LUCK: Near term headwinds clouding outlook , (AKD Daily, Feb 27, 2020)
LUCK: Near term headwinds clouding outlook
- We update our estimates for Lucky Cement Ltd. (LUCK), incorporating the disappointing read for 1HFY20 while tweaking sales volume (incorporating actual sales volumes for 2QFY20) and discount forecasts largely centered over the near term.
- We also incorporate the increased cost of transportation, particularly for coal with strict compliance at import terminal. Our revised EPS estimate for FY21/22 are down 9.7/13.2% to PkR24.1/31.9/sh where increased transportation costs are a major drag.
- For 1HFY20, LUCK maintained its market share largely in-line with the capacity based share however moving forward, with commencement of expansion in Dec’19, we expect the company to increase its share and with market in a situation of a price competition currently, it can potentially lead to higher discounts.
- With a Buy stance on the stock (TP of PkR555.3/sh, implying an upside of 17.8%), we advocate for building positions on dips where pressure on the stock price in the wake of negative broader sentiment and sliding cement prices is expected to provide buying opportunities.
AKD Research
Lucky Cement is a cement manufacturing and distribution company which is based in Pakistan. Co. is engaged in the manufacture and sale of Ordinary Portland, Sulphate Resistant, and Slag Cement. Co.'s brand names included Lucky Cement, Lucky Star, Lucky Gold, Chairman, and Lucky Sulphate Resistant Cement. Co. maintains production facilities in Pezu (Production capacity: 13,000 tons per day) as well as in Karachi (Production capacity: 8,000 tons per day). In addition, Co. is engaged in developing export markets for bulk loose cement from Pakistan to the Gulf Countries, African Markets, and Far East Region including Nepal & Sri Lanka.
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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