Food Producer Industry

8/10/2019 Food Producer Industry

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Disclaimer: All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at

the time of publishing. However, we do not accept any responsibility for its accuracy & completeness and it is not intended to be an offer or a

solicitation to buy or sell any securities. WE Financial Services & its employees will not be responsible for the consequence of reliance upon any

opinion or statement herein or for any omission. All opinions and estimates contained herein constitute our judgment as of the date mentioned in

the report and are subject to change without notice.

For live markets, historical data, charts/graphs and investment/technical analysis tools, please visit our website www.weonline.biz

Morning BriefingMonday, March 24, 2014

IndicesAll Share Index 20,026.10KSE-30TM Index 18,990.38KSE-100TM Index 26,765.49

Turnover

All Share Index 159,929,530

KSE-30TM Index 66,417,000

KSE-100TM Index 125,970,260

Board Meetings

Company Date Time

Askari general insurance Co Ltd 24-03-2014 11:00

Punjab Oil Mills Limited 24-03-2014 11:30

Security Investment Bank Ltd 25-03-2014 4:00Singer Pakistan Limited 26-03-2014 11:45

P.I.B. Terminal 26-03-2014 3:30

Fatima Fertilizer Company 27-03-2014 12:30

Wyeth Pakistan Limited 27-03-2014 2:30

Sindh Abadgar's Sugar Mil ls Ltd 27-03-2014 4:00

First Al-Noor Modaraba 05-04-2014 11:30

Linde Pakistan Limited 16-04-2014 11:00

Unilever Pakistan Foods Ltd 24-04-2014 2:30

Market Review Last Change

KSE 100 Index 26,765.49 -383.03

KSE 30 Index 18,990.38 -348.77

KMI 30 Index 44,606.35 -604.01

All Share Index 20,026.10 -249.31

Market Cap. (Rs bn) 6,460.62 -83.52

Volume Leaders Close Volume

TRG 15.17 14,782,000

BAFL 25.86 11,662,000

LPCL 11.24 9,405,000

JSCL 10.99 7,747,000

AICL 44.33 5,402,400

FOOD PRODUCERS: Earnings decline but outperforming

In our today's morning briefing we would discuss the performance of Food pro-ducer sector in 2013-14.

Trading at highly expensive multiples

The sector is currently trading at highly expensive PE multiples of 57.3 asagainst a PE multiples of 8 of KSE-100 Index due to buyback rumors in fewcompanies after Unilver Buyback and Nestle India. Furthermore, lower multi-

ple remain also reason to corner float by major institution. We believe this isunjustified and can witness heavy sell-off once market goes through a bearishtrend. Therefore investors are advised to adopt a cautious stance and switch toother sector.

Outperforming KSE-100 index so far in CY14

The sector has posted a return of 15% so far in CY14 outperforming the bench-mark KSE-100 index by 9% which

posted a return of 6%. This was main-ly on back of tremendous performance

by NESTLE which posted a return of27.5% in CY14TD outperformingKSE-100 index by 21.5% primarilyowing to buyback news of NESTLEIndia. Second on the list was NationalFoods whose return stayed in line withthe benchmark index.

Cumulative profit slips in 2013

The cumulative earnings of the food producers sector declined by 11.2% toRs 10,457 million in 2013 as compared to a profit after taxation (PAT) of Rs11,770 million in 2012 primarily due to heavy decline in earnings of EFOODS.For our analysis, we have taken companies of the sector that are in KSE-100index which includes; Nestle, Engro Foods, Rafhan Maize, National Foods, andJDW Sugar. The net sales of the sector totaled Rs 183,519 million in 2013which is 8.8% more from net sales of Rs 168,706 million in 2012. The grossmargin of the sector reduced to 23% in 2013 as against 24% in 2012. The pay-out ratio of the sector climbed to 74% in 2013 versus 43% in 2012. The rise in

payout ratio was on back of almost 97% payout by NESTLE.

