Karachi, May 10, 2012 (PPI-OT): Fatima Fertilizer loan cost reduction per share impact
Market is rife with rumours that Fatima Fertilizer is in the process getting reprieve in shape of loan price reduction.
According to Standard Capital, as per Standard Capital’s analysis, this could be a positive development since big corporate usually get reduction in pricing on credit facilities from commercial banks.
As per Standard Capital’s sensitivity analysis, if Fatima Fertilizer gets reprieve of 150bps i.e. (overall reduction from 15.4% to 13.9%) then it could be a saving impact in the vicinity of Rs 540mn to Rs 600mn (after tax per share impact is about Rs 1.07 – Rs 1.14). Usually the pricing is like 3M Kibor + 300bps which in Standard Capital’s view is pretty higher. Since now FATIMA has come out of the red due to robust CY11, Standard Capital believes this option was very much on the cards. Standard Capital has yet to see the final outcome of this development.
Standard Capital has calculated the impact on the present loan amount of Rs 34.5bn plus current port. of long term loan.
The impact could significantly bolster FATIMA bottom-line if the company repays Rs 10bn as current port. oflong term loan instead of Rs 3bn (as envisaged during unveiling of CY11 results).
As for the present situation, the renegotiated pricing may help in enhancing FATIMA’s EPS to Rs 4.9/sh in CY12 from Standard Capital’s earlier rudimentary forecast of Rs 4/sh. Standard Capital signals BUY ratings from Standard Capital’s last call since ECC has already fixed urea sale price at Rs 1600per 50kg bag. Secondly, urea sale prospect for FATIMA is bright since it has got lower capacity as against other players. Moreover, FATIMA is employing sales promotion techniques for NP and CAN sale.
News and views: Public Accounts Committee laments telecommunication issues
As per Business Recorder, the secretary IT of the PAC lamented that despite giving assurance to Ministry of Information Technology, the PTA did not appoint consultant for the valuation of 3G licenses, which the government had earlier planned to auction in March 2012. Government earlier wanted to raise US$ 1bn much needed amount for fiscal space. PAC also directed Secretary Ministry of IT to arrange a separate briefing on pending payment issue of remaining US$ 800mn payment from Etisilat to government and the performance of PTCL.