LAHORE: The Board of Directors of Fauji Fertiliser Bin Qasim Limited (FFBL) met on Tuesday to review the company’s performance and announce its financial results for the quarter ended September 30.
According to details, the fertiliser manufacturer recorded a net profit after tax of Rs3.3 billion for July-Sept 2020 (earnings per share: Rs3.54), as opposed to a loss of Rs1.2 billion in Apr-June 2020 (loss per share: Rs1.24).
On a cumulative basis, the company recorded a net loss after tax (NLAT) of Rs901 million for Jan-Sept 2020 (LPS: Rs0.97) as against NLAT of Rs2.4 billion (LPS: Rs2.59) in the same period last year.
Ailia Naeem, a senior research analyst at AKD Securities Limited, said that the company’s 3Q earnings beat AKD’s expectation thanks to higher than expected “other income” of Rs2.5 billion (EPS impact: Rs2.28), which was due to dividend income from power subsidiaries during the quarter.
Barring the impact of other income, core earnings also posted a turnaround in 3Q, clocking in at Rs1.22 per share against the core loss of Rs2.49/2.37 per share in 2QCY20/3QCY19, she added.
Naeem maintained that the turnaround in core earnings came on the back of (i) 14/65pc YoY/QoQ increase in topline, courtesy 22pc/115pc YoY/QoQ uptick in DAP offtake, (ii) 5.4/3.0 ppt YoY/QoQ increase in GMs to 15.7pc, courtesy DAP price hike and GIDC elimination and (iii) 43/33pc YoY/QoQ decline in finance cost, amid a decline in interest rates.
During Jan-Sept 2020, a 2.4pc YoY higher “other expenses” overshadowed improvement in core business dynamics, dragging down the cumulative earnings for the period.
“We currently have a buy call on the scrip with a TP of Rs30.0/share, implying an upside of 26pc at last close,” she said.
FFBL has recently announced the right issue of Rs5 billion amidst GIDC payment of Rs22 billion over the next two years, where the sell-off of wind power subsidiary could also provide support to FFBL’s liquidity situation.
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