AKD Securities Limited - Off the Analyst's Desk.

Karachi -- November 16, 2022 (PPI-OT)

LOTCHEM: 3QCY22 Analyst Briefing

Lotte Chemical Pakistan Limited (LOTCHEM) held its corporate briefing for 9MCY22 today, wherein the following was discussed:

LOTCHEM is the only manufacturer of PTA in the country, with an annual capacity of 500KT. The annualized market is estimated at ~750KT.

To recall, NPAT was recorded at PkR8.1bn in 9MCY22 (higher by 151%YoY), on net sales of PkR79.5bn (higher by 65%YoY). The bottomline growth is attributable to better PTA-PX margins during the period, with gross margins standing at 19% in 9MCY22, compared to 11% in the same period last year.

Margins were suppressed in 3QCY22, majorly on the back of lower prices of PTA due to poor global demand and heightened inventory levels. On the other hand, PX prices were also lower during the period - tracking the crude oil prices that retreated from recent highs.

Regarding the demand outlook, LOTCHEM is of the view that despite the bleak outlook for the textile sector, the company is hopeful that its demand would remain intact as the domestic supply (LOTCHEM being the sole producer of PTA in the country) was not enough to meet domestic demand.

LOTCHEM apprised that its planned production capacity for the remainder of the year was already committed, hence it did not see any downturn in its demand in the near-future.

Regarding any issues in establishing LCs, the company indicated that it was not facing any issues. Neither were there any...