Rafhan stays best performer, EFOODS the worst one

Rafhan stood as the best performer among the companies in our analysis as thecompany earned a PAT of Rs 2,781 million (EPS: Rs 301.1) in 2013 growing by36.3% from a PAT of Rs 2,040 million (EPS: Rs 220.9) in 2012. On the nega-

tive side, EFOODS stood as the worst performer in the sector and was the mainculprit due to which the earnings of the sector declined. EFOODS earned a PATof Rs211 million (EPS: Rs 0.3) in 2013 which is around 92% less versus a PATof Rs 2,595 million (EPS: Rs 3.4) in 2012. The massive decline in the earningsof EFOODS was mainly due to lower sales by the company as it faced issues inits distribution process. The detailed performance of the companies in ouranalysis can be seen in the tables on the next page.

KSE Statistics March 21, 2014

We Research is Available on Thomson Reuters, Bloomberg, S & P Capital IQ, FactSet

Sector Cap Relative to KSE 100 Index

16,000

19,000

22,000

25,000

28,000

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

300

400

500

600

700

800

KS E 10 0 In de x F oo d Pro du cers

IndexSector

cap in bn

Source: WE Research


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Food Producers Financial Snapshot

2009 2010 2011 2012 2013

Net Sales 80,906 111,215 143,205 168,706 183,519Gross Profit 20,351 26,532 32,863 40,512 42,706Profit after Taxation 4,596 7,459 9,196 11,770 10,457PAT Growth (%) 49% 62.3% 23.3% 28.0% -11.2%PER (x) 27.8 27.2 29.0 29.4 57.3P/BVS (x) 8.8 10.2 10.1 9.9 13.7P/Sales (x) 1.6 1.8 1.9 2.0 3.3Dividend Yield (%) 2.9% 2.4% 1.8% 1.4% 1.3%Payout (%) 82% 66% 52% 43% 74%Gross Margin (%) 25% 24% 23% 24% 23%

Net Margin (%) 5.7% 6.7% 6.4% 7.0% 5.7%

Nestle 2009 2010 2011 2012 2013

Net Sales 41,156 51,487 64,824 79,088 86,227

Gross Profit 11,899 13,879 16,725 21,523 24,161Profit after Taxation 3,005 4,113 4,668 5,865 5,867EPS (Rs) 66.3 90.7 102.9 129.3 129.4DPS (Rs) 60 75 65 70 125PE (x) 18.8 26.2 34.9 36.6 69.5P/BVPS (x) 12.8 19.3 21.4 18.6 25.0P/ Sales (x) 1.4 2.1 2.5 2.7 4.7Dividend Yield (%) 4.8% 3.2% 1.8% 1.5% 1.4%

Efoods 2009 2010 2011 2012 2013

Net Sales 14,665 20,945 29,859 40,169 37,891Gross Profit 2,502 4,393 6,629 10,321 8,173Profit after Taxation (433) 176 891 2,595 211EPS (Rs) (0.6) 0.2 1.2 3.4 0.3PE (x) NM 425.9 84.0 28.9 NMP/BVPS (x) 22.2 14.6 10.3 7.5 8.1P/ Sales (x) 2.9 2.0 1.4 1.1 1.3

Rafhan Maize 2009 2010 2011 2012 2013

Net Sales 11,428 13,913 18,271 19,531 23,673Gross Profit 2,435 3,298 3,800 3,975 4,213Profit after Taxation 1,297 1,838 2,034 2,040 2,781EPS (Rs) 140.4 199.0 220.2 220.9 301.1DPS (Rs) 90 115 125 125 135PE (x) 10.6 10.6 11.4 18.1 26.6P/BVPS (x) 3.4 3.9 3.9 5.4 7.7P/ Sales (x) 1.2 1.4 1.3 1.9 3.1Dividend Yield (%) 6.1% 5.5% 5.0% 3.1% 1.7%

National Foods 2009 2010 2011 2012 2013

Net Sales 3,759 4,490 5,521 7,169 8,546Gross Profit 1,126 1,327 1,574 2,331 2,957Profit after Taxation 139 87 231 583 673EPS (Rs) 3.4 2.1 5.6 14.1 16.2DPS (Rs) - 1.2 2.5 6 7.5PE (x) 19.9 33.2 11.4 20.5 30.0P/BVPS (x) 4.2 3.9 2.9 8.5 12.0P/ Sales (x) 0.7 0.6 0.5 1.7 2.4Dividend Yield (%) - 1.7% 3.9% 2.1% 1.5%

