Lotte Chemical Pakistan Limited (LOTCHEM) announced its 1QCY19 financial result on Friday where the company posted a profit after tax (PAT) of PKR 1,286mn (EPS: PKR 0.85), up by 3.6x YoY compared to PKR 355mn (EPS: PKR 0.23) during same period last year. On QoQ basis, earnings are up by 26% QoQ.
During 1QCY19, net sales witnessed an increase of 30% YoY to PKR 16,123mn, which is majorly owing to a 9% YoY rise in PTA prices and 20% PKR depreciation.
Gross margins of the company are up by 260bps YoY to 11.7% (4QCY18: 10.6% up by 110bps QoQ). The improvement is led by a 20% YoY PKR depreciation, however international PTA margins are down by 8% YoY.
Currently the international PTA margins are hovering around USD 160 per ton, which is higher than our long-term assumption of USD 140/ton. Our Dec-19 TP for the stock is 25.3 per share.