ASTL_Enter the Diamer Bhasha frame!,(AKD Daily, Jun 04, 2021)
AKD Daily
ASTL: Enter the Diamer Bhasha frame!
- We revise our earnings estimates for ASTL, incorporating the demand from Diamer Bhasha after company has been approved as source, along with two other unlisted players, to supply rebars where total demand for FY22 stands at 78k tons. Assuming ASTL’s share of the demand at 61%, we expect incremental impact of PkR0.80 for FY22 (17% for previous FY22 earnings).
- Even though the exact number for demand post FY22 isn’t clear at the moment, our channels checks suggest annual demand can escalate to 100-120k tons annually for a period of 4-5 years. Assuming a similar share for ASTL post FY22 as well, company is expected to supply 55-65k tons annually, resulting in incremental EPS of PkR1.03/1.24 for FY23/24 (18.1/18.2% of our base case estimates).
- On the other hand, aggressive penetration in Punjab (sales mix tilted to 45/55% North/South vs. 28/72% in FY20) is likely to push company's sales volumes by a CAGR of 13.1% over FY21-24F aided by rebar expansion, with ASTL's market share to jump to 6.1% by FY23 against 2.7% before expansion in FY18.
- We expect the sector to remain in limelight on the back of government's continued support towards construction sector. With ASTL posting earnings growth of 19.9% for FY21-24 and PEG of 0.43x, we expect the stock to continue performing with our TP of PkR68/sh providing an upside of 46%.
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