Morning Briefing
July 19, 2012
Tue, Jul 17 Wed, Jul 18
KSE-100 Index
14,445.28
14,596.59
KSE-30 Index
12,534.58
12,665.22
Shares Traded (mn)
105
168
Value Traded - PKRm
4,018
5,444
Market Cap. - PKRbn
3,685
3,725
Market Overview
The market recovered on Wednesday. The KSE-100 Index gained 151 points
to close at 14,597 on the back of 168m shares traded. Activity was mainly
concentrated in Construction & Materials, Commercial Banks and Financial
Services sectors. The top gainers according to Index points were OGDC,MCB
and ULEVER; likewise the top decliners were UBL, PPL and PMPK.
We recommend investors to sell on strength.
Market‐ Last 5 Days
1HCY12 ends on a Mild note– EFOODS
Vol.
(m)
V o l u me
Index
In d e x
14,700
200
14,600
150
14,500
100
14,400
50
14,300
0
Wed
Tue
Fri
Mon
Thr
14,200
Market ‐ Last One Month
Index
V o l u me
In d e x
Vol.
(m)
15000
180
160
140
14500
120
100
14000
80
60
13500
40
20
0
18-Jul
16-Jul
12-Jul
6-Jul
10-Jul
4-Jul
2-Jul
28-Jun
26-Jun
22-Jun
20-Jun
13000
⇒ EFoods reported earnings of PKR 1,018mn (EPS: PKR 1.36) during
1HCY12 as compared to PAT of PKR 216 (EPS : PKR 0.29) up by 370%
YoY. The second Quarter of CY12 presented profits of PKR 531mn (EPS:
PKR 0.71) rising by a phenomenal 436% YoY.
⇒ Net sales for the first half Year 2012 came in at PKR 19,765m rising by
47% YoY as compared to net sales of PKR 13,444m in the corresponding
period last year. Dairy & Juices segment constituted the largest part to
the top line with 92% contribution while Ice cream contributed the rest of
8%.
⇒ Gross Margins increased by 400bps YoY during 1HCY12 due to higher
prices of Olpers milk and rising prices of Ice cream coupled with cost
savings due to the use of vegetable oil in Ice cream along with pure milk
as opposed to using only pure milk in Ice cream manufacturing process.
⇒ Operating margins Jumped by 400bps YoY during 1HCY12 due to the
higher sales revenue, despite the fact that selling expenses are the highest in the second quarter of the calendar year.
Dairy & Juices (D&J) : The Dominant force of EFoods
Corporate Office:
6th floor, Progressive Plaza,
Beaumont Road, Karachi
UAN: +92 (21) 111-828-787
Fax: +92 (21) 3568-6279
Email: research@taurus.com.pk
URL: http://www.taurus.com.pk
Yet again the D&J segment contributed the highest percentage in total sales
revenue with 92% during 1HCY12. The sales revenue for the segment during
the Half year 2012 is PKR 18210mn as compared to PKR 12073Mn during
the same period last year up by 50% YoY; this segment exhibited value
growth of over 39% YoY during 1HCY12 and continued positive volume
growth YoY during the same period.
Dealing Room Ph:
Ambient UHT remains the big seller
+92 (21) 35682690
35662817, 35682559,
35681420
The ambient UHT segment market share of EFoods according to AC Neilson
at June 30th ,2012 stood at 50% as against 45% at December, 2011. Milk
sales exhibited seasonal impact as it increased as compared to the last quarter and will show higher QoQ number in the coming quarters. The growth
in sales of dairy Omung during the second quarter rose by a higher percentContinued on Page 2
Disclaimer: The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be interested in the securities mentioned herein.
Morning Briefing
World Indices
Jul 18, 2012
Markets at Clos e
In dex
Chg%
DJIA
12,908.70
0.81
Nasdaq
2,942.60
1.12
S&P
1,372.78
0.67
FTSE
5,685.77
1.01
DAX
6,684.42
1.62
CAC-40
3,235.40
0.09
Nikkei
8,726.74
0.32
H.Seng
19,239.88
0.32
Board Meetings
Date
Time
HUBC
18-Jul
10.00 AM
UBL
18-Jul
11:00 AM
LUCK
19-Jul
11:30 A.M
FFC
24-Jul
8:00 P.M
ULEVER
3-Aug
10:00 A.M
PPL
8-Aug
11:00 AM
INDU
10-Aug
12:00 PM
UPFL
13-Aug
2:30 PM
KAPCO
28-Aug
1:00 PM
age than Tarrang on during 2QCY12 on a QoQ basis and has some what
cannibalized the Tarrang sales. Tarrang currently commands the highest
portion of revenues in the D&J segment while Dairy Omung constitutes
about 10-15% share in revenues of the same segment. As per management statement the growth in sales of Olpers is expected to slow down in
the future with Dairy Omung and Tarrang to drive the revenues of the
Ambient UHT segment. It has to be noted that Olpers price during
2QCY12 has been increased whereas the prices of Tarrang and Dairy
Omung has been kept Constant.
