Elixir Securities Limited – Flash Note

Karachi, August 10, 2017 (PPI-OT): Pak Elektron Limited – 2Q2017 EPS at PKR 3.24/share (-6%YoY)

Pak Elektron Limited (PAEL) announced its 2Q2017 results today, where the company posted consolidated earnings of PKR1.63bn (PKR 3.24/share); down by 6%YoY which was in-line with our EPS estimate of PKR 3.22/share. 1H2017 earnings of the company clocked in at PKR2.7bn (PKR 5.44/share), up by healthy 21% YoY.

Along with the results the company announced an interim cash dividend of PKR1.5/share as compared to dividend of PKR 1.25/share in the corresponding period last year.

During the quarter, topline of the company remained flat; up by meagre 2%YoY primarily on the back of sluggish demand of white good products owing to heavy downpour in pre-monsoon season. Furthermore, company discounts and sales tax increased massively to 25% vs 16% in SPLY which further hindered revenue accretion.

During the outgoing year, effective tax rate of the company clocked in at ~11.6% vs 12.3% owing to effective utilization of tax credits.

The stock is currently trading at CY17/CY18 PER of 10.6x/10.0x. Our Jun-18 PT of PKR 125/sh offers a total return of 31% from its last closing. We await company’s detailed financials before tweaking our estimates.

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