Elixir Securities Limited – Research

Karachi, August 19, 2016 (PPI-OT): FATIMA: 2Q2016 EPS Clock in at PKR 0.88/sh, DPS: PKR1.25/sh

Fatima Fertilizer Company Limited (FATIMA) announced its 1HF2016 financial results, posting unconsolidated earnings of PKR1.42/sh (down 56% YoY), significantly above market consensus of PKR~0.95/sh. Earnings for 2Q clocked in at PKR0.88/sh (down 58% YoY).

The company also announced a surprise cash payout of PKR1.25/sh along with the results.

Variation in earnings from Elixir Securities Limited’s estimates primarily emanated from significantly lower than estimated tax expense of PKR88mn (effective tax rate clocking in at 4.5%) against Elixir Securities Limited’s expectations of PKR910mn (effective tax rate of 52%). Lower tax expense is likely attributable to reduction in deferred tax liabilities arising from reduction in corporate tax rate by 1pp announced in FY17 budget. Elixir Securities Limited awaits detailed accounts for further clarity on the same.

Elixir Securities Limited’s Jun-17 PT of PKR38/sh offers capital upside of 12% along with dividend yield of 5.2%. Maintain BUY!

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