JDW Sugar 2009 2010 2011 2012 2013

Net Sales 9,898 20,380 24,729 22,750 27,183Gross Profit 2,388 3,636 4,135 2,362 3,202Profit after Taxation 588 1,246 1,372 688 925EPS (Rs) 9.8 20.8 23.0 11.5 15.5DPS (Rs) 4 7 9 6 6PE (x) 5.3 4.3 3.2 10.2 12.4

P/BVPS (x) 1.6 1.6 0.9 1.4 2.1P/ Sales (x) 0.3 0.3 0.2 0.3 0.4Dividend Yield (%) 7.7% 7.9% 12.3% 5.1% 3.1%Source: WE Research


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Pivot AnalysisCompany CR RSI Buy 1 Buy 2 Sell 1 Sell 2 Pivot

KSE 100 INDEX 26765.49 52.19 26,562 26,359 27,089 27,413 26,886

Attock Cement 139.12 59.53 137.70 136.25 140.35 141.55 138.90

Adamjee Insurance 44.33 55.67 43.75 43.20 44.90 45.50 44.35

Askari Bank 17.20 68.64 17.00 16.80 17.50 17.75 17.30

Azgard Nine 7.24 35.83 7.10 6.95 7.45 7.65 7.30

Attock Petroleum 533.30 55.53 528.75 524.15 540.15 546.95 535.55

Attock Refinery 216.21 48.55 213.00 209.80 221.40 226.60 218.20

Bank Al-Falah 25.86 31.35 25.25 24.60 26.85 27.90 26.25

BankIslami Pak 9.99 63.01 9.80 9.65 10.10 10.20 9.90

Bank.Of.Punjab 10.50 40.93 10.45 10.35 10.60 10.70 10.55

Faysal Bank 13.20 56.67 13.00 12.75 13.55 13.85 13.30

Fauji Cement 17.28 62.43 17.15 17.05 17.45 17.65 17.35

Fauji Fert Bin 41.28 30.86 41.05 40.80 41.50 41.75 41.25

Fauji Fertilizer 108.93 39.28 108.50 108.05 109.60 110.25 109.15

Habib Bank Ltd 164.01 38.08 159.20 154.35 166.70 169.35 161.85

Hub Power 52.49 29.36 52.00 51.50 53.00 53.50 52.50

ICI Pakistan 332.17 70.71 328.10 324.05 337.10 342.05 333.05

Lucky Cement 318.64 43.28 315.75 312.90 323.75 328.90 320.90

MCB Bank Ltd 246.55 23.58 240.70 234.85 253.80 261.10 247.95

Maple Leaf Cement 29.38 50.02 29.10 28.80 29.85 30.30 29.55

National Bank 51.56 35.21 50.60 49.65 52.80 54.05 51.85

NIB Bank 2.17 37.06 2.15 2.10 2.25 2.30 2.20

Oil & Gas Dev. XD 251.89 26.74 247.00 242.10 260.35 268.80 255.45

P.S.O. XD 429.18 83.21 425.55 421.95 433.65 438.15 430.05

P.T.C.L.A 30.51 55.72 30.25 29.95 30.95 31.40 30.70

Sui North Gas 23.92 81.43 23.30 22.65 24.40 24.90 23.75

CR = Yesterday's Closing Rate; RSI = 14 day RSI.

RSI Indication: Less than 30 Indicate oversold position & Greater than 70 Indicate overbought

position.

