CHCC_3QFY24 Result Review —Gross margin contraction leads to earnings decline(AKD Off the Analyst's Desk Apr 25, 2024)
AKD, Off the Analyst's Desk
CHCC_3QFY24 Result Review —Gross margin contraction leads to earnings decline
Cherat Cement Company Limited (CHCC) announced its 3QFY24 results, where the company posted earnings of PkR1.2bn (EPS: PkR6.4) vs. PAT of PkR1.9bn (EPS: PkR9.6) in the quarter before, down 33%QoQ (in line with our expectations of PkR6.4/sh). The said quarterly earnings drop is majorly attributable to the gross margins contraction and lower sales volume.
- Net Sales were reported at PkR8.6bn vs. PkR10.2bn in 2QFY24 (↓33%QoQ/2%YoY). The quarterly decline is mainly due to a 14% quarterly decline in company offtakes, clocking in at 0.59mn tons vs. 0.69mn tons in 2QFY24.
- Gross margins contracted by 5.0ppts to 29.6%, likely due to the upward revision in gas prices during the period (~45-50% of power mix).
- Finance costs were reported at PkR321mn vs. PkR386mn in the previous quarter, down 17%QoQ, possibly attributable to a reduction in borrowings along with slight decrease in avg. KIBOR rates.
- Overall, this takes 9MFY24 PAT to PkR4.6bn (PkR23.9/sh) against PkR4.3bn (PKR22.2/sh) in SPLY, an increase of 8%YoY owing to gross margins improvement and lower financial charges.
AKD Research
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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