Report
Shahrukh Saleem
EUR 8.92 For Business Accounts Only

MLCF_1HFY20 LPS clocked in at PKR1.61 , (AKD, Off the Analyst's Desk, Feb 26, 2020)

MLCF: 1HFY20 LPS clocked in at PKR1.61

 

·         Maple Leaf Cement Factory (MLCF) announced results for 1HFY20 where company posted consolidated LAT of PKR1.8bn (LPS: PKR1.61) against PAT of PKR1.4bn (EPS: PKR1.22) for 1HFY19. For 2QFY20, LAT clocked in at PKR785mn (LPS: PKR0.71), witnessing a sequential improvement after LAT stood at PKR982mn (LPS: PkR0.89) for 1QFY20. Though the situation on YoY basis remains weak against a PAT of PkR748mn (EPS: PKR0.68) for 2QFY19.

·         Gross margins improved sequentially to 5.5% for 2QFY20 against 1.7% in 1QFY20 on the back of a combination of factors including improvement in retail cement prices, lower coal prices and higher utilization resulting in better absorption of fixed costs. However, gross margins clocked in below our expectations of 11.2% which we attribute to higher discounts.

·         Operating expenses for 2QFY20 increased by 35.2/34.6% QoQ/YoY due to MLCF selling its product in far flung markets resulting in high transportation costs, in our view. Taxation for the quarter stood at negative PKR57mn after company potentially recorded some tax reversals.

·          We have a Sell stance on the stock with our TP of PKR24.4/sh where we expect the stock to remain under pressure, particularly, in near term, as retail cement prices continue to slide while coal prices witness a surge, resulting in depressed margins for 3QFY20.

Underlying
Maple Leaf Cement Factory Ltd.

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.

Provider
AKD Securities Limited
AKD Securities 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.

Analysts
Shahrukh Saleem

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