Corporate Briefing Notes
Descon Oxychem Limited (DOL) held its corporate briefing session today to discuss its financial results for 1HFY23 and it future outlook.
● During the 1HFY23, the company reported a revenue of PKR3.5bn, up by 81% YoY. Similarly, net profit of the company clocked in at PKR1bn during the noted period. The increase in profitability is attributed to tremendous growth in export market along with higher prices and volumes.
● Export sales volume has significantly jumped up by 453% YoY as compared to SPLY. The management believes that the margins on exports higher as compared to local sales, thus led to massive surge in the profitability.
● As per the management, the total country’s demand for H2O2 is around 110K tons/annum. Only 76k tons is being meet through DOL and import, whereas the gap of 40K ton remains unfilled.
● Currently company is selling its H2O2 product at around USD650-700/ton compared to an import price of USD500/ton from Bangladesh. The company is charging premium on the account of better quality, and a huge gap between demand and supply.
● The company holds a sufficient inventory for next 7-8 months to mitigate the supply chain disruption. Meanwhile, the management does not expect any shutdown in the future.
● Regarding the textile sector, the management shared that strong demand was witnessed during the 1HFY23 from the sector and expects the same in near term. Any further price hike into RLNG prices will be easily catered due to healthy margins from export market.
● The company has upgraded its food-grade production capacity from 2k to 5k tons through which the company would charge a premium for food-grade products.
● The management informed that the company has a cash rich balance sheet as Debt to equity ratio is 0.10 in 1HFY23 as compared to 0.18 in SPLY, thus the company is well protected in the current high-interest rates environment. The management considers to finance the requirements through internally generated cash.
● Going-forward, the management plans to reduce the reliance on the textile sector as currently majority of the sales are to the textile sector. Moreover, the company is actively looking for opportunities into different sectors that include; new chemical market, poultry, livestock, paper, cosmetics, and water treatment.
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