FCCL 2QFY23 Analyst Briefing Key Takeaways, (AKD Off the Analyst's Desk Feb 23, 2023)
AKD, Off the Analyst's Desk
FCCL 2QFY23 Analyst Briefing Key Takeaways
Fauji Cement Company Limited (FCCL) held its corporate briefing session today to discuss its 1HFY23 results and future outlook. To recall, the company PAT of PkR5.1bn (EPS: PkR2.1) in 1HFY23 vs PkR3.8 (EPS: PkR1.5) in SPLY, growing 34%YoY.
- Company has reported higher ever quarterly revenue of PkR19bn, attributed to new capacity expansion of Nizampur in Oct’22. With the commissioning of DG khan plant, FCCL would become the third largest cement player. Currently company operates only in the North region but will start operations in the South as well with the commissioning of the DG Khan plant. Moreover, company will explore the opportunity to export via sea post DG Plant commissioning.
- As per management, current price of local coal is ~33-35k/ton and afghan coal is ~52-54k/ton while imported coal costs at PkR60-62k/ton in North. Company holds around 30 days of inventory and current cost of coal inventory stands at PkR42-43/ton.
- Coal mix of the company stands at 53%/44%/3% of Local/Afghan/Imported coal. Quality of Afghan Coal is at par with imported coal (RB-1) but has lesser portion in coal mix because of high price. In power mix, company reliance on own power generation is 42% while the rest is on National Grid.
- Current retail price of cement in the market stands at PkR1050-1080 per bag.
- Regarding steel rebar shortage, management believes that impact of shortage would have a lagged impact and can impact the cement demand if issue remains for more than ~3-4 months.
- On the expansion front, management expects commissioning of the D.G Khan plant (capacity: 2.1TPA) by end CY23. On the issue regarding LC restrictions, management stated that LC is already in process and does not expects any future hindrances from SBP. Around 60% of the equipment has already been imported for the said project.
- Cost of the said project has increased to PkR38bn from earlier expected amount of PkR32.5bn, impacted by rupee devaluation and rising finance costs.
- Company has utilized PkR4bn of TERF facility for DG khan capacity while SBP has halted the LTFF facility. Company expects the impact of unavailability of LTFF to be around PkR800mn per annum.
AKD Research
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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