By: BMA Capital Management Limited
Al-Ghazi Tractors Limited (AGTL): 1QCY15 Earnings Preview: Al Ghazi Tractors is scheduled to hold its board meeting on Apr 22’15 where we expect the company to post earnings of PKR603mn (EPS: PKR10.4) in 1QCY15 compared to PKR235mn (EPS: PKR4.1) in 1QCY14, representing a growth of 2.5xYoY. The substantial growth in earnings can be attributed to 2.7x growth in tractor sales primarily due to reversal of GST from 16% to 10%. On a QoQ basis, earnings are expected to post a growth of 7% primarily on the back of 7%QoQ growth in tractor deliveries. At our target price of PKR521/sh, we have a ‘BUY’ stance on the scrip offering a total return of 61% (50% capital gain + 11% dividend yield).
Millat Tractors Limited (MTL): 9MFY15 Earnings Preview: Millat Tractors will hold their board meeting dated Apr 22’15 to announce results for 3QFY15. We expect the company to post earnings of PKR687mn (EPS: PKR15.5), posting a substantial growth of 4.8x on a YoY basis compared to PKR141mn (EPS: PKR3.2) presented in 3QFY14. The expected growth in earnings will primarily be on the back of increased tractor sales, in line with the industry, in response to the reversal of GST. On a QoQ basis, earnings are expected to remain flat despite a 6%QoQ growth in sales as decline in other income is expected to cap the growth in earnings. At our target price of PKR677/sh, the stock offers a total return of 22%.