FCCL & DGKC: 4QFY17 Result Preview
FCCL: 4QFY17 Result Preview
FCCL is scheduled to announce its 4QFY17 result on Wednesday (Sept 20'17) where it is expected to post earnings of PkR466mn (EPS: PkR0.34), down 55%YoY. Expected decline in earnings is attributable to lower margin on procured clinker as the existing Line 2 (2.27mn tpa capacity; 66% of its 3.43mn tpa total capacity) is undergoing repairs. While revenues are expected to drop by 1%YoY to PkR4.79bn in 4QFY17 (with shortfall in clinker production met through procured clinker), higher cost of production due to relatively expensive clinker is expected to raise COGS by 39%YoY to PkR3.84bn, reducing GM by 23.2ppts to 19.8% in 4QFY17. On a cumulative basis, FY17 earnings are expected to decline by 55%YoY to PkR2.44bn (EPS: PkR1.77). However, we expect earnings to normalize in FY18F to PkR4.01/sh, as rehabilitation work on Line-II is underway and expected to be finalized in Oct’18. Alongwith the result FCCL is expected to announce a final cash dividend of PkR1/sh. Having lost 23%CYTD, FCCL currently trades at a FY17/F18F PE of 19.8x/8.7x, where our Jun'18 TP of PkR56/sh implies a Buy stance (upside: 60%).
DGKC: 4QFY17 Result Preview
Previewing 4QFY17F earnings for DGKC (expected later this month), we forecasts NPAT to clock in at PkR1.59bn (EPS: PkR3.64), down 34%YoY/18%QoQ. Lower earnings are expected to arise from 1) 8%YoY/3%QoQ decrease in topline (9%YoY/3%QoQ decline in total cement dispatches) and 2) expected 9.2pptsYoY decline in GM to 35.8% (avg. coal prices up 54%YoY in 4QFY17). On a cumulative basis, FY17 earnings are expected to decline by 8%YoY to PkR8.05bn (EPS: PkR18.37). Alongwith the result DGKC is expected to announce a final cash dividend of PkR5.5/sh. Having lost 32%CYTD, the stock currently trades at FY17F/FY18F PE of 8.2x/7.8x where our Jun '18 TP of PkR262/sh offers an upside of 73% from current price level. Buy!
Co. is engaged in the production and sale of Ordinary Portland and Sulphate Resistant Cements.
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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