LOTCHEM is expected to post an NPAT of PKR1.7bn (EPS: PKR1.10) in 4QCY23, down 16% QoQ and 17% YoY. This will take CY23 NPAT to PKR6.5bn (EPS: PKR4.30), down 36% YoY. The decline in earnings is attributed to lower PTA-PX margins and lower PTA volumes amidst weak demand from the textile spinning industry. Revenues are expected to fall 5% QoQ to PKR22.4bn, dragged by both lower PTA prices and PKR appreciation during 4Q.

Gross margins are expected to contract 1.9ppt QoQ and YoY to 12.6%, amidst lower realized PTA-PX margins at c.US$61/ton due to excessive PX inventory for production, along with the November gas price hike.

We expect LOTCHEM to declare a final cash dividend of PKR1.0/sh in 4QCY23, taking CY23 total payout to PKR3.0/sh.

Courtesy – Intermarket Securities Limited