External broker reports(aggregated public sources), Topline Securities

Topline Securities

Topline Securities is one of the fastest growing brokerage houses in Pakistan. It has strong equity brokerage, economic / equity research, mutual fund distribution, commodity trading and corporate finance & advisory functions. Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

External broker reports(aggregated public sources)

Thematic (Sector/Industry)

Pakistan Chemicals / Thematic (Sector/Industry)

<ul><li>We expect Topline Fertilizer universe earnings to decline by 3% due to 34% decline in Urea sales. While on YoY basis, it is expected to go up by 3.6x YoY to Rs25bn as in 2Q2023 tax expenses of the companies were higher. Adjusting for this, Profit Before Tax (PBT) of the companies is up 78% YoY in 2Q2024.</li><li>This will take 1H2024 earnings to Rs50bn, up 3.7x YoY, thanks to increase in our universe gross margins by ~200ppts and lower effective tax rate of 40% (vs. 63% in 1H2023).</li><li>Urea sales declined by 18% YoY and 34% QoQ to 1.2mn tons in 2Q2024. Similarly, DAP offtake decreased by 7% YoY and 11% QoQ to 256k tons during 2Q2024. This took 1H2024 Urea and DAP sales to 3.03mn tons (-2% YoY) and 545k tons (+5% YoY), respectively.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We expect Topline Fertilizer universe earnings to decline by 3% due to 34% decline in Urea sales. While on YoY basis, it is expected to go up by 3.6x YoY to Rs25bn as in 2Q2023 tax expenses of the companies were higher. Adjusting for this, Profit Before Tax (PBT) of the companies is up 78% YoY in 2Q2024.This will take 1H2024 earnings to Rs50bn, up 3.7x YoY, thanks to increase in our universe gross margins by ~200ppts and lower effective tax rate of 40% (vs. 63% in 1H2023).Urea sales declined by 18% YoY and 34% QoQ to 1.2mn tons in 2Q2024. Similarly, DAP offtake decreased by 7% YoY and 11% QoQ to 256k tons during 2Q2024. This took 1H2024 Urea and DAP sales to 3.03mn tons (-2% YoY) and 545k tons (+5% YoY), respectively.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Pakistan Fertilizer: Profits likely to down 3% QoQ in 2Q2024; Market Weight Maintained