LUCK_Portfolio companies joining the party, (AKD Daily, Feb 10, 2021)
AKD Daily
LUCK: Portfolio companies joining the party
- Post release of detailed accounts for 2QFY21, we update our investment thesis, incorporating i) faster than expected normalization of working capital cycle, ii) impressive performance of portfolio companies, and iii) shift in power sources for LUCK as gas supply at Pezu remains suspended due to a pipeline fault.
- LUCK’s venture into automobile sector has provided astounding returns with revenue for 1HFY21 increasing by 2.6xYoY to PkR44.3bn as Sportage and Picanto continue their stellar run while moving forward, a move towards double shift from Jan’21 will further uplift the topline and profitability. Operating margins of the segment also improved to 8.5% against 0.6/7.5% for 2QFY20/1QFY21.
- Congo and Iraq have performed as well with 1HFY21 net profit increasing by 31.8/25.5%YoY for Congo/Iraq to PkR7.5/1.8bn while net margins have increased to 30/26% on the back of improved pricing and demand where upcoming clinker plant in Iraq is going to improve margins further with in-house clinker production.
- With launch of new models in the automobile segment and commencement of Lucky Electric Power Ltd. (LEPL) expected to be major triggers in the medium term, we expect the stock to remain in limelight where our TP of PkR928.5/sh provides an upside of 25.1% with LUCK currently trading at EV/EBITDA of 6.3x (Ex. Portfolio value) against 7.4x of our universe.
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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