Juices remain cornered while Omung Lassi gathers positive response
The juices segment has been kept at the sidelines for now as the segment experienced Negative 59% growth YoY during 1HCY12, but EFoods
newest sensation “Omung Lassi” has received positive response from
the market with the sweet flavor attracting the most attention. The month
of Ramadan is right around the corner which will be a big earner for the
Ambient UHT segment.
Omore’ sizzles during the summer
Ice cream segment recorded QoQ sales growth of 280% during 2QCY12
as the summer season provided the much needed boost to the segment
as the sales remained dismal during 1QCY12. The Ice cream segment
sales during the second quarter of CY12 stood at PKR 1,146m as compared to last quarter sales of mere PKR 406m due to the extended summer. The segment currently contributes around 8% to total sales as per
1HCY12 figures and currently commands about 27% of the market
share. During 1HCY12 the company’s YoY sales growth stood at 13.42%
with Ice cream revenues during this period clocking in at PKR 1555m.
This segments volume growth during 1HCY12 remained stagnant with
negative 1% YoY change, while value growth during the same period was
around 13%YoY.
SALES REVENUE
25,000 PKR Mn
20,000 15,000 19,765 18,210 13,444 12,073 1HCY12
1HCY11
10,000 5,000 1,555 1,371 ‐
EFoods
D&J
Ice cream
Source : EFoods & TSL research
Continued on Page 3
Disclaimer: The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be interested in the securities mentioned herein.
Morning Briefing
Farm stationed at breakeven point
The dairy farm’s bottom line remained near break even as during 2QCY12
the earning came in LAT PKR 0.50m dropping from PKR 5mn during the
preceding quarter. 1HCY12 sales profits of PKR 4.5m as compared to LAT
of PKR 52m during the same period last year. The Production of milk increased to 56000 Ltr/day during 1HCY12 as compared to 39000 ltr/day
during the corresponding quarter last year. The farm which current produces at a high quality 10tpc milk ( Measures Milk Quality ) which is five
times better than milk produced in New Zealand.
Margins Remain on the Higher Side
Gross Margins of the company went up 400bps YoY to 25% during
1HCY12, with gross margins of the D&J segment touching 23% during the
same period as compared to the 19.4% in the same period last year. The
gross margins of Ice cream also showed growth rising to 35.5% during
1HCY12 as against 32% in the corresponding period last year.
Operating margins of the company increased to 10% during 1HCY12 as
opposed to 6% during the same period last year. The operating margins
could have been higher if the Ice cream high gross could have been translated into operating profits. And also the operating margins during
1HCY12 had the impact of higher distribution and selling expenses during
2QCY12 as these expenses during the said period are the highest as compared to all quarters.
Gross margins
40%
36%
32%
35%
30%
%
25%
25%
21%
23%
19%
20%
1HCY12
15%
1HCY11
10%
5%
0%
EFoods
D&J
Ice cream
Source : EFoods & TSL research Continued on Page 4
Disclaimer: The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be interested in the securities mentioned herein.
Morning Briefing
Earning scales new high
Although the earnings of 2QCY12 came below expectations, earnings during
1HCY12 were PKR 1018mn (EPS : PKR 1.36) up by 370% YoY. The D&J segment remained the highest contributor of the bottom line with PAT during
1HCY12 of PKR 1006mn up by 85% YoY with net margins increasing by
100bps YoY to 5.5% during the same period . Although the Ice cream segment remained in the red line but the LAT during 1HCY12 decreased to PKR
166mn as apposed to LAT of PKR 205mn during 1HCY11, the net margins
of Ice cream also improved to -10% during 1HCY12 as compared to -15%
during the same period last year.
Al-Safa profits remain negative
The foreign subsidiary , currently under ECORP ; for which EFoods is expected file with the regulator in order to buy it from ECORP by the end of
CY12 LAT of $ 0.668mn and total revenues of $5.7mn with various new
products launched during 2QCY12.
