By: WE Financial Services Limited
We will discuss the performance of Lotte Chemical Pakistan Limited (LOTCHEM) in the 9MCY15 and would give recommendation to the investors.
Cumulative loss reduces 41% YoY: Largely with the support of improved primary margin, LOTCHEM managed to reduce its losses in 9MCY15 where its loss after taxation (LAT) totaled Rs 505 million (EPS: Rs 0.33) which is 41% YoY less when compared to LAT of Rs 853 million (EPS: Rs 0.56) in 9MCY14.
Losses enlarge in 3QCY15: Owing to lower primary margins, the losses of the company increased in 3QCY15 where it suffered from a LAT of Rs 268 million (EPS: Rs 0.18) which is 16% YoY more from a LAT of Rs 230 million (EPS: Rs 0.15) in 3QCY14. The primary margins of PTA/PX fell to $ 82/ton in 3QCY15 as against primary margins of $ 90/ton in 3QCY14. The industry is facing tough times around the globe reason being the overcapacity due to which PTA prices are in pressure.
Decline in revenue – major culprit: The major dent to the bottom-line was made by 32% YoY decline in revenue to Rs 25,635 million in 9MCY15 as against Rs 37,679 million in the identical period in CY14. This decline in revenue was owing to 34% YoY drop in average prices of Purified Terephthalic Acid (PTA) to $735/ton in the period under review versus $1,120/ton in 9MCY14. The sales volume of the company too remained low in 9MCY15 as it totaled 346k tons which is 1% YoY down from 348k tons in the same period in CY14.