Uncertainty bubble overshadowing the strong position EFERT posted net earnings of PKR5.5bn (EPS: PKR4.24) in CY13, registering significant growth turning its red bottom line into substantial profits. Volumetric upscale in the offtake levels, Urea (11% QoQ) and NPK & NP (50% QoQ), ignited a 13% QoQ growth in the topline of the company. Stability in the offtake and production levels came on the back of supportive decisions made by the government (providing Guddu gas) and the managements efforts (ensuring the conversion of EnVen to Mari). The company has witnessed a remarkable rise in its cash levels, as a result of hefty rise in the core operations accompanied by a decent uptick in the working capital, which led it to offer step up payments to its lenders despite successful re-profiling of its debt. Consequently, the net debt level of the company has witnessed a sharp decline from its position in the CPLY. While CY14TD has been a decent year for EFERT, with stable production and offtake levels alongside the governments decision to provide the concessionary gas rate, much depends on the governments ratification over the KPD gas pipeline and the longevity of the Guddu gas, both of which may cut short EFERTs dream run and halt its production levels. We expect the company to witness significant YoY growth in its volumes, however the QoQ dip in volumes alongside the increased GIDC is expected to trim down its margins until the concessionary gas rate comes into play. Our preliminary analysis suggests that the company is expected to yield an EPS of PKR1.94 in 1QCY14, displaying 290% YoY growth in the bottom line. taurus
Posted on: Wed, 26 Mar 2014 13:57:40 +0000
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