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By SHABBIR H. KAZMI
Updated Oct 22, 2005

Engro Chemical Pakistan announced third quarter results, posting Rs 1,349 million profit after tax (EPS: Rs8.82), registering 34% growth. Net Sales at Rs 10,860 million were in line with forecasts, and pre-tax profit at Rs 1,349 million exceeded expectations. The company also announced a dividend of Rs 3 per share. Engro received dividend exceeding Rs 100 million from Eximp in addition to a 15% dividend from Engro Vopak. Gross Margin for third dropped by some 492 basis points primarily due to sales of imported urea at zero-margin and higher sales of Phosphates (phosphates margin appear in other income as dividends from Eximp). So far there has been no news from the government or any of the fertilizer manufacturers about the gas allocation issue. Three parties have expressed interest in setting up a fertilizer plant if they are allocated gas. Engro is believed to be a strong candidate for the gas allocation as its management was the first to identify the need for another urea plant in the market.

Fauji Fertilizer Bin Qasim announced its third quarter results reporting an impressive 48% growth in its bottomline, which grew to Rs 1.97 billion (EPS: Rs 2.11) for the nine months as compared to Rs 1.329 billion profit (EPS: Rs 1.44) for the corresponding period last year. Besides this phenomenal growth, the company surprised investors by announcing a second interim dividend of 75 paisas, which takes the total dividend payout for nine months to Rs 2 per share. Improved sales of urea and DAP and better fertilizer prices enabled the company to post a topline growth of 32.3%. Furthermore, with the deposit rates almost doubled over the last year, this cash rich company is also likely to have benefited in form of 355% increase in its other income (besides GOP compensation), which grew from Rs 62.8 million in 2004 to Rs 286.4 million in 2005. Higher other income is likely to hike FFBL's full year profit.

Hubco announced its first quarter results posting profit after tax of Rs 638 million (EPS: Rs 0.55) against Rs 1.37 billion (EPS: Rs 1.18) during the same period last year, depicting a decline of 53%. The director's report states that the disappointing result was due to reduction in the tariff after full payment of senior debt that took place in July 2005 amounting to Rs 23.9 billion. Debt repayment is a component of the tariff, and hence revenues. Debt repayment, which has averaged at Rs s1.7-2.0 billion during the last few quarters, has come down to Rs 900 million annually. However, cash flows are likely to remain unaffected. The full year earnings are expected to be in the range of Rs3.0-3.5 per share for 2006, while dividend is likely to be around Rs 2.75-3.0/share.

The Board of Directors of Pakistan Oilfields is scheduled to meet on Monday to announce first quarter results. It is poised to exhibit a strong growth in bottom line with Rs 1,413 million profit after tax (EPS: Rs 10.75) compared to Rs 660 million (EPS: Rs 5.02), a 114% growth. The company has benefited from 1) increase of 54% in oil and 29% in gas prices and 2) production growth of 32 and 64% of oil and gas respectively. Production addition in coming quarters would result in further profitability growth. Interest on debt associated with National Refinery's acquisition would impact the bottom line. The expected dividend income from NRL will start flowing in from second quarter. POL growth story is not any different compared to previous years. Crude price jump and production rise have definitely resulted in improvement in POL's bottom line. POL earnings in absolute terms would continue to rise. Production jump from some of POL major fields like Pindori, Pariwali, Adhi and Tal would remain the engine of growth, leading to increases of 34%, 55% and 22% in Oil, Gas and LPG production respectively. A major portion of production growth is however targeted in second half 2006. Coupled with expected upward gas price revision to be made in January 2006, POL earnings in second half of 2005 would depict even better picture in absolute terms because 53% of POL gas production does not have any cap on pricing and would enable POL to avoid unit price cap.

Askari Commercial Bank is also scheduled to announce its third quarter results on Monday. The bank is expected to post Rs 1,489 million profit after tax (EPS: Rs 9.88). This implies a 2% decline in profits compared to of Rs 1,513 million profit (EPS: Rs 10.04) for the corresponding period last year. The decline in profits is due to be evident only on the non-markup income as ACBL had made capital gains of over Rs 500 million in the second quarter of 20004. Absence of capital gains this year is likely to drag down profitability growth. Although ACBL has been able to post impressive growth in its core interest income, the higher growth in its interest expense, owing to high Advance to Deposit Ratio, is likely to limit growth in net interest income.

Indus Motors is expected to post a bottomline growth of 37.5%. It is expected to report Rs 506 million profit after tax (EPS: Rs 6.43) for the first quarter as compared to Rs 368 million profit (EPS: Rs 4.68) for the first quarter 2005. This growth will trickle down from a 12.55% increase in the company's topline, which should grow from Rs 6.52 billion for first quarter 2005 to Rs 7.34 billion in first quarter 2006. Despite the fact that the company's sales volumes declined by 9% owing to annual maintenance shutdown for around 15 days, the growth in the topline is expected on the back of 5% increase in the prices (prices were raised in November 2004) as well as improved product mix. Furthermore being a cash rich company it is likely to take advantage of higher deposit rates.

Packages is scheduled to announce third quarter results on Monday. It is expect to report profit after tax of Rs 608 million (EPS: Rs 8.70), a growth of 12%. For the third quarter alone Packages is expected to report net profit of Rs 121 million (EPS: Rs 1.73), on the back of 7% growth in local sales and 41% drop in financial charges since the company has retired its Term Finance Certificates early this year. Margins are expected to remain under pressure, owing to high raw material prices (imported plastics & paper pulp). However, going forward an improvement in margins is expected due to commencement of the company's expansion plan, which will eventually replace its dependence on imported paper pulp.

 
 

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