T-Bills (3 Mths) 19-Mar-2014 9.96%T-Bills (6 Mths) 19-Mar-2014 9.98%T-Bills (12 Mths) 19-Mar-2014 9.99%Discount Rate 16-Mar-2014 10.00%Kibor (1 Mth) 21-Mar-2014 10.24%Kibor (3 Mths) 21-Mar-2014 10.04%Kibor (6 Mths) 21-Mar-2014 10.08%Kibor (9 Mths) 21-Mar-2014 10.36%Kibor (1 Yr) 21-Mar-2014 10.39%P.I.B (3 Yrs) 21-Mar-2014 11.70%P.I.B (5 Yrs) 21-Mar-2014 12.15%P.I.B (10 Yrs) 21-Mar-2014 12.70%P.I.B (15 Yrs) 21-Mar-2014 12.85%P.I.B (20 Yrs) 21-Mar-2014 12.90%P.I.B (30 Yrs) 21-Mar-2014 13.00%

Key DataMoney Market

GDR Update

Symbol $.Price PKR/S

MCB (1 GDR= 2 Shares) 5.00 245.40

OGDC (1 GDR= 10 Shares) 25.24 247.76

UBL (1 GDR= 4 Shares) 2.50 61.35

LUCK (1 GDR= 2 Shares) 6.00 294.48

HUBC (1 GDR= 25 Shares) 13.44 52.77

NCCPL (U.S $ in million)

FIPI (21-Mar-2014) -4.37

Local Companies (21-Mar-2014) 1.06

Banks / DFI (21-Mar-2014) 2.18

Mutual Funds (21-Mar-2014) -0.62

NBFC (21-Mar-2014) 1.00

Local Investors (21-Mar-2014) 1.83

Other Organization (21-Mar-2014) -1.07

Commodities*Crude Oil (brent)$/bbl 107.23*Crude Oil (WTI)$/bbl 99.40*Cotton $/lb 92.92*Gold $/ozs 1,334.65*Silver $/ozs 20.41Malaysian Palm $ 842*GOLD (PMEX) PKR 43,170KHI Cotton 40Kg PKR 7,127

Portfolio Investment (U.S $ in million)

Yearly(Jul, 2017 up to 20-Mar-2014) 108.37

Monthly(Mar, 2017 up to 20-Mar-2014) -4.55

Daily (20-Mar-2014) -0.73

Total Portfolio Investment (28-Feb-2014) 4816

WE Financial Services

Corporate Office506, Fifth Floor,Karachi Stock Exchange Building,Stock Exchange Road,Karachi - 74000,PakistanURL: www.we.com.pk


Book ClosureCompany From To D/B/R Spot Date AGM-EOGM

Nishat Power 22-03-2014 29-03-2014 10(II) 14-03-2014 -

Habib Bank Ltd. 22-03-2014 29-03-2014 20(F),10(B) 14-03-2014 29-03-2014

Kohinoor Spinning Mills 22-03-2014 28-03-2014 10(I) 14-03-2014 -Chakwal Spinning Mills 22-03-2014 28-03-2014 5(I) 14-03-2014 -

EFU General I nsurance 28-03-2014 05-04-2014 40,28(B) 20-03-2014 05-04-2014

Din Textile Mills 28-03-2014 04-04-2014 25(I) - -

Pak Datacom 28-03-2014 04-04-2014 20(I) - -

EFU Life Assurance 28-03-2014 05-04-2014 50 - 05-04-2015

Sunrays Textile Mills 28-03-2014 03-04-2014 100(II) - -

Indus Dyeing & Mfg. 28-03-2014 03-04-2014 100(II) - -

Atlas Insurance 03-04-2014 10-04-2014 50(F),10(B) - 10-04-2014

Linde Pakistan 03-04-2014 16-04-2014 40(F) - 16-04-2014

Abbott Laboratories 09-04-2014 16-04-2014 40(F) - 16-04-2014

Indications

# Extraordinary General Meeting

Disclaimer: All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of pub-lishing. However, we do not accept any responsibility for its accuracy & completeness and it is not intended to be an offer or a solicitation to buy or sell any secu-rities. WE Financial Services & its employees will not be responsible for the consequence of reliance upon any opinion or statement herein or for any omission.All opinions and estimates contained herein constitute our judgment as of the date mentioned in the report and are subject to change without notice.

For live markets, historical data, charts/graphs and investment/technical analysis tools, please visit our website www.weonline.biz


Food Producer Industry

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