Pakistan Cement_Profitability to decline 53-14%YoY-QoQ for 3QFY22, (AKD Daily, Apr 25, 2022)
AKD Daily
Pakistan Cement: Profitability to decline 53-14%YoY-QoQ for 3QFY22
- AKD Cement Universe is expected to post PAT of PkR7.6bn for 3QFY22 against PAT of PkR8.9/16.4bn for 3QFY21/2QFY22. On YoY basis, profitability is expected to decline majorly due to high base as MLCF, DGKC and LUCK recorded high other income during 3QFY21 while on QoQ basis, the PAT is expected to decline on the back of increasing power and fuel costs.
- Trend of gross margins for 3QFY22 will vary for every players in our universe where players with high inventory of coal from 2QFY22 are going to outshine while additional comfort will be provided be increased use of Afghan coal.
- We expect DGKC to witness highest pressure on margins with the company having low inventory of coal while in South, it couldn’t utilize Afghan coal either due to high freight cost. LUCK is expected to be the only player to post a QoQ increase courtesy higher other income from ICI.
- The continued volatility in coal prices can provide good opportunity to accumulate where we maintain our overweight stance on the sector for CY22. In this backdrop, we highlight LUCK, MLCF and FCCL as our top picks from sector.
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.
Maple Leaf Cement Factory is engaged in the production and sale of white cement, grey cement and clinker. Co. is a subsidiary of Kohinoor Textile Mills Limited.
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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