Nimir Industrial Chemicals (NICL) & Nimir Resins Limited (NRSL) | Chemical | Analyst Briefing Takeaways
NICL and NRSL conducted their corporate briefing sessions today to discuss the financial performance of FY22 & 1QFY23 along with the company’s future outlook.
To recall during FY22 & 1QFY23 NICL posted PAT (profit after tax) of PKR 1.6bln & PKR 215mn respectively translating into EPS of PKR 14.43/share & PKR 1.95/share respectively.
The management attributed decline in profitability is mainly due to sudden drop in feed stock prices in the international market, high finance cost and imposition of supertax which led to the drop in bottom-line.
The management apprised that around 95% of the revenue generation comes from Oleo Chemicals, whereas Caustic Soda (used in soap manufacturing) comprises of 2-3% of the total revenue, as all the caustic Soda produced used in house for soap manufacturing.
The production capacity of Oleo chemicals stands at 140KMT tons, Chlor Alkali at 79KMT, soap finishing at 75 KMT and Aerosols at 80Mn cans.
NICL has started the commercial operations of the first phase of expansion of Chlor Alkali (Caustic Soda) plant which has production capacity of 60 tons per day while the total capacity of 120 tons per day is expected to be achieved soon once the Thermal power plant shall be operative.
The company has planned major expansions with CAPEX of PKR 10bn (5bn through TERF) which are expected to be completed by 3QFY23, including 20MW solid fuel fired thermal power plant (TPP), Chlorinated Paraffin WAX (CPW) plant including chlorine liquefaction plant, Caustic Soda plant 21KMT/annum along with Sulphate Removal System at Chlor Alkali Plant.
NICL imports 80% of its raw material mainly through Malaysia and Indonesia. Currently the company uses coal for its steam requirements for which Afghan coal and local coal is used. While currently electricity requirements are met through gas generators and WAPDA. Once the TPP is operative the Company will met all its energy needs through it. The management expects NICL energy cost to decline post the expansion comes online.
Nimir Resins (NRSL) posted EPS of Rs. 2.60/ share during FY22 and Rs. 0.12/share during 1QFY23. The company is engaged in the manufacturing of coatings and emulsions, textile chemicals along with paper chemicals.
Special chemical which is the main product is tailored as per customer’s needs, for which the company conducts massive R&D.
The company is not facing any issue in the opening of LCs for raw materials, though scrap import has been difficult due to SBP’s restrictions.
The pulp & paper business is expected to have solid growth in the outgoing year.