Karachi, February 17, 2023 (PPI-OT): ENGRO: CY22 Analyst Briefing Takeaways

Engro Corporation Limited (ENGRO) conducted its analyst briefing, where company shed light on recent result and its future outlook. Key takeaways from the briefing are as follows:

ENGRO has reported consolidated earnings of PkR24.3bn (EPS: PkR42.23) in CY22, lower compared to a NPAT of PkR27.9bn (EPS: PkR48.5) in SPLY. The reason for the decline in earnings is the imposition of super tax applicable in CY22.

Topline grew by 14.4%YoY on consolidated business, however gross margins for the company declined slightly to 29.4% vs. 32.0% last year.

EFERT has undergone debottlenecking of its base plant, after which effective capacity has increased by 150k tons per annum. Earnings in the year declined due to the fall in offtakes along with higher finance costs. The management informed that they expect gas prices for other fertilizer manufacturers to increase in accordance with the hikes for the SSGC and SNGPL network.

EPCL’s profitability declined by 20%YoY owing to higher gas prices along with lower PVC margins. Market share of EPCL for PVC stands at 95%, while the company is also looking to export the product to allow the smooth issuance of LCs by the SBP.

The energy businesses of the company have supplied 4,500GWh of electricity to the grid this year. Furthermore, SECMC has completed the Phase-II expansion of the mine, while Phase-III with a capacity of 11.4mn tons has been granted approval by the Govt. The company has also started preliminary meetings with the government over a renewable energy park with a vision of 1GW capacity, while the first phase will have a capacity of 400MW.

Engro Vopak handled 1,312k tons in CY22, breaking its all-time record while the Engro Elengy terminal handled 74 cargoes of RLNG in the year. The management believes that owing to the FX crisis, chemical handling will remain restricted.

Engro Enfrashare has deployed 1,083 towers in CY22, and is on course to successfully achieve the vision of 5,000 towers by CY24. Moreover, the tenancy ratio has increased to 1.17x.

After the fire incident at EPTL, both units are operational at optimal capacity. In June, NEPRA has made few changes in EPTL’s tariff and company has filed an appeal for the resolution of this matter. Company expects to receive dividends from EPTL in 2HCY22.

The Polypropylene study has been conducted, and while the business seems profitable owing to high demand, owing to the macro-economic environment of the country, the company has decided to not continue with the project for now.