FCCL_2QFY20 EPS clocked in at PkR0.14 - lower than our expectations, (AKD, Off the Analyst's Desk, Feb 21, 2020)
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FCCL: 2QFY20 EPS clocked in at PkR0.14 — lower than our expectations |
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· Fauji Cement Company Ltd. (FCCL) announced financial result for 1HFY20 where company posted an EPS of PkR0.35, down 73.6%YoY on the back of lower gross margins. For 2QFY20, EPS stood at PkR0.14, down 81.5/35.3% YoY/QoQ – significantly lower than our expectations. · Gross margins for 1HFY20 stood at 10.3% against expectations of 13.8% which we attribute to company utilizing high cost inventory of coal while high discounts must have also played a part. However we await clarity from management in this regard. · For 2QFY20, gross margins declined to 7.4% against 13.9/32.0% in 1QFY20/2QFY19. Effective tax rate for the quarter came in at negative 23.2% as company recorded tax reversals, taking the effective tax rate for 1HFY20 to 13.2% vs. 29.2% in 1HFY19. · Operating expenses for the quarter increased by 9.5%QoQ where biggest increase was recorded in administrative expenses which increased by 39.0/73.1% QoQ/YoY. Finance cost increased by 1.2x/88.1% YoY/QoQ. · We have a Neutral stance on the stock with our TP of PkR16.3/sh providing a total return of 10.4%. The stock is currently trading at FY20F EV/EBITDA of 6.5x and EV/ton of USD40. |
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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