fatima fertFatima Fertilizer reports 1HCY13 EPS of PKR1.60, up 30% YoY

 Fatima Fertilizer (FATIMA) reported PAT of PKR3.4bn (EPS: PKR1.60) for 1HCY13, representing 25% YoY growth. For 2QCY13, the company posted bottom-line of PKR1.7bn (EPS: PKR0.80), recording a 24% YoY decline and flattish trend on QoQ basis

The result was below ours and consensus estimates (BMA expected PKR1.01/sh EPS for 2QCY13) probably because NP margins clocked in lower than anticipated

During 1HCY13, revenue growth of 25% YoY to PKR15.8bn was driven by impressively higher NP sales compared to the same period last year. The company’s NP offtake clocked in at 148k tons, up 70% YoY. CAN sales also recorded robust growth of 23% YoY to 228k tons

In contrast, urea sales lagged by 10% YoY to 153k tons as high base effect (courtesy aggressive pre-buying in June 2012) dampened sales this year

The company’s interest costs fell by 28% YoY to PKR2.1bn during the period as deleveraging continues to support bottom-line

We maintain our BUY stance on the stock, where emerging feed gas rate hike risks for the fertilizer sector will play directly in FATIMA’s favor courtesy locked feed gas rates till 2021



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