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LUCK & EPCL_ Result Previews ,(AKD Daily, Aug 05, 2022)

LUCK & EPCL: Result Previews

LUCK – unconsolidated earnings to clock in at PkR39.9/sh in FY22F: LUCK is slated to announce
its 4QFY22 result today, where we expect the company to record an unconsolidated nominal
profit of PkR1.6bn (EPS: PkR4.9) vs NPAT of PkR2.4mn (EPS: PkR7.4) in 4QFY21. This will take
FY22 NPAT to PkR12.9bn (EPS: PkR39.9) against NPAT of PkR14.1bn (EPS: PkR43.5) in FY21. For
4QFY22, the topline is expected to increase by 45/7.6% YoY/QoQ majorly due to higher retail
prices which more than offset the impact of the decline in sales volume by 13.8%QoQ, higher
fuel and power costs, and hefty PkR depreciation. Likewise, gross margins are likely to clock in at
23.6% vs 22.1% in 3QFY22. Moreover, the decline in profitability is a result of the super tax applicable
for the quarter where ETR for 4QFY22 is likely to clock in at 64% vs 16% in 3QFY22. Consequently,
unconsolidated earnings for 4QFY22 are expected to stand at PkR1.6bn, down
71/33% QoQ/YoY. Similarly, for FY22, the topline is expected to increase by 30%YoY due to higher
cement prices which should neutralize the impact of the decline in offtake by 9%YoY, and
higher coal prices where we witnessed coal prices touching an all-time high of US$460/ton during
Mar’22 while avg. at US$212/ton, up 168%YoY in FY22. Gross margins are likely to settle
around 23.7% for FY22F vs 30.1% in FY21. Finally, on a consolidated basis, we expect profitability
to stand at PkR29bn (EPS: PkR82) for FY22.

EPCL – 2QCY22 earnings to clock in at PkR1.8/sh: We expect EPCL to post Consolidated PAT of
PkR1.6bn (EPS PkR1.8) in 2QCY22 as compare to PAT of PkR3.1bn (EPS PkR3.4) in SPLY. The decrease
in earnings is primarily attributable to imposition of super tax. Revenue for the June quarter
is expected to clock in at PkR21bn vs PkR14.8bn in SPLY, recording an increase of 42%YoY.
The increase in revenue is primarily attributable to 13%YoY increase in volumetric sales. On QoQ
basis, revenue is estimated to fell by ~9% owing to lower volumetric sales and decline in PVC
prices. Gross margins are expected to inch up by ~170bps on QoQ basis, owing to lower EDC
prices. Other operating expenses are expected to clock in at PkR1.18bn, up by 100%/39% YoY/
QoQ, owing to higher exchange loss due to devaluation of PKR against USD, which depreciated
by ~11% QoQ in 2QCY22. Other income is expected to increase by 41%QoQ, attributable to higher
cash and cash equivalent and higher profit rates. Finance cost is estimated to clock in at
PkR732mn, up by 43%/19% YoY/QoQ. The increase is primarily attributable to higher financing
rates. Effective tax rate for the quarter is expected to clock in at ~71% for 2QCY22, attributable
to imposition of super tax. We expect company to announce cash dividend of PkR1.5/sh, taking
1HCY22 dividend to PkR6.5/sh.