Profit after tax
1,200 1,018 1,006 1,000 PKR Mn
800 542 600 400 1HCY12
1HCY11
216 200 ‐
EFoods
(200)
D&J
Ice cream
(166) (205)
(400)
Source : EFoods & TSL research Net Margins
10%
5.5%
5%
5%
2%
4.4%
0%
%
‐5%
EFoods
D&J
Ice cream
1HCY12
1HCY11
‐10%
‐10%
‐15%
‐15%
‐20%
Source : EFoods & TSL research Continued on Page 5
Disclaimer: The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be interested in the securities mentioned herein.
Morning Briefing
CAPEX plans
EFoods plans a total CAPEX of PKR 8.7bn during CY12 of which 50%
will be financed by debt where the rest of the requirement will be met
by a mix of equity and internal generation. As of 1HCY12 the company
has carried out PKR 1.5bn worth of CAPEX. The CAPEX is diverted towards setting up their new powder plant which is expected to be operational by 2nd half of CY13 , and towards increasing milk collections center and geographical reach of Omore’.
EFOODS - 1HCY12
Sales
cost of goods sold
Gross profit
Distribution And Selling Expenses
Administrative Expenses
Operating Profit
Other Operating expense
Other Operating Income
EBIT
Finance Cost
Profit before taxation
Taxation
Profit After Taxation
Earnings Per Share
Gross Margin
Operating margin
Net margin
2QCY12 2QCY11 % Chg
10099
7081
43%
7512
5637
33%
2587
1444
79%
1394
881
58%
189
125
51%
1004
438
129%
82
8
894%
107
16
547%
1029
447
130%
232
295
-22%
797
151
427%
265
52
409%
531.775
99
436%
0.71
0.13
436%
26%
20% 600bps
10%
6%
400bps
5%
1%
400bps
1HFY12 1HFY11 %Chg
19765 13444
47%
14922 10622
40%
4843
2822
72%
2465
1702
45%
419
280
50%
1960
840
133%
154
54
188%
172
36
382%
1977
822
140%
441
491
-10%
1536
332
363%
518
115
349%
1018
216
370%
1.36
0.29
370%
25%
21% 400bps
10%
6% 400bps
5%
2% 300bps
Source: Company Accounts
Ahmed Mushtaq
Ahmed.mushtaq@taurus.com.pk
Ext: 202
Continued on Page 6
Disclaimer: The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be interested in the securities mentioned herein.
Morning Briefing
News Snapshot
FBR notifies withdrawal of CNIC, NTN requirement: The Federal Board
of Revenue (FBR) has withdrawn the controversial notification regarding the mandatory requirement of the computerised national identity
card (CNIC) number and the national tax number (NTN) of buyers in
sale invoices, according to the notification on Wednesday. (The News)
Brent slips below $104: Brent crude slipped below $104 a barrel on
Wednesday, snapping five days of gains as Federal Reserve chairman
Ben Bernanke offered no signs of further monetary stimulus to boost
growth in the world’s top oil consumer. (The News)
Pakistan, Iran form joint team to cover all aspects of pipeline deal:
Pakistan and Iran showed a deeper commitment to getting the Pakistan-Iran gas pipeline project off the ground after both countries
formed a Joint Working Group (JWG) to cover all technical legal and
financial aspects of the project in light of US sanctions. (Tribune)
World oil prices rebound: Global oil prices rebounded on Wednesday, in
line with buoyant stock markets, as sentiment was bolstered by upbeat
earnings, encouraging data and escalating unrest in Syria, analysts
said.Brent North Sea crude for delivery in September rallied 92 cents
to $104.92 a barrel in late afternoon deals in London. (Dawn)
SECP to probe IPPs’ financial misconduct: The Securities and Exchange
Commission of Pakistan has decided to probe into the alleged misappropriations by the Independent Power Producers (IPPs) while sources
inside the SECP have revealed that recent examination of financial
statements of IPPs indicated some glaring discrepancies. (Dawn)
Power tariff for April, May: KESC allowed Rs 1.14, Re 0.52 per unit
hikes: National Electric Power Regulatory Authority (Nepra) on Wednesday allowed an increase of Rs1.14 and Rs0.52 per unit in tariff of Karachi Electric Supply Company (KESC) for April and May this year. A
hearing, headed by National Electric Power Regulatory Authority's
(Nepra) Acting Chairman Ghiasuddin Ahmad, focused on two petitions
filed by KESC under monthly Fuel Price Adjustment (FPA) formula. (BR)
Disclaimer: The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be interested in the securities mentioned herein.