Engro Chemical Pakistan Limited (Engro) announced its 1HCY09 result on 28th July 2009 where the company posted earnings of PkR1.04bn (fully diluted EPS-PkR3.50) compared to earnings of PkR1.56bn (fully diluted EPS-PkR5.22) in 1HCY08 – a decline of 32.9%YoY. The result was in-line with our expectation of NPAT of PkR1.05bn (fully diluted EPS-PkR3.51).
Topline of the company grew by 21.3%YoY to stand at PkR10.7bn mainly on account of higher DAP in total sales mix. In 1HCY09, DAP sales grew by 1.8xYoY to stand at 71.6k tons while urea sales declined by 24.1%YoY to stand at 419.2k tons mainly due to 1) lower carryover inventory available this year compared to last year and 2) an annual turnaround in Apr’09 limiting sales to just 42.5k tons in the month.
Consequent to higher DAP sales, GM declined to 27.5% in 1HCY09 compared to 38.3% in 1HCY08.
Though financial charges were higher by 59.6%YoY at PkR904.5mn, they declined by 15.0%QoQ to stand at PkR378.8mn.
Along with the result, the company declared an interim dividend of PkR2 per share. With a target value of PkR197.1 per share, we retain our ‘Buy’ stance on the scrip.