FCCL_Cash flow buffers now vital, (AKD Daily, Oct 09, 2019)
- We update our estimates for FCCL after incorporating FY19 detailed accounts, flagging relative tepidness of the company’s cash flows as being prone to weakness from the ongoing downturn resulting in a stretched working capital cycle for the company.
- Company’s market share has decreased to 8.0% in 4QFY19 from 10.1% in 1QFY19, where we expect sales-based market share to stabilize at 8% for FY20/21, taking cue from guidance provided in annual report and our correspondence.
- To attain a pre-expansion cycle capacity-based market share of ~9.2%, FCCL will need to expand capacity by 1.3mn tons which, according to our estimates can cost around PkR13-15bn possibly resulting in increased leverage.
- Stock has returned 20% over the last two weeks as prices of cement were increased however we expect fundamentals to take over where -1% earnings CAGR for FY19-22 and EV/ton of USD39 against USD34 of our universe makes the stock relatively unattractive. We maintain our Sell stance with Jun’20 TP of PkR15.1/sh.
Fauji Cement is engaged in the manufacturing and marketing of cement.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.