Valuation Update With 7 Day Price Move • Dec 03
Investor sentiment improves as stock rises 19% After last week's 19% share price gain to PK₨380, the stock trades at a trailing P/E ratio of 6.7x. Average trailing P/E is 9x in the Chemicals industry in Pakistan. Total returns to shareholders of 101% over the past three years. Reported Earnings • Oct 31
Third quarter 2024 earnings released: EPS: PK₨9.08 (vs PK₨22.69 in 3Q 2023) Third quarter 2024 results: EPS: PK₨9.08 (down from PK₨22.69 in 3Q 2023). Revenue: PK₨100.1b (down 27% from 3Q 2023). Net income: PK₨4.87b (down 60% from 3Q 2023). Profit margin: 4.9% (down from 8.9% in 3Q 2023). Over the last 3 years on average, earnings per share has increased by 4% per year whereas the company’s share price has increased by 3% per year. Price Target Changed • Sep 26
Price target decreased by 7.9% to PK₨396 Down from PK₨430, the current price target is an average from 5 analysts. New target price is 26% above last closing price of PK₨314. Stock is up 31% over the past year. The company posted earnings per share of PK₨38.60 last year. Reported Earnings • Aug 24
Second quarter 2024 earnings released: PK₨1.14 loss per share (vs PK₨11.03 profit in 2Q 2023) Second quarter 2024 results: PK₨1.14 loss per share (down from PK₨11.03 profit in 2Q 2023). Revenue: PK₨74.6b (down 29% from 2Q 2023). Net loss: PK₨611.0m (down 110% from profit in 2Q 2023). Over the last 3 years on average, earnings per share has fallen by 2% per year but the company’s share price has increased by 4% per year, which means it is well ahead of earnings. New Risk • May 11
New minor risk - Financial position The company has a high level of debt. Net debt to equity ratio: 73% This is considered a minor risk. Having a high level of debt increases the company's balance sheet risk. The company has a higher interest repayment burden, leading to the need to allocate a greater amount of its earnings towards servicing the debt, potentially limiting growth options or shareholder distributions. It can also increase the risk of bankruptcy if business conditions deteriorate enough that the company can no longer meet its debt obligations. Currently, the following risks have been identified for the company: Minor Risks High level of debt (73% net debt to equity). Large one-off items impacting financial results. Declared Dividend • Apr 27
Fourth quarter dividend reduced to PK₨11.00 Dividend of PK₨11.00 is 73% lower than last year. Ex-date: 7th May 2024 Payment date: 30th May 2024 Dividend yield will be 5.1%, which is lower than the industry average of 12%. Sustainability & Growth Dividend is not covered by earnings (124% earnings payout ratio). However, it is well covered by cash flows (34% cash payout ratio). The dividend has increased by an average of 29% per year over the past 10 years and has been stable with no material reductions to payments, indicating a long track record of dividend growth and stability. The company's earnings per share (EPS) would need to grow by 38% to bring the payout ratio under control, which is more than the 12% EPS growth achieved over the last 5 years. Upcoming Dividend • Apr 08
Upcoming dividend of PK₨2.00 per share Eligible shareholders must have bought the stock before 15 April 2024. Payment date: 17 May 2024. Trailing yield: 13%. Lower than top quartile of Pakistani dividend payers (13%). Higher than average of industry peers (10%). New Risk • Mar 12
New minor risk - Financial position The company has a high level of debt. Net debt to equity ratio: 72% This is considered a minor risk. Having a high level of debt increases the company's balance sheet risk. The company has a higher interest repayment burden, leading to the need to allocate a greater amount of its earnings towards servicing the debt, potentially limiting growth options or shareholder distributions. It can also increase the risk of bankruptcy if business conditions deteriorate enough that the company can no longer meet its debt obligations. This is currently the only risk that has been identified for the company. Price Target Changed • Jan 08
