Lotte Chemical Pakistan Limited (LOTCHEM) announced its 4QCY18 financial result on Thursday where the company posted a profit after tax (PAT) of PKR 1,024mn (EPS: PKR 0.68), up by 137x YoY compared to PKR 7mn (EPS: PKR 0.005) during same period last year. This takes CY18 earnings to PKR 4,431mn (EPS: PKR 2.93) compared to PKR 412mn (EPS: PKR 0.27).
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During CY18, net sales witnessed an increase of 55% YoY to PKR 57,400mn, which is majorly owing to a 30% YoY rise in PTA prices.
Gross margins registered a growth of 10pps YoY to 12.9% (4QCY18: 10.6% up by 7pps YoY). The improvement is led by a 54% YoY rise in international PTA margins coupled with 13% PKR depreciation.
Finance cost increased by 7.5x to PKR 505mn mainly on account of an exchange loss attributable to PKR depreciation during the period.
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Currently the international PTA margins are hovering around USD 112/ton, which is lower than our long-term assumption of USD 140/ton. The stock may remain under pressure in the short term. Our Dec-19 TP for the stock is 25.3/share.
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