AKD Daily
NCL: 1QFY20 Result Previews
NCL – All good things come to an end: Previewing 1QFY20F results for NCL, we expect the company to report NPAT of PkR58mn (EPS: PkR0.24) vs. PkR852mn (EPS: PkR3.55) in 1QFY19, down 93%YoY. Numerous factors are at play contributing to earnings plunge: i) margin contraction (-5.83ppts.YoY) due to cyclical headwinds in the lower end of value chain, ii) elevated finance cost (62%YoY) due to interest rate hikes, and iii) absence of FX gains (vs. PkR188mn last year). Sequentially, headline earnings are likely to come off by 92%QoQ, where earnings decline is primarily due to absence of i) dividend income from power subsidiary (vs. PkR376mn last quarter) and ii) one-off FX gain recorded in the last quarter. Moreover, since the Rupee has gained ~2% against the US$, we might potentially see a reversal of some of the exchange gains recorded in the last quarter, thus rupee appreciation poses a downside risk to our quarterly earnings forecast.