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Offline Farzooq

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AKZO -- Akzo Nobel Pakistan Limited
« Reply #-1 on: August 13, 2012, 11:28:22 AM »
All About Akzo Nobel
« Last Edit: October 12, 2012, 07:28:01 PM by M&M »
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AKZO -- Akzo Nobel Pakistan Limited
« Reply #-1 on: August 13, 2012, 11:28:22 AM »

Offline Farzooq

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Re: Akzo -- Akzo Nobel Pakistan Limited
« on: August 13, 2012, 11:29:12 AM »
Akzo Noble seeks listing at KSE
our correspondent
 Saturday, June 09, 2012

KARACHI: Akzo Noble Pakistan Limited, which will run paint business of ICI Pakistan, as a separate entity in future, has applied to get listed at the Karachi Stock Exchange (KSE) while trade in shares of ICI Pakistan would remain suspended from June 21 till the company is reconstructed, according to a KSE notice on Friday.

Akzo Noble Pakistan Limited has decided to separate the paints’ business from ICI Pakistan’s others businesses and run it under the new name of Akzo Noble. In accordance with this, ICI Pakistan has fixed the date of June 27 for the entitlement of shares of Akzo Noble Pakistan to the existing shareholders of ICI Pakistan, and to revalue the shares of ICI Pakistan in accordance with the reduced capital of the company. Therefore, the book of the company (ICI) would remain closed from June 21–27 for the purpose, the notice said.

“…trading in the shares of ICI Pakistan Limited will be suspended with effect from the date of commencement of book closure i.e. June 21, 2012. The last day of trading through KATS in the shares of the company will be June 19, 2012, however, negotiated deals on clients-to-clients basis will only be allowed to T+0 upto 1:00pm on June 20, 2012,” the notice said.

It is further informed that the application for listing of Akzo Noble Pakistan Limited has also been received, which will be listed on fulfilment of the relevant requirements. Separate notice of commencement of trading in the reduced capital of IC Pakistan Limited and Listing and trading in the shares of Akzo Noble Pakistan Limited will be issued on fulfillment of the relevant requirements, it added.
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Offline Farzooq

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Re: Akzo -- Akzo Nobel Pakistan Limited
« Reply #1 on: August 13, 2012, 11:30:30 AM »
AKD Daily
 
ICI’s paints demerger: What is the new palette offering?
 
The demerger process of ICI’s Paints segment is nearing completion and in this regard, trading in the new paints company (Akzo Nobel Pakistan) will commence from next month. In today’s note, we have briefly described the fundamentals of the paints industry in Pakistan as well as Akzo Nobel’s value proposition. Furthermore, we have also provided our initial earnings estimates for the ‘Paints’ business and have arrived at a target price of PkR110/share using a blend of DCF and relative valuations. .

The demerger process in brief: The ‘Paints’ unit is being split from ICI Pakistan to form a new entity ‘Akzo Nobel Pakistan’. Share capital will be distributed in a 33.5%/66.5% ratio i.e. 33.5% for Akzo Nobel Pakistan and the remaining for ICI Pakistan, which in turn will translate into a paid up capital of PkR465mn (46.5mn shares) for the Paints business and PkR923mn (92.3mn shares) for ICI Pakistan. Akzo Nobel is the parent company of ICI holding 76% shareholding (105mn shares) in ICI via ICI OMICRON B.V, where post demerger, Akzo will continue to hold the same proportion of share in the two entities. Furthermore, AKZO will sell its stake in ICI Pakistan (92.4mn shares) for which we have already seen three potential bidders (LUCK, NML, and a consortium of ICOR and Fajr Capital) come forward with their intention to purchase Akzo’s stake.

Akzo’s value proposition: Akzo is a global leader in the paints industry, enjoying market leader ship in a number of categories. Some of its leading brands include ‘Dulux – Decorative Paints’, ‘International – Performance Coatings’ and ‘eka – Specialty Chemicals’. The company is targeting to expand its footprint in high growth markets which include the Middle East and South Asia region, where profitability is also above average, with huge growth potential. Akzo has 3 major business areas namely Performance Coatings, Decorative Paints and Specialty Chemicals, where margins for the Specialty Chemicals are the highest, while that of Decorative Paints is the lowest. Furthermore, raw materials for Akzo account for 72% of the total variable costs while the remaining 28% is represented by Energy & other variable costs. The global paints industry is estimated at around EUR70bn of which the ‘Decorative’ category accounts for 44% of the market.

