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MLCF - FCCL - DGKC - CHCC - PIOC & KOHC 2QFY24 Result Previews ,(AKD Daily Feb 14, 2024)

Pakistan Cements:  MLCF - FCCL - DGKC - CHCC - PIOC & KOHC 2QFY24 Result Previews

MLCF 2QFY24 earnings expected at PkR1.6/sh: MLCF is expected to announce its 2QFY24 results on Feb 20th, wherein we expect company to post NPAT of PkR1.7bn (EPS: PkR1.6) vs. earnings of PkR1.6bn (EPS: PkR1.5) in the quarter before (↑ 7%QoQ), primarily attributed to topline expansion. The company's topline is expected to increase by 5%QoQ, reaching PkR17.6bn, owing to a 5.3% quarterly increase in the retention prices, albeit sales volumes remain flat at 1.06mn tons. Gross margins are expected to contract by 87bps to 30.5%, where the higher energy prices (coal & power) offset the impact of increased retention prices. Additionally, finance cost is projected to decline by 7%QoQ due to decline in effective interest rates (avg. 6 month KIBOR 21.5% vs. 23.0% in preceding quarter). Overall, 1HFY24 earnings are expected to reach PkR3.1/sh, a 22%YoY decline from PkR4.0/sh in SPLY, due to operating expenses being doubled amid elevated inflation.

  

FCCL’s 2QFY24 earnings are expected to clock in at PkR0.99/sh: Fauji Cement Company Ltd. (FCCL) will announce its 2QFY24 result on 26th Feb, where we expect earnings of PkR2.4bn (PkR0.99/sh) vs. PkR2.6bn (PkR:1.07/sh) in 1QFY24, down 7%QoQ. Topline is expected to clock in at PkR20.2bn vs. 20.3bn in the quarter before (↓0.5%QoQ), where the increased retention prices largely offset the 7%QoQ decline in the sales volumes. Gross margins are expected to shrink slightly to 30.9% vs. 31.1% in 1QFY24, owing to an increase in the coal prices, where the weighted average coal price is expected at PkR45.4k/tons vs. PkR42.5k/ton in the preceding quarter. Furthermore, financial charges are expected to reduce by 11%QoQ to PkR1.0bn amid a decline in ST loans in previous quarter. That being said, 1HFY24 earnings would cumulate to PkR5.1bn (PkR2.06/sh) vs. PkR7.1bn (PkR2.9/sh) in SPLY, down 29%YoY, mainly on the back of reduced sales volumes and increased financial charges.

 

DGKC—2QFY24 EPS of PkR2.02 expected: The board of DGKC would announce its 2QFY24 results sometime during current month, where we expect company to post a PAT of PkR883mn (EPS: PkR2.02) compared to earnings of PkR668mn (EPS: PkR1.51) in the previous quarter, an increase of 33.7%QoQ. The said earnings growth is majorly attributable to sales volume growth where exports have doubled QoQ to 0.39mn tons. Subsequently, revenue is expected to increase by 12.3%QoQ on the back of the aforementioned export surge and higher local retention prices. Gross margins are expected to drop slightly to 19.1% vs 19.5% in the previous quarter due to increased export sales in the total mix, as export margins are low comparatively. Moreover, other income is expected to clock in at PkR966mn, an increase of 16.9%QoQ, due to higher dividend income from banking associate. Furthermore, financial charges are expected to decline by 8.6%QoQ to PkR1.9bn during the quarter amid ease in KIBOR rates. Half-year earnings are expected at PkR3.52/sh vs. PkR2.13/sh in 1HFY23, up 65.7%YoY, majorly due to gross margin expansion amid ease in international coal prices.

 

 CHCC- 2QFY24 earnings to clock in at PkR7.4/sh: CHCC is expected to announce its 2QFY24 earnings on Feb 16th, wherein company is expected to report earnings of PkR1.4bn (PkR7.4/sh) vs. PkR1.5bn (PkR7.9/sh) in the previous quarter, a decline of 6.2%QoQ, majorly attributable to gross margins contraction. Revenue is expected to clock in at PkR10.3bn compared to PkR10.1bn in the previous quarter, an increase of 3%QoQ due to a 5.5% increase in retention prices. Gross margins are expected to contract to 29.0% as increased weighted average coal and power cost. Furthermore, the finance cost will likely decline by 11.9%QoQ owing to reduced borrowing, where total debt decreased to PkR9.9bn in 1QFY24 books vs. PkR15.8bn in SPLY. Overall, for 1HFY24, earnings are expected at PkR15.3/sh vs. PkR15.6/sh SPLY, a decline of 2.2%YoY owing to gross margins contraction and increased taxation. Finally, we expect company to announce an interim cash dividend of PkR1.5/sh.

  

EPS of PkR4.9 expected in PIOC’s 2QFY24 results: PIOC is expected to  announce its result sometime during the current month, where we expect company to post earnings of PkR1.1bn (EPS: PkR4.9) vs. PkR0.9bn (EPS: PkR4.11) in the quarter before, an increase of 20%QoQ. The said quarterly increase in earnings is due to topline expansion. Topline is expected to increase by 19%QoQ to PkR10.4bn vs. PkR8.7bn in the previous quarter due to a 12%QoQ increase in the sales volumes, in addition to a 6.9% increase in retention prices. However, gross margins are expected to shrink to 27.8% vs. 30.4% in 1QFY24 due to a 3% increase in weighted average energy prices. Moreover, financial charges are expected to reduce to 14%QoQ to PkR818mn amid reduced borrowings. That brings 1HFY24 earnings to PkR9.03/sh (up 17%YoY) amid gross margin expansions.

 

 KOHC - 2QFY24 EPS of PkR11.4 expected: Kohat Cement Ltd. (KOHC)’s board is scheduled to announce their 2QFY24 result today, where we expect the company to report earnings of PkR2.2bn (EPS: PkR11.4), remaining flat QoQ where the impact of declined sales volume is offset by the increased retention prices (↑4.8%QoQ). Topline is expected at PkR10.4bn vs. PkR11.1bn in the quarter before, primarily due to a 10%QoQ decline in sales volumes to 0.68mn tons vs. 0.76mn tons in 1QFY24. Gross margins are expected to slightly improve to 30.2% vs. 29.2% in the previous quarter primarily due to aforementioned increase in retention prices. Moreover, other income is expected to increase by 2.3%QoQ amid an increase in the company’s ST investments (PkR16.8bn in 1QFY24 books vs. PkR12.3bn at Jun’23 end. Overall, 1HFY24 earnings would accumulates to PkR22.8/sh vs. PkR19.1/sh in SPLY, up 19%YoY, driven by raise in gross profits and other income.