Price target increased by 16% to PK₨404 Up from PK₨349, the current price target is an average from 3 analysts. New target price is 28% above last closing price of PK₨315. Stock is up 12% over the past year. The company posted earnings per share of PK₨42.23 last year. Board Change • Jan 06
Insufficient new directors There is 1 new director who has joined the board in the last 3 years. The company's board is composed of: 1 new director. 5 experienced directors. 3 highly experienced directors. Independent Director Shabbir Hashmi was the last director to join the board, commencing their role in 2023. The company’s insufficient board refreshment is considered a risk according to the Simply Wall St Risk Model. 공시 • Dec 30
Engro Corporation Limited Announces the Resignation of Mr. Mazhar A. Hasnani from Its Board of Directors Engro Corporation Limited has announced the resignation of Mr. Mazhar A. Hasnani from its Board of Directors, effective December 29, 2023. This departure marks a change in the composition of the board for one of Pakistan's leading conglomerates. Reported Earnings • Nov 01
Third quarter 2023 earnings released: EPS: PK₨22.68 (vs PK₨13.91 in 3Q 2022) Third quarter 2023 results: EPS: PK₨22.68 (up from PK₨13.91 in 3Q 2022). Revenue: PK₨136.8b (up 50% from 3Q 2022). Net income: PK₨12.2b (up 52% from 3Q 2022). Profit margin: 8.9% (up from 8.8% in 3Q 2022). The increase in margin was driven by higher revenue. Over the last 3 years on average, earnings per share has fallen by 1% per year whereas the company’s share price has fallen by 3% per year. Board Change • May 02
Insufficient new directors There is 1 new director who has joined the board in the last 3 years. The company's board is composed of: 1 new director. 5 experienced directors. 4 highly experienced directors. Independent Director Dominique Russo was the last director to join the board, commencing their role in 2021. The company’s insufficient board refreshment is considered a risk according to the Simply Wall St Risk Model. Upcoming Dividend • Apr 25
Upcoming dividend of PK₨40.00 per share at 13% yield Eligible shareholders must have bought the stock before 02 May 2023. Payment date: 25 May 2023. The company is paying out more than 100% of its earnings and cash flow. Trailing yield: 13%. Within top quartile of Pakistani dividend payers (13%). In line with average of industry peers (14%). Reported Earnings • Apr 22
First quarter 2023 earnings released: EPS: PK₨8.18 (vs PK₨13.84 in 1Q 2022) First quarter 2023 results: EPS: PK₨8.18 (down from PK₨13.84 in 1Q 2022). Revenue: PK₨97.3b (up 10% from 1Q 2022). Net income: PK₨4.65b (down 42% from 1Q 2022). Profit margin: 4.8% (down from 9.0% in 1Q 2022). The decrease in margin was driven by higher expenses. Revenue is forecast to grow 11% p.a. on average during the next 2 years, compared to a 9.8% growth forecast for the Chemicals industry in Asia. Over the last 3 years on average, earnings per share has increased by 1% per year and the company’s share price has also increased by 1% per year. Upcoming Dividend • Mar 14
Upcoming dividend of PK₨1.00 per share at 11% yield Eligible shareholders must have bought the stock before 21 March 2023. Payment date: 20 April 2023. Trailing yield: 11%. Lower than top quartile of Pakistani dividend payers (13%). Lower than average of industry peers (13%). Reported Earnings • Feb 19
Full year 2022 earnings released: EPS: PK₨42.23 (vs PK₨48.45 in FY 2021) Full year 2022 results: EPS: PK₨42.23 (down from PK₨48.45 in FY 2021). Revenue: PK₨356.4b (up 14% from FY 2021). Net income: PK₨24.3b (down 13% from FY 2021). Profit margin: 6.8% (down from 9.0% in FY 2021). The decrease in margin was driven by higher expenses. Revenue is forecast to grow 12% p.a. on average during the next 2 years, compared to a 11% growth forecast for the Chemicals industry in Asia. Over the last 3 years on average, earnings per share has increased by 7% per year but the company’s share price has fallen by 3% per year, which means it is significantly lagging earnings. Reported Earnings • Oct 21
