The board of directors of the company in its meeting held here on Thursday recommended a final cash dividend for the year at Re. 0.50 per share ie 5 percent. "Better margins, absence of exchange loss, reduction in financial charges and higher other income contributed to this excellent performance of the company during this year", Furqan Punjani, an analyst at Topline Securities said.
The stock has been one of the best performers' at local bourse gaining 400 percent in the last one year. In spite of that the scrip is trading at 2009 PE of 4.64 lower than market PE of 7.9x, he added. The KP Chemical, a subsidiary of the South Korean conglomerate Lotte acquired 75 percent stake in Pakistan PTA in September 2009 from AkzoNobel.
The company's management has planned to invest in power project worth $40 million, which will produce 40MW of electricity. Furthermore to achieve cost efficiency company will invest $5 million. During the year 2009, the company's net sales grew by 15 percent to Rs 37.773 billion mainly due to higher volumetric sales and better PTA prices. Beside, one-off exchange losses last year due to sharp rupee devaluation, 2009 earnings was mainly led by higher gross margins and reduced financial charges.
The company's gross margins stood at 15 percent compared to 3 percent last year. Higher margins were mainly due to steeper decline in Paraxlyene price (raw material for producing PTA) versus final prices. Moreover, financial charges also remained lower at Rs 307 million versus Rs 1 billion recorded last year due to improved cash flow.
Other income also grew by 211 percent to Rs 479 million, mainly due to insurance claim of Rs 178 million and Rs 261 million in respect of interest income earned on surplus cash generated from operations. On quarterly basis, the company posted net earnings of Rs 1.4 billion (EPS of Re. 0.9) in the fourth quarter of 2009 against net loss of Rs 1.2 billion (loss per share of Re. 0.8) in the same period in 2008.
The company's net sales during the period surged by 80 percent to Rs 11.7 billion in the fourth quarter of 2009 against Rs 6.4 billion in the same period in 2008. Moreover, besides better margins lower financial charges and higher other income supported the bottom line. Lotte Pakistan PTA is the country's largest purified terephthalic acid producer with capacity of 500 million tons.