Analyst:

Muhammad Sarfraz Abbasi

Sarfraz.abbasi@atlascapital.com.pk

Summit Capital Update Pulse March 21, 2011

(+92-21)-111-226-100 Ext 404

(Formerly Atlas Capital Markets (Pvt.) Limited)

Fertilizer Sector: FFBL – A good BUY… of PKR6.51bn translating into an EPS of PKR6.97 against
the last year when company had reported PAT of BUY
Synopsis… PKR3.78bn [EPS of PKR4.05]. Moreover, the company
• PAT of the company rose by 72% YoY in CY10. also announced dividend of PKR3.50 in 4QCY10 taking
• Urea and DAP offtake declined by 16% and 7% YoY full year dividend to PKR6.55.
Pakistan Research

respectively in CY10. Market Snapshot

Strongly augmented topline boosted up margins…
• Urea and DAP prices rose by 11% and 32% YoY Topline of the company witnessed an upsurge of 18%
Index Chg %
KSE 30 11303.01 -211.86 -1.84
respectively. YoY to PKR43.25bn due to increased average Urea and KSE 100 11606.61 -251.66 -2.12
• Other income recorded substantially higher by 69% DAP prices which rose by 11% and 32% respectively. KSE ALL 8082.05 -163.67 -1.98
YoY in CY10. However offtake of both urea and DAP declined in
• Finance cost declined by 36% to PKR0.93bn in CY10 CY10. Urea and DAP offtake declined by 16% to 524.54k
as against PKR1.46bn in CY10. tons 7% YoY to 656.78k tons respectively. The main
• Fair value ‘PKR45’, BUY stance recommended. reason behind the decline in offtake was impact of
devastating floods which had created major damages
(PKR m) CY09 CY10 % Chg to the agricultural belt of the country.
Sales 36,725 43,257 18% 69% rise in other income and 36% decline in
Cost of Sales 27,060 29,794 10% financial cost drove earnings…
Gross Profit 9,665 13,463 39% Despite of 75% and 16% YoY rise in admin and selling &
12M FFBL relative performance vs KSE
S & D expenses 2,236 2,585 16% distribution expenses, FFBL’s operating profit increased 155%

Administrative expenses 401 700 75% by 45% YoY to PKR 10.12bn mainly due to 18% YoY 137%
FFBL KSE-100

higher monetary sales. In addition to this, PBT grew by 119%

Operating Profit 7,028 10,178 45%
67% mainly because of 36% YoY lower financial cost 101%
Finance Cost 1,460 934 -36% and 69% YoY higher other income. The company’s 83%
Other operating Expenses 443 713 61% borrowing declined by 23% YoY to PKR10.42bn in CY10
65%
Other Operating Income 683 1,154 69% as against PKR13.60bn in CY09. On the other hand, an

Apr-10

Aug-10
Mar-10

May-10

Jun-10

Sep-10

Oct-10

Dec-10

Jan-11

Feb-11

Mar-11
Jul-10

Nov-10
Profit Before Tax 5,808 9,686 67% upsurge of 69% YoY was witnessed in other income.
Increased other income was mainly because of hefty
Taxation 2,024 3,171 57%
increase in share of profit of PMP Morocco. The
Profit After Tax 3,784 6,514 72% company earned PKR118.11m from PMP while
EPS (PKR) 4.05 6.97 PKR2.712m came through FCCL which enabled
Gross profit margin 26% 31% company to post substantial 72% YoY rise in the bottom
Operating profit margin 19% 24% line.
Summit Capital (Pvt.) Ltd
Net profit margin 10% 15% Fair Value PKR45 - BUY… B-209, Park Towers, Clifton, Karachi
Source: Company Financials, Summit Capital Research Our DCF based target price for the FFBL is PKR45. The Equity Research: Equity Sales:
scrip is currently offering 16% upside potential based on Tel: 92 (21) 5376125 Tel: 92 (21) 5368261-8
PAT rose by 72% YoY… current market price. Fax: 92 (21) 5376126 Fax: 92 (21) 5376122
FFBL concluded CY10 by having a substantial augment Money Market: Corporate Finance:
of 72% YoY in its earnings as the company recorded PAT Tel: 92 (21) 5376128 Tel: 92 (21) 5824991
Fax: 92 (21) 5376129 Fax: 92 (21) 5376122
of PKR6.51bn
Disclaimer: translating
All information intoinan
contained this EPS of PKR6.97
publication against
has been researched and compiled from sources believed to be accurate and reliable at the time
Financial Products Distribution:
of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Summit Capital (Pvt.) Limited
Tel: 92 (21) 5376125
accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is
Fax: 92 (21) 5376126
provided without warranty and Summit Capital (Pvt.) Limited makes no representation of warranty of any kind as to the accuracy or completeness of any
information hereto contained.