Third quarter 2022 earnings released: EPS: PK₨13.91 (vs PK₨10.62 in 3Q 2021) Third quarter 2022 results: EPS: PK₨13.91 (up from PK₨10.62 in 3Q 2021). Revenue: PK₨91.3b (up 8.3% from 3Q 2021). Net income: PK₨8.02b (up 31% from 3Q 2021). Profit margin: 8.8% (up from 7.3% in 3Q 2021). The increase in margin was driven by higher revenue. Over the last 3 years on average, earnings per share has increased by 12% per year but the company’s share price has fallen by 6% per year, which means it is significantly lagging earnings. Buying Opportunity • Sep 14
Now 20% undervalued after recent price drop Over the last 90 days, the stock is down 12%. The fair value is estimated to be PK₨290, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has grown by 18% over the last 3 years. Earnings per share has grown by 20%. Upcoming Dividend • Mar 09
Upcoming dividend of PK₨1.00 per share Eligible shareholders must have bought the stock before 16 March 2022. Payment date: 14 April 2022. Payout ratio is a comfortable 50% and this is well supported by cash flows. Trailing yield: 9.7%. Lower than top quartile of Pakistani dividend payers (11%). Lower than average of industry peers (12%). Upcoming Dividend • Oct 27
Upcoming dividend of PK₨5.00 per share Eligible shareholders must have bought the stock before 03 November 2021. Payment date: 26 November 2021. Trailing yield: 9.1%. Lower than top quartile of Pakistani dividend payers (11%). Lower than average of industry peers (11%). Reported Earnings • Oct 26
Third quarter 2021 earnings released: EPS PK₨10.62 (vs PK₨16.12 in 3Q 2020) The company reported a soft third quarter result with weaker earnings and profit margins, although revenues improved. Third quarter 2021 results: Revenue: PK₨84.3b (up 12% from 3Q 2020). Net income: PK₨6.12b (down 34% from 3Q 2020). Profit margin: 7.3% (down from 12% in 3Q 2020). The decrease in margin was driven by higher expenses. Over the last 3 years on average, earnings per share has increased by 36% per year but the company’s share price has fallen by 2% per year, which means it is significantly lagging earnings. Upcoming Dividend • Oct 04
Upcoming dividend of PK₨7.00 per share Eligible shareholders must have bought the stock before 11 October 2021. Payment date: 04 November 2021. Trailing yield: 9.2%. Lower than top quartile of Pakistani dividend payers (10%). Lower than average of industry peers (11%). Major Estimate Revision • Aug 06
Consensus EPS estimates increase to PK₨51.18 The consensus outlook for earnings per share (EPS) in 2021 has improved. 2021 revenue forecast increased from PK₨265.1b to PK₨285.1b. EPS estimate increased from PK₨44.25 to PK₨51.18 per share. Net income forecast to shrink 6.0% next year vs 6.0% decline forecast for Chemicals industry in Pakistan. Consensus price target broadly unchanged at PK₨372. Share price was steady at PK₨294 over the past week. Upcoming Dividend • Jun 05
Upcoming dividend of PK₨12.00 per share Eligible shareholders must have bought the stock before 11 June 2021. Payment date: 06 July 2021. Trailing yield: 8.2%. Lower than top quartile of Pakistani dividend payers (8.4%). In line with average of industry peers (8.4%). Reported Earnings • Apr 24
First quarter 2021 earnings released: EPS PK₨14.47 (vs PK₨5.76 in 1Q 2020) The company reported a strong first quarter result with improved earnings, revenues and profit margins. First quarter 2021 results: Revenue: PK₨70.9b (up 58% from 1Q 2020). Net income: PK₨8.34b (up 151% from 1Q 2020). Profit margin: 12% (up from 7.4% in 1Q 2020). The increase in margin was driven by higher revenue. Over the last 3 years on average, earnings per share has increased by 33% per year but the company’s share price has only increased by 1% per year, which means it is significantly lagging earnings growth. Upcoming Dividend • Apr 10
