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AKD Quotidian about — KAPCO: 1HFY12 Result Preview

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by February 14, 2012 Brokerage

Karachi: Kot Addu Power Company Limited (KAPCO) is scheduled to announce its 1HFY12 result tomorrow, Feb 15’12. AKD Securities expects the company to post earnings of PkR2.6bn (EPS:PkR2.96) in 1HFY12 compared to earnings of PkR3.85bn (EPS:PkR4.37) during the corresponding period last year – translating into a decline of 32.4%YoY. In 2QFY12 alone, AKD Securities expects earnings to stand at PkR1.4bn (EPS:PkR1.59) compared to earnings of PkR1.8bn (EPS:PkR2.06) in 2QFY11, a decline of 22.8%YoY. The earnings decline will primarily be on the back of lower power generation due to ongoing maintenance project during the quarter. In this regard, cumulative power generation in 1HFY12 has been assumed to stand at 2,640GWH (2QFY12: 1,300GWH), translating into a load factor of ~45%. Furthermore, higher interest payments by Wapda are expected to be offset by rising interest costs owing to short term borrowings to finance working capital requirements. Given the recent relief against circular debt provided by the Government to power generation companies, AKD Securities believes KAPCO is likely to follow HUBC’s lead and declare a dividend of PkR2.5 per share. AKD Securities is in the process of reviewing AKD Securities’ financial model for KAPCO and will update investors shortly.

AGTL: CY11 Result Preview

Al Ghazi Tractors Limited (AGTL) is scheduled to finalize its full-year CY11 financial results later today. AKD Securities expects the company to report NPAT of PkR1,377mn in the review period against NPAT of PkR1,909mn in the previous year, a decline of 28%YoY. The result translates into EPS of PkR32.07 in CY11E against EPS of PkR44.46 in CY10. The decline is expected to result from a 37%YoY decline to 18,254 units in tractor volumes, which should result in a top-line decline of 31%YoY. Furthermore, high steel cost and PKR depreciation should lead to a gross margin of 18% in CY11, down 170bpsYoY. Consequently, the operating margin should also decrease to 16% in the review period (from 18.3% in CY10). While the imposition of GST practically wiped out tractor sales in 2HCY11, the beginning of CY12 has brought good news for tractor manufacturers with reduction in GST to 5% (from 16% imposed in the FY12 budget). Tractor sales have, however, remained low marking the growing of Rabi crop. AKD Securities expects tractor volumes to revive in 2QCY12, as the harvest of Rabi crops begins. AKD Securities’ financial model for AGTL remains under review at present, where AKD Securities shall update it post the release of detailed CY11 accounts.


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