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LUCK 4QFY23 & EPCL 2QCY23 Result Previews, (AKD Daily Aug 04, 2023)

LUCK- 4QFY23 earnings to clock in at PkR10.2/sh: Lucky Cement Limited (LUCK) is expected to announce its 4QFY23 earnings on August 7th, wherein we expect the company to post unconsolidated PAT of PkR3.2bn (EPS: PkR10.2) vs. earnings of PkR12.8/12.7/sh in 3QFY23/SPLY, changing by –20%/-20% QoQ/YoY. This decline in the quarterly earnings is mainly attributable to the high tax charges and a 38%QoQ decline in the other income due to the absence of dividend income especially from LCI (Lucky Core Industries Ltd.). Topline of the company is expected to clock in at PkR27.4bn, an increase of 10%/24% QoQ/YoY, respectively. Increase in the topline is due to an increase in the cement prices (avg. bag price inflated by 4%QoQ) and a 2%QoQ increase in the company offtake during the quarter. Furthermore, total tax is expected to clock in at PkR3.2bn, where effective tax rate calculates to 50%, owing to the retrospective application of the super tax (10%). Overall FY23 earnings cumulate to PkR45.7/sh vs. PkR48.8/sh in SPLY, down 6%YoY. On the consolidated accounts, earnings are expected to amount PkR33.6/sh in 4QFY23. 

EPCL—2QCY23 EPS of PkR1.0 expected: The board of EPCL is scheduled to announce its 2QCY23 results on August 9th, where we expect company to post a Profit after Tax of PkR881mn (EPS: PkR1.0) vs. PAT of PkR1,033mn (EPS: PkR1.3) in 1QCY23, a decline of 15%QoQ. The said decline in the bottom line is due to high taxation charges during the quarter that offsets the quarterly gain on the gross level. Topline is expected to shrink by 3%/22% QoQ/YoY to clock in at PkR17.5bn vs. PkR17.9bn in the previous quarter. This decline is mainly due to a 10% decline in the international PVC prices averaging at US$810/ton during the quarter vs. US$900/ton in 1QCY23. Gross margins improved to 23.5% during the quarter vs. 20.0% in 1QCY23, due to the availability of cheap gas during the quarter offsetting the impact of a 15%QoQ decline in ethylene-PVC core margins. Furthermore, effective tax rate is expected to calculate to 64.5% during the quarter due to implementation of 10% super tax on earnings and deferred tax as well. Finally, we expect company to pay dividend of PkR1.0/sh for the said quarter, taking half-year dividend to PkR2.0/sh.