Khark Petrochemical Company announced 2902 IRR EPS for FY2015 (ending March 20, 2016), recognizing 25% of the estimated EPS for the fiscal year. Gross profit margin both for the first quarter of the year and the financial year stood at 58% and 61% respectively. The company improved its production capacity up to just 1 % compared with the prior year, but sales amount and price each fell by 5% and 25% in the same period.
Methanol, one of basic manufactured items of the PKHA, bearing the major weight of the total sales almost 50% sold at 304 USD per ton that, if translated to domestic currency, shows over 13% actual revenue in sales of this commodity.
The company is on the edge of the brink, facing two major risks: first is the gas-feed price and second is oil price volatility, prone to go downward though it gained some recovery days before. The projections, for the gas-feed on forecasted budget for FY15-16, were based on 8 Cents per cube meter. This is most likely about to be revised and verified by the respective authorities to around 12 Cents per cube meter. Plus, the oil price slide caused an averagely 8% reduction in Methanol price in the Q2 contrasted to the Q1 of Iranian FY.
Scrutinizing the financials of Khark Petrochemical Company, it is needless to say that negative adjustment is just around the corner as current estimated EPS sounds pretty too much optimistic to cover what it meant to in the forecasts. Thus, we expect price correction to be imminent; nonetheless, PKHA does not owe any debts to financial institutions, which should be interpreted as a neutral factor because lack of debt deficits works well at times of acute crises for the company to protect itself against want of working capital and not when there is impending boom of the market on the horizon.
Khark Petrochemical Company
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Market Overview
What is obvious is that we are not observing fire sell offs at times when the market experienced high-tensed volatility as the stocks are touching their record floors due to on-and-on down-trending in equities prices. Put it another way, we can argue that the shares are approaching their tempting levels and there are plenty of tickers on the menu which appear to be compelling to put them on the list of suggested and favored purchases as they are extremely cheap at this prices. But one thing reserving attention is the economic conditions which hinder the actual predictions made on forecasted budgets on the part of the economic enterprises to be realized due to recessions, inflicted by the international community. By the way, this tends to give way to brighter and healthier commercial and financial transactions under the banner of sanctions removal as it would help fuel the engine for the economic locomotive to run faster than it ever did to compensate for the severe damages, incurred involuntarily.
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To contact the reporters: Negar Moshirfatemi at fatemi@agahmail.com