Where does Pakistan fit in? The Pakistani paints industry is passing through a difficult phase as slow pace of growth in the construction and industrial sector has softened demand for paints. Furthermore, the discontinuation of token schemes in the decorative paints category, which was viewed by CCP as market distorting as well as requirement of CNIC on invoices from Apr’12 onwards are likely to further dent demand. However, long term fundamentals of the Pakistan remain alluring given the huge population base, one of the lowest per capita paints consumption (taking paints production as proxy for consumption, per capita consumption is just at 0.15ltr/annum) and potential for revival in the construction sector given the huge housing backlog. Furthermore, penetration in the industrial segment paints business will hold the key for profitability given the high margins in the category. Going forward, AKZO can also utilize Pakistan as a manufacturing hub for exports to the region (Middle East and India).

ICI paints segment performance review: The ICI paints segment has struggled since the takeover by Akzo in CY08 as the high margin auto OEM paints contracts were terminated post Akzo takeover. Operating margins have subsequently reduced from a high level of 23% in CY07, down to just 3% in CY11, while sales volumes are still to match the pre-Akzo levels. However post demerger, we could see Akzo aggressively expanding into the paints market and expanding its product palette, particularly towards high margin segments.
 
One-off cash dividend in the offing: According to the latest 1QCY12 accounts, the net assets of the paints segment amounted to PkR5.8bn, which includes a PkR3.7bn inter-unit account receivable, where post demerger, all inter-unit receivables/payables will be settled, which could potentially result in a one off cash inflow of PkR3.7bn (PkR80/share), which could also be distributed as an extra-ordinary cash dividend. .
 
Paints valuation: We arrive at a blended average Dec’12 end target price for Akzo at PkR110, where our target price based on various methodologies range between PkR44-PkR137. For CY12, we estimate the Paints division to post an NPAT of PkR210mn (EPS: PkR4.52), while the 5-yr earnings CAGR is forecast at 19%, where we see earnings accretion coming from steady increase in margins (higher contribution of specialty chemicals) and steady growth in volumes (8%pa). Our DCF based Dec’12 end TP for Akzo Nobel is calculated at PkR127/share, where we have assumed a WACC of 18%, terminal growth rate of 3% and cash balances of PkR3.8bn. Amongst the listed companies, only Berger (BERG) is a comparable peer for Akzo, however the company has been incurring losses over the last three years, therefore making PS the most appropriate measure for relative valuation. BERG’s PS ratio over the last 5 years has averaged at 1.07x and taking our CY12 sales/share of PkR128 for Akzo, we arrive at a TP of PkR137 for the company. Akzo’s target price based on AKD chemical sector peer group (LOTPTA and EPCL) comparison is PkR126 based on EV/EBITDA, PkR44 based on PE and PkR115 based on PBV.
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Offline Farzooq

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Re: Akzo -- Akzo Nobel Pakistan Limited
« Reply #2 on: August 13, 2012, 11:31:21 AM »

Post the demerger of ICI Pakistan (ICI) and its paints
business (AKZO); we share our valuations for both
the stocks. ICI’s stock price has appreciated by 14%
in the three trading sessions following resumption in
its trading. We believe the reduction in its paid-up
capital by 33% has fueled speculation of a higher
EPS, going forward. However, investors have failed
to incorporate the deteriorating business fundamentals, in our
view. Low margins in the polyester (PSF) business and gas
curtailment are likely to dilute the impact of lower paid-up
capital following the demerger. Moreover, our crude estimate
suggests that valuations for AKZO are extremely stretched.
Hence, we recommend to book profits in both these stocks.
Key risks to our calls on ICI and AKZO are 1) a tender offer
by the acquirer of the AkzoNobel stake in ICI and 2) a one
time heavy cash payout by AKZO.

