ABL and ENGRO will announce financial statement

In next 2 days one bank and one big corporation will announce its results. Financial results of Allied Bank will be announced on August 21 and ENGRO will revile its financial statement on August 22, 2013. Stock market experts says both companies will show profits. 

ABL: 1HCY13 Result Preview

Allied Bank Limited (ABL) is scheduled to announce its 1HCY13 result on Aug 21'13.  Stock Market annalists says ABL will show decline in profits.  On a consolidated basis, AKD expect ABL to post Net Profit After Tax (NPAT) will be PKR. 5.73bn (fully-diluted Earning Per Shear (EPS) : PkR 5.50) in 1HCY13 vs. Net Profit After Tax was PkR 6.74bn (EPS: PkR6.48) in 1HCY12, translating into a decline of 15%YoY. Alongside the result, AKD expect a dividend of PkR 1.50/share, to bring 1HCY13 payout to PkR 2.75/ share. Projected 2QCY13 NPAT alone is expected at PkR2.87bn (fully-diluted EPS: PkR2.76), up 1%QoQ.

Key highlights of 1HCY13 results are expected to be:

Flattish NII with tighter NIMs countered by growth in earning assets

Net provisioning reversals as NPL stock has started to come off ala MCB

27%YoY decline in non-interest income on lower dividends and capital gains

Contained 2%YoY increase in non-interest expenses.         .

ABL has gained 18%CYTD to trade at a CY13F P/B of 1.5x, P/E of 8.1x and D/Y of 6.9%. In this regard, while our target price of PkR81/share implies a Neutral stance, we will look to revisit our investment case shortly where we reiterate that banks are poised to be key beneficiaries of any reversal in the interest rate cycle.

ENGRO:1HCY13 Result Preview

ENGRO is scheduled to announce its 1HCY13 results on Aug 22'13. Market annalists expect that ENGRO will announce profits, We expect the company to post an Net Profit After Ttax (NPAT) of PkR 3,542mn (EPS: PkR 6.93) in 1HCY13 compared with an NLAT of PkR340mn (LPS: PkR0.67) in 1HCY12. Core factor behind the recovery in earnings is the profitability of the fertilizer subsidiary which has posted a profit of PkR1,425mn in 1HCY13 compared to a loss of PkR1,731mn in 1HCY12. For 2QCY13, we forecast an NPAT of PkR1,756mn (EPS: PkR3.43), slightly down by 2% sequentially. Key highlights for 2QCY13 results are i) 21%QoQ increase in Fertilizer subsidiary earnings on improving production from Enven, ii) 30%QoQ drop in EFOODS profitability on declining margins and volumetric sales of UHT milk, iii) 38%QoQ decline in EPCL profitability, primarily due to inventory losses, iv) 18%QoQ decline in loss of Eximp to PkR197mn, where we expect improved profitability of the phosphate segment (DAP sales up by 2x QoQ) and slight improvement in rice operations to pare losses sequentially. ENGRO's share price is under pressure today on possibility of a hike in gas prices (newspaper sources indicate a 300% rise in gas prices for fertilizers) coupled with expectation of monetary tightening. While we wait for details regarding the change in gas price, one possibility could be to equate feedstock gas price with fuel stock, where the current differential including GIDC is at PkR218/mmbtu. If implemented, this would require retail urea prices to be increased by ~PkR300/bag, taking domestic urea prices to ~PkR2,000/bag, which would be at a slight premium to imported urea cost of ~PkR1950/bag (assuming landed cost of US$325/ton and 17% GST). At current levels we maintain our 'Buy' call on ENGRO with a TP of PkR199/share.