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LUCK 2QFY24 Analyst briefing takeaway, (AKD Off the Analyst's Desk Jan 29, 2024)

Lucky Cement Ltd (LUCK) held its corporate briefing earlier today to apprise investors 
on their 2QFY24 financial results and future outlook of the company. Following are 
the key highlights of the call: 
 To recall, company posted consolidated earnings of PkR60.2/sh in 2QFY24 vs. PkR35.7/sh in 
SPLY, indicating a notable 69%YoY surge. The improved performance was driven by higher 
earnings from core cement operations, LEPCL, and LCI. 
 On a standalone basis, earnings amounted to PkR23.1/sh compared to PkR11.2/sh in the 
corresponding period last year, up 107%YoY. This growth was attributed to heightened 
gross margins resulting from increased retention prices.
 Management guided that the current gross margins may not be sustainable in the long 
term as the cost-effective coal inventory advantage is expected to diminish.
 Local retention prices for cement stand at ~PkR14k/ton, whereas export prices for bagged 
cement are ~US$38-39/ton.
 In terms of the coal mix, the company uses 100% imported coal in its south plant, while the 
north plant relies mostly on local coal.
 Local coal is priced at approximately PkR42-43k/ton. Moreover, freight costs from Karachi 
to the north plant location post-axle load implementation amount to ~PkR6-7k/ton.
 Wind power project of 28.8MW is anticipated to come online in 1QFY25, increasing total 
renewable capacity to 103MW. Post-COD of the said project, renewable contribution is 
expected to rise to 50% of the total power mix.
 Looking forward, management expects cement demand for 2HFY24 to remain flat, with 
growth anticipated in FY25.
 Regarding the Iraq expansion of 1.8mn TPA clinker line, management guided that the current grinding plant relies on external clinker sourcing. However, post-expansion of the said 
clinker line, in-house production is expected to result in margin expansion.
 Management stated that LEPCL is expected to achieve tariff true-up in FY24 but needs to 
fulfill further project requirements before any dividend distribution. Currently, LEPCL has 3-
3.5 months (PkR25bn) of receivables dues.
 Additionally, a total of PkR1.0bn investment is approved in NRL (National Resources Ltd.), 
with PkR475mn already invested, and the remaining funds to be utilized within the next 12-
18 months.