Brief history of the demerger
ICI announced the demerger of its paints business in April
2011 contingent to regulatory approval. AkzoNobel after
conducting a strategic review of its businesses in Pakistan
concluded that the paints business offers opportunity to
create value within its transformed portfolio and strategic
ambitions. Hence, AkzoNobel decided to divest its
shareholding in ICI post the demerger.
As per the scheme of arrangement, the paid up shares of ICI
will be reduced by ~33% to 92.36mn. The Paints undertaking
(AKZO) will have 46.44mn paid-up shares. The shareholder
of ICI (before the demerger) holding 100 shares will receive
33 shares of AKZO and 67 shares of ICI.

ICI: drag in profits due to weak fundamentals
1Q2012 review: Incorporating the effects of demerger, ICI
earnings in 1Q2012 clocked in at Rs1.71/share from
continuing operations (a decline of 53%YoY). One of the main
reasons for the drop in earnings was a fall of 15%YoY in the
net revenues of the company. Lower overall revenues were
owing to a decline of 27%YoY in net sales of the company’s
PSF business due to lower cotton prices. Also, gross margin
for ICI contracted to 9.9% in 1Q2012 from 11.8% in 1Q2011
owing to use of expensive furnace oil amid gas shortages.

Earnings expectations: With a likelihood of further
deterioration in the gas situation in the country (particularly in
the upcoming winters), we expect earnings to remain under
pressure at least until March 2013. The expected
commissioning of two coal fired boilers in March 2013 for its
soda ash plant should provide some respite. Also, the
financial charges are likely to increase going forward as the
company will be relying on bank borrowings to make a
payment of Rs3.7bn to AKZO (presently ICI has Rs2.8bn
cash) and loss of cash generation from the paints segment.
Hence, we expect earnings to clock in at Rs13.1/share and
Rs16.2/share in 2012E and 2013F, respectively. We also
expect the company to cut back on its payout ratio due to
liquidity constraints.

Outlook: ICI’s stock has appreciated by 14% in the three
trading sessions following resumption of its trading. We
believe, expectation of a higher EPS due to lower paid-up
shares as paints contributed negligibly to overall profitability
has resulted in investor excitement (see illustration).
2011: Illustration of higher EPS due to decline in paid up shares
(Rs mn) Pre demerger Post demerger

Pre tax paints operating profits 1 56.75 -
Overall after tax profits 1 ,935.71 1,833.83
Paid-up shares 1 38.80 9 2.36
EPS 1 3.95 1 9.86
Source: Company announcements and JS Research

The stock trades at a 2012E PE of 11.4x, which is at a
premium of 28% to its 3-year historical average. Our valuation
for ICI stands at Rs138 and we recommend to book profits in
the stock. However, with AkzoNobel looking to offload its
75.8% stake in the company, any potential tender offer by the
acquirer may generate future excitement in the stock.
Interestingly, a news item suggests that KP Chemicals may
bid as much as WON400bn, which translates into a value of
Rs474/share.

AKZO: Potential for growth, though vals stretched
1Q2012 review: AKZO reported an operating loss of Rs12mn
in 1Q2012. The paints market had remained sluggish due to
prolonged winters, energy crisis and poor law and order
situation. However, the company managed to report earnings
of Rs0.76/share on account of Rs54.7mn income booked on
receivables from ICI. We expect this to be a non-recurring
item for AKZO. However, retention of cash received from ICI
could result in an annual upside of ~Rs5.5/share.
Earnings expectations & outlook: Our crude estimates for
AKZO suggest EPS of ~Rs7 for 2012E, translating into a PE
of 16.0x. Based on this our value for AKZO stands at Rs100,
hence we advise to book profits. Although speculation is rife
that AKZO may payout a exciting payout from the receipt of
Rs3.7bn from ICI; possibility of setting up a manufacturing
unit from it to export to Middle East remains high.

jsgcl
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Offline mra901

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Re: Akzo -- Akzo Nobel Pakistan Limited
« Reply #3 on: September 26, 2012, 12:35:06 PM »
Cash is King!                                            Taurus Research

We initiate coverage on Akzo Nobel (AKZO) with a TP of PKR 107.1, depicting an upside potential of 37%, hence we recommend a BUY. Our liking for the stock emanates from a hefty cash position (which may result in super dividend), while core paints business is also expected to improve after hitting a trough.

