AKD Research - Off the Analysts Desk October 24, 2013 KAPCO: 1QFY14 Result Review (Below Expectations) KAPCO announced its 1QFY14 result today, where the company posted NPAT of PkR1.7bn (EPS: PkR1.96), a decline of 2%YoY. The earnings fell below expectations mainly due to lower than anticipated gross margins. In this regard, GM in 1QFY14 clocked in at just 8.9%, a decline of 1.9pptYoY/4.7pptQoQ. We highlight that these are record low GMs for the company. We await detailed financial results to shed light on the said decline. Key highlights of the 1QFY14 result include: 1) revenue clocked in at PkR29.8bn, an increase of 2%YoY/13%QoQ, 2) financial charges dropped by a substantial 55%YoY/74%QoQ to PkR806mn due to lower mark-up on payables after circular debt retirement by the GoP in Jun’13. We maintain our positive stance on KAPCO despite the disappointing 1QFY14 result, where compelling valuations viz an FY14F D/Y of 15% and anticipated benefits from energy sector reforms underpin our investment case. That said, we await detailed financial results for 1QFY14 for further clarity.
Posted on: Fri, 25 Oct 2013 07:19:00 +0000