High PTA prices impacted Lotte Chemical Pakistan

Lotte Chemical Pakistan Limited (LOTCHEM) announced its 4QCY21 financial result today where the company posted a profit after tax (PAT) of PKR 1,413mn (EPS: PKR 0.93), up by 12% YoY compared to PKR 1,258mn (EPS: PKR 0.83) during SPLY. On a QoQ basis, earnings were up by 125%. This takes CY21 earnings to PKR 4,643mn (EPS: PKR 3.07) compared with earnings of PKR 2,125mn (EPS: PKR 1.40) during CY20

Result Highlights

· During 4QCY21, net sales went up by 58% YoY to PKR 18.9bn due to 61% YoY rise in PTA prices. Cumulatively, sales increased by 72% YoY to PKR 67.2bn during CY21 due to higher production along higher PTA prices (+48% YoY) compared to same period last year.

· During 4QCY21, the company witnessed gross profits margins of 12.0% compared with 11.9% during 4QCY20. The increase in gross margins is witnessed due to higher PTA margins that increased by 59% YoY. On the other hand, Acetic Acid prices increased by 106% YoY.

· Finance cost decreased to PKR 196mn during 4QCY21 compared to PKR 577mn in the last quarter. Decline in finance cost is witnessed due to higher exchange loss during last quarter.

· Other income went down by 61% QoQ to PKR 113mn during 4QCY21 due to lower levels of short term investments, we view.

Recommendation

· Currently, we have a “Buy” call on the stock with a Dec’22 TP of PKR 18.5/share.

Courtesy – AHL Research

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