Cash with the company is more than its market cap

The company has a likely cash position of a whopping PKR4bn (PKR87/share). Not bad for a company, trading at PKR78 only. This hefty sum of cash is much more than the capex requirement of business. After selling their holding in ICI Pakistan, it is likely that Akzo Nobel International will opt to take out the excess cash from this company as well. Though we have not built a super dividend in our model, it remains a possibility.

Margins to see better days

Given the state of world economy, we don’t expect oil prices to rise extraordinarily, which should bode well for paints raw material (as it is an oil derivative). Another reason for improvement in core operations will be that the paints segment (while being part of ICI Pakistan) has already seen heavy provisioning related to trade debts in the last two years (pre demerger). Going forward, we expect these expenses to remain subdued. Using ICI’s paints segment data for previous years, shows that operating margins were as high as 23%, compared to CY11 level of 3% only. Improvement in Akzo’s 2QCY12 operating margin is visible, as it increased to 6.5%.

Volumetric growth to improve

With the tough economic period of FY08-FY12 behind us, it’s safe to assume that the economy will improve gradually. We view Akzo Nobel as a high growth company, as new products from Akzo International’s portfolio are expected to be introduced here.

Offline Valueestimator

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Re: Akzo -- Akzo Nobel Pakistan Limited
« Reply #4 on: October 09, 2012, 09:42:13 PM »
whats updates on AKZO.

how many of u believe that AKZO will pay hefty dividend.
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Offline Valueestimator

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Re: Akzo -- Akzo Nobel Pakistan Limited
« Reply #5 on: October 12, 2012, 05:15:44 PM »
dividend of 10-20 is expected.
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Offline DICTATOR

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Re: Akzo -- Akzo Nobel Pakistan Limited
« Reply #6 on: October 16, 2012, 06:29:22 PM »
dividend of 10-20 is expected.

 :$: yeh Rupees main ha ya %age mein

Offline Valueestimator

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #7 on: October 16, 2012, 07:09:59 PM »
rupees mein hay,

and that is very conservtive estimate. my gut feeling is 15 rupees i.e. 150%.
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Offline Valueestimator

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #8 on: October 16, 2012, 08:30:06 PM »
akzo div is an open secret.

This is the time for AKZO to get payback and they will never let it gooooo.

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Offline pax

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #9 on: October 17, 2012, 09:24:59 AM »
Kia scene hai Azko Nobel ka? Is it a buy at these levels? When will the dividend be announced?

Offline pax

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #10 on: October 17, 2012, 02:38:33 PM »
Whens the business meeting? Anyone?

Offline pax

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #11 on: October 18, 2012, 10:17:30 AM »
Okay, so the meeting is on Wednesday, October 24th at 11:00am.

Can it announce a dividend then? Or is it only for the end of year meetings.


Offline Valueestimator

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #12 on: October 18, 2012, 06:28:56 PM »
akzo div is an open secret.

This is the time for AKZO to get payback and they will never let it gooooo.

CAPPED TODAY, MANY MORE TO COME.
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Offline stockchild

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #13 on: October 20, 2012, 02:06:00 PM »
if a dividend of Rs. 15-20 is announced (which is highly likely), we may see it locked for 6-7 days consecutively. its at Rs. 85 presently, and even if they dont declare dividend, it can goes down to Rs. 80. but in case of dividend, will easily touch Rs.110.  "Low risk high return"

Offline frazmunaf

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #14 on: October 20, 2012, 06:54:26 PM »
i expect 800%div.if nt than zero div.

Offline frazmunaf

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #15 on: October 20, 2012, 07:13:09 PM »
80%100%150%200%300%0rrrrrrrrrrrrrrrrrrrrrrr zero000000000000div. :fingerscrossed1: ;)

Offline 007

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #16 on: October 20, 2012, 07:29:20 PM »
oh GOD look what the cat dragged in

Offline Valueestimator

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #17 on: October 20, 2012, 08:09:47 PM »
just dont worry about the dividend........................

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Offline Dehan

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Re: AKZO -- Akzo Nobel Pakistan Limited
« Reply #18 on: October 20, 2012, 08:10:10 PM »
80%100%150%200%300%0rrrrrrrrrrrrrrrrrrrrrrr zero000000000000div. :fingerscrossed1: ;)

Frazmunaf g aik bar phir in action.
"Suno sab ki, laiken Dehan apna apna"

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