Pakistan Cements_2QFY18F_1HFY18F Result Previews
Commencing next week, the AKD Cement Universe is scheduled to declare its 2QFY18F/1HFY18F results; first up being LUCK (Jan 26'18). In this regard, we expect the AKD Cement Universe to post combined NPAT of PkR8.25/16.93bn in 2QFY18F/1HFY18F as compared to PkR10.65/19.18bn in 2QFY17/1HFY17 - earnings decline of 23%/12%YoY. Lower earnings are expected to arise from significant 8.5ppts/9.5pptsYoY fall in Gross margins to 32.6%/32.1% in 2QFY18F/1HFY17 (avg. coal prices up 35%/37%YoY during 1QFY18/Apr-Sept'17 coupled with 2.5%/1.6%YoY decline in local cement prices in 1QFY18/Apr-Sept'17), despite 3%/8%YoY growth in topline to PkR42.49/80.83bn (13.3%/15.4%YoY increase in total cement dispatches to 6.60/12.29mn tons during 1QFY18/1HFY18). The AKD cement universe has lost 29%FYTD, underperforming the market by 23% in the process. While risk of pricing indiscipline prevails with upcoming expansions, we believe current price levels offer attractive entry points especially when growth dynamics remain intact even after the sector rallying by 11% in Jan'18 (AKD Cement Universe available at current P/E of 9.5x vs. 12.8x in May'17). While maintaining our preference for the Northern players, our top picks include well diversified, energy efficient companies like LUCK (TP: PkR898/sh), MLCF (TP: PkR108/sh), PIOC (TP: PkR109/sh) and CHCC (TP: PkR140/sh).
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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