Upcoming dividend of PK₨2.00 per share Eligible shareholders must have bought the stock before 16 April 2021. Payment date: 18 May 2021. Trailing yield: 8.7%. Within top quartile of Pakistani dividend payers (8.7%). In line with average of industry peers (8.6%). Reported Earnings • Apr 04
Full year 2020 earnings released: EPS PK₨44.05 (vs PK₨29.22 in FY 2019) The company reported a strong full year result with improved earnings, revenues and profit margins. Full year 2020 results: Revenue: PK₨248.8b (up 10% from FY 2019). Net income: PK₨25.4b (up 51% from FY 2019). Profit margin: 10% (up from 7.5% in FY 2019). The increase in margin was driven by higher revenue. Over the last 3 years on average, earnings per share has increased by 29% per year but the company’s share price has only increased by 1% per year, which means it is significantly lagging earnings growth. Major Estimate Revision • Mar 02
Analysts update estimates The 2021 consensus earning per share (EPS) estimate increased from PK₨45.53 to PK₨52.44. No change was made to the revenue estimate which at the last update was PK₨277.2b. Net income is expected to grow by 19% next year compared to 8.9% decline forecast for the Chemicals industry in Pakistan. The consensus price target increased from PK₨364 to PK₨369. Share price stayed mostly flat at PK₨305 over the past week. Reported Earnings • Feb 20
Full year 2020 earnings released: EPS PK₨44.06 (vs PK₨28.70 in FY 2019) The company reported a strong full year result with improved earnings, revenues and profit margins. Full year 2020 results: Revenue: PK₨248.8b (up 10% from FY 2019). Net income: PK₨25.4b (up 54% from FY 2019). Profit margin: 10% (up from 7.3% in FY 2019). The increase in margin was driven by higher revenue. Over the last 3 years on average, earnings per share has increased by 29% per year but the company’s share price has only increased by 3% per year, which means it is significantly lagging earnings growth. Analyst Estimate Surprise Post Earnings • Feb 20
Revenue and earnings beat expectations Revenue exceeded analyst estimates by 2.9%. Earnings per share (EPS) also surpassed analyst estimates by 2.1%. Over the next year, revenue is forecast to grow 7.2%, compared to a 5.0% growth forecast for the Chemicals industry in Pakistan. Is New 90 Day High Low • Feb 12
New 90-day low: PK₨302 The company is down 1.0% from its price of PK₨305 on 13 November 2020. The Pakistani market is up 11% over the last 90 days, indicating the company underperformed over that time. It also underperformed the Chemicals industry, which is up 4.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is PK₨93.96 per share. Is New 90 Day High Low • Jan 08
New 90-day high: PK₨319 The company is up 6.0% from its price of PK₨301 on 09 October 2020. The Pakistani market is up 8.0% over the last 90 days, indicating the company underperformed over that time. However, its price trend is similar to the Chemicals industry, which is also up 6.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is PK₨90.75 per share. Reported Earnings • Nov 06
Third quarter 2020 earnings released: EPS PK₨16.12 The company reported a strong third quarter result with improved earnings, revenues and profit margins. Third quarter 2020 results: Revenue: PK₨75.3b (up 20% from 3Q 2019). Net income: PK₨9.29b (up 52% from 3Q 2019). Profit margin: 12% (up from 9.7% in 3Q 2019). The increase in margin was driven by higher revenue. Over the last 3 years on average, earnings per share has fallen by 24% per year but the company’s share price has increased by 5% per year, which means it is well ahead of earnings. Analyst Estimate Surprise Post Earnings • Nov 06
Revenue beats expectations, earnings disappoint Revenue exceeded analyst estimates by 0.4%. Earnings per share (EPS) missed analyst estimates by 22%. Over the next year, revenue is forecast to stay flat compared to a 5.2% decline forecast for the Chemicals industry in Pakistan. Reported Earnings • Oct 24
Third quarter earnings released Over the last 12 months the company has reported total profits of PK₨22.0b, up 40% from the prior year. Total revenue was PK₨260.9b over the last 12 months, up 27% from the prior year.