In continuation with last two years, we expect another dull year likely to end of Lotte Chemical Pakistan Limited (LOTCHEM), as company to show loss after taxation of Rs 1,026 million (LPS: Rs 0.68) for the CY14 against loss after taxation Rs 546 million (LPS:Rs 0.36) in CY13 owing to lower primary margin and increase in financing cost. In 4QCY14, it is expected that company would post profit of Rs 49 million (EPS: Rs 0.03) against Rs 659 million (LPS: Rs 0.44) in 4QCY13. This is expected due to higher other income from Lotte Powergen despite lower primary margin of $77/ton in 4QCY14against $94/ton recorded in 4QCY13, depicting decline of 18%
Net sales to drop by 18%
Revenue likely to decrease by 18% at Rs 46.65 billion against Rs 57.07 billion during CY13 owing to lower PTA prices and marginal dip in volumetric sales. PTA prices down by 20% YoY to $978/ton in CY14 against $ 1,216/ton in CY13. Similarly, PTA volumetric sales decrease by 1.2% to 485k tons in CY14 versus 491k tons in CY13. Company would post gross loss of Rs 1,574 million against gross loss of Rs 711 million in CY13 mainly due to low average primary margin.
Other income to provide breather
Other income likely to swell by 31% to Rs 1,273 million versus Rs 970 million owing to dividend income from the Lotte Powergen (Private) Limited. Finance costs likely to rise by 109% YoY to Rs 266 million in CY14 mainly on account of net exchange loss.

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Analysis of LOTCHEM

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