· ICI Pakistan Limited (ICI) announced its 4QFY22 financial result today where the company posted a profit after tax (PAT) of PKR 663mn (EPS: PKR 7.18), down by 30% YoY compared to PKR 947mn (EPS: PKR 10.25) during SPLY. On a QoQ basis, earnings went down by 67%. The decline in earnings is due to the imposition of super tax. This takes FY22 earnings to PKR 8,466mn (EPS: PKR 91.66), up by 52% YoY. Along with the result, the company also announced a cash dividend of PKR 15/share, taking the full-year payout to PKR 35/share.

Result Highlights

· During 4QFY22, net sales surged by 70% YoY to PKR 28,345mn due to higher sales across all segments, supporting the overall jump.

· Gross margins of the company went up by 10bps YoY to 20.4% during 4QFY22. The rise in gross margins was led by better performance of all segments, however, the coal prices were 220% higher compared to the same period last year.

· During 4QFY22, ICI booked an exchange loss of PKR 384mn amid PKR depreciation.

· Finance costs of the company went up by 77% YoY | 22% QoQ to PKR 415mn during 4QFY22 due to augmented short-term borrowing along with higher interest rates.

· Effective tax rate during 4QFY22 settled at 76% compared to 35% during 4QFY21, given the imposition of a super tax through Finance Act, 2022.

Other Information

· Board of Directors of ICI Pakistan consider and approved the change of the name of the company from ICI Pakistan Limited to Lucky Core Industries Limited.

Recommendation

· We have a BUY call on the scrip with a Dec’22 target price of PKR 998.04/share.

Courtesy – AHL Research