

Hold

<5%to>5%potential

Reduce

<=5%to>=20%downsidepotential

Sell

<20%downsidepotential

ValuationMethodology
Toarriveatourperiodendtargetprices,BMACapitalusesdifferentvaluationmethodologiesincluding
Discountedcashflow(DCF,DDM)
RelativeValuation(P/E,P/B,P/Setc.)
Equity&Assetreturnbasedmethodologies(EVA,ResidualIncomeetc.)