LUCK & INDU 2QFY24E Previews (AKD Daily Jan 25, 2024)
LUCK & INDU 2QFY24E Previews
LUCK - 2QFY24E unconsol. EPS of PkR16.4 expected: Lucky Cement Ltd. (LUCK)’s board is scheduled to announce their 2QFY24E result today, where we expect the company to report unconsolidated earnings of PkR4.8bn (EPS: PkR16.4) vs. PkR6.9bn (EPS: PkR23.6) in the quarter before (↓31%QoQ). The said is decline attributed to the normalization of gross margins to 30.4%, as the preceding quarter's margins (36.9%) were anomalous due to the procurement of low-cost coal. Topline of the company is anticipated to remain flat QoQ, as the increase in retention prices (up ~4%QoQ) offsets the impact of a 2% quarterly decline in offtakes, totaling 2.12mn tons for the quarter. Furthermore, other income is expected to decline by 35%QoQ to PkR2.1bn, due to the absence of dividend income from LCI. On the consolidated front, earnings for the quarter are projected at PkR51.8/sh (down 14%QoQ), mainly due to the decline in core operation earnings. Additionally, foreign operation (Iraq & DR Congo) earnings are also expected to face a decline due to rupee appreciation.
INDU – Earnings to clock in at PkR17.7/sh in 2QFY24E: Indus Motor Company Limited (INDU) is expected to announce 2QFY24E earnings sometime in the next month, where we expect earnings to clock in at PkR1.4bn (EPS: PkR17.7) vs. PkR3.2bn (EPS: PkR40.9) in the quarter before. The decline is primarily attributed to a 40%QoQ reduction in sales volumes, totaling 2,687units compared to 4,511units in the previous quarter, possibly due to the year-end effect. Gross margins are expected to contract to 5.9% from 10.1% in the preceding quarter due to diseconomies of scale and a drop in ex-factory prices at the end of Oct’23. Additionally, other income is anticipated to witness a decline of 30%QoQ as well, to clock in at PkR2.0bn, due to fall in short-term investments during the previous quarter. Overall, 1HFY24E earnings are projected to accumulate to PkR58.6/sh, compared to PkR33.4/sh in SPLY (up 75%YoY). Along with that, we expect company to announce interim cash dividend of PkR10.5/sh, taking half-year dividend to PkR35.0/sh.
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