Pak Elektron back with bang! Pak Elektron Limited (PAEL) is one of the leading manufacturers of electrical goods in Pakistan. Saigol group is holding major shares of PAEL since 1978. Pak Electron has wide range of product portfolio divided in two main divisions namely Home Appliances division and Power division. Seasonal sales uplift profitability: Pak Elektron Limited (PAEL) recently announced financial result for 2QCY14. Company shows triple growth in profitability in both QoQ and YoY basis mainly due to outstanding seasonal sales of home appliances. For 1HCY14 PAEL reported net profit of Rs 1.16bn (EPS Rs 3.93) against Rs 309mn (EPS Rs 1.05) posted in same period last year. For the 2Q PAEL reported net profit of Rs 904mn (EPS Rs 3.07) against Rs 240.7mn (EPS Re 0.82) reported in previous quarter. Sales up by 19% YoY Rs 13.06bn is the value of gross sales during 1HCY14 against Rs 10.977bn reported in 1HCY13 showing fabulous YoY growth of 19% this increase in sales is mainly due to higher demand of home appliances. As Pak rupee was appreciating against dollar during this quarter and cost of import has been declined which enable PAEL to enjoy higher gross margin of 31.25% in 1HCY14. Home appliances- High margin segment As per our conversation with company, we came to know that during this quarter companys higher sales was due to higher home appliances sales which have higher margin. Future outlook We expect a good sales number ahead based on midsummer sales during July and August. The power division is also in limelight given expected demand of transformers and electricity meters as Siemens Pakistan is winding up its power segment business. Valuation| PE 4.4x- Buy Currently PAEL is yielding lowest expected PE of 4.4x based on our expected full year earnings of Rs 7/sh. Higher earnings are expected due to good margins and boost in volumetric sales in coming days. We recommend BUY for PAEL given lower expected PE.
Posted on: Tue, 26 Aug 2014 07:50:08 +0000
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