Result Preview: Summertime sadness for profitability
- AKD Cement universe is expected to post a 29%YoY decline in profitability for FY19 as higher energy/fuel cost weigh on margins despite 9%YoY higher retail cement prices. For 4QFY19, profitability is expected to decrease by 60%YoY on the back of lower margins and higher finance cost.
- Total dispatches of our universe for FY19 are expected to increase by 2.2%YoY due to increase in exports of 51.3%YoY. Also, increase in market share of our universe resulted in local dispatches declining by 4%YoY against the decline in industry’s dispatches of 6%.
- DGKC is expected is post the highest YoY decline in profitability of 66% as increase in finance cost of 5.7xYoY weighs heavy while gross margins are expected to clock in at 16% in FY19 vs. 28% in FY18.
- We expect MLCF to record a tax credit to the tune of PkR1bn after the company commenced its expansion in 4QFY19 while CHCC is expected to reverse 50% of the tax credit booked in 3QFY19 after the quantum of credit was decreased to 5% in Budget’20 from 10%.
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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