Unity Foods Limited (UNITY) held its analyst briefing session today where the panelists included the senior management of the company to discuss its FY21 results. To recall, the company posted NPAT of PkR3.1bn (EPS: PkR3.45) compared to PkR210mn in (EPS: PkR0.35), a remarkable growth of 14.8x YoY.
· The revenue of UNITY has clocked in at PkR66.4bn in FY21, depicting a growth of 122%YoY. The revenue from industrial and commercial oil sales has grown by ~147%YoY among which the volumetric growth stood at 91%YoY. Similarly, the revenue from Consumer Packs/PKE/Animal Feed has depicted a growth of ~68%/83%/48%YoY.
· The revenue from newly launched Sunridge has swelled by ~172%YoY on account of ~159%YoY increase in volume offtakes and 12.4% increase in price. The revenue from wheat and flour category has clocked in at PkR7.6bn, growing ~36x YoY. The product portfolio in the flour segment now contains 6 variants compared to a standard category in FY20.
· In order to increase its market share, the company has partnered with several E-commerce platforms which include Daraz, Metro online, Airlift express, Chase, Naheed.pk etc.
Going forward, the company plans to list its products with other new entrants as well.
· The company is in the process of issuing right shares through which it intends to raise ~PkR5.3bn. The purpose of this issue is to invest in working capital due to higher requirement amidst the commodity bull cycle where palm oil prices are currently hovering around US$1,375/MT in contrast to US$590/MT at the start of FY21.
· The currency devaluation possess a key risk for the company since the payables of the company are US$ denominated. As of FY21 end, the company had foreign currency denominated trade payables of US$57.8mn. The company is in process to convert its liabilities in the local currency.
· The company is in the process to deploy SAP and B2B portal system in 2QFY22 which is expected to increase the efficiency of the company. In addition to this, the company also plans to deploy sales automation system in 4QFY22.
· In FY23, the management plans to increase its Flour Mill capacity to 400MT/day. Meanwhile, the management expects the integrated refinery fraction plant to be completed whereas it plans to increase the oil terminal capacity to 45k MT.
· Going forward, the company is gearing up to enter into the business of rice and pulses in upcoming months. Similarly, it expects the palm oil prices to subside in 2HFY22 due to which the margins may see an upward trend.
Courtesy – AKD Research