KOHC_1QFY23 Analyst Briefing Takeaways, (AKD Off the Analyst's Desk Nov 21, 2022)
Kohat Cement Company (KOHC) organized its analyst briefing today to discuss 1QFY23 results and company’s future outlook.
- To recall, KOHC posted PAT of PkR1.78bn (EPS: PkR8.9), up 28%YoY. Company posted strong GMs of 31.3% during the quarter vs. 27.6%/33.2% during 4QFY22/1QFY22.
- Total industry dispatches for the 1QFY23 clocked in at 9.62mn tons, down 21%/25% on QoQ/YoY basis. Meanwhile, offtakes for KOHC during the same period stood at 688k tons, down 17%/20% on QoQ/YoY basis. Capacity utilization for the quarter stood at 55% for both KOHC and the industry.
- Regarding future outlook, management expects dispatches to recover in the post-flood rehabilitation process expected in the coming quarters. Overall, management expects local industry dispatches to remain down by 10% during FY23.
- Company’s coal mix comprised of 30% Imported, 38% Afghan and 32% Local coal in 1QFY23 compared to 70% Afghan Coal and 30% Local Coal in the previous quarter.
- Coal prices stand as follows: Mozambique coal is PkR45k/ton (CFR: US$150/ton), Local coal PkR32-33k/ton, Afghan coal PkR50k/ton. Average cost of coal stood at PkR41k/ton, up 97% YoY. Company carries one month of coal inventory.
- Regarding the power mix, share of captive generation stood at 27% (vs. 30% during FY22 average). Recent hikes in base tariff has resulted in cost of grid to increase to PkR32.35/kwh, while avg. cost for the quarter stands at PkR25.42/kwh (vs. PkR14.42/kwh SPLY). Company’s captive is running solely on WHR (waste heat recovery), as higher prices of RFO and coal have made it unfeasible to use them, as it was historically.
- On the expansion front, additional cement capacity of 11mn tons is expected to be added during FY23, whereas total 16mn tons shall be added in the next three years. Furthermore, land is being procured in Khushab for a greenfield cement production line, with work on other infrastructure developments underway as well (utilities, connections, roads etc.). Finally, an additional 10MW solar power plant is in the works as well.
- Due to PkR’s sharp devaluation and rising input costs, revised cost of Khushaab expansion project is expected to be ~PkR35bn compared to the initial estimate of PkR30bn.
- Average Cement bag MRP during 1QFY23 stood PkR995/bag, vs. PkR955/650/bag during 4QFY22/1QFY22. Retention price for the quarter stood at PkR12,850/ton, up 15%/63% on QoQ/YoY basis.
Kohat Cement Company Limited. Kohat Cement Company Limited is a Pakistan-based company, which is engaged in the production and sale of cement. The Company's products include Grey Cement and White Cement. The Company offers Ordinary Portland Grey Cement under the brand name KOHAT CEMENT. The Company produces and sells White Portland Cement under the brand name KOHAT SUPER WHITE. The Company also offers white canvas for various architectural applications. The Company's white canvas is used for concreting and ornamental applications, terrazzo floorings, fixing of tiles and marbles, and others. The Company's White Portland Cement is available in all local markets in Pakistan and Afghanistan. The Company has an annual production capacity of 2.8 million tons of Grey Cement and 150,000 tons of White Cement. The Company produces both Grey and White Cements at its plants located in Rawalpindi Road, Kohat.
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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