AKD Securities Limited - Cherat Cement Co. (CHCC) CHCC_2QFY21 EPS clocked in at PkR4.22; DPS: PkR1/sh, (AKD, Off the Analysts Desk, Feb 10, 2021)

Report

AKD Securities Limited

Shahrukh Saleem

EUR 8.90 For Business Accounts Only

CHCC_2QFY21 EPS clocked in at PkR4.22; DPS: PkR1/sh, (AKD, Off the Analyst's Desk, Feb 10, 2021)

AKD Research - Off the Analyst's Desk

February 10, 2021

CHCC: 2QFY21 EPS clocked in at PkR4.22; DPS: PkR1/sh — significantly above expectation

· Cherat Cement Company (CHCC) announced results for 2QFY21 where PAT stood at PkR820mn (EPS: PkR4.22), up 1.7xYoY. The result came in significantly above our expectation majorly on account of lower than expected cost of sales where we believe low cost inventory of coal played a part.

· Gross margins for the quarter stood at 25% against our expectation of 20% while improving against 2QFY20/1QFY21 by 16/4ppts as overall increase in dispatches led to better absorption while prices also improved during the quarter.

· Finance cost of the company decreased by 31/45% QoQ/YoY as decrease in interest rates due to COVID-19 took effect while we believe improved cash flow due to robust profitability will have decreased short term borrowing during the quarter.

· For 1HFY21, company posted PAT of PkR1.1bn (EPS: PkR5.81) against LAT of PkR560mn for 1HFY20 as gross margins increased to 25% vs. 7% in 1HFY20. Against street expectations, along with the result, company also announced a dividend of PkR1/sh.

· We believe a significant earnings beat will keep stock as well as the whole sector in limelight. The results also warrants a revision to our FY21 earnings estimate of PkR7.1/sh where we await clarity from management regarding the reason behind lower than expected cost of sales.

10/02/2021 1 EN

Underlying

Cherat Cement Co.

Co. is engaged in the manufacturing and marketing of cement and clinker.

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PK0029801013 Pakistan Stock Exchange Pakistan

Provider

AKD Securities Limited

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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Analysts

Shahrukh Saleem

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CHCC_2QFY21 EPS clocked in at PkR4.22; DPS: PkR1/sh, (AKD, Off the Analyst's Desk, Feb 10, 2021)

CHCC_4QFY23 Result Review ? Higher taxation hit earnings, (AKD Off the Analyst's Desk Sept 5, 2023)

Cherat Cement: 3QFY23 Review: Low volumes and margins hurt profit

Cherat Cement: 2QFY23 Review: Elevated topline lead to earnings beat

Pakistan Strategy - IMF successful review strengthens case for strong rebound once geopolitical tensions subside, (AKD Daily May 10, 2025)

KOHC 3QFY24 Result Review - Lower offtakes lead to profit decline (AKD Off the Analyst's Desk Apr 25, 2024)

CHCC_3QFY24 Result Review —Gross margin contraction leads to earnings decline(AKD Off the Analyst's Desk Apr 25, 2024)

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