Engro to post EPS of Rs4.08 and Dividend of PKR 2 per share for 2QCY12 – InvestCap

Engro Corp. to post PAT of Rs2.08bn, EPS of Rs4.08 for 2QCY12

Engro Corp. is scheduled to announce 2QCY12 results on Aug-16, 2012, the company is expected to post after tax profit of Rs2.08bn (EPS of Rs4.08) for the quarter as compared to after tax profit of Rs1.27bn (EPS of Rs2.49) during corresponding period last year, posting an appreciation of 63%YoY. On cumulative basis, the company is expected to post profit after tax of Rs1.43bn (EPS of Rs2.81) during 1HCY12 compared to profit after tax of Rs3.31bn (EPS of Rs6.49) during the same period last year, showcasing decline of 57%YoY. Furthermore, we expect the company to provide Rs2/sh as dividends during 1HCY12.

Engro Fertilizer to post profit of Rs1.12bn for 2QCY12

Engro Fertilizer is expected to post profit after tax of Rs1.12bn (EPS of Rs2.19) compared to profit after tax of Rs778mn (EPS of Rs1.52) during 2QCY11, highlighting the appreciation of 44%YoY. The company posted the loss after tax of Rs1.42bn (LPS of Rs2.77) during 1QCY12. During 2QCY12 urea off-take of the company stood at 316ktons up 251%QoQ, down 3.2%YoY, while on the same side urea prices has also increased by ~40%YoY on weighted average basis. During the quarter, the company’s new plant is expected to have managed only 9% utilization due to frequent gas supplies disruptions, whereas the old plant is expected to have managed 95% utilization. Total revenue of Engro Fertilizers for 2QCY12 is expected to stand at Rs10.0bn up 60%YoY, gross margins of the company are expected to stand at 40%(down 17pps YoY), operating margins are expected to clock in at 31% (down 11pps YoY), while net profit margins are foreseen at 11% (down 1pps YoY). Falling margins of the company have been due to the imposition of Gas Infrastructure Developmental Surcharge (GIDS) at the rate of Rs198/mmbtu on old plant, which as absent during the previous year.

Food, Energy to also lead, Polymer dazzled by low top line

As results of Engro Foods and Engro Polymer has already been announced, Engro food has posted the profit after tax of Rs532mn, EPS of Rs1.04 up 436%YoY, 9%QoQ (minority adjusted profit after tax of Rs479mn). Although the milk sales of Engro Foods have declined by 1%QoQ, the relative price increase during the period supported the bottom line growth of Engro Foods. Meanwhile, Engro Polymer posted loss after tax of Rs395mn (LPS of Rs0.77) compared to profit after tax of Rs414mn (EPS of Rs0.81) during 1QCY12 (minority adjusted Loss after tax of Rs221mn during 2QCY12). The 2QCY12 did not stood well for Engro Polymer as low sales revenue (declined by 2%QoQ) and high cost of sales (up 8.8%YQoQ) has resulted in decline in gross margins by 9ppsQoQ to 13%. Other segments of the Engro Corp. are also expected to stand strong; Engro Power is expected to post the profit after tax of Rs400mn (minority adjusted) up 65YoY, down 21%QoQ. Others segments including Eximp and Vopak are expected to post the profit after tax of Rs306mn compared to the loss after tax of Rs405mn during last quarter. At current levels, we have “buy” call on Engro with Dec-12 TP of Rs135/share.