Based on 1) higher Soda Ash prices and 2) better than expected volumetric sales of PVC, we have upward revised our FY13E and FY14E EPS by 22% and 16% to PKR1.50 and PKR1.83 respectively
Resultantly, our Dec13 TP of the stock now stands at PKR14.5/sh which represents a total return of 26% over current trading levels thus we maintain our “BUY” stance on the stock
Full swing operations of VCM plant, steady caustic soda segment operations and most importantly upcoming capacity expansion by 30k tons will be the key value drivers for the stock
Recent strengthening of demand from India with some support from Chinese buying will provide much needed lift to PVC prices (down by 6% MoM) and thus improve margins
The company plans to complete the process of adding 30k tons capacity to 155k tons in three phases at an estimated cost of PKR600mn-700mn. The entire process is expected to complete by Jan15
Barring the impact of one-time insurance claim realized in 1QCY12, the earnings of the company surged by a robust 45% to PKR263mn (EPS: PKR0.40) in the outgoing 1QCY13