FFBL reported above expected 2Q12 EPS of PRs1.1/sh but contrary to our expectations the company did not announce any cash payout.
2Q12 earnings came down 47% YoY due to 8%/15% lower urea/DAP sales, decline in DAP primary margins, share of loss from associates and surge in financial charges.
We scale up FFBL PO by 5% (to PRs41) and 12E/13E EPS by 5%/10.8% to account for PRs20/bag increase in urea and PRs100/bag increase in DAP prices announced earlier this month. We reiterate our U/P rating for FFBL.
We believe lack of dividend announcement will hurt 3Q12 earnings outlook for its holding company, FFC where 3Q12 EPS can go down to as low as PRs1.8-2.0 from PRs4.57 expected for 2Q12.
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